Ex­ec­u­tive fac­ing U.S. ex­tra­di­tion ap­pears in court

The Prince George Citizen - - News - Jim MORRIS, Rob GIL­LIES, Paul WISEMAN

VAN­COU­VER — A Cana­dian prose­cu­tor urged a Van­cou­ver court to deny bail to a Chi­nese ex­ec­u­tive at the heart of a case that is shak­ing up U.S.-China re­la­tions and wor­ry­ing global fi­nan­cial mar­kets.

Meng Wanzhou, the chief fi­nan­cial of­fi­cer of telecom­mu­ni­ca­tions gi­ant Huawei and daugh­ter of its founder, was de­tained at the re­quest of the U.S. dur­ing a lay­over at the Van­cou­ver air­port last Satur­day – the same day that Pres­i­dents Don­ald Trump and Xi Jin­ping of China agreed over din­ner to a 90-day cease­fire in a trade dis­pute that threat­ens to dis­rupt global com­merce.

The U.S. al­leges that Huawei used a Hong Kong shell com­pany to sell equip­ment in Iran in vi­o­la­tion of U.S. sanc­tions. It also says that Meng and Huawei mis­led Amer­i­can banks about its busi­ness deal­ings in Iran.

The sur­prise ar­rest, al­ready de­nounced by Bei­jing, raises doubts about whether the trade truce will hold and whether the world’s two big­gest economies can re­solve the com­pli­cated is­sues that di­vide them.

“I think it will have a dis­tinc­tively neg­a­tive ef­fect on the U.S.-China talks,” said Philip Levy, se­nior fel­low at the Chicago Coun­cil on Global Af­fairs and an eco­nomic ad­viser in Pres­i­dent Ge­orge W. Bush’s White House.

“There’s the hu­mil­i­at­ing way this hap­pened right be­fore the din­ner, with Xi un­aware. Very hard to save face on this one. And we may see (Chi­nese re­tal­i­a­tion), which will em­bit­ter re­la­tions.”

Cana­dian prose­cu­tor John Gib­bCars­ley said in a court hear­ing Fri­day that a war­rant had been is­sued for Meng’s ar­rest in New York Aug. 22.

He said Meng, ar­rested en route to Mex­ico from Hong Kong, was aware of the in­ves­ti­ga­tion and had been avoid­ing the United States for months, even though her teenage son goes to school in Bos­ton.

Gibb-Cars­ley al­leged that Huawei had done busi­ness in Iran through a Hong Kong com­pany called Sky­com. Meng, he said, had mis­led U.S. banks into think­ing that Huawei and Sky­com were sep­a­rate when, in fact, “Sky­com was Huawei.”

Meng has con­tended that Huawei sold Sky­com in 2009.

In urg­ing the court to re­ject Meng’s bail re­quest, Gibb-Cars­ley said the Huawei ex­ec­u­tive had vast re­sources and a strong in­cen­tive to bolt: She’s fac­ing fraud charges in the United States that could put her in prison for 30 years.

Meng’s lawyer, David Martin, ar­gued that it would be un­fair to deny her bail just be­cause she “has worked hard and has ex­tra­or­di­nary re­sources.”

He told the court that her per­sonal in­tegrity and re­spect for her fa­ther, Huawei founder Ren Zhengfei, would pre­vent her vi­o­lat­ing a court or­der. Meng, who owns two homes in Van­cou­ver, was will­ing to wear an an­kle bracelet and put the houses up as col­lat­eral, he said.

Huawei is the world’s big­gest sup­plier of net­work gear used by phone and in­ter­net com­pa­nies and long has been seen as a front for spy­ing by the Chi­nese mil­i­tary or se­cu­rity ser­vices.

“What’s get­ting lost in the ini­tial frenzy here is that Huawei has been in the crosshairs of U.S. reg­u­la­tors for some time,” said Gre­gory Jaeger, spe­cial coun­sel at the Stroock law firm and a for­mer Jus­tice Depart­ment trial at­tor­ney.

“This is the cul­mi­na­tion of what is likely to be a fairly lengthy in­ves­ti­ga­tion.”

Meng’s ar­rest came as a jar­ring sur­prise af­ter the Trump-Xi trade cease-fire in Ar­gentina.

Ex­act de­tails of the agree­ment are elu­sive.

But the White House said Trump sus­pended for 90 days an im­port tax hike on $200 bil­lion in Chi­nese goods that was set to take ef­fect Jan. 1; in re­turn, the White House said, the Chi­nese agreed to buy a “very sub­stan­tial amount of agri­cul­tural, en­ergy, in­dus­trial” and other prod­ucts from the United States.

The de­lay was meant to buy time for the two coun­tries to re­solve a trade con­flict that has been rag­ing for months.

The U.S. charges that China is us­ing preda­tory tac­tics in its drive to over­take Amer­ica’s dom­i­nance in tech­nol­ogy and global eco­nomic lead­er­ship.

These al­legedly in­clude forc­ing Amer­i­can and other for­eign com­pa­nies to hand over trade se­crets in ex­change for ac­cess to the Chi­nese mar­ket and en­gag­ing in cy­ber theft.

Wash­ing­ton also re­gards Bei­jing’s am­bi­tious long-term de­vel­op­ment plan, “Made in China 2025,” as a scheme to dom­i­nate such fields as ro­bot­ics and elec­tric ve­hi­cles by un­fairly sub­si­diz­ing Chi­nese com­pa­nies and dis­crim­i­nat­ing against for­eign com­peti­tors.

The United States has im­posed tar­iffs on $250 bil­lion in Chi­nese goods to pres­sure Bei­jing to change its ways. Trump has threat­ened to ex­pand the tar­iffs to in­clude just about ev­ery­thing China ships to the United States. Bei­jing has lashed back with tar­iffs on about $110 bil­lion in Amer­i­can ex­ports.

Fears the Huawei case might spark re­newed U.S.-China trade hos­til­i­ties have rat­tled global fi­nan­cial mar­kets.

On Fri­day, the Dow Jones in­dus­trial av­er­age plunged nearly 560 points.

But in a sign the case might not de­rail the Trump-Xi truce, Bei­jing protested Meng’s ar­rest but said talks with the Trump ad­min­is­tra­tion would go ahead. Chi­nese Com­merce Min­istry spokesman Gao Feng said China is con­fi­dent it can reach a deal dur­ing the 90-day time­out.

Still, Cor­nell Univer­sity economist Eswar Prasad warned that “this in­ci­dent high­lights the huge gap in trust be­tween the two sides, cast­ing a pall over the tough ne­go­ti­a­tions that still lie ahead. It will clearly take more than one con­vivial din­ner be­tween the lead­ers of the two coun­tries to start bridg­ing that gap.”

Gil­lies re­ported from Toronto and Wiseman re­ported from Wash­ing­ton. As­so­ci­ated Press writ­ers Frank Bajak in Bos­ton, Joe McDon­ald in Bei­jing and Yuri Kageyama in Tokyo con­trib­uted to this re­port.

She’s fac­ing fraud charges in the United States that could put her in prison for 30 years.

CP/JANE WOLSAK

In this court­room sketch, Meng Wanzhou, chief fi­nan­cial of­fi­cer of Huawei Tech­nolo­gies, back right, sits be­side a trans­la­tor dur­ing a bail hear­ing at B.C. Supreme Court in Van­cou­ver, on Fri­day.

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