Pros­e­cu­tors ask that Chi­nese ex­ec­u­tive be de­nied bail

The Columbus Dispatch - - Front Page - By Jim Morris, Rob Gil­lies and Paul Wiseman

VAN­COU­VER, Bri­tish Columbia — 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 Pres­i­dent 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 Meng 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 Gibb-Cars­ley said in a court hear­ing Fri­day that a war­rant had been is­sued for Meng’s ar­rest in New York on 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.”

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