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Tuesday, Aug 11, 2020

Huawei to double down on HSBC as legal battle over extradition of Meng Wanzhou intensifies

Huawei to explore ‘all evidence and remedies against’ HSBC, source says, but discussions on whether to sue bank still in preliminary stage. Huawei has hired five law firms in an all-out effort to free Meng

Huawei Technologies, the giant Chinese telecom equipment maker at the centre of the growing China-US technology rivalry, is considering all possible options against HSBC for allegedly presenting “misleading evidence” that resulted in the arrest of its chief financial officer, Meng Wanzhou, in Canada, according to people familiar with the matter.

While internal discussions are still in their preliminary stage, Shenzhen-based Huawei, which Washington has labelled a threat to US national security, has decided to “explore all evidence and remedies against HSBC”, one source briefed on the discussions told the South China Morning Post. The source declined to be identified, as the discussions were confidential.

If Huawei goes ahead, it would mark a widening of the legal battle over whether Meng, the daughter of Huawei founder Ren Zhengfei, should be extradited to the United States.

It would also drag HSBC – the flagship bank of Hong Kong that provided evidence to the US Department of Justice about Meng – into a direct legal dispute with the powerful Chinese company, escalating its current public relations crisis.

Huawei is pulling out all the stops to rescue Meng – at least five separate law firms are working on her behalf. In the latest move, Meng has asked for access to redacted spy agency documents, in an effort to end the extradition process.

This is in sharp contrast to the fate of Michael Kovrig and Michael Spavor, who were detained in China a few days after Meng’s arrest in December 2018 and charged last month with spying. China had denied Canadian embassy officials access to Kovrig and Spavor since early this year.

HSBC was pushed into the public spotlight in China last week after Huawei lawyers disclosed what they said was new evidence that showed Meng should be set free.

On July 17, lawyers for Meng filed two applications calling for the British Columbia Supreme Court to halt extradition proceedings against Meng.

The first application, using public reports, argues that the case was poisoned by US President Donald Trump for political purposes. If the court finds that the extradition request was politically motivated, Meng could be released.

The second application stated that the core evidence provided by HSBC was incomplete and inaccurate. According to the document filed by lawyers on behalf of Meng, the evidence provided by HSBC to support the allegations about Meng was “in itself misleading”.

The lawyers said that Meng had provided a presentation to HSBC about the relationship between Huawei and Skycom Tech, its Iran subsidiary, and that this single presentation had misled the Hong Kong bank into maintaining financial services to Huawei, including clearing payments related to Skycom.

Meng’s lawyers argued that the relationship between Huawei and Skycom was “immaterial” to the risk that HSBC would breach US sanctions because the bank would be able to use a non-dollar payment system that would not make it subject to such sanctions.

Also, they say HSBC knew that Huawei controlled the bank account of Skycom well before Meng’s presentation to the bank in a Hong Kong restaurant in August 2013. Furthermore, HSBC did not incur any real financial losses, according to the lawyers.

In Meng’s presentation, there was “No deception. No material omission. No conduct by [Meng] placing HSBC at risk. No Fraud,” according to the document.

While it remains unknown whether the new arguments from Huawei could help set Meng free – the final ruling in the extradition case is likely to come no earlier than April – the latest information from Huawei has quickly translated into a widespread attack on HSBC by mainland publications, including People’s Daily, which alleged that HSBC had colluded with the US to frame Huawei.

HSBC, in a statement on Chinese social media on Saturday, denied that it had framed Huawei. “HSBC does not have any hostility towards Huawei and did not ‘frame’ Huawei,” HSBC said. The bank said it merely provided facts to the US Department of Justice as required by law.

HSBC declined to comment further on Tuesday.

Meng is currently under partial house arrest in Vancouver. If she is extradited to the US, she could face charges of bank and wire fraud in violation of US sanctions against Iran. If convicted, she could face up to 30 years in prison.

The legal battle has become one of the most widely watched cases in the world and is a prime cause of the rapid deterioration in the bilateral relationship between Beijing and Ottawa.




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