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Meng Wanzhou, chief financial officer of Huawei, leaves her home to attend her extradition hearing at B.C. Supreme Court, in Vancouver, Aug. 12, 2021.Jimmy Jeong/The Canadian Press

A judge presiding over the extradition hearing of a Chinese executive being sought by the United States says the fraud charge against Meng Wanzhou is unusual.

No one lost money, the allegations are several years old, and the intended victim, a global bank, knew the truth even as it was allegedly being lied to, Associate Chief Justice Heather Holmes of the B.C. Supreme Court said Thursday.

Her comments – objecting when a Canadian government lawyer said the case is neither unique nor unprecedented – conveyed the impression, for a second day in a row, that the U.S. case against Ms. Meng faces challenges in winning judicial approval.

Canada’s arrest of Ms. Meng at the request of the United States in December, 2018, has sparked a confrontation with China, which has detained two Canadians, Michael Kovrig and Michael Spavor, for nearly 1,000 days in apparent reprisal, and just this week upheld the death sentence on a third, Robert Schellenberg. China says the Meng case is politically motivated.

The hearing is now in its evidence phase. The judge must decide whether there is enough evidence to send Ms. Meng, the chief financial officer of China’s biggest telecom company, Huawei Technologies Co. Ltd., to trial in New York. Extradition is not a trial; there only has to be some evidence on which a jury could convict. But the judge must do a meaningful assessment of the evidence to ensure the “justice or rightness” of committing Ms. Meng to trial, as the Supreme Court of Canada has instructed.

Ms. Meng is accused of lying to HSBC, a global bank, in Hong Kong in 2013 about the relationship between Huawei and Skycom Tech Co. Ltd., putting the bank at risk of violating U.S. sanctions on Iran as it dealt with the two companies.

Associate Chief Justice Holmes indicated she has questions about the justice or rightness of the case.

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On Wednesday, the first day of the evidence phase, the judge said she was having “great difficulty” understanding how sanctions law applies to the alleged fraud, as Ms. Meng acknowledged doing business in Iran and the U.S. did not spell out in the legal documents provided to Canadian authorities what the line was between legal and illegal activity.

On Thursday, Associate Chief Justice Holmes reacted when Robert Frater, a lawyer for the Attorney-General of Canada, which is presenting the U.S. case, said the fraud charge was not unique.

“On the facts, isn’t it unusual that one will see a fraud case with no actual harm many years later?” asked the judge, a former prosecutor specializing in corporate crime. “And one in which the alleged victim, a large institution, appears to have had numerous people within the institution who had all the facts that are now said to be misrepresented?”

“The law is quite clear about that,” Mr. Frater replied. “As you yourself said, people within the institution may know and have been participants [but that] doesn’t mean there is no fraud.”

Associate Chief Justice Holmes: “I’m simply suggesting that it may be unusual to have both of those features: no actual loss and arguably fairly extensive knowledge within the institution of the true state of affairs.”

Mr. Frater: “Right, and in our law, those features of a case are usually taken care of in sentencing because it speaks to the seriousness of the offence perhaps.”

The Attorney-General needs to show not only that Ms. Meng lied to HSBC in a PowerPoint presentation in 2013, but also that the lies put HSBC at risk of economic harm – in particular, for breaking the rules on sanctions. Whether the risk was remote is also an issue in the case.

Trying to show the connection between the alleged deceit and the risk of harm, or deprivation, Mr. Frater said: “A deprivation exists where a victim is deprived of the opportunity to protect itself.” Because Ms. Meng was dishonest, “HSBC was deprived of the opportunity to protect itself by blocking any transaction related to Skycom, or deciding to end the relationship with Huawei altogether.”

Citing a 2011 appeal court ruling affirming the fraud convictions against theatre impresario Garth Drabinsky, Mr. Frater said: “Proof of actual loss is irrelevant. Proof of risk to the economic interests of the victim is sufficient.” U.S. authorities could have held HSBC criminally or civilly responsible for a sanction violation.

He said it was clear Ms. Meng had a criminal intent to mislead. “Ms. Meng’s PowerPoint is clearly an artfully prepared script that is generous in its description of sanctions … but economical in its description of the nature of the Huawei-Skycom relationship. This demonstrates that there is a reasonable inference of the deliberate character of the representations.”

On Friday, Ms. Meng’s legal team will have its chance to show that the evidence against her is “manifestly unreliable” and “defective” – the standard for undermining the case for committal.

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