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Meng Wanzhou, chief financial officer of Huawei, arrives at B.C. Supreme Court to attend her extradition hearing on Aug. 11, 2021.DARRYL DYCK/The Canadian Press

A B.C. Supreme Court judge who must decide whether Meng Wanzhou can be extradited to New York to face a fraud charge says she doesn’t understand the U.S. allegation against the Chinese executive.

The revelation came more than a year and a half after the extradition hearing started, and on the first day of its evidence phase – the all-important segment in which the Attorney-General of Canada, representing the U.S. Department of Justice, presents the case against Ms. Meng.

Before Robert Frater, lawyer for the Attorney-General, could begin to lay out the evidence, Associate Chief Justice Heather Holmes of the B.C. Supreme Court questioned whether the U.S. had explained the essence of the crime it alleged Ms. Meng had committed – and in particular, its connection to sanctions against Iran.

“I’ve had great difficulty understanding,” she said. The judge – a former prosecutor specializing in corporate crime – went on to pose questions about how the United States set out the allegations in the record of the case (ROC) it supplied to Canadian authorities.

The extradition request has deeply angered China. Days after Ms. Meng’s arrest on Dec. 1, 2018, it arrested and detained two Canadians, Michael Spavor and Michael Kovrig, and has held them for nearly 1,000 days. (Ms. Meng is free on bail.) Mr. Spavor was found guilty this week of spying and sentenced to 11 years in prison. The death penalty was upheld for another Canadian, Robert Schellenberg, for drug trafficking. China says the charge against Ms. Meng, the chief financial officer of the telecom Huawei Technologies Co. Ltd., is politically motivated.

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Ms. Meng is charged with fraud for allegedly misrepresenting to HSBC, in a PowerPoint presentation in Hong Kong in 2013, Huawei’s links to Skycom Tech Co. Ltd., another technology company. The U.S. alleges her misrepresentations exposed HSBC to the risk that it would be punished, criminally or civilly, for violating U.S. sanctions on Iran in dealings with Skycom and Huawei.

Judges in extradition hearings are allowed only a limited weighing of the evidence. The government needs only to make the case that, if the crime were alleged to have happened in Canada, the evidence was sufficient to send it to trial. While it’s a low bar, and most extradition cases involving the U.S. succeed, former chief justice Beverley McLachlin of the Supreme Court of Canada once cautioned: “The judge must act as a judge, not a rubber stamp.”

Ms. Meng is charged with fraud for allegedly misrepresenting to HSBC, in a PowerPoint presentation in Hong Kong in 2013, Huawei’s links to Skycom Tech Co. Ltd., another technology company.DARRYL DYCK/The Canadian Press

Associate Chief Justice Holmes made it clear she had no intention of being a rubber stamp.

“What I don’t understand,” she told Mr. Frater, “is whether the simple fact of dealing with government in Iran would be viewed as offside sanctions.”

“No,” Mr. Frater replied. “It is clear there is good Iran business and bad Iran business.”

“Can you show me that in the ROCs?” (The ROCs are the documents that lay out the evidence and explain the alleged crime.)

Mr. Frater acknowledged: “There isn’t a clear statement of ‘here’s what’s on one side of the line’ and ‘here’s what’s on the other.’”

He said there was a “reasonable inference” that some Iranian business was legal, from the fact that Ms. Meng was candid about doing business in Iran.

“She admits that they’re doing business in Iran. She admits they work … with Skycom. No point in making that admission if all activity in Iran was proscribed,” Mr. Frater said.

“I have been troubled by this issue,” the judge said. “What I’m trying to get at is how does the ROC make all of that clear? That certain things engage sanctions and other things don’t. Because it’s only with that background that one can assess what’s said in the PowerPoint as to whether it was deceptive.”

Mr. Frater said he would get back to her on the point after the lunch break. When they reconvened, he said Huawei was certainly doing permissible business in Iran – but transactions in U.S. dollars put through in the United States were prohibited.

The judge also asked about possible contradictions in Mr. Frater’s summarizing of the case against Ms. Meng: that she told HSBC there was no risk of sanctions violations from Huawei or Skycom, while failing to disclose the true relationship between the two companies.

Associate Chief Justice Holmes said: “As I understand your theory ... the bank had nothing to worry about as far as sanctions violations went because Ms. Meng or Huawei could assure the bank that Skycom was in compliance. Doesn’t that run counter to the theory ... that she falsely misrepresented that Huawei didn’t control Skycom? In other words, how would she be able to give that assurance ... in a way that would be satisfactory and convincing to the bank unless Huawei was in full control of Skycom?”

Mr. Frater said he didn’t see the inconsistency.

The judge then asked whether it was reasonable to suppose that a large bank with risk committees would rely on one individual’s assurance about companies not under its control.

The meeting between Ms. Meng and HSBC was arranged after Reuters published articles suggesting Skycom, which it said had “close ties” with Huawei, was violating sanctions. Associate Chief Justice Holmes expressed skepticism several times that the bank was truly put at risk by Ms. Meng’s presentation after it received a clear warning of sanctions violations in the Reuters reports. For fraud to have occurred, HSBC would have had to face a risk from the misrepresentations.

The evidence phase, which wraps up the hearing, continues on Thursday, and is expected to last until the middle of next week.

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