Wanzhou Meng asks for an order discharging her from the extradition process on the basis that, as a matter of law, the “double criminality” requirement for extradition cannot be met.
The United States seeks Ms. Meng’s extradition for prosecution in the Eastern District of New York for conduct that the Minister of Justice for Canada (in the Authority to Proceed, or ATP) says corresponds to fraud contrary to s. 380(1)(a) of the Criminal Code of Canada. In the committal hearing, the Attorney General must therefore show, among other things, that the conduct in which Ms. Meng is alleged to have engaged would have amounted to fraud, had that conduct taken place in Canada.
美国要求将孟女士引渡到纽约东区（the Eastern District of New York）起诉，因为加拿大司法部长（负责诉讼当局，简称ATP）称，孟女士的行为等同于欺诈罪，违反了《加拿大刑法》（ Criminal Code of Canada）第380（1）（a）条款。因此，总检察长此外还必须在听证会上表明，如果孟女士被指控参与的行为发生在加拿大，将构成欺诈。
Ms. Meng says that the alleged conduct could not have amounted to fraud in Canada because it relates entirely to the effects of US economic sanctions against Iran, and at the relevant time Canada had no such sanctions (just as it has none now).
The Attorney General counters first, that the elements of the offence of fraud in Canada can be made out, on the allegations, without reference to US sanctions against Iran; and second, that in any event the sanctions may properly give background or context to the alleged conduct and explain why it mattered.
For the reasons I will give, I find that the allegations depend on the effects of US sanctions. However, I conclude that those effects may play a part in the determination of whether double criminality is established. For that reason, Ms. Meng’s application will be dismissed.
I will begin by outlining the allegations and the legal framework for this application, before then detailing and discussing the parties’ positions in order to explain my conclusions.
THE ALLEGATIONS MADE BY THE REQUESTING STATE
The application is made in the context of allegations set out by the USA in the Record of the Case (ROC) and the Supplemental Record of the Case (SROC). These documents, filed under s. 33 of the Extradition Act, summarize the evidence that the US authorities certify is sufficient and available for Ms. Meng’s prosecution in that jurisdiction.
It is important to note that these allegations are unproven but must be taken as true for the purpose of this application. Ms. Meng intends to dispute the allegations, but accepts that this application must be argued as though they were unchallenged.
The allegations relate to the banking relationship between Huawei, a China-based telecommunications company, and HSBC, an international bank. Ms. Meng was (and is) Huawei’s Chief Financial Officer, as well as the daughter of its founder, Ren Zhengfei. She is said to have made false statements to HSBC in 2013, significantly understating Huawei’s relationship with Skycom Tech. Co. Ltd., a company based in Iran.
The banking relationship between Huawei (and its subsidiaries and affiliates) and HSBC (and its US subsidiary) ran from at least 2007 to 2017, and involved very significant transactions, including the following. HSBC’s US subsidiary cleared very substantial dollar transactions for various Huawei entities between 2010 and 2014. In August 2013, HSBC coordinated a syndicated loan to Huawei in an amount equivalent to USD $1.5 billion, and was one of the principal lenders. In April 2014, HSBC sent Huawei a signed letter describing negotiated terms for a USD $900 million credit facility. HSBC was also part of a syndicate of banks that loaned Huawei USD $1.5 billion in July 2015.
This all occurred while regulations were in place in the US that, among other prohibitions and restrictions, required banks to obtain authorization from the US Department of the Treasury’s Office of Foreign Assets Control before providing financial or credit services through the US to entities in Iran. Counsel in the committal hearing referred to these regulations, officially titled the Iranian Transaction and Sanctions Regulations, as the “US sanctions”, and I will do so too. In this application, the details of the US sanctions do not matter, except that, as appears to be agreed as a general proposition, violations could lead to criminal and civil penalties.
这一切发生时，美国实施了相关条例，除了其他禁令和限制外，这些条例要求银行在通过美国向在伊朗的实体提供金融或信贷服务之前，必须获得美国财政部外国资产控制办公室（the US Department of the Treasury’s Office of Foreign Assets Control）的授权，条例官方名称为《伊朗交易和制裁条例》（Iranian Transaction and Sanctions Regulations），以此作为“美国对伊朗的制裁”，而且我也会这么做。在这项申请中，美国制裁的细节并不重要，但就好像作为达成的普遍提议，违规行为可能导致刑事和民事处罚。
HSBC had run afoul of the US sanctions relating to Iran and other countries before the events relating to the allegations against Ms. Meng. It entered into a deferred prosecution agreement (DPA) with the US Department of Justice in December 2012, in which it agreed not to commit further sanctions violations, as well as to undertake various remedial measures and to pay forfeitures and penalties amounting to well over a billion dollars.
在孟晚舟被指控事件发生之前，汇丰银行曾违反了美国对伊朗和其他国家的制裁。2012年12月，该银行与美国司法部（US Department of Justice）签订了一份延期起诉协议（DPA），同意不再违反制裁，以及采取各种补救措施，并支付超过10亿美元的罚款和罚金。
Against this backdrop, Reuters published two articles associating Huawei with Skycom’s US-related business dealings in Iran. The first article, published in December 2012, reported that Skycom had offered to sell US manufactured computer equipment to Iran’s largest telecommunications equipment maker in violation of US sanctions. The article reported that Huawei and Skycom had “close ties”, and that Huawei described Skycom as one of its “major local partners” in Iran. The second article, published in January 2013, reported various connections between Huawei and Skycom, including that Ms. Meng served on Skycom’s board from February 2008 to April 2009, and that in 2007 she was company secretary for a Huawei holding subsidiary that, in turn, owned 100% of Skycom’s stock.
When HSBC then made inquiries of Huawei about the reports in the Reuters articles, various Huawei representatives denied the substance of the reported allegations. Ms. Meng requested an in-person meeting with a senior HSBC executive responsible for banking operations in Asia, and such a meeting took place on August 22, 2013 in the back room of a restaurant in Hong Kong. Ms. Meng spoke in Chinese, and an interpreter translated into English for the benefit of the HSBC executive. Ms. Meng also showed a PowerPoint presentation written in Chinese, and some time after the meeting provided HSBC with an English translation.
In the meeting, Ms. Meng told the HSBC executive that Huawei’s operations in Iran complied strictly with applicable laws and US sanctions. She said that Huawei’s relationship with Skycom was one of normal business cooperation in which Huawei required Skycom to make commitments to observe all applicable laws, regulations, and export control requirements. Ms. Meng said that Huawei was once a shareholder in Skycom, and she herself was once a member of Skycom’s board of directors, because at that time these measures were necessary for managing Skycom as a business partner and for strengthening and monitoring its trade compliance. However, these measures later became unnecessary to ensure compliance, and Huawei sold all its shares in Skycom, and Ms. Meng resigned from Skycom’s board. Ms. Meng said that Huawei did business in Iran, but did so through its local subsidiary, and that Huawei’s subsidiaries in countries such as Iran would not transact business with HSBC.
The HSBC global risk committee met in London on March 31, 2014 to discuss “reputational and regulatory concerns” regarding Huawei, and decided to retain Huawei’s business. In reaching that decision, the committee relied on the assurances provided by Ms. Meng at the August 2013 meeting. About a month after the committee’s decision, HSBC sent its letter describing terms for the proposed $900 million credit facility. And about a year after that, HSBC participated with other international banks in a $1.5 billion syndicated loan to Huawei.
Although Huawei had sold its shareholding in Skycom some years before the August 2013 meeting, and Ms. Meng had resigned from Skycom’s board, Huawei in reality continued to control Skycom and its banking and business operations in Iran. Skycom employees had Huawei email addresses and badges, and some used Huawei stationery. Skycom’s directors, and the signatories to its bank accounts, were Huawei employees. The company that had purchased Huawei’s shareholding in Skycom did so with financing from Huawei, and its banking and business operations were under Huawei’s control.
Huawei’s true relationship to Skycom is said to have been information that was material to HSBC’s decision whether to continue to retain Huawei as a client. False assurances by Ms. Meng at the August 2013 meeting in Hong Kong, misrepresenting the actual relationship, are said to have put HSBC at risk of fines and penalties for violating the DPA and for new violations of the US sanctions. Those misrepresentations are also said to have exposed HSBC to both economic and reputational risk.
Before turning to the legal principles that apply, I emphasize once again that the allegations found in the ROC and SROC that I have just outlined are unproven. They are nonetheless to be taken at face value for the purpose of assessing whether the double criminality requirement is met.
The double criminality principle prevents extradition to another state for prosecution where, in a reversed situation, the requested state would not have made an extradition request. Internationally, the principle is recognised as central to extradition law: Canada (Justice) v. Fischbacher, 2009 SCC 46 at para. 26. The principle derives from the foundational principle of reciprocity, by which states are not required to extradite a person to a foreign jurisdiction for conduct that does not amount to a criminal offence in the requested state: M.M. v. United States of America, 2015 SCC 62 at para. 207.
Canada and most other jurisdictions internationally have opted to implement the double criminality principle through the conduct-based approach that asks whether the conduct in the foreign jurisdiction could amount to an offence under domestic law: Fischbacher at para. 29. The alternative offence-based approach, expressly rejected in Canada, looks for a match between the elements of the foreign offence and those of an equivalent Canadian offence. Because Canada has rejected that approach in favour of the conduct-based approach, it is not necessary that the foreign offence have an exactly corresponding Canadian offence identified in the Minister’s authority to proceed. It is the “essence of the offence” that is important: Fischbacher at paras. 28-29.
Paragraphs 3(1)(b) and 29(1)(a) of the Extradition Act express the double criminality requirement that applies in a committal hearing where a person is sought for prosecution (as distinct from sentencing):
3 (1) A person may be extradited from Canada in accordance with this Act and a relevant extradition agreement on the request of an extradition partner for the purpose of prosecuting the person . . . if
. . .
(b) the conduct of the person, had it occurred in Canada, would have constituted an offence [required maximum sentences omitted].
29 (1) A judge shall order the committal of the person into custody to await surrender if
(a)in the case of a person sought for prosecution, there is evidence admissible under this Act of conduct that, had it occurred in Canada, would justify committal for trial in Canada on the offence set out in the authority to proceed . . .
As mentioned earlier, the Minister has identified fraud as the offence reflecting the alleged conduct. The double criminality question in the committal hearing is therefore whether Ms. Meng’s alleged conduct, had it occurred in Canada, would have amounted to fraud contrary to s. 380(1)(a) of the Criminal Code.
380 (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,
(a)is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars . . . .
Fraud in Canada thus requires dishonest conduct with a corresponding deprivation. McLachlin J. in R. v. Zlatic,  2 S.C.R. 29 at 43 neatly described the actus reus and mens rea of this two-part offence as follows:
The elements of the offence of fraud are discussed in a general fashion in R. v. Théroux,  2 S.C.R. 5, released simultaneously. For the purposes of this case, it suffices to state that the actus reus of fraud will be established by proof of:
1. the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and
2. deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim’s pecuniary interests at risk.
Correspondingly, the mens rea of fraud is established by proof of:
1. subjective knowledge of the prohibited act; and
2. subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim’s pecuniary interests are put at risk).
Where the conduct and knowledge required by these definitions are established, the accused is guilty whether he actually intended the prohibited consequence or was reckless as to whether it would occur.
The deprivation caused by the prohibited act need not be actual economic loss, but may consist of the potential for loss, meaning that the victim’s economic interests are imperilled: R. v. Théroux,  2 S.C.R. 5 at 16.
I will begin by explaining why I cannot accept the Attorney General’s first proposed basis for establishing double criminality, namely that deprivation may be established in this case without reliance on US sanctions.
Can Double Criminality Be Established Without Reliance on the US Sanctions?
There are many situations where a false statement by a borrower puts the creditor at risk even though the proceeds of the loan are repaid without incident. Even with no actual loss resulting, fraud is made out as the creditor is found to be at some risk of loss while the loan is outstanding. See, for example, R. v. Abramson,  B.C.J. No. 1305 (B.C.C.A.), R. v. Fast, 2014 SKQB 84, and R. v. MacMullen, 2014 ABQB 476.
However, the false statement or misrepresentation must have been a material or meaningful one in the sense that it could give rise to a loss or risk of loss. It is no fraud simply to lie, where the lie is unrelated to any potential loss or risk of loss to the deceived party. The risk of loss must be real, and it must be integrally connected with the dishonest act or statement: see R. v. Knowles (1979), 51 C.C.C. (2d) 237 (Ont. C.A.). The risk cannot be merely theoretical: R. v. Olson, 2017 BCSC 1637 at para. 68.
In R. v. Riesberry, 2015 SCC 65, Cromwell J., writing for the Court, stated that proof of fraud does not always depend on showing reliance by a victim on the fraudulent conduct or that the victim was induced to act to their detriment. However, there must be proof of a sufficient causal connection between the fraudulent act and the victim’s risk of deprivation, which cannot be too remote: Riesberry at paras. 17, 26-28.
As noted earlier, the ROC and SROC are replete with references to US sanctions-related risks to HSBC arising from Ms. Meng’s misrepresentation of the relationship between Huawei and Skycom, including potential criminal or civil liability, financial penalties, or damage to HSBC’s reputation because of its association with a sanctions-violating client.
The Attorney General submits that the ROC and SROC also describe potential loss or risk of loss to HSBC unrelated to US sanctions, but I cannot agree.
The Attorney General appears to submit that economic or reputational risk to HSBC arose from the simple fact that Ms. Meng misrepresented Huawei’s relationship with Skycom in order to maintain the financing relationship, because the misrepresentation deprived HSBC of the ability to make an informed decision about dealing with Huawei. While such may be so, for there to have been a deprivation it nonetheless remains necessary for the evidence to show a causal link between the misrepresentation and the information HSBC needed to make a decision, whether or not HSBC actually relied on that information. It is difficult to discern such a link, in the ROC and the SROC, that does not rely on the effects of US sanctions.
The Attorney General points to but two references in the ROC and the SROC as evidence of potential loss unrelated to US sanctions.
The first reference appears in the ROC, para. 36:
36. HSBC Witness A is further expected to testify that, had Huawei not actually sold Skycom, such a fact would have been “material” to HSBC’s decision whether to end the client relationship with Huawei in light of the additional risks the relationship would have posed.
Read in isolation, this conclusory statement expected of Witness A may appear capable of bearing the interpretation the Attorney General would give it, addressing “risks” in broad and general terms raised by a borrower’s false statement about whether it had sold and disassociated itself from a smaller company. However, the ROC as a whole, and the immediate context in which para. 36 appears, make clear that the conclusion Witness A would express is integrally related to US sanctions. Witness A’s anticipated evidence is also described in para. 35, a paragraph which relates HSBC’s concerns about Huawei’s relationship to Skycom directly to claims that Skycom had “attempted to sell embargoed HP computer equipment into Iran”.
The Attorney General’s second reference to evidence of potential loss unrelated to US sanctions appears in para. 8 of the SROC. That paragraph addresses in somewhat more detail the type of evidence described in the ROC, para. 36, expected to be given by a different witness. My comments about that paragraph apply similarly.
To the extent that the Attorney General appears to argue further that reputational risk could arise from the simple fact of economic dealings with Iran, regardless of potential sanctions-related consequences of those dealings, I find no basis for such a conclusion in the ROC or the SROC.
Without reference to the US sanctions, the ROC and the SROC do not set out a causal basis (beyond the theoretical or speculative) for economic or reputational risk to HSBC because of Ms. Meng’s alleged misrepresentations.
On the question of law posed, I conclude that, as a matter of law, the double criminality requirement for extradition is capable of being met in this case. The effects of the US sanctions may properly play a role in the double criminality analysis as part of the background or context against which the alleged conduct is examined.
I make no determination of the larger question under s. 29(1)(a) of the Act of whether there is evidence admissible under the Act that the alleged conduct would justify Ms. Meng’s committal for trial in Canada on the offence of fraud under s. 380(1)(a) of the Criminal Code. This question will be determined at a later stage in the proceedings.