VANCOUVER - Huawei executive Meng Wanzhou should not be extradited to the United States to face fraud charges because her alleged misconduct doesn't amount to fraud in Canada, says her lawyer.
Scott Fenton told a British Columbia Supreme Court judge on Tuesday, the second day of Meng's extradition hearing, that people can't be convicted of fraud in Canada unless their misrepresentations cause harm or a risk of harm.
The United States accuses Meng of lying to HSBC about a Huawei subsidiary's business in Iran, putting the bank at risk of criminal and civil penalties for violating American sanctions.
Fenton said Canada does not have similar sanctions against Iran and therefore it's impossible to prove a fraud case against Meng because the bank would not have faced any risk in Canada.
"The risk of loss is driven by legal risk — legal risk that only exists in the United States of America," he said.
The hearing in Vancouver this week is focused on the legal test of double criminality, meaning that Meng's alleged conduct must also be illegal in Canada for her to be extradited to the United States.
The case has severely strained Canada-China relations, with Beijing calling the charges "political" and Deputy Prime Minister Chrystia Freeland urging the release of two detained Canadians.
Canada lifted sanctions against Iran in 2016 after world powers reached a nuclear deal with the country. The U.S. withdrew from the deal in 2018 and imposed sanctions again while also adding new penalties.
Fenton said the only risk HSBC faced was in the United States because of its "peculiar" sanctions that are "out of step" with Canada and the rest of the international community.
He also argued that HSBC faced no risk in Canada because the country would not impose criminal fines against an "innocent victim" of a misrepresentation, which the bank would be in this alleged scenario.
Justice Heather Holmes questioned whether the bank might have faced a risk to its reputation in Canada, leading to financial losses because investors were wary of doing business with HSBC.
Fenton responded that, while the attorney general makes brief reference to reputational risk in court documents, it doesn't provide evidence that such a risk would lead to economic danger.
He also said the bank's reputation wouldn't be damaged because Canada doesn't ban doing business with Iran.
"There can't be reputational harm to a Canadian branch of a bank for doing things that are not only entirely lawful, but that Canada encourages them to do," he said.
Another lawyer for Meng, Eric Gottardi, said the principle of double criminality is meant to ensure that no one is surrendered to the United States for conduct that is not criminal in Canada.
"Many Canadians take pride in our independence and our uniquely Canadian approach to criminal law," Gottardi said.
He said the alleged case against Meng is not only contrary to the legal test, it's contrary to Canadians' "core values" as the country has rejected sanctions against Iran.
Meng denies the allegations and is free on bail, living in one of her two multimillion-dollar homes in Vancouver. The judge has allowed her to sit behind her lawyers at a desk, rather than in the prisoner's box, so she and her Mandarin interpreter can better follow proceedings.
China has detained Canadians Michael Kovrig and Michael Spavor for over a year without access to lawyers or their families and has restricted some Canadian commodity imports in actions widely seen as retaliation.
Meng's lawyers concluded arguments on double criminality Tuesday and the Crown is set to respond on Wednesday.
If Holmes decides the legal test has not been met, Meng will be free to leave Canada. But if the judge finds there is double criminality, the hearing will proceed to a second phase.
That phase, scheduled for June, will consider defence allegations that Canadian and American authorities conspired to conduct a "covert criminal investigation" during her arrest at Vancouver's airport in 2018.
Lawyers for the attorney general deny those allegations and also argue that the defence's focus on sanctions is a "complete red herring." They say Meng's alleged lies to HSBC are sufficient to prove a fraud case in Canada.
They also argue that Holmes can, if necessary, consider the context of American sanctions in a limited way, simply in order to understand the economic and legal risk that HSBC faced.