In a decision that made headlines recently, a British Columbia court allowed the extradition hearing to proceed in the case of Meng Wanzhou, the CFO of a Chinese telecommunications giant arrested in Canada under charges laid in the United States.
Meng Wanzhou, a Chinese citizen, is the chief financial officer of Huawei, a China-based telecommunications company. She was arrested at Vancouver’s airport in December 2018 on an extradition warrant while transferring planes en route to Mexico from Hong Kong. She is being accused of lying to an HSBC executive in Hong Kong about Huawei’s control of a company that was said to be violating U.S. economic sanctions against Iran.She is charged with fraud in the United States for allegedly deceiving banks into a possible violation of U.S. economic sanctions against Iran.
The United States is seeking Meng’s extradition for prosecution in New York for conduct that the Minister of Justice for Canada said corresponded to fraud contrary to s. 380(1)(a) of the Criminal Code of Canada. It was therefore up to the Attorney General to show, among other things, that the conduct which Meng was alleged to have engaged in would have amounted to fraud, had that conduct taken place in Canada.
Meng filed an application to a British Columbia court asking for an order discharging her from the extradition process on the basis that, as a matter of law, the “double criminality” requirement for extradition could not be met.
Meng argued that the alleged conduct could not have amounted to fraud in Canada because it related entirely to the effects of U.S. economic sanctions against Iran, and at the relevant time Canada had no such sanctions; therefore there could be no deprivation as is required for an allegation of fraud in Canada.
The Attorney General first argued that the elements of the offence of fraud in Canada could be made out, on the allegations, without reference to US sanctions against Iran; and second, that in any event the sanctions could properly give background or context to the alleged conduct and explain why it mattered.
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. 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.
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.
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 […].
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 […].
The court began by stating that Canada’s law of fraud looks beyond international boundaries to encompass all the relevant details that make up the factual matrix, including foreign laws that may give meaning to some of the facts.
The court found that the essence of Meng’s alleged wrongful conduct was the making of intentionally false statements in the banker client relationship that put HSBC at risk. It stated that the U.S. sanctions were part of the state of affairs necessary to explain how HSBC was at risk, but they were not themselves an intrinsic part of the conduct. The court then stated:
“Ms. Meng’s approach to the double criminality analysis would seriously limit Canada’s ability to fulfill its international obligations in the extradition context for fraud and other economic crimes. The offence of fraud has a vast potential scope. It may encompass a very wide range of conduct, a large expanse of time, and acts, people, and consequences in multiple places or jurisdictions. Experience shows that many fraudsters benefit in particular from international dealings through which they can obscure their identity and the location of their fraudulent gains. For the double criminality principle to be applied in the manner Ms. Meng suggests would give fraud an artificially narrow scope in the extradition context. It would entirely eliminate, in many cases, consideration of the reason for the alleged false statements, and of how the false statements caused the victim(s) loss or risk of loss.”
The court concluded that, as a matter of law, the double criminality requirement for extradition was capable of being met in the case. It found that the effects of the U.S. sanctions could properly play a role in the double criminality analysis as part of the background or context against which the alleged conduct would be examined.
The court found that the allegations depended on the effects of U.S. sanctions. However, it concluded that those effects might play a part in the determination of whether double criminality was established.
As a result, Meng’s application was dismissed and the extradition hearing will proceed.
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