Huawei CFO proposes electronic monitoring, bail hearing adjourned

The chief financial officer of Chinese telecom giant Huawei has offered to submit to strict electronic monitoring as she sought release from Canadian detention – but will will have to wait at least one more day to see if she will be granted bail.

Meng Wanzhou was arrested at the request of Washington during a layover at the Vancouver airport on December 1, the same day that the leaders of China and the US agreed to a 90-day truce in their countries’ trade war that has threatened global economic growth.

The 46-year-old’s arrest rocked financial markets and infuriated Beijing, fuelling tensions between the world’s two largest economies and complicating efforts to resolve their trade dispute. 

Washington has accused Huawei of using a Hong Kong shell company to sell equipment to Iran in violation of US sanctions. It also says Meng, daughter of founder Ren Zhengfei, and Huawei misled banks about the company’s business dealings in Iran.

China protested over the weekend by summoning the US and Canadian ambassadors, demanding that Washington withdraw its arrest warrant and warning Ottawa that it faces “grave consequences”.

Packed courtroom

The hearing, which began on Friday, has sparked widespread interest. On Monday, the courtroom was packed again with media and spectators, including some who came to support Meng. One man in the gallery brought binoculars to have a closer look at the 46-year-old executive, while outside court a man and woman held a sign that read “Free Ms. Meng”.

After a second daylong session on Monday, Justice William Ehrcke said the bail hearing would continue on Tuesday.

In urging the court to reject Meng’s bail request, prosecutor John Gibb-Carsley said the Huawei executive has vast resources and a strong incentive to flee as she is facing fraud charges in the US that could put her in prison for 30 years.

Gibb-Carsley later told the judge that if he does decide to grant bail it should include house arrest.

David Martin, Meng’s lawyer, said she was willing to pay for a surveillance company to monitor her and wear an ankle monitor but she wanted to be able to travel around Vancouver and its suburbs. Scot Filer of Lions Gate Risk Management group said his company would make a citizen’s arrest if she breached bail conditions.

Martin said Meng’s husband would put up both of their Vancouver homes plus $1m Canadian ($750,000) for a total value of $15 million Canadian ($11.2m) as collateral.

The judge cast doubt on that proposal, saying Meng’s husband is not a resident of British Columbia – a requirement for him to act as a guarantor that his wife will not flee – and his visitor visa expires in February.

The prosecutor said her husband has no meaningful connections to Vancouver and spends only two or three weeks a year in the city. Gibb-Carsley also expressed concern about the idea of using a security company paid by Meng.

He said later that $15m Canadian ($11.2m) would be an appropriate amount if the judge granted bail, adding that half should be in cash.

‘Damocles’ sword hanging over Chinese government’

Meng’s arrest has come at a time when the two countries are seeking to resolve a dispute over Beijing’s technology and industrial strategy. Washington has slapped tariffs on $250bn in Chinese imports, charging that Beijing steals US technology and forces US companies to turn over trade secrets.

Tariffs on $200bn of those imports were scheduled to rise from 10 percent to 25 percent on January 1. But over dinner with his Chinese counterpart Xi Jinping in Buenos Aires, Argentina, US President Donald Trump on December 1 agreed to delay the increase for 90 days, buying time for more negotiations.

Both sides have sought to keep the trade talks and the arrest separate, at least so far, but the developments in Canada roiled markets. 

Stocks around the world fell on Monday over investor concerns about the continuing trade dispute, as well as the cloud hanging over Brexit negotiations after the UK’s prime minister postponed a vote on her deal for Britain to quit the European Union. In the US, stocks were volatile, tumbling in the morning and then recovering in the afternoon.

Bill Perry, a trade lawyer with Harris Bricken in Seattle, said China’s decelerating economy is putting pressure on Xi to make concessions before US tariffs go up.

“They need a trade deal. They don’t want the tariffs to go up to 25” percent, said Perry, who produces the “US China Trade War” blog. “This is Damocles’ sword hanging over the Chinese government.”

Over the weekend, Chinese Vice Foreign Minister Le Yucheng summoned Canadian Ambassador John McCallum and US Ambassador Terry Branstad.

Le warned both countries that Beijing would take steps based on their response. Asked on Monday what those steps might be, Chinese Foreign Ministry spokesperson Lu Kang said only, “It totally depends on the Canadian side itself.”

The Canadian province of British Columbia has already canceled a trade mission to China amid fears China could detain Canadians in retaliation for Meng’s detention.

Huawei, the biggest global supplier of network gear for phone and internet companies, has become the target of US security concerns because of its ties to the Chinese government. The US has pressured other countries to limit use of its technology, warning they could be opening themselves up to surveillance and theft of information.

Lu, the foreign ministry spokesperson, accused unspecified countries of hyping the “so-called” threat.

“I must tell you that not a single piece of evidence have they ever presented to back their allegation,” he said. “To create obstacles for companies’ normal operations based on speculation is quite absurd.”

Canadian officials have declined to comment on Chinese threats of retaliation, instead emphasising the independence of Canada’s judiciary and the importance of Ottawa’s relationship with Beijing.