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Huawei’s CFO lost a key case against HSBC in her battle against US extradition

Meng Wanzhou leaves her Vancouver home.
REUTERS/Jennifer Gauthier/File Photo
Huawei chief financial officer Meng Wanzhou is at the center of a political tug-of-war between Washington and Beijing.
  • Annabelle Timsit
By Annabelle Timsit

Geopolitics reporter

Virtual courtPublished Last updated on

It’s been a rough month for HSBC in the UK.

First, in January, the bank’s CEO, Noel Quinn, and its chief compliance officer, Colin Bell, were asked to appear before the foreign affairs committee of Britain’s Parliament to account for HSBC’s support of a repressive security law imposed by authorities in Beijing on Hong Kong six months earlier.

Then, earlier this month, the London-headquartered bank was taken to court in the UK by Meng Wanzhou, the chief financial officer of Huawei, who is fighting a US extradition request from Canada.

But in a ruling today (Feb. 19), the UK High Court of Justice spared HSBC from having to get further embroiled in the case, which has become a symbol of China’s increasingly fraught relations with Western democracies.

Why did Huawei’s Meng Wanzhou sue HSBC in the UK?

Meng, who is also the daughter of the tech giant’s founder Ren Zhengfei, was arrested in Canada in Dec. 2018 at the request of US law enforcement. The US wants her extradited so she can face charges in the Eastern District of New York for bank fraud, wire fraud, and conspiracy to commit bank and wire fraud.

At the center of their case is a PowerPoint presentation provided to US authorities by HSBC; it allegedly shows that Meng downplayed Huawei’s relationship with telecoms firm Skycom in an Aug. 2013 meeting with a representative of the bank in a Hong Kong restaurant. That’s important because Reuters has published evidence that Skycom may have violated US trade sanctions against Iran. HSBC says Meng didn’t disclose that Huawei owns a controlling stake in Skycom and that the bank therefore continued to clear transactions for Huawei, which the US alleges includes more than $7 million in payments from Skycom between 2010 and 2014. Because those transactions were in US dollars, they fall under US jurisdiction, meaning that HSBC may have facilitated violations of US sanctions; HSBC says it did so unknowingly, blaming Huawei and Meng.

Meanwhile, Meng’s lawyers argue HSBC was fully aware of Huawei’s relationship with Skycom, both because her presentation made it clear, and because the information was widely available. They also allege that the US gave Canadian authorities an incomplete version of the presentation in order to convince them to arrest Meng when she flew through Vancouver.

As a result, Meng sued HSBC in the UK under the Bankers’ Book Evidence Act to force the bank to disclose the presentation and other documents in its books, including internal employee communications, compliance records, and risk evaluations. Her lawyers hoped to prove their allegation that HSBC executives knew about Huawei’s relationship with Skycom, and use that to fight the US’s extradition case in Canada. (The next hearing in Meng’s case is scheduled for March 1.)

In an email statement to Quartz, HSBC said: “This application for disclosure in the UK is without merit. HSBC is not a party to the underlying criminal case in the US or the extradition proceeding in Canada. It would be inappropriate to comment further on an ongoing legal matter.”

Huawei, HSBC, and the UK-China relationship

This hearing was the latest chapter in the political saga that is Meng’s case. More broadly, both HSBC and Huawei have repeatedly been caught in the middle of the UK and China’s increasingly tense relationship over the last year.

Huawei was banned from the UK’s telecommunications network after the US prevented Huawei from buying American technology. British authorities warned they could no longer mitigate the security risks of including Chinese-made gear in the UK’s critical infrastructure, and the government said all Huawei equipment had to be stripped from the UK’s networks by 2027.

Meanwhile, a major flashpoint for HSBC has been China’s imposition of a security law in Hong Kong that covers everyone on Earth (yes, including you) and essentially, criminalizes dissent. The UK, Hong Kong’s former colonial power, took the lead in condemning the law, and has since created a bespoke visa to allow Hong Kongers to move to the UK if they want to.

But HSBC, a London-headquartered bank whose growth comes from China, threw its support behind the law—as did most British banks active in Hong Kong. In a WeChat post, HSBC said one of its chief executives signed a petition in favor of the law. HSBC also closed the bank accounts of activists, media executives, and a donation fund for anti-government protesters, in response to a request from Hong Kong authorities.

Meng’s case has also affected China’s relationship with Canada. In a seemingly retaliatory move following Meng’s arrest, China detained two Canadian citizens, Michael Kovrig and Michael Spavor, and charged them with spying. They have been detained under harsh conditions. Meanwhile, Meng was released from detention after posting a CAD$10 million ($7.8 million) bail and can leave her luxurious Vancouver home for 17 hours a day, albeit under supervision.

What’s next for Meng Wanzhou?

In a hearing that lasted several hours, the lawyer representing HSBC argued that the UK’s Royal Courts of Justice don’t have jurisdiction to rule on Meng’s request and that, even if they did, they should rule against it because not doing so would “impose an enormous burden on banks in giving disclosures.” The lawyer representing Meng defended the jurisdiction, statutory scope, disclosure burden, and relevance of its disclosure request.

The judge sided with HSBC in his ruling. He said the bank did not have to open its books to Meng’s legal team and ordered her to pay HSBC £80,000 ($112,000) in compensation for legal fees by March 5, 2021.

A Huawei spokesman told Quartz via email, “Huawei is disappointed by today’s court ruling. The pursuit of justice benefits from access to relevant information and clarity of fact. Huawei remains confident in Meng Wanzhou’s innocence and will continue to support her pursuit of justice and freedom.”

This post has been updated with the ruling and a statement from Huawei.

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