For Huawei CFO, an Idyllic Summer Playground Turns Into a Prison

(Bloomberg) -- Vancouver plays a special role for Meng Wanzhou, as it does for many a wealthy Chinese -- a place to park some assets, educate your children, and just let your hair down from time to time.

Meng -- chief financial officer of Huawei Technologies Co., a telecom equipment giant present in more than 170 countries -- would carve a few weeks out of her punishing travel schedule every year for a break in the Canadian city.

She’d time it for the summer, when her children would be there and when the city’s crystal waters and craggy mountains would emerge from 10 months of rain to be bathed in long, golden days of sunshine. Just last August, she was seen strolling through a local park, snapping photos with her in-laws.

Her place of retreat has now become a jail. On Dec. 1, Meng stepped off a Cathay Pacific flight from Hong Kong around noon, and had planned a 12-hour stopover in Vancouver before heading on to Mexico. Instead, she was arrested by Canadian authorities and faces a U.S. extradition request on charges she conspired to defraud banks, including HSBC Bank Plc, so that they unwittingly cleared millions of dollars in transactions linked to Iran, in violation of U.S. sanctions.

This time, her stay looks to become an extended one -- extradition cases can sometimes take years. Whether she spends that time in a cell or under house arrest may hinge in part upon her ties to Vancouver and if they’re considered deep enough to stop her from fleeing.

Meng’s bail hearing resumes Monday at 10 a.m. local time. It’s expected to last the whole day as her defense team calls witnesses, including security companies, to testify on ways to address flight risk.

“In essence, Ms. Meng vacations for two weeks in Vancouver -- I say that is not a meaningful connection to this jurisdiction,” Crown attorney John Gibb-Carsley said Friday at the six-hour bail hearing in Vancouver as more than 100 spectators watched from a glass-walled gallery.

Meng -- wearing a dark green sweat suit, her posture impeccable -- watched from the back of the courtroom with her interpreter, occasionally taking notes on a sheet of paper. The 46-year-old has an incentive to flee home to China, which has no extradition treaty with the U.S., and she has the vast resources and connections to remain out of reach indefinitely, Gibb-Carsley said.

Canada has long been a favored destination for millionaire migrants, and Vancouver, especially, for the Asian ones. But increasingly that’s been stoking tensions in a city awash in Chinese cash, with wealthy part-time residents blamed for property prices that have made Vancouver the most unaffordable city in North America.

Meng, who first visited Vancouver 15 years ago, bought a six-bedroom house with her husband Xiaozong Liu in 2009 that’s now assessed at C$5.6 million ($4.2 million), according to property records and an affidavit by Meng read aloud in court. In 2016 they bought a second property, a brick-and-glass mansion set in a 21,000-square-foot lot assessed at C$16.3 million. Purchased with mortgages from HSBC, she’s offered to post the family’s equity in both as part of her bail.

Meng and Liu live in Shenzhen with their 10-year-old daughter. She also has three sons from a previous marriage, one of whom attends a prep school in Massachusetts. If granted bail, the family would move into one of their Vancouver homes and the son in Massachusetts would join them for Christmas, Meng’s lawyer told the court.

Three of her four children have done part of their schooling in Vancouver, and they still spend weeks -- sometimes months -- in the city during summer. Meng, who also goes by the names Sabrina and Cathy, holds two passports, one from China and one from Hong Kong, and until 2009 also had Canadian permanent residency.

Her defense argues that those ties are substantive, and proposes she wait it out at one of her houses, under surveillance, tagged by a GPS device, and subject to unannounced police checks.

“She would not flee,” Meng’s defense lawyer David Martin responded. “She has a home here.”

Meng is the daughter of Huawei’s founder Ren Zhengfei, whose net worth was estimated at $3.2 billion, according to Gibb-Carsley. A million-dollar bail to that family is equivalent to a C$156 bail for an upper-middle class Canadian family with C$500,000 in assets, he said.

“I’m not saying that wealthy people can’t get bail,” said Gibb-Carsley. “But I’m saying in terms of magnitude to feel the pull of bail, we are in a different universe.”

To contact the reporters on this story: Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.net;Kevin Orland in Calgary at korland@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Ros Krasny

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