Liu Xin Investigates: The Untold Story of the Meng Wanzhou Case
[Promo]A pioneer in 5G technology. “In optical transmission systems, we are ahead of the US by far. Absolutely ahead of the US.” Huawei… Huawei… Huawei…
“Huawei is something that’s very dangerous. You look at what they’ve done. From a security standpoint to a military standpoint, it’s very dangerous.” A global banking giant. “HSBC has a deep and special bond with Hong Kong. We were founded in HK in 1865. We were founded to support trade between China and the world.” Once partners. Now strangers. What really happened?
“Obviously, the story has not been fully told.” [Voice Over]Supposedly, it’s all about a meeting in a restaurant. On August 22, 2013, Meng Wanzhou met with Alan Thomas, HSBC’s then deputy head of global banking for Asia Pacific, in a restaurant in Hong Kong. During that meeting, Meng made a PowerPoint presentation about Huawei’s business links in Iran through a company called Skycom and Huawei’s efforts in compliance with U.S. sanctions. Some five years later, that presentation became the key evidence in a U.S. extradition case against her, alleging that she committed fraud against HSBC and other banks, exposing them to “both economic and reputational” risks. [Voice Over]Little is known about the details of this meeting between Meng, through her translator, and Thomas. According to Reuters, an internal probe by HSBC years later found the meeting to have been “at Huawei’s request”.
I reached out to the Reuters journalist behind the report. [SOT]Karen Freifeld: Hello?
Liu Xin: Hello. Is that Ms. Freifeld?
Karen Freifeld: Yes, it is.
Liu Xin: Hi, this is Liu Xin. I’m a journalist with CGTN, China’s National Television…
Karen Freifeld: Beep, beep, beep. [Voice Over]A written reply from Reuters confirms that the journalists stand by their reporting. HSBC, in a written reply on July 16, 2020, says it would be inappropriate for them to comment as they are not a party to Meng Wanzhou’s case. The statement adds, HSBC provided objective facts to U.S. authorities. [SOT]Song Liuping, Chief Legal Officer & Chief Compliance Officer, Huawei
“We believe she is innocent and hope that she will regain her freedom as soon as possible. But as her legal case is still ongoing, I am very sorry I cannot make more comments about the case itself.”
[Voice Over]But was the meeting really requested by Huawei? A person in the know agreed to talk to me on conditions of anonymity. [SOT]Liu Xin: One of the details that has been regarded as a fact was that this meeting was initiated at the request of Huawei, was this detail accurate?
Person In The Know: As far as I know, HSBC invited Huawei to the meeting in 2013 and asked to meet Meng Wanzhou. This is my understanding of the situation. So I believe what you just stated was not true.
Liu Xin: On what basis do you make that statement?
Person in the know: From the various sources that I have access to, various channels.
Liu Xin: Was this communication done via telephone or via email?
Person in the Know: Normally when a bank invites a senior executive of a client for a meeting, it would be done through a formal email. But according to information available to me, for this meeting there was no such email. [Voice Over]Meng Wanzhou is the Chief Financial Officer of Huawei, not the Chief Legal or Compliance Officer. It could make sense for her to talk to HSBC, but compliance matters are not under her portfolio. By the time the presentation was made, she had no direct relationship with Skycom either. However the circumstances, Meng made a Chinese language presentation to Thomas through the translator. The English version of that presentation was later delivered to HSBC at Thomas’s request. Meng told Thomas Skycom was a business partner of Huawei in Iran. She also talked about Huawei’s activities in that country and its trade compliance program related to U.S. sanctions. Allegedly, HSBC decided to retain Huawei as a customer based on her presentation. [SOT] Einar Tangen, Former U.S. Prosecutor“We don't need to torture ourselves. Obviously, this meeting was instigated not by Huawei. Alright, it doesn't make any sense. If I’m the bank, and if I was asking, I would ask you to send it to me prior to the meeting so I'm prepared to discuss it when we're there.” [Voice Over]What could have been the motivations for HSBC to request such a meeting?
In 2012, U.S. prosecutors charged HSBC with four crimes including money-laundering in Mexico, involving at least 880 million USD.
The bank was fined 1.9 billion USD and signed a 5-year Deferred Prosecution Agreement or DPA, to self-rectify and cooperate with judicial investigations.
This was the third time in a decade that HSBC had been punished for similar offenses. [SOT] Zhu Wenqi, Prof. of Int’l Law, Renmin University of China“In the Anglo-Saxon legal system, there is what we call (plea) bargaining (system). That means for HSBC certainly it realizes that it did something wrong. However, in order to reduce the responsibility it should be held, and then it preferred to do something as a deal with the U.S. prosecution, so that is quite possible.” [Voice Over]U.S. prosecutors accuse Meng of lying in order to obtain financial services from HSBC. According to the new evidence provided by Huawei, HSBC, including senior management, was aware of Huawei’s business activities in Iran through Skycom. This, Huawei argues, shows HSBC had known the risks associated with servicing Skycom. [SOT] Armstrong Chen, Member of Law of the People’s Republic of China on Commercial Banks
“We could see HSBC had closed the Skycom account. From this fact, we could see the bank should have known both Huawei and Skycom were their own customers. The evidence provided by HSBC also proved this point.” [SOT] Edward Lehman, U.S. Lawyer “Meng Wanzhou is not inside a secret head had been on the board of directors of Skycom… And so there wasn’t any bad activity or bad mind on her part, because that’s a matter of public recognition, which the bank would have known about previously”. [Voice Over]The relationship between Huawei and Meng with Skycom was outlined in the PowerPoint. Somehow that piece of information was left out in the summary of the PowerPoint by U.S. prosecutors provided to the Canadian courts. What could have been on HSBC’s agenda to ask Meng Wanzhou to provide information they already knew? [SOT] Mark Tucker, Group Chairman of HSBC Holdings plc.“HSBC has a deep and special bond with Hong Kong. We were founded in HK in 1865. We were founded to support trade between China and the world”.
[Voice Over]However, HSBC’s compliance history has not been a perfect one. From 2006 to 2010, for instance, HSBC Bank USA failed to implement an anti-money laundering program capable of adequately monitoring suspicious transactions and activities from HSBC Group Affiliates, particularly HSBC Mexico. As a result, at least $881 million in drug trafficking proceeds were laundered through the system. [SOT]David S. Cohen, Former Under Secretary for Terrorism and Financial Intelligence“HSBC absolutely knew the risks of the business it pursued, yet it ignored specific, obvious warnings. Its failures allowed hundreds of millions of dollars in drug money to pass through its unattended gates.”[Voice Over]In December, 2012, the U.S. Department of Justice announced enforcement actions on HSBC. A Deferred Prosecution Agreement was signed between the two sides. HSBC committed to improve compliance and cooperate fully with investigators. A compliance monitor was also appointed to the bank. [VO]According to the WSJ, the monitor’s 2016 annual report to the DOJ found “instances of potential financial crime” and questioned whether HSBC was meeting all of its DPA obligations. In late 2016, HSBC began to conduct an internal probe of Huawei. In Feb, 2017, U.S. Departments of Treasury, Commerce, Homeland Security and Justice, reportedly gathered in Washington, D.C. and talked about how they were moving forward against Huawei, including its the relationship with HSBC. It’s reported that some time later, HSBC helped authorities obtain evidence of links between Skycom and Huawei, including the PowerPoint. [SOT]Robert Sherman, U.S. Head of Media Relations, HSBC“Information provided by HSBC to the Justice Department was provided pursuant to formal demand, including grand jury subpoena or other obligation to provide information pursuant to a Deferred Prosecution Agreement or similar legal obligation.” [Voice Over]Did HSBC breach its obligation to its clients? [SOT] Edward Lehman, U.S. Lawyer “Is HSBC supposed to turn over that documentation? The answer is yes. But what I think that the defense lawyers for Meng Wanzhou would easily argue that HSBC was fully aware that there was nothing in that presentation that would be misleading, because it was a matter of public record what the connection is between Meng Wanzhou and Skycom. It was a matter of public record that didn't have anything to do with the PowerPoint presentation. ”
[Voice Over]In the DPA with U.S. authorities, HSBC is obliged to “cooperate fully with the Department in any and all investigations. The cooperation is “subject to applicable laws and regulations and the attorney-client and attorney work product privileges”. The DPA demands HSBC’s full cooperation involving the roles of the HSBC Parties such as officers, directors, employees, and agents charged. Clients are not explicitly mentioned. [SOT] Armstrong Chen, Member of Law of the People’s Republic of China on Commercial Banks
“Any country should protect the legal rights of a company. You can cooperate according to the law, but not at the cost of the interests of your clients.” [SOT]Zhu Wenqi, Professor of Int’l Law, Renmin University of China“Before HSBC handed over the document, it must have evaluated the situation. If it provides the info to the U.S., or even, it may have bargained with the U.S. side, if I provide these documents, could you be more lenient to me in terms of my illegal activities, such as money-laundering and etc.? Anyways, the role of HSBC has not been a glorious one. At least it’s been a very unethical one. ”
[Voice Over]In December 2017, HSBC escaped prosecution after it was found to have “lived up to all its commitments” to improve control and compliance measures. The bank is now listed as one of four “victim institutions” in the U.S. indictment against Meng Wanzhou. [SOT]Einar Tangen, Former U.S. Prosecutor “No, not one, single one or any of them, interdicted at an airport and held based on some warrant, no, they were all given a pass, not one of them is in jail. We’re talking about criminality on a vast scale… And now you understand what was HSBC is driving force here. What they wanted to do was to hand something over to the U.S. government, to the Department of Justice, that would curry favor. ” [Voice Over]The PowerPoint presentation became the key evidence of U.S. indictment of fraud against Meng. They allege she made misrepresentations about the company’s links to Iran and compliance issues, exposing HSBC to risks. But when submitting the PowerPoint as evidence to Canadian court, an important part was left out. The part about Huawei’s efforts to comply with U.S. sanctions. I talked to the Chief Legal Officer, also the Chief Compliance Officer of Huawei to find out more about their efforts in this regard. [SOT] Liu Xin: What kind of communication had or has been going on between Huawei and authorities in the U.S.? Song Liuping: Huawei is committed to global and comprehensive management in compliance and we have invested hugely in this area since very early on. We have a team of over 1,500 people working in global compliance management. Compliance is a basic principle for Huawei’s operations and for our senior management. In fact, in terms of activities related to compliance in trade, we had been briefing the U.S. Department of Commerce since a long time ago, including de minimis rules, our understanding of U.S. laws, newly enacted laws. We had been briefing the U.S. Department of Commerce. I also personally visited the department several times.
Liu Xin: When did such briefing, such communication, start? Is it still ongoing?
Song Liuping: We started around 2009, 2010. On average we would brief them about once every year and a half or every two years. It lasted till 2016 because then the U.S. Department of Commerce started to investigate us and it was not convenient any more.
Liu Xin: Every time when you briefed, what was the reaction from the U.S. side? What was their feedback? Song Liuping: Every time they would seek clarifications from and communicate with us, always on technical aspects or contents. Of course we were discussing technical details, such as de minimis rules, such as the interpretation of their CISADA (sanctions).
Liu Xin: So until 2016 when the U.S. started to investigate Huawei, they had not issued any warning to Huawei in terms of compliance issues, nor had they prompted Huawei to rectify in order to comply better? Song Liuping: Never. [Voice Over]In an interview in June 2018, U.S. Commerce Secretary Wilbur Ross confirmed that Huawei was in compliance. [SOT]Wilbur Ross, U.S. Commerce Secretary“I’ve heard a lot of the rumors about Huawei. As of the moment, I don’t believe that our department has found any violations of Huawei.” [Voice Over]However, 8 months later, the U.S. made a completely different assessment. While joining others in announcing the U.S. charges against Huawei and Meng Wanzhou. [SOT] Wilbur Ross, U.S. Commerce Secretary“For years, Chinese firms have broken our export laws and undermined sanctions, often using U.S. financial systems to facilitate their illegal activities. This will end. The Trump Administration continues to be tougher on those who violate our export control laws than any administration in history.” [Voice Over]Why the U-turn? [SOT] Einar Tangen, Former U.S. Prosecutor “Obviously, this came from the very top. You have the statement by Donald Trump saying that this is a card that he intended to use in his trade negotiations.” [SOT] Donald J. Trump, U.S. President
“If I think it's good for what will be certainly, the largest trade deal ever made, I would certainly intervene if I thought it was necessary.”
[SOT]Louis Arbour, Former Justice of the Supreme Court of Canada“This extradition request is based on the enforcement by the United States of its unilateral sanctions against Iran to try to force Iran to renegotiate a nuclear deal. These are not United Nation sanctions, they’re U.S. sanctions. Canada doesn’t agree in terms of foreign policy with this strategy... Furthermore, these proceedings are conveniently addressed against a commercial competitor of some U.S. interests, Huawei. So there was a lot of good reasons to look at this case with suspicion.” [SOT] Edward Lehman, U.S. Lawyer “Is this politically motivated? I mean, someone objective would say, might say, yes. I mean, there’s this this has been intended death path to Huawei in the United States. This is a great way to get rid of competition. “ [SOT]Einar Tangen, Former U.S. Prosecutor “This is not a game of Go Fish. Right? The idea that we are supposedly are civilized, more civilized than we were today than we were in the past. How is that possible when in essence, he's kidnapped her. All right, is holding her for ransom against her father and the Chinese government and her own liberty for his own political gain.” [SOT]Allan Rock, Former Minister of Justice and Attorney General of Canada “The sanctions in the act was quite clear, there are no condition of qualifications... can the government do something? We say it certainly can, it has the legal authority, always respecting the rule of law, and the independence of the courts, to intervene now and put a stop to this extradition proceeding.” [Voice Over]In the building where Meng Wanzhou used to work, there’s a library which she helped set up. At the entrance, a guest book caught my attention. Many employees left messages for her, wishing her well. One such message reads: Wanzhou, which literally translates into late boat in Chinese, please come back soon. [End]
