VANCOUVER (AFP) – Chinese telecom giant Huawei’s chief financial officer faces US fraud charges related to sanctions-breaking business dealings with Iran, a Canadian court heard Friday, a week after she was detained on an American extradition request.

Meng Wanzhou, 46, was arrested in Canada’s Pacific coast city of Vancouver on December 1 while changing planes during a trip from Hong Kong to Mexico — ratcheting up tensions between the United States and China just as the countries’ leaders agreed to a truce in their trade war.

A day-long hearing was adjourned until Monday, when the judge is expected to render a decision on bail. Until then, she will remain in custody.

Canadian government lawyer John Gibb-Carsley asked for bail to be denied, saying Meng has been accused of “conspiracy to defraud multiple financial institutions” and if convicted faces more than 30 years in prison.

She is specifically accused of lying to a US bank, identified by her lawyer as “Hong Kong Bank,” about the use of a covert subsidiary to sell to Iran in breach of sanctions.

Meng had personally denied to bankers any direct connections between Huawei and the subsidiary, SkyCom, when in fact “SkyCom is Huawei,” Gibb-Carsley said, putting the bank in jeopardy of violating sanctions. SkyCom’s alleged sanctions breaches occurred from 2009 to 2014, while Meng’s alleged fraudulent misrepresentations were in 2013.

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Meng had been a member of SkyCom’s board a decade ago, but the company was later sold, said her lawyer David Martin.

US authorities, however, claim Huawei continued to control the company, with Gibb-Carsley noting that SkyCom employees continued to carry Huawei identification and use its email.

He suggested that Meng has also shown a pattern of avoiding the United States over the past year since becoming aware of the investigation into the matter, arguing that she has no ties to Canada and has access to vast wealth and political connections — and thus poses a flight risk.

Huawei said in a Friday statement that it “will continue to follow the bail hearing” next week, expressing “every confidence that the Canadian and US legal systems will reach the right conclusion.”

Meng’s detention in Canada came on the day of a summit at which US President Donald Trump and his Chinese counterpart Xi Jinping agreed to a truce in the escalating trade dispute between the two economic powerhouses.

China says Meng — the daughter of Huawei founder Ren Zhengfei, a former engineer in China’s People’s Liberation Army — has violated no laws in Canada or the United States and has demanded her release.

Washington and Beijing have exchanged steep tariffs on more than $300 billion in total two-way trade, locking them in a conflict that has begun to eat into profits.

Trump tweeted Friday that negotiations to defuse the high-stakes dispute were “going very well,” but the messages since Meng’s arrest have been mixed, roiling global stock markets.

Her appearance at the British Columbia Supreme Court in Vancouver is a prelude to an extradition process that could take months.

‘Princess’ of Huawei

Huawei is the second-largest smartphone manufacturer in the world after Samsung Electronics, having overtaken Apple earlier this year, and is ranked 72nd on the Fortune Global 500 with revenues of nearly $90 billion in the most recent fiscal year.

Ren, 74, founded the company with a few thousand dollars in 1987, growing it into one of the world’s leading suppliers of hardware for telecommunications networks.

He remains Huawei’s president.

A Huawei representative prepares the Huawei Mate 10 Pro smartphone for display at the Huawei booth during CES 2018 at the Las Vegas Convention Center on January 10, 2018 in Las Vegas, Nevada. Photo: David Becker/Getty Images/AFP

CNN, quoting an unnamed official, said the United States saw the arrest as providing leverage in US-China trade talks — although White House trade advisor Peter Navarro has denied any link to the dialogue.

Chinese state-run media said the arrest was part of US efforts to curtail China’s tech industry.

“The Chinese government should seriously mull over the US tendency to abuse legal procedures to suppress China’s high-tech enterprises,” said the nationalist tabloid Global Times in an editorial.

“Obviously, Washington is resorting to a despicable rogue’s approach as it cannot stop Huawei’s 5G advance in the market,” it went on.

Meng spent most of the past week at a women’s detention facility in a suburb of Vancouver.

If she is released on bail, she has agreed to surrender her passports and submit to electronic monitoring until she is discharged or surrendered for trial to the United States. All security costs would be borne by her.

The extradition process could take months, even years, if appeals are made in the case. The court heard Meng’s husband Xiaozong Liu owns two mansions in the city.

Repeated setbacks

Canada has a longstanding extradition treaty with the United States, requiring it to cooperate with US Department of Justice requests to hand over suspects.

The offense for which extradition is being sought must also be a crime in Canada.

A Canadian court must decide if there is sufficient evidence to support the extradition, but then it is left to Canada’s justice minister to sign the order.

On Thursday, Prime Minister Justin Trudeau defended Canada’s arrest of Meng, saying politics played no part in the decision.

“I can assure everyone that we are a country [with] an independent judiciary,” Trudeau told a tech conference in Montreal.

Huawei’s affordable smartphones have made strong inroads in the developing world, but the company has faced repeated setbacks in major Western economies over security concerns.

Canadian officials have said Ottawa was continuing to review Huawei’s technology for use in upcoming fifth-generation networks.

The company faces being shut out of Australia, New Zealand and US 5G rollouts, and British telecom group BT revealed on Wednesday it was removing Huawei equipment from its core cellular network.

The five nations together form the “Five Eyes” intelligence alliance.

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