HSBC provides the only key evidence for the US


Original title: HSBC provides the only key evidence for the United States
On July 23, 2020 local time, British Columbia High Court of Canada (Canadian court) at the application of Meng Wanzhou lawyer team, made public the evidence materials of the next stage of the trial.
Meng Wanzhou’s lawyer team strongly responded to the US accusation and PPT, the only key evidence provided by HSBC.
HSBC provides “the only key evidence”
On December 1, 2018, Meng Wanzhou was suddenly arrested on the way to Canada. Subsequently, the Canadian authorities said that on behalf of the United States government, Meng Wanzhou was temporarily detained.
Since the trial of Meng Wanzhou case, “the only key evidence” has been provided by HSBC.
According to the US side, on August 22, 2013, Huawei CFO Meng Wanzhou gave a PPT speech to a bank executive of HSBC in Hong Kong, introducing Huawei’s legal business cooperation with a Hong Kong Star Technology Co., Ltd. (skycom) in Iran.
According to previous reports in the South China Morning Post, Meng Wanzhou told the truth about Huawei’s business in Iran when he met with senior executives of HSBC. In his PPT, Meng Wanzhou introduced Huawei and skycom’s customers, products, compliance requirements and compliance systems in Iran. It also stressed that Huawei attaches great importance to the sanctions against Iran bill signed by US President Barack Obama on July 1, 2010. It not only strictly abides by Huawei itself, but also requires its partners to comply.
Huawei said in the PPT that skycom is Huawei’s partner in Iran. Huawei once held shares in the company, and Meng Wanzhou briefly served as a director of the company. But as early as 2007, Huawei sold all of its stake in skycom, and in April 2009, Meng Wanzhou resigned from the company’s board of directors.
After meeting with Meng Wanzhou, HSBC took the initiative to ask for the English version of PPT, which is the most important basis for the US side to accuse Meng Wanzhou.
According to the “case prosecution record” submitted by the United States to the Canadian court, the introduction of the relationship between Huawei and skycom company in the PPT “has some concealment”, which misleads HSBC. As a result, HSBC “has not understood the whole picture of Huawei’s business” and continues to provide services to Huawei, thus exposing Huifeng to the “risk” of civil and criminal fines in violation of the U.S. sanctions against Iran. Accordingly, the United States accused Meng Wanzhou of “fraud”. Canadian federal prosecutor Robert Frater also pointed out in the court statement that “fraud is the core of this case”.
Meng Wanzhou’s lawyer team stressed that he had never cheated HSBC
Meng Wanzhou’s lawyer stressed that for Huawei’s business in Iran, Meng Wanzhou has informed HSBC of all the necessary facts, enough to support the latter to judge whether there is any risk in it. For HSBC, knowing whether a customer has a business in Iran is the only element in its assessment of compliance risk. As for the relationship between Huawei and Hongkong star, it is not really important, nor should it be included in this ppt describing business compliance in detail.
Meng Wanzhou’s lawyer team added: even if Huawei and skycom’s relationship, HSBC is always aware of it, and a number of business emails in 2011 can prove that HSBC understands the relationship between Huawei and skycom. The evidence submitted by Meng Wanzhou’s lawyer team also shows that Huawei has sent skycom’s financial report to HSBC, which has a clear description of skycom’s business.
Ren Zhengfei, CEO of Huawei, personally refuted the claim of HSBC in June 2019. “The bank was aware of skycom’s business in Iran from the very beginning, as well as the relationship between skycom and Huawei,” he said. The email between Huawei and this bank can prove that there is also the logo of the bank. So from a legal point of view, the bank can’t say they were cheated or didn’t know. There’s all this evidence, and it’s hard to rely on. ”
It is understood that for many years, HSBC has been dealing with skycom business by communicating with Huawei employees through Huawei email. Within HSBC, skycom is also marked as part of the Huawei Group.
The US side’s “extradition case record” states that only “junior” employees of HSBC are aware of the relationship between Huawei and skycom, but these “junior” employees fail to pass on relevant information to the “senior” managers of HSBC, resulting in the latter having to rely on the PPT provided by Meng Wanzhou to judge the business compliance risk.
According to Meng Wanzhou, this statement is “unbelievable” and many evidences indicate that it is a “major untrue statement”.
An expert lady with 25 years of working experience in financial institutions said that Huawei, as the world’s largest communication equipment manufacturer and Forbes Fortune 500 company, is the 17th largest customer of the global liquidity and cash management department of HSBC. The two sides have had business cooperation for nearly 20 years. With such a large scale and long time, it is hard to imagine that the customer manager assigned to Huawei is a “low-level employee” who does not know how to report. Therefore, the senior management of HSBC should fully understand the business situation of Huawei and skycom in Iran, whether from the perspective of Bank approval process, business involving sensitive countries, or business involving major customers.
The e-mail submitted by Huawei to the court also confirmed that employees of different regions, different businesses and different levels of HSBC, including “vice president” and “senior vice president”, are directly communicating with Huawei on skycom’s banking business.
More importantly, in December 2012, HSBC signed an extended prosecution agreement with the US Department of justice for its own misconduct, including money laundering for drug traffickers and Al Qaeda members, in violation of US sanctions. HSBC assured the US Department of justice that it would conduct a review and clean-up of its customers across the group. In the process, financial experts say, it is impossible for HSBC not to recognize Huawei’s relationship with skycom. The most basic compliance requirement of large financial institutions is “know your customers”. HSBC has a dedicated Risk Management Committee and all branches have compliance departments. Risk assessment can not only rely on a PPT document of Meng Wanzhou.
HSBC has no liability and no loss

“Fraud crime” can be established only when the fraudster has “criminal motive” and produces “fraud behavior” which causes “real loss” to the cheated. In the record of supplementary extradition cases, the US side pointed out that Meng Wanzhou cheated HSBC, thus enabling Huawei to obtain a “high” credit line of US $900 million, thus putting the economic interests of HSBC at risk.
However, Meng Wanzhou’s team pointed out that in fact, the US $900 million credit line was jointly proposed by HSBC and eight other banks on April 30, 2014. The total limit provided by HSBC is only $80 million. More importantly, Huawei has never used this line of credit and cancelled it in June 2017.
In addition, in the case prosecution record submitted by the United States to Canada, the United States pointed out that HSBC had illegally provided us $100 million settlement for skycom’s Iran related business, which violated the financial sanctions against Iran. In the face of this conclusive accusation, if HSBC, bearing the “suspension of prosecution agreement”, does not have a reasonable explanation, it will be difficult to escape the heavy punishment of confiscating its financial license and losing its bank identity by the United States. However, HSBC immediately “dropped the pot” of Huawei, blaming all the faults on the “omnipotent reason” that “HSBC is not aware that Huawei and skycom have businesses in Iran”, and has made a clean sweep of its own mistakes.
According to public materials, Huawei and HSBC have been communicating with each other through email, and the settlement business between Huawei and skycom is also among them. As mentioned above, with a full understanding of Huawei and skycom’s business in Iran, from 2010 to 2014, HSBC provided Huawei with relevant financial services, with a total amount of business capital of about 100 million US dollars.
A witness with 26 years of banking experience said that the specific path of cross-border US dollar payment and settlement is determined by the paying bank; as a bank customer, they usually only care about the timeliness and cost of payment, “Huawei is very unlikely to know the settlement path.”. Moreover, the bank can freeze or refuse payment if it thinks that the relevant payment may violate the sanctions law.
In short, financial institutions are responsible for whether transactions are cleared through the United States. If the settlement of HSBC is illegal, it should be the primary responsibility of HSBC itself, not the bank customers.
The bottom of the case: is HSBC excused from the crime by submitting a “warrant of investment”?
HSBC, which has always claimed to have been cheated by Huawei, has yet to claim its rights by legal means. Why is that?
Some analysts believe that, because the “bottom line” is in the hands of the United States, HSBC actively conspired with the United States in order to reduce its crime, and cooperated with the United States to piece together various materials for the construction of Meng Wanzhou.
Public information shows that in 2012, the US government charged HSBC with money laundering and financing of international terrorism by Mexican drug dealers, and its business license was likely to be revoked in the United States at that time. It not only paid $1.92 billion in fines, but also reached a five-year (2012-2017) extension agreement with the US Department of justice. Prior to the expiration of the agreement, HSBC agrees to cooperate with the Department of justice in any investigation, “co-ordinate monitoring and ongoing cooperation.”. In 2013, the US Department of justice, together with the FBI, appointed exiger, a US financial research firm, to settle in HSBC to “monitor the global remittance of HSBC customers and obtain all information about HSBC”.
In September 2016, the US Department of justice discussed whether to withdraw the extended prosecution agreement and whether to prosecute HSBC for criminal charges. At the end of the same year, HSBC investigated Huawei’s accounts, and thousands of people were interviewed by the US Department of justice. According to media reports, it was HSBC that cooperated with the US investigation and handed over PPT to the United States. In August 2017, it abruptly terminated its 20-year business cooperation with Huawei.
In 2017, the U.S. Department of justice compliance regulator issued a report, which showed that HSBC’s compliance still had great defects, which caused great pressure on whether the HSBC deferred prosecution agreement could be closed as scheduled. However, US prosecutors unexpectedly dropped all criminal charges against HSBC and ended its supervision. Neither was prosecuted by the United States, nor any executives were arrested. HSBC landed safely and ended the deferred prosecution agreement, so it became one of the few companies to withdraw its charges.
Earlier, the Global Times quoted an observer as saying: “in the next few months, HSBC may face further layoffs or even lose the Chinese market completely. HSBC could be sued in Chinese courts and eventually expelled from the market because of collusion with the US government to crush Huawei.