Showing posts with label Meng. Show all posts
Showing posts with label Meng. Show all posts

Monday 8 July 2019

Canadian Politicians Were Caught Like Deer in the Headlights, but Why Are Canadian Journalists Censuring any Discussion of the Merits of Meng's Case?

"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum."                                                                                 

                                                     Noam Chomsky         

HSBC, "the victim," doesn't want to prosecute

After the G20 summit, President Trump let it be known that he is backtracking on the Huawei ban. Bloomberg and the Financial Times are reporting that HSBC is telling Beijing "It Is Not to Blame for Huawei CFO Arrest."  Where does that leave us?  Let's see:  HSBC is, according to the Grand Jury indictment, supposed to be the victim of Meng Wanzhou's alleged bank fraud.  The only evidence against Meng, according to the indictment, is a meeting she had with an HSBC executive and an accompanying Power Point presentation.  If the "plaintiff" and the "victim" are backing away from the case, the original warrant suspect and the evidence thin to non-existent, what's left?

It's all about Richard Donoghue, a CA Tech employee

Why is Canada still holding Meng Wanzhou, the Huawei CFO, under arrest? Why is Canada accepting that Canadians are being held in a Chinese prison or facing execution?  Why is Canada accepting the blockade of Canadian shipments of canola, pork and beef?  Why is Canada accepting this extreme deterioration of our trade and relations with China?  The answer is:  "Richard Donoghue asked us to." Yes, Canada and Canadians are facing these dire consequences because Richard Donoghue, Chief Litigator for CA Technologies (a Huawei competitor, now owned by Broadcom) who became a US Attorney in 2018, is the individual who requested Meng's arrest and is requesting her extradition.

Do Canadian journalists do any research?

"Richard Donoghue": what a dumb answer, except that it's true.  Despite the apparent conflict of interest, Canada and Canadians are facing these consequences because Richard Donoghue asked us to. I understand that our Canadian politicians panicked when faced with the request to arrest Meng and were paralyzed with fear and indecision.   "Deer in the headlights" is a very apt analogy.  Later they would have to come up with justifications for their paralysis and spread the nonsense claims that extradition is a "judicial, non-political" affair and we are "following the rule of law"--claims that are easily refuted by simply having a look at the relevant 14 pages of the  Canadian Extradition Act (pages 11 to 15 and 40 to 48).  Bizarrely, politicians of every political stripe lined up behind them without a single example of anyone looking at the details of the case or the law.  However, what continues to baffle and confound me is the refusal of Canadian journalists to allow any serious discussion of the case, in particular, the merits of Meng's defence.

Is the Meng arrest justified according to Canadian law?

Last week I watched a "rebroadcast" on CBC News of Natasha Fatah hosting a panel of three commentators to discuss Canada-China relations.  "How is it possible," I asked myself, "for four journalists to discuss current Canada-China relations, and never get around to the facts (let alone the legality) of our arresting and holding Meng Wanzhou?"

David Akin of Global News seemed to offer some hope of an open discussion with his "ANALYSIS: Trudeau cannot just order Huawei’s Meng Wanzhou to go free — or can he?"   Those three words-- "or can he?"-- are the nearest I have seen to any Canadian journalist opening up discussion of the grounds for Meng's release.  However the "analysis" turns out to be the usual diatribe designed to close down any rational dialogue.  Although Akin begins by noting that former Prime Minister Jean Chretien has joined John McCallum in discussing the possibility of releasing Meng Wanzhou, he then quotes University of Ottawa law professor Amir Attaran that “I think it’s shocking. [ . . . .] I think that’s absolutely inappropriate. If they want to make those comments, run for office again.”

Who in Canada is allowed to question Meng's arrest?

Take note of the Catch 22.  We have been told that elected officials and their appointees are not allowed to comment (on the grounds that "politicians" and their appointees cannot comment on "judicial" affairs).  Now we are being told that you have to be elected to comment.  Once you have eliminated both the elected and the un-elected, who's left?  We have to wonder, who is this Amir Attaran, who would have us believe that no-one is allowed to discuss the arrest or release of Meng Wanzhou?  According to his Wikipedia page, Amir Attaran has had a very distinguished legal career. He is an American-born Iranian who specializes in medical and environment cases.  Why is a medical/environment lawyer being asked to comment on an extradition case?

We get an answer to this question by reading to the bottom of Attaran's Wikipedia page, where we discover: "In 2013, Attaran accused Peter MacKay of falsely alleging that Justin Trudeau committed a crime by smoking marijuana."  And, when Attaran launch a complaint with the Canadian Human Rights Commission against the Canadian Research Chair program  "The government under Prime Minister Justin Trudeau sided with Attaran [ . . .].

Finally the questions is asked:  and the answer is . . . 

Akin asks the rhetorical question "Why suffer all that pain? Why not just send Meng back to China?" Then answers:  "But we cannot. At least, not right now. Because in Canada, like most western democracies and not — this cannot be stressed enough — like China, politicians cannot simply phone up a judge and order that an accused person be set free."  The folksy tone makes this claim sound like an obvious truth, but it is an absolute falsehood.  This is what the Extradition Act actually says:

Withdrawal of the authority to proceed 

 (3) The Minister may at any time withdraw the authority to proceed and, if the Minister does so, the court shall discharge the person and set aside any order made respecting their judicial interim release or detention.

According to Canadian law, extradition is a political decision

"The Minister" in this case is Minister of Justice.  So yes, a politician, according to the law, can put an end to these proceedings and have Meng released "at any time."

Akin claims that

Meng’s case is right now: before Associate Chief Justice Heather Holmes of the British Columbia Supreme Court. 
If Holmes does eventually rule that Canada should honour the extradition request by the United States — which has charged Meng with fraud in association with alleged violations of Huawei on American sanctions on trading with Iran — and surrender her to American authorities, there will be an opportunity for Prime Minister Justin Trudeau, through his justice minister, David Lametti, to intervene and, if they so choose, to block the extradition.
There is some truth in this claim, but it seems to deliberately get the chronology of events and responsibilities upside down. The Extradition Act specifies that

The Minister may, after receiving a request by an extradition partner for the provisional arrest of a person, authorize the Attorney General to apply for a provisional arrest warrant, if the Minister is satisfied that  
(a) the offence in respect of which the provisional arrest is requested is punishable in accordance with paragraph 3(1)(a); [i.e., that the crime is punishable by two years of imprisonment] 
and (b) the extradition partner will make a request for the extradition of the person.

As the Justice Committee hearings on SNC-Lavalin revealed, we have an odd situation in Canada in which the Minister of Justice and the Attorney General are the same person.  The Lavalin scandal was about the fact that the government was putting pressure on Jody Wilson-Raybould in her role as Attorney General.  Minister of Justice is a political office, distinct from the Attorney General.

Consider how this single paragraph of the law contradicts so much of what we have been told about the Meng case.  First, extraditions are clearly and explicitly political decisions in Canada.  Second, the Minister of Justice is the first to receive a request for extradition (and it is "a request"; so much for "we had no choice").  Third, the Minister of Justice authorizes the arrest, not a judge.  Fourth, once the Minister of Justice has given the authorization, the Attorney General can instruct a provincial judge (in this case ACJ Heather Holmes) to issue the arrest warrant.  What Akin's claim gets right is that the Minister of Justice can intervene "at any time," including after ACJ Holmes has made her decision.

 How can any Canadian claim we are "following the law"?

The law is explicit:

Powers of the Minister
Assurances et conditions 
(3) The Minister may seek any assurances that the Minister considers appropriate from the extradition partner, or may subject the surrender to any conditions that the Minister considers appropriate,
Not only does the law make it plain that the Minister of Justice (a politician) is responsible for the extradition, it lays out the specific circumstances in which a request for extradition is to be refused:

Reasons for Refusal
order not to be made 
 44 (1) The Minister shall refuse to make a surrender order if the Minister is satisfied that 
(a) the surrender would be unjust or oppressive having regard to all the relevant circumstances; or
(b) the request for extradition is made for the purpose of prosecuting or punishing the person by reason of their race, religion, nationality, ethnic origin, language, colour, political opinion, sex, sexual orientation, age, mental or physical disability or status or that the person’s position may be prejudiced for any of those reasons.

When order not to be made  
 46 (1) The Minister shall refuse to make a surrender order if the Minister is satisfied that  
[ . . . .]
(c) the conduct in respect of which extradition is sought is a political offence or an offence of a political character
And finally:
48 (1) If the Minister decides not to make a surrender order, the Minister shall order the discharge of the person.

Ignoring the law, then bragging about our "unwavering insistence of the rule of law"

Without a single citation from the law or even mention of the Canadian Extradition Act, Akin concludes:

Canada is a nation of laws with a fully independent judiciary to interpret and enforce those laws. Full stop. 
And the nations of the world — Chretien and McCallum, notwithstanding — can take inspiration and comfort from Canada’s unwavering insistence on the rule of law.

Sunday 7 April 2019

Why Does Everyone Care So Much about This Huawei Issue?

The Huawei case matters to Canadians

I don’t know about “everyone,” but I can tell you why I, as a Canadian, “care so much about the Huawei issue.” In theory Canada and the USA are independent countries and trading partners. However, for most of my adult life, I have been aware of the argument that in practice the relationship is more like a colony and the empire which controls that colony. In this kind of colony-empire relationship the colony can benefit from the relationship and pursue its own interests, but when the interests of the colony and the interests of the empire are in conflict, the colony must always give priority to the interests of the empire. No case in my life time has more acutely demonstrated Canada acting against its own interests in order to serve the interests of the USA than the arrest and extradition of the Huawei CFO.

Diversifying our trading partners versus "the China clause"

As an independent country it is in Canada’s obvious interest to diversify its trading partners, to establish trading relations with other countries and most importantly with China, the second largest and fastest growing economy on the planet. It is in Canada’s interest to adopt Huawei’s 5G technology, and to benefit from the jobs and research that Huawei Canada has to offer. The Americans have made their opposition to Canada-China trade relations clear by insisting on what is known as “the China clause” in the recent US-Canada-Mexico trade agreement.

Arresting Meng blocks Canada's trade with China:  who benefits?

Requiring Canada to arrest Meng (she could have been arrested in numerous other countries) had strategic value for US interests: by causing a rift between China and Canada. Thus the Americans doubly insured that trade negotiations between the two countries would be halted. However, it is not American behaviour which disturbs me and makes me “care so much about the Huawei case.” The behaviour of Canadian politicians and the Canadian media is what I find incredibly frustrating and disturbing—and makes me care about the Huawei case more than ever.

Are Canadians really honest, law abiding and open-minded?

Canadians tend to think of themselves as honest, law abiding, and open-minded. We admire politicians and media journalists who tell us repeatedly that we are honest, law-abiding and open-minded. As long as we keep hearing this message, we have no reason to question ourselves. We can focus our attention and outrage on “other people” who are not as honest as we are. However, in the Huawei case, our politicians have not been honest, the media has simply repeated the lies and mistakes of our politicians, and two thirds of Canadians have believed what they have been told. We have not followed the law, the Canadian Extradition Act, in the Meng extradition case. We have remained closed-minded, refusing—in the public domain—to even consider that the Meng extradition is not in keeping with Canadian law. The Canadian ambassador to China was fired by the Prime Minister, Justin Trudeau, just for saying that Meng had a strong case—which experts agreed was obvious. The new Justice Minister, David Lametti (the former Justice Minister Jody Wilson-Raybould was demoted in the middle of Meng case) has decided to proceed with the Meng extradition. What chance was there that he would decide against extradition when his boss, the Prime Minister, had fired the ambassador, just for saying that not extraditing Meng was a possible outcome? Despite this obvious political interference and the new Justice Minister saying publicly that extradition is “political,” you will still hear politicians, journalists and people in general in Canada insisting that the Meng extradition is a “non-political, judicial” affair.

Why are Canadians operating against their own best interests?

Why are Canadians behaving this way? This is where the case gets so sad and I find myself caring so much. The only reason I can see (other than a total lack of awareness) that our politicians, our media and people in general would behave this way is that they have automatically adopted the attitude of the victim, of the colony, and are convinced that if we don’t do what we think the USA wants, we will be severely punished. How pathetic! We had ample reason to reject the initial warrant: the US Attorney, Richard Donoghue, who issued the warrant, was in a conflict of interest. We had ample reason to deny extradition: it was obviously political, based on Meng’s nationality and ethnicity, and there was no precedent for arresting an executive in this type of case. The Americans (in general) would have accepted our legal arguments and might even have respected our independence, but instead we reverted to cowering acquiescence and the self-delusion that we Canadians are honest, law-abiding and open-minded.

Saturday 5 January 2019

A Dozen Reasons Why the Canadian Minister of Justice Should Release the Huawei CFO, Sabrina Meng Wanzhou

The "Canadian Extradition Act" Gives the Minister of Justice the Right and Obligation to Release Meng

It's becoming more and more obvious in the media (social, anti-social and other) that the  request for Sabrina Meng Wanzhou's extradition is bogus. Contrary to what you may have read or heard from Canadian politicians about extradition proceedings being out of the hands of the political leadership, the Canadian Extradition Act clearly states that:  "The Minister [of Justice] is responsible for the implementation of extradition agreements, the administration of this Act and dealing with requests for extradition made under them." (For more see Was Freeland Lying?  and How Canada Arrested a Chinese Exec.)

According to The Act, the Canadian Minister of Justice, Jody Wilson-Raybould, can and should intervene in an extradition if she considers it "unjust" after reviewing "all the relevant circumstances."  She can "at any time withdraw the authority to proceed and, if the Minister does so, the court shall discharge the person." The "circumstances" provide ample reasons and The Act provides specific injunctions requiring the Minister to intervene in the case of Sabrina Meng Wanzhou; including the "political" nature of the extradition request, that the request is based on Meng's "nationality and ethnicity," that her alleged crimes would not be prosecuted in Canada, that her alleged white-collar crimes would not warrant two years of imprisonment as required by The Act, that the character and legitimacy of the warrant for Meng's arrest, detention and extradition are highly questionable, and that while the legitimacy of Meng's detention and the extradition proceedings are in serious doubt, they pose a threat to public safety and are counter to Canadian interests.

1. The charges against Meng are not substantive enough to warrant extradition.  

Various media outlets have repeated the claim that each of the charges against Meng is punishable by 30 years of imprisonment.  Stop and consider:  why are we being fed this piece of information?  The exact details of her alleged crimes have remained sketchy, so why has this precise detail of 30 years of imprisonment been so widely and precisely promulgated?  Who is spreading this claim?  For what purpose?  More to the point, even based on the most exaggerated rumours of the seriousness of Meng's alleged crimes, does anybody really believe that an American court is going to throw her in jail for the next 30 or 60 or 90 or 120 years?  So why this emphasis on the maximum sentence?  Because, according to the Extradition Act, in order for the extradition process to proceed, it must be clear that Meng's crimes would be punishable by at least two years of imprisonment.  We don't extradite people for minor crimes; we don't extradite people to pay fines, or be put on probation or be imprisoned for less than two years.  In the aftermath of the financial collapse of 2008 and extensive evidence of wrongdoing, no American was convicted of a crime, but the punishment for white-collar crime in the USA has become a much debated topic.  Based on the information leaked to the public so far, Meng's alleged white-collar crimes fall well below the two-years-of-imprisonment threshold required for extradition.

2.  The accusations against Meng would not constitute a criminal offence in Canada.   

According to media reports, Meng is accused of contravening trade sanctions against Iran; Huawei, of which she is CFO, is accused of selling technology in Iran which contained US components and/or patents, and Meng is accused of bank fraud.  Of these three accusations only "bank fraud" would be a criminal offence in Canada.  To keep it simple, "bank fraud" is stealing money from a bank--but without pointing a gun at anyone.  (You might want to have a look at Should Bank Robbery Be Deregulated?) However, the "bank fraud" in this case is related to sanctions against Iran in that she is accused of failing to inform or hiding from bankers that Huawei owned a shell company which owned a company called Skycom which was doing business with Iran.  (For more detail see:  The Chaos Theory of International Trade.) How much money did she steal?  There is no hint of an answer to this question in the media.  I suspect the answer will be zero.  How much the banks lost determines how long the prison sentence could possibly be.  The claims of a 30-year prison sentence imply that the banks (or a bank) lost billions.  I have seen no claims concerning the amounts that the banks lost despite the repeated claims of multiple 30-year prison sentences. As reporters for the New York Times point out:  HSBC (the bank Meng is accused of defrauding) has repeatedly been convicted of money laundering.  In order to avoid another conviction in the USA for moving money in Iran, they threw Huawei CFO Meng under the bus, claiming that she tricked them into doing it.

Patent Infringement would be a civil and not a criminal case, therefore not grounds for extradition.  Moreover, patent infringement is such a common occurrence in large American companies that the practice has spawned a new expression: infringement efficiency, which means, in short, that stealing patents is good business as long as the amount of money you end up paying if you are found guilty in court is less than the profit made from the stolen patents.

3.  Contravening trade sanctions against Iran is not a crime in Canada.  

(See the Canadian Government's Guide for Doing Business in Iran.) In order to continue to push for extradition, the US Attorney will have to keep pushing the idea of "bank fraud," despite the shadowy, sketchy chain of events which will need to be proven.  The necessary sequence of accusations depends on trade sanctions against Iran.  Canada does restrict trade with Iran, but those restrictions only apply to materials for the construction of nuclear weapons and ballistic missiles.  The accusations against Meng refer to statements she made (or failed to make) in 2013 or 2014 (depending on which news report you believe).  The year or years are crucial because in 2016 the Obama administration negotiated an anti-nuclear deal with Iran and trade sanctions were lifted.  In 2018 the Trump administration reneged on and cancelled that agreement and unilaterally imposed new sanctions.  Here's a legal question:  Would we prosecute someone for committing a crime which is no longer a crime in Canada?  Need some context?  We just legalized possession of marijuana.  Will we prosecute people if we find proof that they possessed pot before it was legalized?  Still not convinced?  In 1968, homosexuality and various forms of recreational sex were legalized in Canada.  Do you imagine that we might have continued to convict people for acts of homosexuality and oral sex in the 1970s?  We would not prosecute Meng in Canada because the underlying basis of her alleged crimes is currently not criminal in Canada.

4.  There is an underlying conflict of interest in the request for Meng's extradition.  

As I outlined in an earlier post (The Chaos Theory of International Trade), Richard Donoghue is the US Attorney for the Eastern District of New York.  In a matter of months, Donoghue went from being an employee of CA Technologies (their Chief Litigator, in fact) to spearheading the request for Meng's arrest, detention and extradition.  The mere fact that he was so recently employed by a Huawei competitor strongly suggests that he might still be acting as an agent for the benefit of CA Technologies, which puts him in an apparent, if not actual, conflict of interest.

5.  The extradition request is based on Meng's nationality and ethnicity.  

The Canadian Extradition Act explicitly instructs that the Minister of Justice "shall refuse to make a surrender order if the Minister is satisfied that  . . . .  the request for extradition is made for the purpose of prosecuting or punishing the person by reason of their race, religion, nationality, ethnic origin language, colour, political opinion, sex, sexual orientation, age, mental or physical disability or status or that the person’s position may be prejudiced for any of those reasons.  German banks continue to do business in Iran.  The USA has an extradition treaty with Germany, but there have been no reported moves to extradite executives of German banks.  Skycom, the German company at the centre of the accusations against Meng, continues to operate, and there have been no moves to extradite German executives.  When the Standard Chartered Bank of Britain was convicted, in 2012, of doing hundreds of billions of dollars of business with Iran through its New York office, they were required to pay a fine.  No criminal charges have been laid.  Banks found to be in noncompliance and fined with operations in the United States include Barclays, ING, Credit Suisse, Lloyds, and ABN Amro.  No bank executive has faced criminal charges for doing business in Iran.  There is little doubt that the only reason Meng is being singled out for criminal prosecution is because she is Chinese and her company is Chinese.

6.  The extradition request is political.  

The Act specifies that the extradition will be refused if "the conduct in respect of which extradition is sought is a political offence or an offence of a political character."  The political nature of the request is so obvious, it seems redundant to comment.  However, the moment that President Donald Trump tweeted that he was prepared to intervene in the case, he made the case political (if there was any doubt that it already was).  If this case is about "national security" as is being constantly and slyly implied by US politicians and others, then the extradition request is by definition political.  To date, no one has claimed that Meng, as an individual, has done something to jeopardize American or, more importantly in this case, Canadian national security.  [By firing the Canadian Ambassador to China, John McCallum, for stating the obvious--that Meng had a strong case against being extradited--PM Justin Trudeau reinforced the "political" nature of the case.  Worse still, the PM has prejudiced the case against Meng.  The new Justice Minister, David Lametti, will be hard pressed to refuse the extradition after his boss, the PM, fired the Ambassador just for saying Meng had a case.]

7.  Canada is being played.  

For all intents and purposes the extradition request looks like a move by American tech giants to undermine a Chinese technology company which has been taking over a huge swath of the global market share.  Far from attempting to further justice and punish the crimes of an individual, what we are witnessing is one group of business interests blocking the development of a competitor by arranging the arrest of the company's CFO.  My prognosis is that Meng will never be convicted of a crime worthy of imprisonment.  It is unlikely that she will ever stand trial.  However, if the naivety and Dudly-Do-Rightism of Canadian leadership allow the extradition hearings and detainment of Meng to continue for years, then the corporate objective of slowing down the competition will have been achieved--and the Government of Canada will have colluded in that corrupt undertaking.

8.  Public safety.  

The arrests of two Canadians by Chinese authorities, ostensibly in retaliation for the Meng detention, have made the optics of releasing Meng more difficult.  Nonetheless, the Minister of Justice, the Minister of Public Safety (Ralph Goodale) and the Minister of External Affairs (Chrystia Freeland) have the obligation to confer with one another and recognize that they have to prioritize the safety of Canadians over dubious demands for the extradition of one Chinese citizen.

9.  Canadian self-interest.  

Every kid in the schoolyard knows that if some bigger kid asks you to punch yourself in the head, you are being bullied--and if you submit to this bullying, you are encouraging more bullying in the future.  It is in Canada's interests to diversify its trading partners.  It is, in particular, in Canada's interests to increase trade and friendly relations with China.  Canada will greatly benefit from Huawei's 5G technology, and the research funding and business development which Huawei Canada offers.  Of course, we need to maintain our trading partnership, friendly relations and military alliances with the USA, but the occasional demonstration that we are willing to act in our own best interests should strengthen the mutual respect that makes these relationships work.

10.  Canadian sovereignty.  

Historically, when Canada has asserted its independence from American military and foreign policies, our independence has served us well.  Prime Minister Jean Chretien's refusal to enter George W. Bush's Iraq war in 2003 is a good example.  Similarly, PM Lester B. Pearson kept Canada out of the Vietnam War in the 60s.  On June 1, 2018, the Trump administration's imposition of a 25% tariff on Canadian steel on the grounds of "US national security" together with Trump's alienated nationalism has provided a conspicuous opportunity for Canadians to recognize the importance of Canadian independence from American hegemony.  Unfortunately, Canada accepted the inclusion of the "China clause" in the recent US-Canada-Mexico trade agreement which, according to some analysts, has given the USA rights of veto over future Canadian trade deals--in particular, over our trade with China.  The American warrant for the extradition of Sabrina Meng Wanzhou trapped us into the embarrassing situation of arresting Huawei's CFO at the same time that we are courting and receiving Huawei investment in Canada.  Worse still, the arrest of Meng puts a halt to our developing relationship and plans for increased trade with China--once again surrendering our sovereignty to American interests.  Pathetically, in the arrest of Meng we are not even serving explicit American national or security interests, just the corporate interests of American technology companies.

11. Canadian "peace, order and good government."  

Clearly, Canada and China have ideological differences, although I suspect those differences are not well understood in either country.  Canada's ideological tendencies are quite different from those of the USA, and the difference has become pronounced in recent years.  In contrast to the American Declaration of Independence's valourization of "life, liberty and the pursuit of happiness," the Canadian constitution sets out the objectives of the Federal Government as "peace, order and good government."    The American pursuit of life, liberty and happiness has resulted in a state of near-constant warfare throughout the USA's history. The question which our Minister of Justice needs to ask in the Meng extradition case is:  "what decision will best promote and exemplify 'peace, order and good government' in Canada?"  As sparsely and sporadically as I have been informed of the details of the case through the media--and I trust the Minister has been more thoroughly informed--I have become convinced that Canada would be best served by Meng's immediate release.

12.  Canadian respect for the Chinese.  

The Chinese response to the Meng arrest has been to describe it as a gesture of disrespect toward China and the Chinese people.  Canadian apathy toward the Meng arrest has led me to fear that Canadians have been conditioned to accept the melodramatic myth of "The American 'good guys' versus the Chinese [and Asian in general] 'bad guys'."  Distance makes it easy for Canadians to ignore the empirical facts that while the Americans have been spending trillions of dollars on wars in Iraq and elsewhere, resulting in hundreds of thousands of deaths, the Chinese have raised 800 million of their fellow citizens out of poverty, and China has not been engaged in a war since the 1970s.  Canada must also respect the Chinese because they have been part of its history since Canada's earliest development in the 18th century.  There are 1.78 million Canadians of Chinese ancestry currently living here.  They have contributed to every aspect of life and culture in Canada, perhaps most iconically represented by our former Governor General Adrienne Clarkson.  Sabrina Meng Wanzhou has herself been a long-term resident of Canada. Attitudes of mistrust and suspicion are unwarranted and insulting to the Chinese of China and to our fellow citizens.  No doubt, apologies will be forthcoming--because we're good at that--but the Government of Canada should act quickly and not allow this insult to linger.

PS Since I first published this post on January 5, 2019, Jody Wilson-Raybould was demoted from Justice to Veterans Affairs.  The middle of a crisis requiring action from the Minister of Justice seems a very strange time (or was it deliberate obfuscation?) to be changing the Minister, but that is what the Government of Canada has chosen to do. David Lametti became the new Minister of Justice. On Feb. 7, 2019, despite denials from the PM and the Minister of External Affairs, the new Justice Minister, David Lametti, finally admitted that the extradition of Sabrina Meng Wanzhou is "political."…/decision-whether-to-extradite-hua…

PS2 On February 12, 2019, Jody Wilson-Raybould resigned her position as Minister of Veterans Affairs in the Trudeau cabinet. The prevailing assumption is that Wilson-Raybould resigned because of reports she was under pressure from the PM's office to allow the engineering firm, SNC-Lavalin, to pay a remediation agreement rather than face further criminal proceedings for bribes they were alleged to have paid in Libya in 2002 to 2011.  In the wake of the Meng arrest, two Canadians remain in jail and a third is facing the death penalty.  In terms of significance and potential consequences, the SNC-Lavalin affair doesn't even compare to the Meng extradition, but SNC-Lavalin has disappeared the Meng extradition from media coverage.

PS3 In a feature article in the February edition, Maclean's magazine reported that "29 percent of Canadians align with Beijing’s views, believing the arrest [of Meng] was politically and economically motivated."  In other words, almost 1 in 3 Canadians believe that the Meng arrest was contrary to Canadian law--the Canadian Extradition Act.  Imagine what the numbers would be if the Canadian media told the whole story, instead of the fable they think Canadians want to hear about our being law-abiding, transparent and honest in this case.  Imagine what the numbers would be if our Canadian representatives, like John McCallum, were allowed to tell the obvious truth--that Meng has a strong case against extradition--without being fired.

PS4 On January 28, 2019, the US Justice Department released its 13-count indictment against Huawei.  If you read the Justice Department announcement carefully, you will note that there is nothing new in the accusations against Meng.   The only direct accusation against Meng is that she misinformed executives of HSBC, as described above.  There are four (4) defendants named in the indictment.  It is worth noting that Meng is the only individual, the only executive, named as a defendant.  The other three defendants are companies, reinforcing the fact as noted above, that there is no precedent for criminal charges against an individual executive in this type of case.

Saturday 29 December 2018

The Chaos Theory of International Trade, or How Canada Arrested a Chinese Executive on a US Warrant in Order to Protect Israel from Iran

I heard it from every economics professor I ever had, at both Oregon and Stanford, and everything I saw and read thereafter backed it up. International trade always, always benefits both trading nations. Another thing I often heard from those same professors was the old maxim: “When goods don’t pass international borders, soldiers will.” Though I’ve been known to call business war without bullets, it’s actually a wonderful bulwark against war. Trade is the path of coexistence, cooperation. Peace feeds on prosperity.

 Phil Knight. Shoe Dog: A Memoir by the Creator of Nike (p. 374). Scribner. Kindle Edition. 

A Few Facts

Huawei holds 4% of the cellphone market in Israel. In the UK, which is a member of the Five Eyes intelligence alliance, Huawei has 14% of the market.  Huawei Canada is a major contributor to Canadian business and research.  These facts matter. 

Why Conspiracy Theories Exist

Reading about the arrest of Huawei’s CFO Sabrina Meng Wanzhou, who is also the daughter of the company’s founder, at the Vancouver airport, I had the same question everyone was asking:  why?  Attempts to answer the question have spawned a number of conspiracy theories.  Conspiracy theories flourish when the information available in the public domain never quite makes sense or at least never comes close to explaining who did what, how, with what motives and intended outcomes.  The explanations for why and how never satisfy the parameters of what has happened, and we live in suspense,  forced to speculated about behind-the-scenes, cloak-and-dagger black ops in search of explicable motives for unexplained or inexplicable events.   

Just Because It's a Conspiracy Theory . . .

Once established, conspiracy theories take on a life of their own.  They thrive and spread and become better known than the mundane facts because they tell a better, more dramatic and coherent story.  All this being said, to cannibalize a better-known expression:  just because it’s a conspiracy theory doesn’t mean that it isn't true.

Chaos Theory Is the Opposite of a Conspiracy Theory

The opposite of a conspiracy theory is “chaos theory”—the theory that explains how very small causes can precipitate very large effects.  Science tells us that if we want to know the answers to big questions like  “how did we get here?” or “where did that hurricane come from?”  the answer requires “chaos theory.”  No one caused it; a lot of small things happened and as a result that big thing happened.  The butterfly in Brazil may have intended something but she did not intend to set off a tornado in Texas.  Unlike conspiracy theories, chaos theory is no fun at all. Reviewing the explanations, analysis, speculation and theories emerging from Sabrina Meng Wanzhou’s detainment in Vancouver, chaos may be the only answer.

What We've Been Told

Based on media reports, sometime in 2014 (and/or earlier) Sabrina Meng Wanzhou did a presentation in front of HSBC executives in New York (HSBC is the Hong Kong and Shanghai Banking Corporation) in which she is alleged to have misrepresented the ownership of a company called Skycom which was doing business in Iran in contravention of US and United Nations sanctions.  The physical evidence against her as an individual is, allegedly, a powerpoint presentation and a paper trail showing that Skycom is owned by a Huawei shell company. As a result, a warrant for her arrest was issued (22 August 2018) by the Eastern District Court of New York.  After various people had been informed, including Prime Minister Justin Trudeau and John Bolton, National Security Advisor to the White House, the RCMP exercised the American warrant and detained Sabrina Meng Wanzhou as she was changing planes at Vancouver airport en route from Hong Kong to Mexico.  She was jailed on December 1 pending a bail hearing.   She was released on bail on December 5.  Friends and family posted the 10-million-dollar bail, and she remains under house arrest in Vancouver, pending an extradition hearing in which American authorities must present evidence that her extradition is justified, meaning that there is compelling evidence that she has committed a crime which would be recognized as a crime according to Canadian as well as American law, and that the motives of her extradition are justified.

Mr. Chaos and the Conspiracy Theories

Not surprisingly, the immediate conspiracy theories make Mr. Chaos himself, President Donald Trump, the central antagonist.  Theory number one is that Meng’s arrest was a Trump gambit to gain leverage in trade talks with China, attempting to bully and cower China by showing how far he is willing to go playing hardball.  Theory number two is the exact opposite.  Meng’s arrest on December 1, the same day Trump was having one-on-one trade talks with China’s President Xi, was a deliberate attempt by an anti-Trump Washington faction to embarrass and undermine the American President. 

The "Let's Put Canada in Its Place" Conspiracy

Conspiracy theory number three is distinctly Canadian.  On June 1, 2018, the USA imposed a 25% tariff on Canadian steel on the grounds that Canadian steel imports were “a threat to US national security.”  Suddenly all the rhetoric about Canada and the USA being the greatest of trading partners, the best of friends and the closest of allies evaporated, and we were just another potential enemy.  Nonetheless the USA still didn’t want us to go around acting like a sovereign nation.  As part of the recent trade deal replacing NAFTA, the US-Canada-Mexico trade agreement, the American’s insisted on what is known as the “China clause” requiring three-months notice before Canada could sign a trade agreement with  “non-market countries.”  (The list of “non-market countries” includes China, Vietnam, North Korea and 11 others.)  In other words, if Canada approaches a trade agreement with China, we will be putting at risk our trade with the USA to whom we export nearly 70% of our goods and services, accounting for 20% of our Gross Domestic Product.  Having Meng arrested in Canada had the effect, which would be desirable from an American perspective, of blocking friendly relations and future trade between China and Canada.  

The Paradox of China's Getting Tough with Canada

Ostensibly as a consequence of the Meng detention, two Canadians—Michael Kovrig and Michael Spavor—were arrested in China.  As I try to imagine the strategic value of these arrests from a Chinese perspective, my conclusion is that they must be a gesture for domestic consumption in China.  In other words, Chinese politicians needed to show their Chinese compatriots that they are doing something about Meng’s arrest.  However, I would surmise that these Chinese politicians are more than sophisticated enough to realize that Canada, in contradiction to its own best interests, has been trapped in the middle of this affair by the American warrant.  The Chinese leadership have made Canada the target of their ire rather than focussing on the USA.  The rational conclusion is that Canada just doesn’t matter enough to either China or the USA.  Both countries are at ease making Canada a patsy and the detained Canadians collateral damage, but the real game—where the big money and power are at stake—is China-US trade.  Paradoxically, the more China puts pressure on Canada to release Meng, the more it will be in Canada’s interest to extradite her to the USA, thereby forcing the Chinese to address their true antagonist the USA, leaving Canada out of the US-China trade war. 

The Chinese Global Domination Conspiracy

In casual conversation with my fellow Canadians, this is the conspiracy theory that is least understood but is the most readily and stubbornly accepted.  Arresting Meng has nothing to do with protecting Israel.  From this point of view, the claim that she was arrested for contravening trade sanctions with Iran becomes a bogus pretext, smoke and mirrors.  From this point of view even the allegations that Meng committed bank fraud by failing to reveal a Huawei/Skycom/ Iran connection, are a pretext, accusations that are not intended to pursue justice and discourage crime, but simply to undermine a large and successful Chinese technology company.  If this is the case, the crime being perpetrated against Meng seems much more significant than the crime she is being accused of.

What exactly is this conspiracy theory?  Huawei is in the process of developing 5G technology in Canada and around the world which will provide the next generation of wifi and internet applications.    Huawei is believed to have close ties to the Chinese government and the MSS (Ministry of State Security).  Huawei's presence in and even control of cyberspace in other nations will give them the potential to access state secrets and the possibility of disrupting any industry connected to the internet (aka The Internet of Things).

As evidence of this conspiracy my fellow Canadians point out that three--USA, Australia, New Zealand--of the five members of the Five Eyes have "banned" Huawei's 5G technology.  The USA's decision to go with an American company for its 5G technology is hardly surprising.  We might wonder why Australia and New Zealand have decided not to go with Huawei.  The counter to this conspiracy theory is that so far two Five Eyes members--Canada and the UK--have not banned Huawei, but we can imagine that they are both under enormous American pressure to do so. 

The Chinese counter to this conspiracy theory is that if Huawei's 5G technology is a gateway to global domination, then any of its three major competitors in 5G development--Verizon, IBM, AT&T--also threaten global domination.  The USA's use of its secret services and intelligence networks in conjunction with private contractors and businesses to promote American economic interests has a long and publicly acknowledged history.  "What's good for General Bullmoose is good for the USA" may once have been considered somewhat ironic, but history has shown that the slogan can be taken literally as representative of American attitudes and practices.

Once again, the great paradoxical, Chinese miscalculation is that the arrest of two Canadians in retaliation for the Meng arrest is the strongest evidence that the choice of Chinese 5G technology might prove dangerous for foreign nations.

The "Business as Usual" Conspiracy

In 1953 the CIA orchestrated the overthrow of Iran's democratically elected President, Mohammad Mosaddegh, in order to support BP and prevent the nationalization of the Iranian oil fields.  The USA installed and maintained the Shah of Iran as dictator, for the benefit of Anglo-American oil companies, until he was overthrown in 1979.  In 1954, the CIA arranged a coup in Guatemala, overthrowing the democratically elected President, Jacobo Arbenz, thereby preserving the monopoly of the United Fruit Company.  In 1973 a US-backed military coup overthrew the government of Salvador Allende and installed Augusto Pinochet as dictator thereby protecting the assets of the Anaconda Copper Company and Kennecott Utah Copper from Allende's plans to nationalize the copper industry.  These covert operations may strike you as distant in time (which is why we now know about them) but they establish a pattern of collusion between American business and American intelligence and secret services that has grown stronger not weaker over the years.  Of all the things we have heard about Edward Snowden over the years, the one I find most striking that usually goes by without comment was that he was working for a private company, Booz Allen Hamilton, when he copied and leaked classified NSA (National Security Agency) files. Snowden's previous employers were Dell technologies and the CIA. 

The warrant for Meng's extradition issued by the Eastern District Court of New York was a collaboration among the US Attorney, the secret service and American business interests on the grounds of national security.  "National security" in the USA means "for the perseverance and profit of American businesses."  From this perspective Meng's arrest was just "business as usual" as the various American agencies collaborated in undermining a Chinese company.

The Chaos Theory of International Trade

While none of these conspiracy theories tells the whole story, each has some degree of truth, which is why I think that chaos rather than conspiracy offers the better answer to the question "why?".  One particular butterfly has been flapping his wings vociferously enough to cause turbulence in Canada and around the world.  His name is Richard P. Donoghue.  He is a US Attorney for the Eastern District of New York.  His name is on the letter released to the public asking that Meng not be given bail, and presumably, he is the attorney who signed the original warrant for her arrest.  Remarkably little attention has been paid to who exactly Richard P. Donoghue is.

Richard Donoghue, until recently (I.e. 4 January 2018), was an employee of CA Technologies.  Does it matter that the man who caused Meng's arrest and detention was, until less than a year ago, the Chief Litigator of CA Technologies, a competitor of Huawei in the Internet of Things?  Logically, this is at least a question that should be asked.  Why isn't the Canadian media asking this question? 

Did someone from CA Technologies suggest, last January, that it would be useful if one of their litigators became a US Attorney?  I'm going to guess that Donoghue took a pay cut to become a US Attorney.  Does he maintain contact with colleagues in CA Technologies?  Have any of his buddies from CA suggested that it would be really helpful if "someone" went after Huawei?  Is Donoghue receiving any kind of compensation from CA?  Did Donoghue receive financial compensation from CA in 2018--after he became US Attorney and before he issued the warrant for Meng's arrest in August?  Does Donoghue have close friends and family employed by or receiving benefit from CA Technologies which would put him in a conflict of interest in demanding the arrest of Huawei's CFO?

Let's be clear:  I have no inside knowledge of Richard Donoghue's motivations, but his situation and the circumstances are obviously something that the Canadian media should be investigating in the first instance and the Canadian judiciary considering Meng's extradition and continued detention must thoroughly consider.  If the request for Meng's extradition is just a ploy to undermine a business competitor, then the detention of Huawei's CFO for years of extradition hearings will accomplish that goal and a travesty will have been perpetrated on and by the Canadian judiciary.

I consider the Donoghue warrant more chaos than conspiracy because I cannot imagine that Richard P. is a singular agent in this case or that he sat down and said to himself, "I think today I will embarrass Canada, cause a trade war between the USA and China, provoke the arrests of innocent bystanders in China, destabilize the global economy, and broach the possibility of a war which could drag every country in the world into the conflict."  Oh, I know this has to sound farfetched, but Meng's arrest and all of its potential ramifications could not have happened or be happening without Donoghue.  These days whenever I think about Richard P. Donoghue and the mess he's unleashed, I can't help thinking, at the same time, about a 19-year-old named Gavrilo Princip.

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