A Chinese tech executive facing extradition to the U.S. on fraud charges related to alleged Iran sanctions violations asked a Canadian court Monday to grant her bail, the latest development in an explosive case that has tested a shaky truce over trade between the United States and China.

Before a packed courtroom in Vancouver, British Columbia, lawyers for Meng Wanzhou, Huawei Technologies’ chief financial officer and daughter of the company’s founder, argued their client should be released ahead of her extradition hearing because she is in poor health and is unlikely to flee because of her close ties to the Canadian city.

The hearing closed without a decision Monday and will continue Tuesday.

Meng’s case is being closely watched by Washington, Beijing and Ottawa, where her arrest has roiled markets and is at risk of devolving into a broader political dispute.

The Chinese tech executive was arrested at an airport in Vancouver while traveling from Hong Kong to Mexico on Dec. 1 – the same day that President Trump met Chinese President Xi Jinping on the sidelines of a Group of 20 summit in Argentina to discuss ongoing trade tension.

The timing appears to be a coincidence. The court heard Friday that the warrant for her arrest was issued Aug. 22. Canadian authorities readied to act in November, when they learned of her plans to transit through Vancouver.

Since news of her arrest broke last week, the U.S. and Canada have said little about the case.

China has called repeatedly for her release, calling her detention a violation of human rights and implying that she was the victim of a cynical U.S. effort to gain leverage over China in the trade war.

Beijing has thus far shown a willingness to keep the issue separate from its ongoing trade dispute with the United States, focusing instead on pressuring Canada to release Meng and stop extradition proceedings.

Over the weekend, China warned of “severe consequences” for Canada if the country does not immediately release Meng. Chinese officials also summoned the U.S. and Canadian ambassadors to protest the arrest.

During Monday’s hearing, her team outlined a security plan that would have Meng reside at one of her two multimillion-dollar Vancouver homes under the watch of her husband, offer millions in cash and real estate as collateral, wear a tracking device and be watched around the clock by a private security firm that would monitor her movements, all at her own expense.

But the judge, Justice William Ehrcke, questioned whether her husband, who is not a permanent resident of Canada, was fit to supervise her release. The prosecutor argued that Meng was a flight risk who should not be released.

The bail hearing, which began Friday, provided the first sense of what may be contained in the still-sealed U.S. case against Meng.

A Canadian prosecutor argued Friday that Meng committed fraud in 2013 by telling financial institutions that China’s Huawei had no connection to a Hong Kong-based company, Skycom, which was reportedly selling U.S. goods to Iran in violation of U.S. sanctions.

Meng’s lawyers denied the charges, saying Huawei sold Skycom in 2009.

In an affidavit released Sunday, Meng made her case for release.

“My father founded Huawei and I would never do anything that would cause the company reputational damage,” she said. “I wish to remain in Vancouver to contest my extradition, and I will contest the allegations at trial in the U.S. if I am ultimately surrendered.”

The affidavit she had a history of hypertension and was briefly taken to hospital after her airport arrest. She said she survived thyroid cancer in 2011 and had surgery related to sleep apnea in May.

Much of Monday’s courtroom testimony focused on the logistics of how Meng would be surveilled upon release. Her lawyers suggested her husband could act as her guarantor – an idea the judge discounted, in part because his Canadian visa expires in February.

Huawei is China’s largest privately held company. It has grown to become the biggest supplier of telecommunications gear in the world, this year surpassing Apple to become the second-largest maker of cellphones.

Though it is a major telecom player, it is still not a household name in the United States, largely because some U.S. lawmakers see the company as a threat and have taken steps to block Huawei from certain U.S. investments.

In 2012, the House Intelligence Committee issued a report on Huawai and another Chinese firm, ZTE, saying the companies “provide a wealth of opportunities for Chinese intelligence agencies” to spy on U.S. companies or agencies that use their equipment.

Ever since, Huawei in particular has been viewed with suspicion from U.S. lawmakers and some allies.

Four of the five countries in the “Five Eyes” intelligence-sharing network – the United States, Britain, Australia and New Zealand – have blocked Huawei from their new 5G cellular network, citing national security concerns. The fifth member, Canada, has not.

Japan on Monday issued instructions effectively banning Huawei and ZTE from official contracts. The country’s top three telecom operators plan will reportedly follow suit, further hurting the company’s global prospects.

Huawei and the government of China have denied any wrongdoing, casting the moves as politically motivated.


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