BEIJING —
China has charged two detained Canadians with spying, escalating tensions between the two countries following the arrest in Vancouver 18 months ago of a senior Huawei executive wanted on U.S. charges.
Chinese prosecutors said Friday that Michael Kovrig was charged in Beijing on suspicion of spying for state secrets and intelligence.
Michael Spavor was charged in Dandong city near the North Korean border on suspicion of spying for a foreign entity and illegally providing state secrets.
The charges were announced by China’s highest prosecutor’s office in brief social media posts.
Asked what evidence China had against the two, Chinese foreign ministry spokesperson Zhao Lijian said only that each is charged with “secretly gathering state secrets for overseas forces with particularly serious consequences.”
“The facts are clear and the evidence solid and sufficient,” Zhao told reporters at a daily briefing. Zhao gave no details.
Both men have been held since December 2018 in a move seen as an apparent attempt to pressure Canada to release Meng Wanzhou, a top executive at Chinese tech giant Huawei.
China has denied any explicit link between her case and the lengthy detention of the two Canadian men, but outside experts see them as tied and Chinese diplomats have strongly implied a connection.
The daughter of Huawei’s founder was arrested at Vancouver’s airport on Dec. 1, 2018, at the request of U.S. authorities who want her on fraud charges, which she and the company have denied.
Meng is out on bail as hearings are ongoing in B.C. Supreme Court after a judge rejected the first set of arguments from her lawyers late last month in a bid to set her free.
Associate Chief Justice Heather Holmes ruled Meng’s alleged offences would constitute a crime in Canada and the case should proceed.
The next round of legal arguments is set to focus on whether Meng’s arrest was unlawful and whether the U.S. records of the case contain misstatements or omissions.
The Chinese embassy in Ottawa denounced Holmes’s decision and called once more for Meng’s immediate release.
Foreign Affairs Minister Francois-Philippe Champagne responded in turn by calling for the release of the two “arbitrarily detained” Canadian men.
Kovrig is an ex-diplomat who was working for the International Crisis Group and Spavor is an entrepreneur who did business in North Korea.
They have been in Chinese prisons since they were arrested nine days after Meng’s arrest.
The conditions under which the two Canadians are being held has been the subject of scrutiny.
Kovrig and Spavor had no access to lawyers or their families as of May, with the exception of a phone call the Chinese embassy said Kovrig was allowed to make to his sick father in mid-March.
At the same time, the embassy said Kovrig and Spavor were being provided with better food to strengthen their immunity against the novel coronavirus.
It said detention centres were closed due to the epidemic, so Kovrig and Spavor were receiving more frequent letters and parcels to ensure their contact with Canadian diplomats in China.
The allegations against Meng, who is Huawei’s chief financial officer, date back to 2013.
The U.S. is seeking to extradite Meng on fraud charges based on allegations she lied to HSBC about Huawei’s relationship with Skycom, a telecommunications company in Iran, putting the bank at risk of violating American sanctions against that country.
But in a case management memo dated June 12, Meng’s lawyers assert their client delivered a presentation to an HSBC banker in Hong Kong that included statements about Huawei’s business activities in Iran, and the statements were omitted from U.S. records of the case.
They argue Meng’s statements provided the bank with “the material facts it needed to know in order to assess whether there was any risk to HSBC in continuing to provide banking services to Huawei, including processing U.S. dollar transactions related to Huawei’s commerce in Iran.”
The tensions between Canada and China have spilled over into trade between the two countries as China suspended imports of Canadian canola.
Earlier this month, Huawei’s ambitions to be a player in Canada’s 5G network were very much cast in doubt after two of the country’s three largest telecom companies announced partnerships with the Chinese company’s European rivals.
Bell Canada announced on June 2 that Sweden-based Ericsson will be its second supplier of the radio access network equipment — a major component in fifth-generation wireless networks — following its choice of Finland’s Nokia in February.
Later in the day, Telus Corp., which uses Huawei equipment extensively in its current network, announced that it too had selected Ericsson and Nokia for its 5G network needs.
Huawei is the world’s biggest supplier of network gear used by phone and internet companies.
The announcements come as Ottawa continues its review of Huawei’s role in Canada’s 5G networks over security concerns due to suspicions about the company’s relationship with China’s government.
The United States has warned Canada, the United Kingdom and other allies that it will limit intelligence sharing with countries that have Huawei equipment in their 5G networks — citing its potential use for spying by China, an allegation Huawei denies.
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
