VANCOUVER -- The United States' case against Huawei executive Meng Wanzhou suffers an "evidentiary vacuum" linking her actions with any risk of reputational damage or financial loss suffered by HSBC, her alleged victim, one of her lawyers argued in court Tuesday.

Scott Fenton attempted to hammer home a theme in the defence team's arguments: that the United States failed to provide crucial evidence of deprivation or risk of deprivation, a fundamental element of fraud, so the telecom executive should be freed.

Meng was arrested at Vancouver's airport in 2018 at the request of the United States to face fraud charges that both she and Huawei deny. She is out on bail during the extradition hearing, living in one of her Vancouver homes.

"The overwhelming weight of the jurisprudence makes it clear that in all cases, concrete evidence must exist that the alleged deceit triggers either actual loss or a concrete, non-speculative risk of financial loss," Fenton said.

The B.C. Supreme Court hearing is at the tail end of formal arguments in the extradition case.

Meng's arrest embroiled Canada in a bitter battle between the United States and China.

Days after she was taken into custody, Canadians Michael Kovrig and Michael Spavor were arrested in what has widely been seen as retaliation and Canadian officials have promised to continue fighting for their release.

The fraud charges against Meng centre on a PowerPoint presentation she gave during a meeting in a Hong Kong tea room in 2013 with a senior HSBC banker.

Meng, who is Huawei's chief financial officer and daughter of the Chinese telecom giant's founder, is accused of misleading the banker about Huawei's control over another company that did business in Iran, putting put the bank at risk of violating U.S. sanctions against the country.

Lawyers for Canada's attorney general, who represent the United States in the case, argued last week that Meng's alleged lies would clearly constitute fraud in Canada.

Government lawyer Robert Frater told the court that Meng's deceit lay in both what she said and left unsaid during the meeting.

Meng "went to some length to demonstrate that Huawei had a rigorous approach to sanctions compliance, and that Huawei demanded the same of any partners working in Iran," he said.

She neglected to tell the banker that Huawei controlled the company, Skycom, that was the subject of HSBC's concern, he said.

As a result, HSBC made financial decisions based on incomplete information about its clients that put it at risk of not only violating sanctions, but also at risk of reputational damage and financial losses, Frater told the court earlier.

Fraud law is clear that actual loss need not occur, only risk of loss, the government has argued. Meng's alleged misrepresentations fall within the definition.

However, Meng's team has tried to convince the judge the Meng's case is anything but ordinary and, in fact, the government lawyers are trying to turn fraud law "on its head."

The United States has presented a case against Meng that is riddled with evidentiary gaps and fails to demonstrate a concrete link between the presentation and any civil or criminal liability or risk of losses, her legal team has argued.

Court documents from the defence say Skycom made payments from its Chinese bank account to a third party's HSBC U.K. bank account, and HSBC cleared those payments through a U.S. subsidiary.

The dollar-clearing transaction is the only sanctions violation that occurred, Fenton said Tuesday, and HSBC was entirely responsible for its own decision.

The United States has not offered proof that HSBC's continuation of loan-related business with Huawei caused it any risk of loss.

Reputation is not something that is protected under fraud law, and even if it was, the United States has failed to provide anything beyond a theoretical risk, Fenton said.

"We're left with a reputational risk theory that ultimately flounders on the shoal of no evidence, and no amount of conjecture or theorizing or speculation -- as is well known to the court -- could possibly be a substitute for actual evidence demonstrating a concrete risk of identifiable pecuniary harm to HSBC," Fenton said.

This report by The Canadian Press was first published Aug. 17, 2021.