Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 18 - Evidence - March 21, 2011
OTTAWA, Monday, March 21, 2011
The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill C-61, An Act to provide for the taking of restrictive measures in respect of the property of officials and former officials of foreign states and of their family members, met this day at 3:13 p.m. to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, today the committee is considering Bill C-61, An Act to provide for the taking of restrictive measures in respect of the property of officials and former officials of foreign states and of their family members.
Appearing before the committee shortly will be the Honourable Rob Nicholson, Minister of Justice and Attorney General of Canada, and the Honourable Lawrence Cannon, Minister of Foreign Affairs.
There are officials accompanying the ministers. I will leave it to the ministers to introduce those officials. Minister Nicholson has been held up, but we have decided to start with your presentation, Minister Cannon. Welcome to the committee. You have been here before.
Hon. Lawrence Cannon, P.C., M.P., Minister of Foreign Affairs: Good afternoon, senators. Thank you for inviting me. I am accompanied today by Alan Kessel, a member of our legal team, as well as Sabine Nölke, who is also part of our legal team. Both will be in a position to respond to the detailed questions that I am sure you, chair, as well as colleagues have.
[Translation]
I am here to speak today on Bill C-61, An Act to provide for the taking of restrictive measures in respect of the property of officials and former officials of foreign states and of their family members. Recent events in North Africa and the Middle East have brought home again how quickly the political landscape can change and how important it is that we have the tools in place to be able to respond quickly and effectively to those changes.
[English]
To be able to support efforts at democratic reform, it is critical that Canada have the ability to ensure that misappropriated property may be frozen to allow for its return to the new authorities and the people of the state concerned. It is also critical that we support efforts to hold accountable foreign officials who have misappropriated state funds or inappropriately acquired property as a result of their public office, family, business or personal connections.
This legislation responds to the needs by creating a new and effective means to allow us to respond to requests from foreign states to freeze assets of corrupt former officials.
[Translation]
The draft legislation would permit the government to freeze the assets or restrain property of foreign politically exposed persons upon receipt of a request from a state, and where the Canadian government has determined that the state is in turmoil or political uncertainty. Assets would be frozen for a five-year period, which would provide the foreign state with an opportunity to initiate the necessary proceedings to allow for seizure and forfeiture of assets situated in Canada. The time period is open to renewal.
[English]
It may be asked why we are creating new legislation instead of imposing sanctions under existing Canadian law or simply proceeding with existing criminal law instruments.
If the United Nations Security Council has not imposed sanctions, then Canada can use the Special Economic Measures Act to impose unilateral sanctions. This tool, however, requires a high threshold to be met; namely, that there has been a grave breach of international peace and security leading to a serious international crisis.
[Translation]
Another possible tool at the government's disposal is the Mutual Legal Assistance in Criminal Matters Act. This act however requires a foreign state to produce evidence of criminal activity or the existence of legal proceedings or a court order in order for Canadian authorities to be able to act on assets situated in Canada.
In the case of a newly emerging governing authority, it may be difficult to come by such evidence on short notice — and I think that everyone understands this situation. In addition, the time required to meet the procedural steps under the existing, criminal-law based framework in situations where speed is of the essence could potentially allow the foreign national in question to conceal or deplete the assets.
[English]
Our existing sanctions legislation, while effective in addressing states' concern, is not the appropriate mechanism when the state in question is in the process of democratic transformation. In these cases, using the sanctions tool would punish the whole state and not solely the corrupt former regime. This response would not be appropriate at a time when the Canadian government and the international community wish to express their support for democratic transition.
[Translation]
Both sanctions and criminal-law based proceedings will remain available for use, in appropriate circumstances. However, it is also clear that we need a nimble legislative regime that will permit asset freezes in circumstances where our existing tools are not sufficient.
[English]
This new legislation includes a number of procedural and substantive safeguards. The bill provides that freezes are imposed for a limited period of time and automatically expire if they are not renewed. It provides authority to the Minister of Foreign Affairs to recommend the revocation or repeal of an order or regulation if the person does not meet the definition of a "politically exposed foreign person."
The bill also provides authority to the Minister of Foreign Affairs to issue permits for dealings with certain property to exempt certain persons and property, as well as to issue certificates in cases of mistaken identity and to provide exemptions for reasonable expenses.
[Translation]
In closing, we can all agree that tyranny and corruption cannot go unchallenged. The Government of Canada does not want to say "no" to requests for help from emerging foreign democracies, especially when speed is of the essence to avoid allowing a former dictator to conceal or deplete assets that rightfully belong to his people and are needed to assist the state in its recovery from misrule.
The government also wants to ensure that individuals who have misappropriated state funds can be held accountable for their ill-gotten gains.
[English]
This bill will allow us to meet these important objectives. We hope that the committee can return this bill swiftly to the Senate so that we can put this important new tool into place as quickly as possible.
The Chair: Thank you, Mr. Minister.
Minister Nicholson, welcome to the committee. I know that you had another issue to deal with before you arrived. Minister Cannon has made his presentation with respect to Bill C-61 and we look forward to yours.
Hon. Robert Nicholson, P.C., M.P., Minister of Justice and Attorney General of Canada: On March 3, this important bill was introduced in the House of Commons to address swiftly the current inability for Canada to ensure that, upon the request of a state experiencing political turmoil, misappropriated property of that state, as well as property that has been otherwise illicitly acquired — for example, through bribery or corruption — can be rapidly frozen and thereby preserved. This action will allow the foreign state a subsequent opportunity to initiate legal proceedings for the preservation of property and its return to the new authorities and the people of the state concerned.
I am pleased that this bill has moved quickly.
The postponement of opposition day on consent and the hard work of the House of Commons Standing Committee on Foreign Affairs and International Development permitted the bill to be fast-tracked through the House of Commons. This swift attention to, and passage of, the bill by all parties is acknowledged and appreciated. I equally hope that there will be quick passage of this bill through the Senate.
I will restrict my remarks to the fundamental importance of the bill and what it seeks to address.
There is a gap in Canadian law and this bill aims to fill it. The legal tools that are available currently to address this issue in Canada are through regulations passed under the United Nations Act, if the United Nations Security Council has issued a resolution imposing sanctions, or, if the United Nations has not imposed sanctions, then Canada can use the Special Economic Measures Act to pass regulations to impose unilateral sanctions, but these measures can be used only if a higher threshold has been met — that is, that there has been a grave breach of international peace and security leading to a serious international crisis or the Mutual Legal Assistance in Criminal Matters Act, which requires a foreign state to produce evidence of criminal activity or the existence of legal proceedings or a court order in the foreign state, in order for Canadian authorities to be able to act in relation to assets situated in Canada.
For newly emerging governing authorities, obtaining the evidence on short notice may be difficult.
In addition, assets can be concealed or depleted by the time it takes to meet the procedural requirements in a criminal law framework.
The Criminal Code proceeds of crime regime allows for seizure and restraint of alleged proceeds of crime and their subsequent forfeiture. These provisions, however, require preconditions that must be fulfilled. Specific assets must be identified; evidence must be available linking the assets to a criminal offence either in Canada or in the requesting state; or evidence must be available that the assets are proceeds of crime. As I have mentioned in the House of Commons, Canada's criminal forfeiture system is conviction-based. To obtain a forfeiture order there must be a criminal prosecution resulting in a conviction or the offender must have absconded or died. These preconditions may be difficult to meet for a state that is still in political turmoil.
If none of the current tools are available in the circumstances where a foreign state requests assistance, Canada may not be able to act. I am sure you will agree that Canada must be able to support efforts to ensure foreign officials are held accountable if they have misappropriated state funds or inappropriately acquired property due to their position or connections. Not having the appropriate tool is simply not an answer.
This bill before you is an important measure. It will ensure that Canada can respond rapidly to requests to freeze and preserve property.
More specifically, the bill will allow Canada to respond rapidly to a request from a foreign state to freeze assets of corrupt former officials identified as politically exposed persons in the bill, or to restrain property. This bill will allow Canada to freeze the property where it determines that the state is in a situation of political uncertainty or turmoil.
A period of five years, which can be renewed, will give the foreign state an opportunity to collect the necessary evidence to initiate proceedings to seize or forfeit the misappropriated property.
The appropriate safeguards have been identified in the bill. The assets are frozen for a limited period and the bill will allow for the thawing of assets automatically if the time is not renewed.
My honourable colleague, the Minister of Foreign Affairs, will have certain authority to revoke or repeal a freezing order or regulation to issue permits for dealing with certain property and to exempt certain persons and property. These safeguards strike the appropriate balance.
I am sure you will agree with the importance of this bill in filling the gap that exists; that this bill will give Canada a tool to respond quickly and effectively to foreign requests; and that the bill is the most effective response to the current gap that our existing tools cannot address.
I encourage the committee to consider this bill and we welcome your comments or questions.
The Chair: Thank you, Mr. Minister. I believe the officials will respond to questions if you wish them to do so during the course of the hearing.
Senator Downe: Thank you, Ministers, for your presentations.
I am curious as to why you requested that the governments put a submission in writing. The United States has a similar provision for seizing and freezing assets but the U.S. does not require a submission in writing.
Mr. Cannon: I will let Mr. Kessel respond to that question, but there is a great deal of flexibility in the way the Americans approach the freezing of assets. The American administration has tools that we do not possess. There are variants across the world community, in terms of how they go about freezing assets. In this specific case, we want to ensure that we possess that flexibility.
On the specific question, perhaps Mr. Kessel can respond.
Alan Kessel, Senior Legal Advisor, Foreign Affairs and International Trade Canada: The Americans have a different system of government. Their President has the capacity to act unilaterally.
In our system, normally, in the seizing of assets, we would require a process which would allow for a review by domestic courts. In the international sphere, to be as agile as many of our colleagues around the world, it has been seen that it is necessary that if a country asks us to do something — because if we had our own issues domestically, I am sure our colleagues from Justice Canada would be able to manage them within our law — and if that country is on the way to dealing with issues, for example, Tunisia, we would be able to put in place a rapid freezing mechanism, which we have not had up to the present.
In the past we were required, through domestic legislation, to engage in mutual legal assistance, either through an agreement or through a multilateral process.
The written request from the government in question would provide the certainty that we were dealing with the interlocutor that we knew, and would give us the basis to move forward within our own domestic judicial process.
If my colleagues from Justice Canada have additional concerns to add, they should do so.
Donald K. Piragoff, Senior Assistant Deputy Minister, Policy Sector, Departement of Justice Canada: In addition, having a written request would form part of any written record, in case the decision of the Minister of Foreign Affairs was subject to judicial review. This way, there would be at least a written record in support of the minister's exercise of discretion that might be reviewed by the Federal Court.
Senator Downe: Thank you for those responses.
I am interested in definitions. I notice in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act there is a different definition than the one in this bill:
. . . any person who, for personal or business reasons, is or was closely associated with such a person, including a family member: . . .
This bill has that more extensive definition. Are you also considering amending the other act, namely, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act?
Mr. Nicholson: We are taking them one step at a time, senator. If this one is passed we are always open to suggestions. This bill was carefully drafted to encompass the possibility and real situation that we have on our hands of closing the gaps. Again, we can have a look at these definitions.
Senator Downe: I assume you included that definition in Bill C-61 because you needed it, and it is missing from the other two bills. Is it logical to conclude that, at some point, that issue would be part of your review?
Mr. Nicholson: Yes, we are prepared to review that issue. I hear what you are saying.
Senator Downe: I know that many senators here have questions, so if we have a second round I will come back.
Can the Minister of Foreign Affairs describe how this legislation works? You have signed it; someone's assets are seized or frozen. What happens then?
Sabine Nölke, Director, United Nations, Human Rights and Economic Law Division, Foreign Affairs and International Trade Canada: As soon as regulations are passed that effectively freeze the assets of named persons, notice goes out to the Office of the Superintendent of Financial Institutions. They, in turn, through their network, notify the various financial institutions listed in the act, as per procedures that have been well established in other legislation and regulations, such as the Special Economic Measures Act and United Nations Act regulations.
In effect, if assets are identified then that belong to a named individual, these assets are frozen. From there on in, a couple of things can happen, and these things are speculative. The action can be challenged by the individual concerned, and there can be requests for permits for exemptions for certificates.
On the practical matter, the assets remain frozen for up to five years, to permit the foreign government to put together its case so that it can lead ultimately to the seizure or forfeiture of these assets and their return to the country concerned.
Essentially, the freeze is just that: It is an asset preservation measure that permits the ordinary legal process to commence and take its course to return the assets to their rightful owners.
Senator Downe: Not all assets are kept in financial institutions, however. If, for example, a foreign government advises you that they were at someone's house in Rockcliffe Park and they saw two paintings on the wall that were from their national museum, what do you do then?
Ms. Nölke: With respect to specific things, say a bag of diamonds or a van Gogh painting, there is provision in the act for seizure. Seizure, in that sense, is not taking away permanently but simply keeping safe. Individual items that could be subject to quick and easy disappearance could be taken.
An asset such as a business venture, say a hotel, can be subject to a permit that will allow it to continue to function so that the salaries of Canadians working there can continue to be paid, and the asset will not be depleted unnecessarily. However, those assets would be subject to a process of permit and transaction exemptions to ensure that this could be done.
Senator Downe: I understand that. On the example I gave of artwork, you would send in the RCMP to seize the assets and they would be held somewhere?
Ms. Nölke: Yes.
Senator Downe: It is held until when?
Mr. Nicholson: Until there has been a disposition on the issue; the country submits the paperwork and everything is put together. It will be held until that time or until the expiry in five years.
Senator Downe: How does this bill affect Canadian citizens who may be foreign officials? For example, if some of the former Egyptian cabinet ministers were Canadian citizens?
Mr. Nicholson: It would apply to them all.
Senator Downe: Are you concerned about a Charter challenge if the RCMP go in and seize assets that are alleged by a foreign government to be stolen from their country and in the control of a Canadian citizen?
Mr. Nicholson: The bill itself is consistent with the Charter. There are safeguards there. Again, these matters can be reviewed.
In answer to the first question about the differences between the Canadian and American justice system, there was specific reference to the fact that the potential for a judicial review is there. That will continue to exist and be a part of this process.
Senator Meredith: Minister Nicholson, you indicated that Bill C-61 is open to review. In your opinion, what specific areas of the bill should we look at in the future for parliamentary review?
Mr. Nicholson: When I said you are reviewing this bill, I hope you will pass it in its present form. However, Senator Downe made a suggestion with respect to definitions in a couple of other pieces of legislation, and I said we are pleased to have a look at those definitions. We have a busy justice agenda, as you are aware, and I am pleased at the progress we have made in the past couple of weeks.
Again, this bill is well drafted. It is tight and complete, and will fill in that type of gap. There is a five-year review in any case but, again, as the bill stands now, it is in good shape.
Senator Meredith: Minister Nicholson, with respect to freezing assets, we are looking at Canadian companies that could be associated directly and not know that they are in partnership with a foreign entity. The assets are then frozen. That freezing of assets impacts Canadians here. How will you separate out that situation, in terms of allowing that Canadian entity to operate? Canadian jobs are at stake in that situation if the assets are frozen.
Mr. Nicholson: I believe my colleague, in his opening remarks, pointed out the flexibility that he maintains with respect to permitting either individuals or companies to go about their business so that they are not shut down unfairly or people are not placed unfairly in the untenable position of not being able to access assets that they have a reasonable expectation of being able to use. Again, the flexibility is built into the bill, and I am convinced it will work.
[Translation]
Senator Fortin-Duplessis: My question is for the Minister of Justice. The Federation of Law Societies of Canada is very concerned about the obligation set out in clause 9 of Bill C-61. Are you not worried that the disclosure obligation, prescribed in clause 9 of the bill, is imposing on legal officers an obligation that infringes upon the independence of the bar, the duty of loyalty and the preservation of the solicitor-client privilege?
[English]
Mr. Nicholson: That is a good question, Senator Fortin-Duplessis. This bill does not infringe upon solicitor-client privilege. Solicitor-client privilege is one of the fundamentals of our justice system, and nothing compromises that privilege. The solicitor-client privilege has been recognized at all levels of courts in Canada and it will continue to be recognized. It is not necessary to put in every exception or to state that specifically, when we have legal precedents throughout our judicial system that protect solicitor-client privilege.
Again, individuals have to be able to communicate with their lawyer if they become involved with something like this seizure of assets, and that ability, of course, has to be protected. That privilege does not give a blanket exemption to a solicitor who, like any other Canadian, comes across information with respect to illegal assets. The solicitor-client privilege continues to be protected only if they are acting in a professional capacity.
[Translation]
Senator Fortin-Duplessis: A decision was handed down and a ruling made in Lavallée v. The Queen. Why are various Canadian bars worried because a decision was made with respect to Canadian property? They should be reassured, but they are concerned. All committee members have received e-mails confirming this.
[English]
Mr. Nicholson: People are entitled to ask questions about any aspect of these bills. However, you are correct. The Supreme Court of Canada, in the year 2002, made it clear that a fundamental aspect of our judicial system is, and will continue to be, solicitor-client privilege. Anyone having a look at this issue can take comfort in that decision, and there is nothing in this bill that compromises that privilege.
Senator Peterson: I have a couple of questions. First, would your bill help a country like Libya? There is no one in Libya to write and ask you to do something. The government is a dictatorship.
Second, other than the assets you know are there, can you ask a financial institution or people who will be dealing in financial instruments whether they have assets of this particular entity that you have approval from?
Mr. Cannon: In this specific case, as you know, there are United Nations Security Council resolutions, in particular, Resolution 1970 and Resolution 1973, which reinforce the number of sanctions that have been taken against this country. Once those resolutions are there, we are then able to use the Special Economic Measures Act as well to put in place the sanctions. That tool fundamentally does exist. This piece of legislation is to cover the gap where we do not have, for instance, a UNSC resolution or a mutual agreement with the foreign state in question.
Senator Wallin: I have a couple of points of clarification. All of this process is triggered by an external request; is that correct?
Mr. Cannon: That is correct.
Senator Wallin: No government official, including the Prime Minister, takes an initiative to decide.
Once a request has been made, then we either act under the UN auspices or we can use the Special Economic Measures Act. Are those the existing tools?
Mr. Cannon: They are the existing tools, for the most part, yes.
Senator Wallin: This bill would give us a third category, less specified, but a category that says, this situation is bad and we need to deal with it?
Mr. Nicholson: If you are dealing with a country in which there is instability or they have not completely organized themselves, this bill fills in that gap.
Senator Wallin: We have a couple of those situations right now. If we look at Egypt or Tunisia, we are asking: Who do we deal with? Does this bill give us enough range to respond?
Mr. Nicholson: We want to be in a position so that people are not dissipating these assets, moving them around or believing that it is safe to put them into Canada. We want to make sure that we cover all possibilities, so that we are able to move, and to move quickly.
Senator Wallin: The five-year review is automatic, so that will happen. Is this bill only about assets that are in this country, on Canadian soil?
Mr. Cannon: Right.
Mr. Nicholson: Yes.
Senator Wallin: The individuals who own the assets or who are in control of the assets may be residing or hiding out anywhere else, but if the assets are here, we can move on that?
Mr. Nicholson: Exactly: This situation is why the bill talks about either family members or close associates, et cetera. You are correct; the individuals themselves who have misappropriated this property or who have initiated this action may not be physically here in Canada, but through their agents or family they have assets here, and this situation is what the bill targets.
[Translation]
Senator De Bané: What sets the process in motion under this bill? If a country's government is brought down in a coup and the new leaders want to strike out at the previous government authority, does their submitting a request to Canada suffice for us to take action?
Mr. Cannon: I want to say right away that we recognize states and we work in collaboration with governments.
First, the Department of Foreign Affairs will determine whether action is warranted. This is done through a diplomatic note or an adequate investigation by the government. We then determine whether it is in Canada's interest to follow up on the matter, especially in accordance with the definition outlined in the bill.
Senator De Bané: So if, following a coup, a country's new leaders submit a request to Canada regarding the previous authority, it does not mean that you are obligated, under the legislation, to comply with that request. Correct?
Mr. Cannon: We must determine the legitimacy of the request.
Senator De Bané: Could you provide us with a comparative study on what various like-minded countries have as far as related legislation?
I was impressed when, the day after Ben Ali fled from Tunisia, Switzerland announced that it would freeze all his assets. We did not have the tools to do the same. This bill is the tool we were lacking. Could either the Department of Justice or the Department of Foreign Affairs submit a comparative study on other countries with legal traditions similar to ours? This would help us.
Mr. Cannon: I will let my colleague answer this question.
[English]
Ms. Nölke: There are a number of states and also groupings of states that have provisions to this effect. The European Union, for example, can issue a directive that then is immediately binding on all its 26 member states ordering the freezing of assets.
Senator De Bané: I would appreciate very much if you could transfer to the committee a short comparative study of those different measures of like-minded countries, because we are interested, not in all of them but in some with whom we have traditionally the same approach to legal matters, to see how the others do things. For you to draft the bill, I am sure you have studied what other like-minded countries have put in place. That information would be instructive and enlightening.
The Chair: We have a summary on the European Union and Switzerland. Do you want others or are those sufficient?
Senator De Bané: This information is due to our research, but I would like to see what those who drafted the bill have, if possible, if you have no objection.
[Translation]
Mr. Cannon: I think that the best way to obtain information would be through the Library of Parliament.
Senator De Bané: Your information sources are much better than ours. You have to be transparent.
Mr. Cannon: We are always transparent, senator; transparency is our trademark.
I am simply saying that you could perhaps look at the information available through the Library of Parliament and identify what specific elements are missing. Then, it would be our pleasure to provide you with whatever information you are lacking.
Senator De Bané: Mr. Minister, it would be very informative for us to see the study your department has conducted. We are not in the same situation as the U.S. Congress, which is aspiring to establish the same research systems as those available to the executive branch. Our research resources are relatively limited. I am sure that you have conducted this study, which would really clarify things for us.
[English]
Mr. Nicholson: Again, we did not undertake a particular study, senator. The information is part of the knowledge base that we have. From my observation, you cannot exactly compare us, say, to Switzerland here. The legal system is different, which goes without saying, but we had to analyze the existing Canadian legislation and fill in the gap. That is exactly what we had to do.
We had to look at Canadian laws. We were aware that the Europeans, the Swiss and the Americans have different regimes. We are aware of those regimes and you have that information, I believe, from the Library of Parliament, which is our information as well, but our knowledge base concentrates on what the existing Canadian components are and what needs to be done to correct that situation.
The other part is that we want to move as quickly as possible to make sure that those gaps are plugged and so, again, my department did not start undertaking some extensive study on this area. This was part of the knowledge base they have and they moved on it quickly.
Senator De Bané: We have had in place for many years now a system of oversight of money laundering through all the financial institutions. To what extent is this system different from the one that is already in place and has been for many years to control money laundering between countries? I have forgotten the acronym for that entity.
Mr. Nicholson: The answer to your question is that this bill is in addition to that legislation. Yes, there is an extensive regime within the Criminal Code. We mentioned the ability of the government to act on the basis of a United Nations resolution under the Mutual Legal Assistance in Criminal Matters Act. However, our analysis of the Canadian law means there is a gap to move quickly when there is instability or a rapid change in a country, and a request has been made. Again, this bill will supplement that legislation. There are safeguards in this particular piece of legislation, but it will be in addition to the laws that are already on the books.
Senator Moore: My questions are for Minister Nicholson. The first one, minister, is a follow-up to the question of Senator Fortin-Duplessis. You mentioned that this bill does not infringe on the Charter. This question goes back to the letter that Senator Fortin-Duplessis mentioned from the Federation of Law Societies of Canada and the whole aspect of solicitor-client privilege being a fundamental principle to the rule of law. You said the courts have upheld that privilege and that is so. You said there is no need to include the exception in every bill.
In their letter, which came to all committee members, they note that this view has been upheld by the courts. In a series of legal proceedings in 2001 and 2002 the federation obtained court orders exempting legal professionals from the suspicious transaction reporting regime imposed under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Following those proceedings the government repealed the regulations, imposing reporting requirements on legal counsel.
If it is that important, why was that exemption not set out in this bill?
Mr. Nicholson: Again, senator, just as all bills are subject to the Charter and the Canadian Bill of Rights, so are all laws subjected to solicitor-client privilege. I suppose the case could be made that every bill is subject to the Charter. I would say the same thing. All the bills we have are subject to the Charter and to the Canadian Bill of Rights and, as a fundamental principle of our judicial system, solicitor-client privilege applies to all bills. Therefore we do not make specific reference to that privilege in the legislation.
Senator Moore: Having said that, I take it then there will not be a need for legal counsel to go to court to seek an order to ensure that privilege?
Mr. Nicholson: Solicitor-client privilege is protected, no question.
Senator Moore: You are on the record on that point and I am glad to hear you say it.
My second question is a follow-up to what Senator Wallin asked with regard to assets in Canada. This situation is hypothetical. What if a politically exposed foreign person controlled a company in Canada that had assets in another haven; what would happen then?
Mr. Cannon: I think we can refer back here, but essentially we would not put this company out of business. We would make sure that this company would be run.
Senator Moore: I take it that you could seize the shares. How do you see that seizure happening?
Mr. Cannon: Mr. Kessel will respond to how that could happen. However, in this hypothetical situation, a number of Canadians are working for this company. Obviously, we would not want the company to go bankrupt, so we would run it in a proper fashion to maintain operational feasibility.
Senator Moore: You would seize the shares, and then you could elect the board, appoint the officers and carry on, thereby controlling the assets.
Mr. Cannon: That is correct.
The Chair: To follow up, your example was of a Canadian company engaged in business elsewhere.
Senator Moore: Yes, and the company has assets in another country.
The Chair: How far can you trace those other assets? Are you restricted to what you can do on Canadian soil?
Ms. Nölke: The legislation deals with transactions in Canada by persons in Canada and Canadians abroad. The assets themselves would be located in Canada. In this particular instance, the asset would be the company.
Senator Moore: The shares of the company.
Mr. Kessel: If there were other assets that belonged to the company in other jurisdictions, those jurisdictions would need legislation to deal with those assets, in which case we would deal with the ones in Canada.
For example, if a country sent a generic message to other countries saying that the assets of these particular people or companies belong to Country X and asking them to do what is necessary, Canada would do its bit in Canada, and other countries would do their bits in their jurisdictions.
Senator Moore: Is there a reciprocal agreement between, for example, Commonwealth countries to deal with situations like that? I know that we are proposing this legislation for the first time. Does any cooperative arrangement currently exist or is one anticipated?
Mr. Piragoff: Various international conventions dealing with transnational organized crime or corruption impose obligations on parties to the convention to work together to repatriate assets, for example. Each country must act under its own domestic law to fulfil its international obligations under those conventions.
Also, there are various organizations such as the Financial Action Task Force, FATF, in Paris that is part of the Organisation for Economic Co-operation and Development. These organizations help coordinate countries to have joint responses to deal with situations throughout the world. The organizations also come up with common standards for how countries should deal with issues like corruption and repatriation of assets.
[Translation]
Senator Nolin: Ministers, it is always a pleasure to have in-depth, serious discussions with you.
I have a few minor questions. That is why I waited until the end to ask them. During the debate at second reading, some colleagues asked two questions, and I wanted to give you an opportunity to clarify certain points.
First, clause 8 talks about banks, and a colleague said that, in English — in French, it is rather clear — the clause covers all types of banks. There could be some ambiguity there. Can you clarify whether we are talking about all types of banks that can do business in Canada, even if they are under foreign ownership?
Mr. Cannon: My counselors are saying that all banks are covered by that clause.
Senator Nolin: I see them nodding their heads. I would like you to confirm.
Mr. Cannon: Perhaps the Department of Justice representatives could also confirm this.
Mr. Piragoff: Yes.
Mr. Cannon: You see, the Department of Justice and the Department of Foreign Affairs have an amazing relationship.
Senator Nolin: I admire your collaboration when it comes to taking serious action.
There is a small issue with clause 7, and perhaps we will have to amend the legislation in the next five years.
Senator Downe already raised this issue. There seems to be a discrepancy between the French and the English versions. The French version definitely refers to the two Houses of Parliament and to the clerks of each of those Houses. However, in the English version, we get the impression that the text is referring only to the clerk of the House of Commons and does not mention that the Senate also has a clerk. Could you clarify this for me?
Mr. Cannon: This is a question for those who drafted the bill.
[English]
Mr. Nicholson: It says "in each House of Parliament" and in the French version it says "chaque Chambre du Parlement."
[Translation]
Senator Nolin: Yes, the French version is very clear. The issue is in the English version, where the clerk of the House is mentioned.
[English]
Does that mean each house?
Mr. Nicholson: In clause 7 the bill says:
A copy of each order or regulation made under section 4 must be tabled in each House of Parliament within 15 days. . .
[Translation]
Senator Nolin: My understanding is that the bill is talking about the clerks of each of the two Houses or Parliament.
Ms. Nolke, in your answer, you referred to the procedure, the protocol you intend to implement when an order or regulations are issued for a specific individual. You referred to the Superintendent of Financial Institutions. The subclauses under clause 8 list the entities that fall under provincial jurisdiction. If a need should arise, how do you intend to give notice to those institutions to fulfill the obligations set out in clause 8 of the bill?
[English]
Ms. Nölke: That, too, is done through the Office of the Superintendant of Financial Institutions. The notices that are issued cover all institutions in Canada.
Senator Nolin: Including the provincial ones?
Ms. Nölke: That is correct.
[Translation]
Senator Fortin-Duplessis: I have an additional question regarding clause 8. I am a little concerned about it. You provide a list of persons, or entities, that are subject to Bill C-61. I think that an important omission was made. Entities authorized by provincial legislation to do business involving financial instruments other than securities, such as derivative financial instruments, will not necessarily be obligated to report suspicious financial activity. This gap in the legislation could be of major importance because existing legislation quite possibly imposes on entities that do business involving other financial instruments less demanding obligations to report than those imposed on securities dealers.
Do you intend to add those entities to the list by creating, via regulations, a category of prescribed entities for provinces?
[English]
Mr. Nicholson: At the end of clause 8 we see "(k) other entities of a prescribed class of entities." Clause 19 says:
The Governor in Council may make regulations for carrying out the purposes and provisions of this Act, including regulations prescribing anything that by this Act is to be prescribed.
There is, therefore, the ability to add to this legislation to clarify what assets can be seized and from where.
[Translation]
Senator Fortin-Duplessis: So you believe that we do not need to add anything to the list because this is already implied, correct?
[English]
Mr. Nicholson: No, it is covered there. Subclause 8(k) covers it with "other entities."
Senator Finley: I have a short and simple question. At the outset you said there are two current situations and this bill somehow fills the gap around the two situations. Are you satisfied now, from a departmental and ministerial point of view, that you have covered the waterfront here and there is not something that will turn up a year from now that we have never thought about? I suppose that is possible, but given the best knowledge that the ministries have at this point in time, is this bill satisfactory?
Mr. Nicholson: I believe this bill will give us the complete ability to move against misappropriated corrupt assets, stolen assets that are located in this country. When we carefully analyze where we are with the existing regulations, the Mutual Legal Assistance in Criminal Matters Act, the Special Economic Measures Act and the UN resolutions, and we put them all altogether, this area is a clearly defined gap. I am confident that this legislation will close the gap. Canada will be a bad place for anyone to place corrupt assets in.
Mr. Cannon: I can respond briefly to what my colleague said by saying that Canada is adapting to the changing environment on the world scene. Obviously, this bill gives us the required flexibility. As my colleague has mentioned, it is a quick freeze for gap closure. Basically, this quick freeze is the intention of the legislation. Canada will be in this position to act, with a number of like-minded countries.
Mr. Nicholson: It is not too surprising that we come across something like this gap. In my years dealing with justice- related issues, on a regular basis we come across new areas that individuals who become involved in this kind of activity have discovered. Whether it is the Internet or identity theft, again, the globalization of some of these activities requires us to examine our laws continuously to ensure that they cover these types of activity.
In answer to your question, I am confident that this bill closes the loop, but I never underestimate the bad guys. For now, however, we are covered.
Senator De Bané: Mr. Cannon, you said that the bill will allow us a quick response. Will it be as quick as that of other like-minded countries?
[Translation]
Mr. Cannon: Not necessarily. This bill contains mechanisms that enable us to assess Canadian interest. As you have noted, the Americans initially intervened because the U.S. president received a directive from the executive branch of the government, which enabled him to intervene. I am not familiar with the specific mechanisms that make it possible to take such action, but we have our own Canadian procedures, which allow us to act in step with all the other countries and the countries with which we maintain very close ties. As you have seen, different governments have different ways of doing things. The goal is to provide us with the flexibility we need to act.
[English]
Senator Downe: We heard earlier that the initial contact once the Minister of Foreign Affairs signs the order is the Superintendent of Financial Institutions. I assume this effort is government-wide and that the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, the Canada Revenue Agency, the Department of Finance and everyone would be involved. Is that correct?
Mr. Nicholson: That is correct.
Mr. Cannon: That is correct.
Senator Downe: My second question is for the Minister of Foreign Affairs. Clause 13 sets out a procedure whereby persons subject to orders or regulations under clause 4 can apply for reconsideration of their status. The reconsideration process can be used only to contest whether the individual falls within the definition of a "politically exposed foreign person."
The bill does not provide an avenue by which a person can apply for reconsideration on the basis that the initial request from the foreign state or the assertion therein is unjustified. In other words, there could be a settling of the scores. A new regime comes in and sends us a list of names. What recourse do we then take?
Mr. Cannon: This is all judicial review so I will ask our colleagues.
Mr. Kessel: The process of judicial review would bring the decision of the minister before an administrative tribunal where this issue could be determined.
Senator Downe: If the minister finds reasonable grounds, the minister cannot take a recommendation to the Governor-in-Council?
Mr. Nicholson: The minister can, but the decision can be reviewed ultimately.
Senator Downe: However, if the minister has reasonable grounds, the minister could take action through cabinet?
Ms. Nölke: Yes.
Mr. Nicholson: It would be with the Governor-in-Council, yes.
Mr. Cannon: We are all in agreement.
Senator Downe: If the ministers are agreed, it is agreed.
Mr. Kessel: Remember that the legislation is trying to deal with a narrow moment in time where we needed to fill a gap. We are still bound by the safeguards that Canadian values and Canadian law have provided. This bill is trying to deal with only that tiny gap where we will now bring ourselves into line with our other colleagues. This bill does not remove the capacity of Canadians or others to challenge that decision, and it also provides the flexibility to reverse ourselves. As Ms. Nölke says, if there is a Mr. Mubarak working in Windsor and it is not the Mr. Mubarak in Egypt, then by definition we would not be freezing the assets of Mr. Mubarak in Windsor.
Senator Downe: That individual does not have to go through a judicial review; the minister could come to that conclusion?
Mr. Cannon: Yes.
Mr. Nicholson: Yes.
Senator Downe: Thank you.
[Translation]
Senator Fortin-Duplessis: My question is for both ministers. It is about clause 5. At the end of clause 5(1), it is stated that the Minister may:
. . . issue a permit, which may be subject to any terms and conditions that are, in the opinion of the Minister, consistent with this Act and any order or regulations made under section 4.
Subclause 5(2) states the following:
The Minister may amend, suspend, revoke or reinstate the permit.
However, as far as I can tell, there is no mechanism for examining or appealing decisions made by you. Is this implied? If not, it may be important to explicitly state it. Or, would you rather not have such a mechanism?
[English]
Mr. Nicholson: All decisions of ministers are reviewable by means of a judicial review. Someone could bring an application, Senator Fortin-Duplessis, and have it challenged within the court system.
The Chair: Minister Cannon and Minister Nicholson, thank you and your officials for coming here to brief us on this bill and to answer our questions.
We know that part of the dilemma is today's technologies and that those who wish to hide assets have new tools that they did not have before. Also, as Minister Cannon pointed out, there is a new awareness and a willingness of the international community to respond in these times of crisis to assist countries that are moving in the right direction toward democratic transition. I notice that the House of Commons has added a review and that the legislation is capable of being reviewed both here and in the House of Commons.
I can assure you, ministers, that this committee will continue to review this legislation, and suggest either informally to you or by other means, to continue to ensure that the assets are placed with the people who deserve to have them on behalf of their citizens rather than to those who have ill-treated their citizens.
Senators, we will allow the ministers to leave and will then continue our meeting.
Are we now prepared to go to clause-by-clause consideration?
Hon. Senators: Agreed.
The Chair: Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-61, An Act to provide for the taking of restrictive measures in respect of the property of officials and former officials of foreign states and of their family members?
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 7 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 8 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 10 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 11 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 12 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 13 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 14 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 15 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 16 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 17 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 18 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 19 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 20 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Can I report the bill without amendment?
Senator Nolin: Yes.
Senator Wallin: You should.
Hon. Senators: Agreed.
The Chair: Thank you, senators, for the efficient handling of this bill, which I think is important. The qualifier is that we shall continue to study this bill. That part of our meeting has ended.
There will be a steering committee meeting on Wednesday at 4:15 p.m. in the time that normally is set for the committee, and the committee will not sit on Wednesday. The committee meeting on Thursday shall commence at eleven o'clock.
On that basis, if there is no further business, the committee is adjourned.
(The committee adjourned.)