THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Thursday, March 24, 2022
The Standing Senate Committee on Foreign Affairs and International Trade met this day by videoconference at 11:30 [ET] to study Bill S-217, An Act respecting the repurposing of certain seized, frozen or sequestrated assets.
Senator Peter Harder (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: My name is Peter Harder. I am a senator from Ontario and the deputy chair of the Committee on Foreign Affairs and International Trade. Today, in the absence of the chair, Senator Peter Boehm, and at his request, I will chair the meeting.
Before we begin, I wish to introduce committee members participating in today’s meeting: Senator Gwen Boniface, from Ontario; Senator Marty Deacon, from Ontario; Senator Amina Gerba, from Quebec; Senator Stephen Greene, from Nova Scotia; Senator Michael MacDonald, from Nova Scotia; Senator Victor Oh, from Ontario; Senator Mohamed-Iqbal Ravalia, from Newfoundland and Labrador; Senator David Richards, from New Brunswick; Senator Yuen Pau Woo, from British Columbia.
Today, we are conducting a hybrid meeting. I’d like to remind senators and witnesses taking part by videoconference to please keep your microphones muted at all times, unless recognized by name by the chair.
Welcome to all of you, colleagues, and to all Canadians who are watching.
[English]
I will ask senators to use the “raise hand” feature in order to be recognized. Those present here in the committee room can signal the clerk with their desire to ask questions or to comment. Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or clerk and we will work to resolve the issue.
Today, we are beginning our consideration of Bill S-217, An Act respecting the repurposing of certain seized, frozen or sequestrated assets. The proposed short title for this bill is: Frozen Assets Repurposing Act.
The bill was introduced in the Senate on November 24, 2021, by our colleague, Senator Ratna Omidvar. It received second reading on March 1 of this year and was referred the same day to our committee. Today to discuss this bill we have two one-hour panels with experts.
For the first panel, we welcome, the president of the World Refugee and Migration Council, Fen Hampson. He is also Chancellor’s Professor and Professor of International Affairs at the Norman Patterson School of International Affairs at Carleton University here in Ottawa. Susan Côté-Freeman, President, Transparency International Canada; Brandon Silver, Director of Policy and Projects, Raoul Wallenberg Centre for Human Rights.
Welcome and thank you for joining us. Each of our witnesses will be given an opportunity to make a five-minute opening statement. I will keep you strictly to that time so we can maximize our conversation among us. Professor Hampson, the floor is yours but before I ask you to make your comments, I would like to, on behalf of the committee and I’m sure the Senate, express condolences on the passing of your honorary chair, the late Secretary of State Madeleine Albright, yesterday.
Fen Hampson, President, World Refugee and Migration Council, as an individual: Thank you very much, Mr. Chair. The world of sanctions has changed and profoundly so. When it comes to foreign assets in key Western countries, they are not just freezing but seizing foreign assets and repurposing them. They include the United States, France, Italy and Switzerland, but the pattern of doing this is with executive authority. Switzerland is a notable exception which requires the involvement of the federal administrative court in that process.
There can be no doubt that FARA is highly relevant to the situation we face today in Ukraine. But moral outrage, though entirely justified in this case, is not necessarily the basis of sound public policy. Let me put a number of propositions on the table to explain why I think FARA is good public policy.
Proposition 1: FARA is based on the concept that it is well within the proper role of our government to conduct our country’s foreign policy. That same authority was used to enact Magnitsky and FARA is the logical extension of that authority. FARA is not building a completely new bridge. That bridge was built when Magnitsky was passed, when SEMA was passed and earlier when the FACFOA was passed.
Freezing assets under Magnitsky was meant to be a means to an end. FARA now provides that destination. If passed, we can think of FARA as the toll booth at the end of the Magnitsky bridge because those who have crossed it are already deemed under Magnitsky to be “ . . . responsible for, or complicit in, extrajudicial killings, torture or other gross violations of internationally recognized human rights . . .” violations and also corruption.
Proposition 2: FARA introduces political accountability and legal due process in the dispossession of assets for those complicit in gross human rights violations or corruption. It is also important to note that the experience of the courts is well established to deal with the repurposing of assets. As Senator Dalphond has noted on substance, Bill S-217 is nothing to fear. The concepts are already well established in our domestic law relating to the proceeds of crime under the Seized Property Management Act.
Proposition 3: Canada has the sovereign right to enact such legislation. When an individual chooses to invest or acquire assets in Canada, it is axiomatic in international law that those assets are subject to local laws and jurisdiction.
Proposition 4: FARA will reduce the costs to taxpayers and other holders of frozen assets. When an entity is frozen or sequestered, there are costs associated with managing it.
Proposition 5: FARA levels the playing field when our country is forced to deal with bad actors and corrupt regimes. Our government needs the ability to fire back at those who are not constrained by the rule of law, as we see in Russia.
Unlike the Emergency Powers Act, which does give the government extensive confiscatory powers in an international emergency, including situations short of all-out war, FARA is a scalpel and not a chainsaw.
Proposition 6: FARA will have significant deterrent effects against bad actors who want to park their money and ill-gotten gains in Canada. If the government has confiscatory powers, as it would under FARA, those individuals may think twice about hiding their wealth here, which is a good thing given our country’s reputation for snow washing.
Proposition 7: Some believe that frozen assets should only be returned to the government of the asset holder’s country of origin. That might come, for example, when there is regime change. FARA in no way constrains the ability of our government and officials to do that. But it does give our government the additional option to apply to repurpose those assets to help the victims of that state’s action when there is no regime change. Repurposing those assets to help the victims of the heinous crimes that we are seeing now in Ukraine carried out by Russia is the kind of down payment on future reparations we could enact now.
Finally, I would like to suggest that FARA be officially named the Volodymyr Zelenskyy Act to honour and celebrate the courageous leader of Ukraine. If we pass this act, hopefully other countries will follow our lead.
Susan Côté-Freeman, President, Transparency International Canada, as an individual: Deputy chair, honourable senators, thank you very much for giving Transparency International Canada the opportunity to speak today on Bill S-217.
First I would like to say that TI Canada is supportive of the general intent of the bill. No one can be insensitive to the plight of refugees and the needs of displaced persons. The current war in Ukraine with the vivid images of throngs or mothers and children fleeing the country has reminded us of the sad consequences of conflict. I would add that the issue of justice for the victims of corruption is a missing link in the fight against this scourge, and we do appreciate the bill’s attempt to address this issue. However, a close reading of the act raises several questions.
The first of these questions is the singular focus of the bill on refugees, particularly in the preamble. We fully recognize that poor governance and corrupt practices can lead to the forced displacement of persons. But unfortunately, the ill effects of poor governance and corruption on a grand scale are not limited to refugees. Citizens living in their own countries can be deeply affected by corruption in many ways. Infrastructure, health care, education and many more necessities will be massively underfunded, depriving citizens of basic rights and services. It may even put lives at risk. Not everyone can or will see these problems as refugees. They will stay in their countries and continue to live under the grind of grand corruption.
The worst kleptocrats commit serious human rights abuses to enrich themselves and maintain power, but their victims are not necessarily displaced persons. TI Canada would therefore urge senators to include a broader range of victims in the bill — in addition to refugees — who may be equally deserving of repurposed funds.
Another concern is that the bill appears to assume that meaningful sums or assets are being frozen in Canada under the Special Economic Measures Act, the Freezing Assets of Corrupt Foreign Officials Act and our own Magnitsky Law, which Bill S-217 builds on. We are not aware that large sums or assets have to date been seized under these laws. In fact, it is our view that the powers granted by these laws are currently vastly underutilized. Canada does have reasonably aggressive civil and criminal forfeiture provisions that are not used to their full potential. We therefore query whether legislation such as Bill S-217 would simply create a new legal infrastructure while existing laws have not been used to full effect.
In addition, TI Canada urges senators to explore the constitutional division of powers involving forfeiture laws. These have previously been considered by the courts, including the Supreme Court of Canada, in the context of provincial civil forfeiture laws. The impact of such constitutional questions may be relevant to the procedures and standards set out in the bill for the court to determine issues and to order repurposing of seized assets and for affected parties to be heard. TI Canada takes no particular position on these questions but rather urges senators to ensure that these legal issues are fully canvassed as part of the consideration of the bill.
Section 8.1 proposes:
Moneys paid into court under this Act may be distributed by the court, by order, to any individual or entity, including a foreign state, in any amount or proportion that the court sees fit if, in the court’s opinion, the funds will be used for a purpose that the court believes is just and appropriate in the circumstances.
With the greatest of respect for Canadian courts, we query whether judges sitting in Canada where the illicit assets are seized will be sufficiently knowledgeable of the context of the country or group that might receive these funds. It is imperative that any repurposed funds do not end up in the hands of those who might use them to further perpetuate corruption or human rights abuses. To this end, TI Canada encourages Parliament to integrate concrete mechanisms of accountability for these repurposed funds.
Finally, a fundamental building block in support of the proposed bill is missing, in our view. To freeze illicit assets, we must know who the actual owners of these assets are. The war in Ukraine has highlighted how the ill-gotten fortunes of oligarchs have been successfully laundered through complex webs of the shell companies behind which they hide. At the moment, Canada does not have a registry of beneficial ownership, which would help alleviate this major impediment. Thankfully, Canadians heard this week that the planned implementation of such a registry will move up to 2023 from 2025.
In closing, this is a bill with noble intent. It rightfully increases the emphasis on the fight against grand corruption. However, to achieve the aims of the bill, we must think more broadly about the victims of corruption, leverage existing legal mechanisms and, with your help, prioritize the establishment of a publicly accessible beneficial ownership registry. Thank you.
The Deputy Chair: Thank you. We will now hear from Brandon Silver.
Brandon Silver, Director of Policy and Projects, Raoul Wallenberg Centre for Human Rights, as an individual: Thank you, honourable senators, Professor Hampson and Ms. Côté-Freeman for your compelling and comprehensive testimony.
At a time when the rules-based international order is under attack and democratic norms are in decline, Canada has a unique opportunity to set the global standard for human rights practice and policy by refining our targeted sanctions framework through Bill S-217. Our current sanctions legislation sends an important message of solidarity to victims and accountability to violators, ensuring through visa bans and asset seizures that the despots and dictators of the world cannot enjoy the freedoms in Canada that they deny their compatriots at home. Bill S-217 builds upon this in a meaningful way. We wholeheartedly endorse it and offer three prospective amendments for your consideration.
First, in section 6, “foreign national” should be changed to “foreign person.” The distinction is important. “Foreign national” restricts the proposed legislation to only apply to individual people, which would thereby exclude a significant proportion of currently implemented sanctions, particularly under the more expansive Special Economic Measures Act. Using the term “foreign person” would be more inclusive, covering the full range of those subject to sanctions under existing legislation, including legal persons such as corporate entities. Due to the current opacity that this bill addresses, we cannot explore the breakdown of seized assets. However, we can surmise that such entities constitute a compelling and significant proportion of them while being part and parcel of the human rights violations and corruption that the bill seeks to redress.
Second, with respect to section 5, you may wish to consider a mechanism for the public — or parliamentarians, such as this very committee — to be able to petition government to initiate a repurposing of assets and mandating a fulsome explanation if the government declines to do so. This additional democratic oversight and transparency would further strengthen standards and expand expertise while promoting a more proactive and responsive process. It would also very much be in line with foreign and domestic best practices. For instance, the U.S. Global Magnitsky Act requires a detailed government response to submissions by legislators. It also encourages petitions and submissions from NGOs and civil society actors, all of which have often anchored and inspired sanctions implementation in the United States.
Here at home, Canadian parliamentary procedure provides precedent for such legislative oversight practices where, for example, Order Paper questions pursuant to article 39 of the Standing Orders of the House of Commons have generally engendered substantive governmental responses within a mandated 45-day time frame. Enshrining such democratic oversight would enhance Bill S-217.
Third, it should be made clear that individual targeted victims and survivors can also be the beneficiaries of asset repurposing in addition to the important focus on the broader class of forcibly displaced populations that the current bill emphasizes. Section 8 of the bill could potentially be interpreted to offer this already, though the originators of the bill have made very clear that they view the forcibly displaced as the single and exclusive class of beneficiaries — the preamble of the bill alludes to this. The individual dissidents and human rights defenders who not only put their livelihoods but their lives on the line in the defence of fundamental freedoms are particularly deserving of consideration in such a framework for the repurposing of frozen assets.
While no amount of money could ever compensate for the loss of loved ones, limbs or years lost in unjust imprisonment, it can at least help them cover some of the heavy costs involved in reclaiming their lives — costs that are far too frequently out of reach for them financially. This can be accomplished without unduly complicating the bill’s envisioned process. Its simple and straightforward summary hearing could be maintained with a more generous interpretation of section 7.1 so that victims and survivors are deemed to potentially have a valid interest in the frozen asset and may participate in the hearing. This more inclusive interpretation can be reinforced in a variety of ways, but the most unintrusive one — both for sections 7 and 8 — would be by simply amending the preamble of the bill so that it specifically references the importance of redress for individual victims as a core purpose alongside support for forcibly displaced persons.
We believe that the three proposed refinements strengthen the bill and ultimately its main purpose of advancing justice and accountability while assisting the most vulnerable.
In closing, we wish to reaffirm our strong endorsement of the bill and encourage its expeditious adoption. Senators, some of the worst kleptocrats and killers of the world are benefiting from foreign banks and lounging on beaches while their victims languish in pain.
When that image is replaced with one of an empowered survivor claiming their rights, international justice starts to tell a different story. Thank you.
The Deputy Chair: To our witnesses, we will now begin to open up the floor to questions.
Senator Ravalia: Thank you very much to all our witnesses for your compelling presentations today. I have a three-part question. Bill S-217 has a clause calling for the Minister of Foreign Affairs to put in place a registry accessible to the public with the name of any personal entity with a frozen asset as well as the value of that asset. What would creating and maintaining this registry involve with respect to Global Affairs Canada? What other federal departments or other entities, such as the provinces, should be involved in creating and maintaining this registry, if any, and do we have any evidence that other countries have registries accessible to the public as part of their sanctions regime?
Thank you. I’m leaving it open to all three.
The Deputy Chair: Who would like to start? Professor Hampson?
Mr. Hampson: I think you would have to put the question to Global Affairs Canada in terms of what the resourcing of such a registry would involve, senator, and if the beneficial ownership registry is developed sooner rather than later I think we can probably agree that would not only complement such a registry — and it may make sense just to have one registry there, to be honest — but it would also help to reduce the costs.
Right now it’s a bit of a black hole. There’s a lot of anecdotal evidence that there are Magnitsky Law individuals and others who have been sanctioned and who have assets in Canada. I think we can confidently say the number is not zero, but is it hundreds of millions or billions? That is a matter that we would only find out after we have done suitable forensics.
The Deputy Chair: Additional comments from Ms. Côté-Freeman or Mr. Silver?
Mr. Silver: I would concur with what Professor Hampson aptly described and add that in an informal way, Global Affairs Canada maintains online a consolidated sanctions list which identifies every entity and individual sanctioned under the variety of legislation that Bill S-217 would seek to invoke in repurposing assets.
In a more informal way, we would submit that might be an effective venue from a civil society standpoint and transparency standpoint to identify the assets that are actually seized, pursuant to that legislation and those individuals listed. Identifying the assets in a comprehensive and accessible way would be important matters of building trust with the public and engaging the public and even internally in terms of streamlining processes.
In a more formal way, it’s usually under the relevant regulatory frameworks that the individuals are listed, and, obviously, it would be a more fulsome process to identify the assets involved. Perhaps there, too, there would be a clear way to identify in a particularistic manner assets that are associated with those individuals.
Senator Woo: Thank you to all the witnesses.
I have four questions for this round. The first is on Professor Hampson’s seven propositions, which are very compelling, but they don’t get to the question of whether these actions through the bill will change behaviour. There is a deterrent effect. I get that. But part of the idea of sanctions is to incentivize the targeted individual or country or organization to reverse a course of action. Seizing and repurposing the assets, it seems to me, would not give that opportunity for a change in behaviour.
Now, in the case of Magnitsky, we’ve already decided that these are bad actors and they have to be punished. This is a court making a decision, in a sense.
But in the case of SEMA and FACFOA, I suspect there is a slightly different motivation, an incentive, a desire, I would think, on the part of those acts to try to inspire some change in behaviour. The seizing and repurposing might not achieve that objective. That’s for Professor Hampson.
For Ms. Côté-Freeman, I want to ask about the purposes for which these assets can be redirected and what your view is of the recent American decision to repurpose the entirety of Afghanistan’s foreign reserves, half of them for humanitarian purposes, to be decided by the American government, and the other half to compensate the victims of the tragic 9/11 terrorist attacks. This is, in effect, taking all the wealth of a country — after regime change, by the way. This is an interesting case where the regime change was precipitated by the West itself, but after a regime change deciding to then take all of a country’s assets, freeze them, seize them, and now repurpose them essentially for the benefit, to a large extent, of Americans.
My third question can be taken by Ms. Côté-Freeman or Mr. Silver. It has to do with your point that this bill focuses on displaced peoples and not on other issues. You advocate a broader coverage. I understand your argument, but to the extent that we are focusing on the forced displacement of peoples, do you think it would cover the forced displacement of — well, the largest single forced displacement before Ukraine was Afghanistan. A lot of it happened during the last 20 years of Western involvement in Afghanistan. Do you think it should include an assessment of the reasons, causes, and the foreign actors who are directly involved or complicit in the forced displacement of Afghans and, of course, also of Iraq, which was before Afghanistan and during Afghanistan, also a significant source of internally displaced peoples and refugees?
Finally, there was some reference to the Swiss FIAA bill, which is a landmark bill, indeed, but that bill is very different from the one we are considering in that it places a huge amount of emphasis on mutual legal assistance. In other words, it really places the onus of action on the Swiss government on a foreign government making a request for assets to be seized, frozen and then repurposed. Could you comment on that distinction with our own effort here, which appears to be much more unilateral and coming from Canadian judgments of corrupt behaviour, of bad acts, and so on, and whether we might take an approach that is more based on cooperation with the foreign requesting country. Thank you.
Mr. Hampson: I will answer, with the permission of the chair, the first question that was put to me about the role of sanctions.
I think it is fair to say, as the senator correctly pointed out, that sanctions are viewed as a tool of compliance to force actors to do things they don’t necessarily want to do or to reverse a course of action they have already taken. The effectiveness of sanctions has been exhaustively debated in the literature.
Let me draw your attention to three other aspects that are important here and that have a behavioural dimension to them.
The first is the deterrence function of the Frozen Assets Repurposing Act, or FARA, which I alluded to and whose purpose is to prevent bad actors. It is another tool to put bad actors on notice that, if they put their ill-gotten gains in Canada, they may lose them, not just freeze them but lose them. Deterrence plays an important role there, which is behavioural.
The second is prevention. Every Russian I’ve talked to has said that the oligarchs are part of President Putin’s levers of power. Therefore, if you confiscate their ill-gotten gains, you are removing those levers of power. Why is that important? It is important for the reason that another witness pointed to, which is to prevent Humpty Dumpty from being put back together again when there is a regime change. You’re altering the power structures in a country.
The third is the principle of compensation, which Mr. Silver referred to. It’s well established in international practice that victims deserve reparations. FARA provides an instrument for dispensing reparations sooner rather than later.
So prevention, compensation, deterrence are aspects of this legislation that complement compliance. The same arguments could be levied against our existing sanctions regime to say that it’s not going to change behaviour, but I think that this is upping the ante.
The Deputy Chair: Thank you, professor. We have one minute left in this round, Ms. Côté-Freeman, would you like to add to the comments that have been made?
Ms. Côté-Freeman: Yes.
The Deputy Chair: Senator Woo, I will put you on the next round.
Ms. Côté-Freeman: Yes. I wanted to speak to Senator Woo’s question about the purpose of repurposed assets. The victims of corruption, from our perspective, deserve some form of compensation or a return of assets that will allow them to build the country that they want to build when we’re talking about grand corruption. The effects are very pervasive. It would seem only fair that these victims be compensated.
I don’t have any specific view on the questions regarding Afghanistan, but I wanted to make the point that this compensation or giving back assets that were stolen from people is important. It is an underdeveloped aspect of the fight against corruption, but it is an important one.
The Deputy Chair: Thank you. We’ll come back both to you and to Brandon Silver in the next round.
Senator M. Deacon: Thank you to our guests and witnesses for being here today. You’ve provided helpful information, and it’s an important and timely issue as we go through this bill.
My question concerns how the seized assets should be allocated. Does the legislation indicate how much leeway the courts actually have in determining where the money should go? I’m wondering if there is an assumption or a requirement that any money is to go to a cause that is related to why those assets have been frozen and seized, or if a court is free to make that determination on their own.
I’m going to direct this question to Ms. Côté-Freeman, and we can go from there. Thank you.
Ms. Côté-Freeman: You are asking the same questions that we ask. How will this discretion operate? How does a judge decide?
I assume there will be some guidelines, but I do worry. I’m sure it is not an insurmountable problem, but I worry that the lack of understanding or knowledge of whom the money should go to and the context of the country it may be going back to, is problematic.
I don’t have an answer to your question. We are asking ourselves the same question.
The Deputy Chair: Does any other witness wish to respond?
Mr. Silver: Yes, if I may. I believe that section 8 of Bill S-217 strikes the right balance between mandated requirements and an emphasis on judicial independence and discretion. Section 8 does create a nexus between the criminality of those associated with the seized assets and its distribution, while emphasizing that the judge may — “may” is the key word — undertake whatever disbursement the court might feel is appropriate to the matter.
Therefore, section 8, on the one hand, mandates the nexus of the criminality and the individual offences of the listed individual or entity and, on the other hand, gives autonomy to the judge. I believe it provides strong guidance and a push in the right direction.
The Deputy Chair: Thank you.
Mr. Hampson: It is important to recognize that this is going to be done on a case-by-case basis and that the process will be initiated by the government through the Attorney General, who will make an application to the court. The Attorney General will consult with his cabinet colleagues, including the Minister of Foreign Affairs. Part of that application process will be to indicate the government’s preference as to how those assets are disposed of.
The elegance of this process is that it provides for due process. It is not simply an executive decision of the kind we’ve seen in other countries. It allows victims, the owner of the assets or anyone who feels they have a legitimate claim to those assets to make an application to the court. Then, the court will decide how that disbursement should take place.
I don’t think we should prejudge that process by referring to our favourite cases where we’ve seen various crimes taking place, violating human rights or corruption, for example. It is going to be on a case-by-case basis. Again, this does give the government sufficient latitude in its application to the court to make that determination.
The Deputy Chair: Thank you.
Senator MacDonald: My question is for anyone who can reasonably answer it.
In 2016, Switzerland enacted a law allowing for the domestic assets of corrupt foreign officials and their close associates to be frozen, confiscated and returned. Under this law, once assets have been confiscated, Switzerland can seek to restore to the country of origin, the assets of a corrupt foreign official for the purpose of improving,
. . . the living conditions of the inhabitants of the country of origin; or . . . to strengthen the rule of law in the country of origin and thus contribute to the fight against impunity.
My two questions are: How often and effectively has the Swiss legislation been used since 2016? What, if any, unintended consequences have been observed with respect to the use and enforcement of this Swiss law?
Mr. Hampson: The law has been used. There have been quite a few cases where it has been applied. It has been used to repurpose assets for land mine clearance in Angola. It was also used for humanitarian purposes by setting up a foundation in Kazakhstan for illicit assets that were deemed under that administrative law to be repurposed. So it has been used. The Swiss government does have a paper that indicates the number of times it has been used.
When we consulted with Swiss officials as we were doing our own thinking — including the architect, shall we say, of that particular piece of legislation — the Swiss themselves have recognized that sometimes returning those funds or using them in the country of origin, with the consent of local authorities, is not optimal because there has been no regime change, and so you are constrained.
In fact, one official said to us that the way you are thinking about FARA is a much more elegant solution because it is not tied to the country of origin; it is tied to the citizens of that country who may have been forcibly displaced. But it does give you more options.
Ms. Côté-Freeman: Just to emphasize the challenge of returning assets to countries where there hasn’t been a regime change. That is a huge challenge because the risk is that you are just putting the money back in the hands of people who will commit the same crimes and wreak the same type of havoc over their country. So it is challenging.
I don’t quite see how FARA prevents that effectively. But I am happy to hear that Professor Hampson believes that, because he is more of an expert than I am in these matters. Thank you.
Senator MacDonald: Do you consider this stuff to be unintended consequences or are they expected consequences?
Mr. Hampson: Senator, if I may address Ms. Côté-Freeman’s question.
FARA does allow you to help those who have been forcibly displaced, who are citizenless. A hypothetical contingency: The government could say that these funds should go to UNHCR or, as some are now arguing, be put in a global fund to help the people of Ukraine, both those who have been forcibly displaced but also those who are facing dire circumstances, who are still in-country. Again, it is going to be case by case.
[Translation]
Senator Gerba: Thank you to our witnesses for being here today. I’m going to come back to Senator MacDonald’s question, because the Restitution of Illicit Assets Act, which was adopted by Switzerland in 2015, is the benchmark for this.
So, I know we were told that it has already been implemented, but the time frame for implementing this law is quite significant. We are talking about 10 to 15 years. My first question is for Mr. Fen Hampson. The deadline that applied, for example, in the case of the release of the assets of Egyptian President Mubarak, which had been seized after the Arab Spring, was 10 years. Do you think the situation that prevailed in Switzerland could be repeated in Canada, and what steps could we take to ensure reasonable restitution times?
My second question is for Ms. Côté-Freeman. Few countries in the world have adopted legislation to put in place mechanisms that allow, as Bill S-217 proposes, the reallocation of frozen assets when these assets are associated with a foreigner who is responsible for or complicit in serious human rights violations or corruption. What might be the effects of such legislation on foreign nationals’ investments in Canada?
[English]
Mr. Hampson: My response would be that, yes, it may take longer than you want, but that is the nature of the rule of law, due process and transparent processes in this country. Sometimes it is not as efficient as we would like, but FARA is upholding the rule of law, and I think on very good grounds.
[Translation]
Ms. Côté-Freeman: Yes, to answer the senator, unfortunately, I do not know how many countries have laws like the one being considered. There is a lot of talk about asset recovery, because it is a theme that has been favoured for a long time. However, it is certain that the fact that the procedure takes a long time is a problem that will have to be resolved. When justice is delayed and slow, it is quite problematic, so I don’t know. I’m sorry, but I don’t think I understood the second part of your question about investors in the countries concerned. Could you possibly repeat it?
Senator Gerba: Actually, I’m wondering about the effects of Bill S-217 on foreign investment in Canada. Won’t it hurt foreign investment in Canada?
Ms. Côté-Freeman: This is not a question that I’ve thought about, but it seems to me if Canada is seen as a state where the rule of law and justice prevail, that can’t hurt foreign investment. I think it is important that Canada be seen as a country where you can invest, a country where all rights are protected. I haven’t really thought about the question. I thank you for asking it.
The Deputy Chair: Thank you.
Senator Clement: I thank all the witnesses. I had the same question as Senator Deacon, but I have another one for Ms. Côté-Freeman. I was interested in the fact that you generally agree with the objectives of the proposed bill, but you expressed some doubt about what it might add to the conversation when we’re in a context where other laws are underutilized. Can you add anything to your comments? I would like to better understand the tenor of the comments you made.
Ms. Côté-Freeman: Should I answer in French or English?
The Deputy Chair: It’s your choice.
Ms. Côté-Freeman: All right, I’ll answer in French. As you have clearly understood from my remarks, we support the bill and certainly its spirit. The problem in Canada is that we have very few anti-corruption laws that are implemented. We have very limited resources for that. There is a real question as to whether it makes sense to put in place a new legal process when our resources are so limited. We have tools, we use them very little for reasons that sometimes seem a bit mysterious to us, but we are always told that it is because of a lack of resources.
Will creating another mechanism not drain those same resources that are already insufficient? This is really a question we have to ask ourselves, just as we have to ask ourselves whether we want to optimize the mechanisms we already have. That’s the spirit in which I made my comments.
Senator Gerba: Thank you very much.
[English]
The Deputy Chair: Senator Woo, we’re in the second round. Can I suggest that you leave room for an answer?
Senator Woo: I will just repeat the questions quickly. The first has to do with a view on American repurposing of Afghanistan reserves and whether that is a suitable approach to what we’re proposing. I would remind you that the Russian central bank is a listed entity under SEMA.
Secondly, the question of whether or not the Swiss approach is something that we should follow more closely. That discussion has happened already. The Swiss approach tends to put more emphasis on mutual legal assistance, in other words, working with the country to request corruption action.
I think about some major countries that have huge corruption, anti-corruption drives. If one of these countries were to come to Canada and say, “Look, we have 50 fugitives in your country living in Vancouver, Toronto and Montréal. They are all corrupt officials from our country who have escaped to your country. We would like you to freeze their assets and send them back to us,” is this something that we would contemplate?
The Deputy Chair: We’ll begin with Brandon Silver as you were disadvantaged in the first round.
Mr. Silver: Sure. Thank you, Mr. Chair.
I believe that the American example is not necessarily germane to consideration of the current legislation because it was done pursuant to executive order in the United States.
As Professor Hampson explained, Bill S-217 is far more sophisticated and nuanced than what the United States has undertaken. There is a mechanism within Bill S-217 that allows, as the professor aptly described, for an application from the federal government, which would then engage judicial discretion and authority which would, of course, be tethered to the acts of those listed and sanctioned persons, but which would allow for — and this touches upon your second question, Senator Woo — the engagement of interested third parties. Whether that interested third party comes in the form of a notice and an intervention from a foreign state with an interest in the assets or whether that comes from the victim claimants or from the listed individuals themselves, it allows for a full and broad engagement in a multi-party manner.
That’s quite a distinction from the unilateral executive action in the United States and in a more nuanced way I believe that the United States’ transfer was done largely based on existing court decisions and writs of action against those assets that were separate from the executive order itself. I feel like it is an apples‑and-oranges scenario here. The current legislation being considered is a completely different mechanism with a lot more sophistication and nuance and checks and balances from different levels within the democratic process.
The Deputy Chair: Thanks. Ms. Côté-Freeman would you like to add?
Ms. Côté-Freeman: I would defer to agree with Mr. Silver’s response.
The Deputy Chair: Professor Hampson, last word to you on this.
Mr. Hampson: I would agree with everything that has been said.
The Deputy Chair: Senator Woo, can you cope with agreement?
Senator Woo: Would anyone care to comment on my other question about the focus on displaced peoples and whether you would consider recent massive displacements of individuals in, say, Afghanistan and Iraq to be subject to coverage under this bill and whether we should entertain requests for investigations into what is called foreign actors who are responsible or complicit in the displacements of these individuals?
The Deputy Chair: Briefly, Professor Hampson?
Mr. Hampson: The short answer is yes.
Senator MacDonald: Professor Hampson, you recently co‑authored an article called Let’s seize — not freeze — the wealth of Putin’s cronies.
In the article you argue that, if enacted, Bill S-217 will provide the Government of Canada with an additional tool to hold President Putin and his associates to personal account by giving our government the authority to repurpose their wealth in a legal and transparent way.
I’m curious what publicly available information exists presently on the estimated value of the frozen assets of Russians listed under Canada’s sanctions regime?
Mr. Hampson: Nothing has been officially published on that. However, I think it’s fair to say that there are a number of Russian oligarchs who have been sanctioned under Magnitsky or SEMA, and that is a question that should be put to our officials because presumably they were put on that list because they hold assets here.
There’s certainly anecdotal evidence. It has been widely reported that there are oligarchs who have holdings in steel companies in Western Canada, in aluminum companies in Eastern Canada, large real estate holdings and have benefited from lax oversight when it comes to those investments and holdings in our country.
As I said, we know it is not zero. Is it hundreds of millions or billions? Some say it is billions.
The Deputy Chair: Thank you. This brings our first session to a close. I want to thank our witnesses, Fen Hampson, Susan Côté-Freeman and Brandon Silver, for your comments and insights and sharing them with us. Thank you to our witnesses and we look forward to introducing our next panel.
[Translation]
The Deputy Chair: We’ll now move to our second panel of experts. From Global Affairs Canada, we have Alexandre Lévêque, Assistant Deputy Minister, Strategic Policy. Mr. Lévêque, we welcome you to the committee.
To assist you, if necessary, in answering our questions, you have with you Louis-Martin Aumais, Executive Director, Criminal, Security and Diplomatic Law Division; Ms. Matina Karvellas, Deputy Executive Director and General Counsel; Brandon Cove, Senior Advisor, Sanctions Policy and Operations Coordination Division.
[English]
We also have with us Meredith Lilly, Associate Professor and Simon Reisman Chair in International Affairs at Carleton University; and Ihor Michalchyshyn, Chief Executive Officer and Executive Director of the Ukrainian Canadian Congress.
We would like to welcome everyone and thank you for being available for us today. As is our practice, we will hear from the principal witnesses each for five minutes.
Mr. Lévêque, you have the floor, and we’ll follow with Professor Lilly with Mr. Michalchyshyn following immediately thereafter.
Alexandre Lévêque, Assistant Deputy Minister, Strategic Policy, Global Affairs Canada: Thank you, Mr. Chair, for inviting us to appear today to speak to you about Bill S-217.
[Translation]
Let me begin with a few contextual points on Canada’s use of sanctions. In the current context, sanctions are a valuable foreign policy tool for enabling accountability and compliance with international norms and standards. It is important to underscore that the decision to impose autonomous sanctions is not one taken lightly. The imposition of sanctions should be regarded as a coercive measure of last resort. In that vein, Canada views sanctions as only one component of a more comprehensive suite of foreign policy tools, including engagement, dialogue, and capacity-building.
[English]
As many of you know, Canada employs several sanctions laws that can be used to deal with current international realities, two of which have been mentioned. I will not go into great detail because I believe the members are familiar with them, but we’re talking about the Special Economic Measures Act, or SEMA; and the Justice for Victims of Corrupt Foreign Officials Act, or JVCFOA, also known as the Magnitsky Act. As well, it has been mentioned as the Freezing Assets of Corrupt Foreign Officials Act, or FACFOA. The only thing I would say on this is it should be noted that FACFOA is a distinct piece of legislation that sits apart from Canada’s broader sanctions regime.
[Translation]
In a recent example of our use of sanctions, Canada, in coordination with its allies and international partners, has imposed a significant number of new sanctions in response to Russia’s unprovoked and unjustifiable invasion of Ukraine. This includes sanctions on the Russian regime, including President Putin, oligarchs, and businesses in sectors of strategic importance to Russia. Further, Canada has imposed robust financial sanctions that have significantly reduced Russia’s ability to access global financing to fund its unprovoked war.
Bill S-217 would expand on Canada’s existing sanctions framework through establishing a regime by which certain property related to international human rights abuses and corruption that is frozen under the three aforementioned acts may be repurposed for humanitarian support.
Global Affairs Canada has undertaken an initial analysis of this bill, in consultation with the Department of Justice. We note that this new tool would represent an innovative, ground‑breaking approach to responding to human rights abuses and acts of corruption, and would be unique in the international sanctions context. However, in its current formulation, the bill does raise some issues from both a policy and legal perspective that may need to be addressed.
[English]
From a foreign policy perspective, we note that sanctions are currently intended to be a coercive measure to effect a change in behaviour, particularly in the case of SEMA, which implies that measures could be lifted if that behaviour has changed. However, the confiscation and redistribution of assets under this new mechanism suggest that sanctions would be permanent.
The bill also contemplates an environment where the Governor-in-Council has already issued orders to freeze the assets of specific persons listed under the JVCFOA and SEMA. In practice, no such orders have ever been issued under either of these acts. Rather, the JVCFOA and SEMA effectively freeze the assets of listed persons who are located in Canada because they restrict any dealing with the listed person.
The Department of Justice has also identified concerns from a division-of-powers perspective, as has been mentioned by previous witnesses, in that certain elements of this bill may fall under provincial jurisdiction. Another potential legal challenge is that some of the decision-making assigned to the courts appears to be policy-related in nature, which may be seen to undermine the independence and impartiality of the judiciary.
We raise these potential challenges as issues that may need to be taken into account in order to help ensure that this new act is effective in meeting the objectives it sets outline to achieve. In that vein, we welcome the opportunity to answer any questions you may have today and stand ready to assist. Thank you.
The Deputy Chair: Thank you very much. We will hear from Professor Lilly.
Meredith Lilly, Associate Professor and Simon Reisman Chair in International Affairs, Carleton University, as an individual: Mr. Chair, thank you for the opportunity to be here today to speak with members of the committee. I have expertise in the application of Canada’s sanctions laws and have written about recent amendments to our regime, including the passage of the Magnitsky Law. Today, I will focus my contribution on the interplay of Bill S-217 with the enabling legislation that would give FARA legal effect, that is the Special Economic Measures Act, SEMA, and the Sergei Magnitsky Law. Because while Bill S-217 would enable the repurposing and reporting on frozen assets held in Canada, it’s these other originating legislative instruments that enable the initial orders to freeze those assets.
I would like to make three points. First, I am supportive of the spirit and goals of the bill. I support moving beyond simply freezing assets via Canadian sanctions laws to repurposing those funds to help alleviate the suffering caused by the events that led to sanctions. Having said that, it is my strong view that Canada should never act alone in imposing sanctions on foreign nationals. This has always been Canada’s tradition. We have never acted in a truly unilateral fashion to impose sanctions against any country. We’ve always worked in concert with at least one other jurisdiction, usually the United States, the European Union or both. If this legislation is passed, the repurposing of assets should also be implemented in coordination with other countries to repurpose funds as part of an allied effort.
There has already been potential for this. In the case of the current crisis in Ukraine, G7 countries have committed to the creation of a Russian Elites, Proxies and Oligarchs Task Force to freeze and seize assets. The U.S. and the EU are considering legislation specific to the crisis to freeze and repurpose assets to aid Ukrainians, so for Canada, the passage of Bill S-217 can help fulfill our commitment in this area.
Second, I support the requirements outlined in the bill to use the courts to make determinations about the repurposing of funds. Currently, individuals can be sanctioned by the Government of Canada under the UN Act, SEMA or the Magnitsky Law without any due process in a court of law. In drawing up lists of individuals to be sanctioned, mistakes can be made and have been made in Canada. While individuals and entities can appeal to be removed from Canada’s sanctions lists, if the FARA bill is passed, it will be important to provide due process before repurposing assets irreversibly. This is particularly important because the FARA bill shifts emphasis from using sanctions to coerce behaviour change, to that of punishment. Therefore, by requiring a court ruling, the bill offers an important element of due process while also curbing the potential for government overreach.
My final point is very specific to the language in section 6 of the bill. Committee members may wish to study in more depth the list of conditions in section 6 for which frozen assessments can be ordered by a court to be repurposed. Specifically, the list of conditions in Bill S-217 differs from the list of conditions for imposing satisfactions under the enabling legislation of SEMA and Magnitsky. This inconsistency could potentially create challenges for implementing the FARA legislation.
For example, the FARA bill refers to a full range of human rights violations under paragraph 6(d) whereas SEMA and the Magnitsky Law are limited to gross and systematic human rights abuses such as torture, illegal detention and extrajudicial killings. Elsewhere, the bill, the proposed FARA legislation, is narrower in the list of conditions for repurposing than the enabling legislation in SEMA. By far the most common legal rationale for imposing Canadian sanctions is for the condition of:
. . . a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis . . . .
— as defined in SEMA.
This is the legal rationale listed for the more than 800 individuals sanctioned to date over Russia’s invasion of Ukraine. However, the SEMA condition of a “grave breach of international peace and security” is not listed under FARA for repurposing assets. Instead, FARA casts a narrower set of conditions that requires evidence that sanctioned individuals have been responsible for or complicit in human rights violations, forced displacement or significant acts of corruption.
This matters because this inconsistency of language may potentially impact the court’s ability to fully repurpose assets that have been frozen in Canada, particularly with respect to the current crisis in Ukraine. Therefore, I want to ensure the list of conditions reflected in FARA reflects the intentions of senators for its potential use should the bill pass.
I will stop there, Mr. Chair. I am happy to answer questions.
Ihor Michalchyshyn, Chief Executive Officer and Executive Director, Ukrainian Canadian Congress: Thank you, Senator Harder. It is good to see you and the senators and the other witnesses here today. Thank you for the opportunity. Thank you to Senator Omidvar for bringing this bill forward.
As you know, the Ukrainian Canadian Congress is the voice of our community here in Canada, which includes at the last census 1.4 million Canadians who have self-identified as Ukrainian. We bring together local, national and provincial organizations.
Certainly, it has been a very busy month. The conflict in Ukraine has brought forward tremendous support from all corners of Canada. We represent the voice of our community to you, to the federal government and to Canadians.
In February 2014, Russia invaded Ukraine. From 2014 onward, over 13,000 people have been killed, 30,000 wounded and 1.5 million internally displaced.
One month ago today, on February 24, Russia launched an all‑out assault on Ukraine. In the past month, the Ukrainian people have been putting up a valiant defence of their homeland, inflicting heavy casualties on Russian forces. We believe Russia is committing systematic war crimes on a mass scale by bombing civilians from the air and destroying cities and civilian infrastructure with cruise missiles and artillery.
At least 4 million Ukrainians, which is about 10% of the country’s population, have fled Ukraine in the last month; more than 10 million, which is a quarter of the country’s population, have been internally displaced. We know that thousands of innocent people have been killed including children.
Part of the West’s response to these barbaric attacks has been to impose sanctions. The sanctions Canada has imposed in the last month with its allies on sectors of the Russian economy and Russian officials responsible for this brutality are strong. They are sanctions we have argued for years which should have been used to deter against the current attack on Ukraine we’re seeing. These sanctions are now being used as a punishment in response to Russian aggression. We believe it would have been better, in the opinion of our community, to use them before the attack. The implementation of sanctions in a timely fashion may have deterred Russia, but that is not what we are here to discuss today.
The UCC has consistently argued that the Government of Canada should be stronger on sanctions. We have in the past, unfortunately, not always been heard.
For years before February 2022, Canada has lagged behind our allies on imposing sanctions on Russia for aggression against Ukraine. From March 2019 until February 2022, no significant sanctions were imposed on Russia, during which time the U.S. and the EU broadly expanded sanctions against Russian officials.
With regard to Bill S-217, our community strongly supports this bill. We know that the officials, oligarchs and businessmen who profit off of Russia’s aggression, who abuse internationally recognized human rights and who hide their money in the West should be deprived, at long last, of this safe haven for ill-gotten gains and should be deprived of the opportunity to corrupt our institutions with this money. The legislation is overdue and we welcome it.
We offer three points to consider in your work in reviewing this legislation.
First, identification of assets. Often these assets are hidden through shell companies, numbered companies and so forth. We ask you to consider how they will be identified and tracked. I will use a simple example. If there was a corrupt Russian official named Orest who is under Canadian sanctions law of Magnitsky Act, who has a 20-year-old daughter, Mariyeva. If Orest gives her $50 million and she opens a bank account in Canada, is there any recourse? Is there any way for Canada to freeze and seize these assets? If there is, that’s excellent; if there isn’t, then we need to understand how that can be done.
Next, second point, on implementation. What are the mechanisms by which the federal government tracks these assets? Do we know about the total amount of assets that hundreds of Russian officials, politicians and oligarchs sanctioned in the last month have in Canada? Do we know if they are being tracked effectively? I urge you to ask the Global Affairs Canada and Justice Department officials about this matter.
Finally, enforcement. In the last three decades or so, there have been, to our knowledge, only four successful prosecutions for sanctions violations in Canada. I won’t get into the details of them, but there may be more cases. So we believe either Canadians are extraordinarily law-abiding or our government hasn’t been excellent at identifying and prosecuting violations of sanctions law.
Therefore, I would submit the problem is more likely the latter that Canada has not been excellent at identifying sanctions violations. So I would urge you to ask those questions of the department and welcome the discussion. Thank you.
The Deputy Chair: Thank you, Ihor Michalchyshyn. We will open up the floor now for questions. Again, I would remind both witnesses and senators that we will allocate four minutes to each question and answer. If we don’t finish, we will get to the second round.
Senator Oh: Thank you, witnesses. My question is: Bill S-217 has a clause calling for the Minister of Foreign Affairs to put in place a registry, accessible to the public with the name of any person or entity with a foreign asset as well as the value of the foreign asset. What would creating and maintaining this registry involve for Global Affairs Canada? What other federal departments or other entities, such as the provincial, should be involved in creating and maintaining this registry if any?
Mr. Lévêque: Thank you for the question. I will take a first crack at this.
It is a fact that under existing legislation, Global Affairs Canada does not have access to detailed information on the assets that have effectively been frozen. That is due mainly to the fact that Global Affairs Canada is not designated as a disclosure recipient under existing sanctions legislation. In order for this to be a reality in the future, legislative amendments would need to be made and adequate and commensurate resourcing to our department in order to be able to maintain such a registry.
Senator M. Deacon: Thank you for being here to all of our witnesses today. I do certainly appreciate the perspectives and the work we’re trying to do to get this bill to be the best it can be right now. My question is obviously tied to the times that we’re in and some of the events we are in right now. I will field this question to Global Affairs but, of course, open it up to anyone. It’s a bit hypothetical but given the recent events in Ukraine it has made me think about them and how this might relate to the legislation as certain things unfold.
Should Ukraine and Russia come to a peaceful settlement, I would guess that the unfreezing of Russian assets could be a condition of any agreement. In a world where this bill was already law and assets had been seized and redistributed, what would be the mechanism for Canada to return them? Could the government just transfer money from another source? I wonder what that might look like. If Global Affairs could start and then open that up. Thank you.
Mr. Lévêque: Thank you, senator, for the question. Mr. Chair, I think this is precisely what I was alluding to in my opening remarks. The risk of making the transfer of assets effectively permanent or effectively doing the transfer of assets would make the sanctions permanent. The intent of these sanctions is that they serve to deter and amend behaviour. There is a potential gap there, so we would need to see in the legislation such mechanisms or very high threshold to be met in order for the transfer of assets to be effective.
There is, of course, currently in existence a procedure to follow for individuals and entities that have been sanctioned to apply to be withdrawn from the list of sanctioned individuals. It is a process that has been utilized in the past. In a few instances it has been granted, I’m thinking among others in the case of Myanmar, I believe in the case of Zimbabwe, a long time after the reasons to impose sanctions have been resolved.
Senator M. Deacon: With the time that I have left — I’m not sure if our witnesses heard the first panel — but I would like to come back to the scenario around Switzerland and Switzerland’s law and ask if any of our witnesses here have been aware and observing the potential pitfalls that have arisen. Or if there are any best practices from their perspectives of the recent experiences of Switzerland. Similar to the first panel but looking forward to feedback from this panel. Thank you.
Mr. Lévêque: Certainly, thank you, Mr. Chair. I may turn to my colleagues from the legal department to complement my answer.
Of course we follow these evolving pieces of legislation elsewhere in the world. We want to learn from their successes and their mistakes. The one thing I would flag at this time is that to our knowledge, other countries that are contemplating or about to implement such pieces of legislation on the repurposing of assets focus on corruption and repurposing money that has been obtained through the proceeds of crime.
The legal threshold to be met on that is considerably higher than in some of the triggers, I believe, as Professor Lilly mentioned, that have been used in the past for our pieces of legislation.
Senator Woo: For Global Affairs, picking up on the Switzerland case study, it strikes me that the Switzerland FIAA example is not part of the sanctions regime but part of a mutual assistance for claiming back funds that have been syphoned out of the country, working together with Canada, so it’s more akin to our FACFOA. I’m just characterizing — I may be wrong. But if I am right about it, if the FIAA in Switzerland is more akin to FACFOA in Canada, would it be helpful to think about Bill S-217 purely in the context of FACFOA and not in the context of SEMA and Magnitsky? Because SEMA and Magnitsky, as you point out and as Senator Deacon has pointed out, should have a compelling effect to change behaviour and not lead to irreversibility of actions. I think you know what I mean. That’s for GAC.
For Professor Lilly, I wonder if she might clarify whether she feels that the criteria of the displacement of people should or should not be included in the list of triggers for Bill S-217. She pointed out the discrepancy, but I’m not clear what her view is.
To Mr. Michalchyshyn, let me say how much admiration we have for you to be with us at this stressful and trying time for you and Ukrainian-Canadians.
You make the good point that maybe we should have had these tough sanctions in place well before the war erupted, and it’s hard to abstract, but if I can ask you to try to abstract, if we could wind the clock back 10 years or think of a different situation where there is an abusive situation in some part of the world that could lead to war 10 years later, would you have advocated for a sanctions regime that in fact seizes and repurposes the assets immediately? Or would you prefer to have it as an incentive that doesn’t actually seize and repurpose, so there is, as you put it, the prospect of the bad actor changing its actions before things get too bad?
Mr. Lévêque: I will turn to my colleague Louis-Martin Aumais for Senator Woo’s first question.
Louis-Martin Aumais, Executive Director, Criminal, Security and Diplomatic Law Division, Global Affairs Canada: Thank you. On Senator Woo’s question, just to emphasize that the Swiss example in 2011 was very much on the mind of civil servants when the time came to develop a piece of legislation that would address the situation, that is, a country that is facing turmoil, and yet there is a situation where significant amounts of assets have departed with the senior leader that has left the country at the time, for instance, Tunisia and Egypt.
You are correct, senator, in that FACFOA is not sanctions legislation but very much dovetails with our mutual legal assistance mechanisms in Canada, the ones that exist already in Canada. It was to enable those countries in turmoil sufficient time to get back in order, in order to come back to Canada, to Canadian courts, with formal mutual legal assistance requests, and that could be handled under our Mutual Legal Assistance in Criminal Matters Act, which allows for the implementation of foreign orders, forfeiture, seizure, and confiscation.
The Deputy Chair: Thank you. We will put down for a second round, senator.
Senator MacDonald: I will direct my question to Professor Lilly. This bill ostensibly complements other sanctions legislation we already have on the books. I’m thinking specifically of the Justice for Victims of Terrorism Act, enacted in 2012 by the Harper government. How do you see this bill complementing rather than overlapping the existing legislation?
Ms. Lilly: Thank you, senator. At present, as I think other witnesses have said, we have not focused on redistributing assets and instead have focused on the freezing of assets. In that way, I believe it could be complementary. I won’t get into domestic legislation around repurposing of civil assets, primarily because it’s not my expertise. Those do exist. I believe it could be complementary in that way.
My main concern is to ensure that the triggers of the existing legislation align properly with this legislation, should it be approved.
Senator MacDonald: Are there amendments you would suggest that could improve the ability of this bill to complement the other legislation?
Ms. Lilly: As far as the improvements that I would suggest, I think it is for senators to determine the goals for this legislation. If you would like it to remain very restricted to specific categories of individuals, the conditions could be left as they are. But if parliamentarians want to give the courts greater latitude to use and repurpose assets for a variety of purposes, then it is section 6 that I would recommend be amended, depending on what your goals are.
The Deputy Chair: Thank you very much.
Senator Boniface: My question is for Mr. Lévêque. I wanted to clarify his opening comments.
Mr. Lévêque, you made reference to an area of the bill, if I understood correctly, that you thought were policy considerations, not legal considerations, and I wonder if you could clarify whether I heard that correctly and if there is anything you can share further.
On the second point you made, you thought in the division of powers respect that some fall under provincial. Could you be more specific on those two issues?
Mr. Lévêque: Thank you for the question. I will keep it general because we could go down some rabbit holes. What I meant by that in my opening remarks is that the scope of the bill as it is and the trigger we choose to enable the transfer of assets are essentially policy choices, and putting this in the hands of the courts might put them in difficult situations. What I’m referring to here is what I was alluding to earlier, which is the repurposing of assets because of financial crimes and corruption is a very different trigger from a grave breach of international peace and security or gross human rights violations.
On your second question, I would defer to my legal colleagues.
The Deputy Chair: Who will take that up? Ms. Matina Karvellas? I think you’re on mute. Can you unplug and replug?
Mr. Lévêque, is there anything that you can add before we go to the next question?
Mr. Lévêque: Not at this time, Mr. Chair, but I will try to communicate quickly with my colleagues and come back.
The Deputy Chair: We’ll come back when you signal that to me.
Senator Boniface, do you have a supplementary, or shall we come back when they’re available?
Senator Boniface: I’m good. Thank you, Mr. Chair.
[Translation]
Senator Gerba: My question is for Mr. Lévêque. The confiscation and restitution process is undoubtedly very complex and costly. Section 19 of the Swiss law, which was mentioned earlier, provides that Switzerland retains at most 2.5% of the confiscated assets to cover confiscation and procedural costs.
Do you think that Bill S-217 should include a provision similar to the Swiss law? If such a means of funding were applied in Canada, do you think it would enhance the effectiveness of this legislation?
Mr. Lévêque: I think what you are referring to is entirely appropriate and sensible. Indeed, if this bill comes into being, we would like to see the administrative considerations of the costs of administration to support the operations taken into account. It would be a bit premature to give you an exact percentage, but you are right that these kinds of costs should be considered in order to align resources with objectives.
[English]
Senator Woo: I think Professor Lilly answered the question already. She is leaving it up to legislators, I think is her view. If she wants to elaborate on whether forced displacement should be a criterion, I welcome her to jump in.
I have a question for Mr. Michalchyshyn. If we could look back or look to abstract to a different situation, would you do it differently in terms of actually seizing and repurposing assets?
Mr. Michalchyshyn: We feel that deterrence and seizure as soon as possible is the best approach. We saw the creep of Russian forces first in the east, then in Crimea and then in the north, so our advice to the government was, and will continue to be, to deter proactively and to seize proactively to show an authoritarian regime like Putin’s Russia that we’re serious.
We did not think that the approach of sending weapons or sanctions after an invasion was the correct one. I believe we did see Canada and other countries changing their tact as things were going.
But we believe that, yes, deterrence and showing a strong hand to authoritarian regimes are the best ways to go.
The Deputy Chair: Professor?
Ms. Lilly: I will jump in because my view is that, yes, forced displacement could be one of those reasons, and I support that.
My concern, though, is that, currently, the enabling legislation is not one of the reasons to freeze assets in the first place. You could repurpose assets, but if you haven’t frozen the assets due to triggering refugee flows, then there is nothing to repurpose.
You would have to trace a reason such as the SEMA condition of a grave breach of international peace and security. Triggering refugee flows could be one of those reasons, but you would then have to trace that original reason for freezing assets with the follow-on of repurposing under FARA.
The fact that these two do not line up, to me, could create potential challenges down the road as I think about how the courts would actually give life to this.
This. I hope that makes sense.
Senator Woo: Thank you both.
Senator Richards: Mr. Michalchyshyn, I’m wondering if freezing assets beforehand would have caused him to attack sooner. I’m just interested in what you think of that.
Will freezing assets in the long run do any good for the Ukrainian people because of the terrible atrocities that are going on at the moment?
Mr. Michalchyshyn: Thank you for the question.
We can go back to February 2014 when Russia invaded Crimea, which is part of Ukraine, obviously. The response from Canada, the West and the various world powers was not strong or seen to be a sufficient deterrent. We would use that example as doing something after the fact that did not really impact the Russian regime. They continued on with their war of aggression for eight years until they launched a larger war of aggression.
That would be my answer in terms of what we feel in terms of the proactiveness of that.
Senator Richards: Thank you very much.
Seeing how the West over the last number of years has courted Ukraine, in a way, and tried to make them feel a part of the European Union, of which they are still not a part, do you think they have more responsibility for arms and weapons to go into Ukraine to try to stop these atrocities, such as a no-fly zone, for instance?
Mr. Michalchyshyn: Yes. We believe that Canada, NATO and the EU must be doing more than nothing. There is an argument that nobody wants to trigger World War III or a nuclear attack from Russia, but between that extreme and doing nothing, there must be other options.
We know Canada and our foreign policy leadership have been bold in the past in terms of coming up with the concepts of peacekeeping and other such leadership positions. We are disappointed that it seems to be an either/or; either we do nothing and watch the slaughter of civilians, or there will have a nuclear attack. There must be options in the middle.
We are encouraging Canadian officials at all level to think about what those options must be, because the current situation, as you said, is untenable.
Senator Richards: I agree with you, sir. Thank you.
The Deputy Chair: Colleagues, if I could, I would like to use the chair’s prerogative to ask a question of both Alexandre Lévêque and Meredith Lilly.
It seems to me that we are in a conflict situation here with respect to the purpose of the sanction regime. As Senator Woo and others have commented, the sanction regime is intended to change behaviour. Repurposing is intended to utilize the resources that have been seized for a different purpose.
Perhaps you can help me, because I don’t see what amendments could provide the incentive to change behaviour while allowing repurposing, if not immediately, then at some point. Is there a way to save this contradiction going forward?
I would start with Alexandre Lévêque and then ask Meredith Lilly to comment.
Mr. Lévêque: Thank you, Mr. Chair. It’s a very good question. Usually, people say this when they don’t have a good answer, but it is.
The only thing I would say to this, sir, is that, as I mentioned before, sanctions are one of several tools that we use to apply pressure on foreign governments and leaders. You are right that it is not the be-all and end-all that will make the ultimate difference.
Therefore, we would also like to see additional pressures through this piece of legislation or others to effect the changes we are looking for, but we’re constantly reminded of the fact that it has to go hand-in-hand with other measures and, very importantly, coordination with other countries. Because of the size of our economy and the impact we can have on any given sanctions measures, but also because doing it together prevents sanctions evasion and culpable individuals from moving their assets around to avoid the harsh, blunt object that sanctions can be.
The Deputy Chair: Thank you.
Professor Lilly?
Ms. Lilly: Thank you, Mr. Chair. Thank you for the question.
I think this is an important tension, but I would like to be a bit provocative and say it is not necessarily a settled one.
While sanctions experts typically want to use sanctions to encourage a foreign state to change its behaviour, and they ideally would like to return the funds eventually, that is not an uncontroversial position. The truth is that sanctions are imposed for many reasons. Sanctions are imposed to signal to a home audience that a country is doing something, even if they expect minimal effect. Sanctions are implemented to threaten or sabre rattle, and they are also implemented to deter others who might be watching from pursuing the same path.
Professor Kim Nossal of Queen’s University documented in 1989 the idea that sanctions are imposed as punishment for wrongdoing, including retribution, which is not about changing behaviour. My own research on the passage of Canada’s Magnitsky Law demonstrated that Canadian parliamentarians passed this law in part as punishment for the torture and murder of Mr. Magnitsky while imprisoned in Russia. In their statements during the passage of this law, parliamentarians across political parties reflected a desire to hold accountable the individuals responsible for Mr. Magnitsky’s death and to end a culture of impunity, as the former MP, Robert Nault, put it. He was head of the Foreign Affairs Committee in the House at the time that legislation was passed. In other words, the purpose was to punish.
If you look at current public opinion polls in Canada, you will see similar sentiments of a desire to punish rather than to necessarily change behaviour. In that respect, I think the shift in FARA towards repurposing that favours punishment is formalizing a sentiment that clearly exists among lawmakers who originally passed the Magnitsky legislation, even if those intentions are at odds with the goals of sanctions experts.
The Deputy Chair: Thank you. I have to limit myself here.
Ms. Lilly: Sure.
The Deputy Chair: Thank you very much.
It seems to me that the legislation being permissive, that is to give the tool to the government, is another safeguard for abuse. That is just a commentary on my part.
Madam Karvellas, you are definitely muted now. Let’s see.
Matina Karvellas, Deputy Executive Director and General Counsel, GAC Legal Services, Global Affairs Canada: One last try, can anyone hear me?
The Deputy Chair: Yes.
Senator Boniface, you have your answers.
Ms. Karvellas: Thank you, honourable senators. The windup might be more exciting than the pitch.
This does touch back to some of the earlier points that were raised in the first session regarding division of power. The bill itself would have to come under the federal head of power, and as we know, the provincial head of power relates to property and civil rights.
The understanding is that the more the bill appears to relate to property and civil rights in the —
The Deputy Chair: Excuse me, Ms. Karvellas. The quality of the sound does not allow translation.
Ms. Karvellas: Oh, goodness.
The Deputy Chair: May I suggest we ask you for a written response to be tabled with the Clerk and shared with the senators?
Ms. Karvellas: I would be very pleased to follow up in writing. Thank you, senator.
The Deputy Chair: Thank you very much.
I would like to thank our witnesses for their testimony. It has been very helpful.
I would like to remind senators that our next meeting will be on March 31, a week hence. We intend to have one panel of witnesses, after which we will move to clause-by-clause consideration of Bill S-217.
I would also like to remind committee members who may want to propose amendments to Bill S-217 that they are encouraged to consult the Office of the Law Clerk as soon as possible to ensure any amendments are drafted in the proper format in both official languages.
The Clerk will circulate a memo to the same effect later today or tomorrow.
(The committee adjourned.)