Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 15 - Evidence - May 16, 2007
OTTAWA, Wednesday, May 16, 2007
The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill C-48, to
amend the Criminal Code in order to implement the United Nations Convention against Corruption, met this day at
4:07 p.m. to give consideration to the bill.
Senator Consiglio Di Nino (Chairman) in the chair.
The Chairman: Welcome to this meeting of the Standing Senate Committee on Foreign Affairs and International
Trade. This is our second meeting on Bill C-48, to amend the Criminal Code in order to implement the United Nations
Convention against Corruption.
We have the pleasure of welcoming two outstanding witnesses to discuss with us not so much the bill per se, rather
the Convention against Corruption as well as corruption as a major international issue.
We will first hear from Transparency International in the person of Mr. Bill McCloskey, who is an incoming board
member of the Canadian national chapter of the organization. Launched in 1996, Transparency International Canada
is a voluntary not-for-profit organization affiliated with approximately 100 other national chapters around the world.
The purpose of Transparency International Canada is to inform business, government and the general public of the
effects of corruption in national and international marketplaces and to provide support and resources for public- and
private-sector initiatives to prevent corrupt business practices.
We will then hear, live from Washington, D.C., from Mr. Raymond Baker, author of Capitalism's Achilles Heel:
Dirty Money and How to Renew the Free-Market System, published in 2005.
The Financial Times has named Capitalism's Achilles Heel: Dirty Money and How to Renew the Free-Market System
as one of the best business books of the year. In his book, Raymond Baker reveals the methods by which corrupt
governments and crooked executives, as well as terrorists, move money through the global financial system.
Raymond Baker, after a long career in international business, is a guest scholar at the Brookings Institution and a
senior fellow at the Center for International Policy, both located in Washington D.C. Mr. Baker lived in Africa for
many years and has done business across much of the developing world.
Bill McCloskey, Incoming Board Member, Transparency International: Transparency International is a global civil
society organization headquartered in Berlin that is leading the fight against corruption. It brings people together in a
worldwide coalition to end the devastating impact of corruption on men, women and children around the world.
Transparency International's mission is to create change toward a world free of corruption.
Transparency International is a non-partisan organization. It does not undertake investigations of alleged
corruption or expose individual cases, but will at times work in coalition with organizations that do. Essentially, its
mission is to try to set the conditions whereby corruption is eradicated systematically in countries around the world.
Transparency International Canada, which I represent, is the Canadian chapter affiliated with the other 100 or so
national chapters around the world that make up Transparency International.
As you have noted, our mission is to inform governments and the general public of the effects of corruption in
national and international marketplaces, and to provide support and resources for public and private initiatives to
prevent corrupt business practices.
The long-term goals of Transparency International Canada are that all levels of government have effective anti-bribery measures in place; that Canadian companies, subsidiaries and supply and distribution chains do not bribe; that
the government complies with and advocates for global and regional conventions against corruption, such as the bill
before you today is intended to do; and that transparency exists in all Canadian organizations.
When Transparency International Canada was invited to meet with the committee today, it was suggested that we
discuss the background that led to the drafting of the UN convention, why the convention is important, why it is
important that Canada ratify it and what we hope its effects will be.
I will cover this briefly.
In terms of background, representatives of over 100 countries from all regions negotiated the UN convention over a
two-year period. Representatives of civil societies, including Transparency International, also participated and played
a critical part in the drafting process. The convention was approved by the United Nations General Assembly in 2003
and opened for states to sign and ratify it. It currently has 140 signatories and has been ratified by 91 nations. The
remaining signatories, of which Canada is one, have pledged to ratify it.
Perhaps it should be noted that the UN convention is not the only, nor indeed the first, such convention. Both the
Organization of American States, OAS, and the Organisation for the Economic Co-operation and Development,
OECD, have conventions against bribery. However, the UN convention is unique, both because of its global coverage
and because of the extensiveness and detail of its provisions. It is for these very reasons that it is so important.
Under the convention, parties are obligated to effectively take action in six ways. First, they are to have in place
certain preventative measures against corruption. These are things such as codes and standards of conduct for officials
and public procurement systems based on transparency, competition, objective criteria, et cetera. Canada essentially
has these in place now. Second, they are required to criminalize a wide range of offences. Third, the convention also
provides for an international framework with the potential to improve mutual law enforcement assistance. Fourth, one
of the most noteworthy aspects of the convention is that it elaborates an asset recovery framework for the first time on
a global basis. Fifth, it provides for technical cooperation and information exchange; and sixth, it provides for an
implementation mechanism under the auspices of the Conference of State Parties. In fact, the first such implementation
conference was held in Jordan in December of last year.
Transparency International Canada believes it is extremely important that the bill before the committee be passed
by Parliament. It is important because by implementing the provisions of the UN Convention against Corruption, it
provides Canadian law enforcement officials with additional tools to combat corruption, both here in Canada and
internationally. It also sends a signal to the international community that Canada is fully prepared to combat
corruption amongst public officials and companies. This is an important message. As noted earlier, the convention has
yet to be ratified by some 50 signatory countries.
At the Gleneagles meeting a year ago, the G8 countries noted the importance of the convention and urged its
members to proceed with ratification quickly, but as of yet, less than half of the G8 countries have done so. It is surely
hypocritical for developed countries, such as Canada, to urge and support anti-corruption measures in less-developed
nations of the world, while failing to take action themselves.
Passage of Bill C-48, therefore, will clear the way for Canada's ratification of the UN convention and will send a
strong message to the international community that Canada is fully behind efforts to rid the world of corrupt practices.
On behalf of Transparency International-Canada, I thank you for the opportunity to explain our views on the bill
and the importance of Canada's ratification of the United Nations Convention against Corruption.
Raymond Baker, Author of Capitalism's Achilles Heel: Dirty Money and How to Renew the Free-Market System, as
an individual: I am appreciative of the opportunity to appear before the Standing Senate Committee on Foreign Affairs
and International Trade, particularly in a process that will lead to Canada's ratification of the United Nations
Convention against Corruption.
The year 2007 marks the forty-sixth year of my involvement in developing countries. Across these years, I have been
a strong critic of rampant corruption, poor governance and weak institutions in so many developing countries.
Having said this, I am also a strong critic of our facilitating role, the facilitating role of those of us in the West in the
rampant corruption, poor governance and weak institutions in many developing countries. This is the aspect of
development that has fascinated me for decades.
Since the 1960s, we, in the West, have built and expanded an entire global structure to facilitate the movement of
illicit money across borders. There were aspects of this structure available before the 1960s, but they were quite minor.
There was a handful of tax havens and transfer-pricing techniques were utilized.
The 1960s, however, marked the takeoff point in the development of this structure for two reasons. One, it was the
decade of decolonization. Between the late 1950s and the end of the 1960s, 48 countries gained their independence, and
unfortunately some of the economic and political elites in these countries wanted to take their money out by whatever
means possible; and we facilitated the structure that enabled that.
The second reason the 1960s marked the point when this structure took off in earnest was the spread of
multinational corporations. Yes, there were a few international businesses before that, but the 1960s really marked the
point at which corporations began to plant their flags all over the planet; a process that has continued in the 1970s,
1980s, 1990s and in the current decade. Many of these corporations also wanted to utilize techniques for shifting their
profits across borders without having to resort to declared dividends.
The illicit financial structure that we have created and expanded now comprises a number of elements; one of which
is tax havens. There are 72 tax havens around the world. Many of these tax havens provide secrecy jurisdiction
capabilities — that is to say, places where one can establish entities hiding behind nominees and trustees. There are
now millions of such disguised corporations around the world.
Many of these corporations are equipped with "flee clauses" that allow those disguised entities to flee from one
secrecy jurisdiction to another without ever being asked where they are going. The nominees and trustees can arrange
Anonymous trust accounts, fake charitable foundations, and falsified documentation in trade and capital
transactions are all a part of this structure. The most frequently used part of the illicit financial structure is falsified
pricing in imports and exports, used both in arms-length transactions and in transfer pricing between related parties.
Then there are all sorts of money-laundering techniques and also holes left in the laws of Western countries to
facilitate the movement of money through the illicit financial structure and ultimately into Western accounts.
This illicit financial structure facilitates the movement of three forms of illicit money: The proceeds of bribery and
theft by foreign government officials; the proceeds of criminal activities by drug dealers, racketeers and terrorist
financiers; and the proceeds of tax evasion by the private sector.
Speaking of the cross-border flow of illicit money, the proceeds of corruption are only about 3 per cent of the global
total, the criminal component is about 30 or 35 per cent of the global total and the commercially tax-evading
component is about 60 or 65 per cent of the global total.
I estimate that the illicit financial structure moves $500 billion to $800 billion a year out of poor countries into
Western economies. I developed this estimate, I feel conservatively and with some care, in the book to which the
Compare $500 billion to $800 billion a year of illicit money flowing out of developing and transitional economies to
overseas development assistance flowing in. Overseas development assistance has been running about $50 billion to
$80 billion a year through the 1990s and into the current decade. In other words, for every $1 that we have been
generously handing out across the top of the table, we have been taking back some $10 in dirty money under the table.
In recent years, the corruption agenda has, to some extent, been kicked upstairs into the larger governance agenda. I
believe there is a risk in this. The governance agenda, as it has gotten under way, is making the same mistake that was
made in the Washington consensus of the late 1980s and the 1990s. As you know, the Washington consensus was the
economic prescription for poor countries that entailed balanced budgets, curtailing inflation, privatization, cutting
customs duties, free trade and opening up the commercial sector.
There was not, within the Washington consensus, a single particle of introspection, not a particle of looking at
ourselves and asking what we need to do to enable the prescriptions of the Washington consensus to work most
effectively in poor countries. Very much that same mistake is being made now in the governance agenda.
The focus of the governance agenda is almost entirely on those corrupt countries over there. Very little of the focus
is on ourselves. We could quibble about the percentages — 90 per cent, 95 per cent, 98 per cent of the focus of this
agenda is on them, with very little attention being paid to our facilitating role.
Across the years that I have been involved in the developing countries, the prescriptions for their success have
generally been very much the same — more foreign aid, more foreign direct investment and more debt relief. Recently,
we have added more free trade to that and, even more recently, more good governance for the developing countries.
There is no question in my mind, however, that the greatest contribution we can make to the developing countries is
to curtail our facilitation of those things that make it difficult for the developing countries to work themselves out of
their condition. The spread of global prosperity depends equally on what we do ourselves.
The Chairman: Thank you, Mr. Baker. Both of your presentations were fascinating, gentlemen, and I am sure we
will have an interesting discussion.
Senator Stollery: I read Mr. Baker's book, as most of us here know, and recommended it to our committee when we
were doing our study on Africa. I believe the things that he says are self-evident. I have a couple of questions, but I
think that my colleagues, who may not be as up on it as I am, should have an opportunity because our time is limited.
Are there consequences if a state that has signed and ratified the UN Convention against Corruption does not live
up to it?
Mr. McCloskey: That is a good question. Probably the weakest part of the convention is the monitoring aspect right
now. However, the meeting, to which I referred, that took place in Jordan in December was basically focused on the
need for implementation oversight of what countries do. It is one thing for countries to sign and ratify the convention,
but if they do not implement it, it is meaningless.
There was general agreement at that meeting that this was a very important issue. In a traditional UN approach,
they have put together a group of experts to come back with some recommendations on how they might proceed with
monitoring the implementation of the convention.
Senator Stollery: To me, it is self-evident that if we do not stop facilitating people making illegal deposits in our
banking system, it is hard to see any progress.
When I was in Cape Town on behalf of the committee not long ago, at the annual meeting of the World Bank, the
president of the African Development Bank said that if growth rates are 5 per cent to 5.5 per cent in equatorial Africa
and you took the monies from the oil-producing countries between Angola and Nigeria along the Atlantic coast out of
the growth rates — there were questions because so much of it disappeared into illicit bank accounts — there was a
question as to whether the growth rates were actually negative in some of those places.
The president of the African Development Bank was very concerned, because monies coming out of these particular
countries were not being reinvested into the local economies; they were disappearing into the banking system. It does
not take much imagination to think that probably real estate developments in Toronto could well be financed by
money from developing countries filled with poor people.
It is an observation rather than a question.
The Chairman: Do either one of you want it make a comment on Senator Stollery's observation? By your silence, I
feel you probably agree.
During the study of the Africa issue, we heard that there is a misconception that corruption is a Third World
problem — a problem of developing countries as opposed to a world problem. Could either one of you give us your
thoughts on that?
Mr. Baker: I could not agree with you more. It is a problem that is shared across the board, by all of us. We, in the
Western countries, have certain corruption problems ourselves, but they are not nearly as debilitating as many of the
Some people argue that corruption is an inevitable product of poverty. That is an analysis that I do not agree with. I
will give you two examples. Julius Nyerere's Tanzania in the 1970s was dirt poor, but it was not a corrupt country.
There was some corruption in the provinces, but the central government was as clean as it could be. Contrast that with
a very rich country, Saudi Arabia, where corruption is rampant.
I do not agree with those who say that corruption is a product of poverty. It is a product of perhaps having not
enough money to foster a sound judicial system, but it is not an inevitable product of poverty.
Mr. McCloskey: I fully agree with Mr. Baker. Transparency International has over 100 chapters around the world
in various countries. Basically, the focus of the national chapters, such as the one in Canada, is domestic — to try to
promote the movement away from corrupt practices in those countries.
While I feel it is more of a serious problem in some of the less developed countries, it is a problem in all countries.
The focus of Transparency International is on all countries.
The Chairman: Thank you. I wanted to put that on the record.
Senator Robichaud: Give me some hope. Are we making any progress in fighting terrorist activity?
Mr. Baker: I believe we are making progress, but not as much as I would like to see. I do not believe the total
amount of illicit money floating around the world has significantly declined. The cross-border component of corrupt
money, the proceeds of bribery and theft, has declined a little. I praise Transparency International for having placed
this subject on the agenda. In fact, I was at their head office in Berlin last week saying the same thing.
I believe we have curtailed the cross-border flow of corrupt money. I am not so sure that we have curtailed corrupt
money that stays within a country, and I certainly do not feel that we have begun to curtail the cross-border flow of the
criminal component and the commercially tax evading components, which are far larger than the cross-border flow of
Mr. McCloskey: I would agree entirely with the speaker's comments.
Senator Robichaud: We have before us Bill C-48, which amends our Criminal Code to put into effect the UN
convention. You say it should be passed as soon as possible so we can ratify it.
Would you like to see the bill passed exactly as it is, or would you have any suggestions as to how it should be
Mr. McCloskey: It is difficult for me to comment on the provisions of the bill; it is better for perhaps a lawyer from
the Department of Justice Canada to comment on it.
Many of the amendments of the Criminal Code are basically to bring it in line with the convention, and I assume
that work has been completed.
Canada already has in place most of the provisions to allow it to ratify. These are just technical changes required so
that we could indeed fully ratify the convention. We were 98 per cent there, and this is getting us the additional 2 per
cent of the way. That is perhaps the best way of looking at it.
We feel that the weakest part of the convention is probably the lack of a monitoring mechanism, but that is on the
agenda for ongoing discussion. However, there is not much Canada could do unilaterally. It has to be done
Senator Robichaud: Mr. McCloskey, we value the opinions of non-lawyers here. Mr. Baker, do you have anything to
Mr. Baker: I agree with Mr. McCloskey. In fact, I have been an admirer of Canada on these issues for some time. If
I could go one step beyond, I particularly admire your anti-money laundering legislation, which is a companion issue
For some time, you had on the books a statute that states, if a criminal activity committed abroad would have been
illegal under Canadian domestic law, it is illegal to knowingly handle the proceeds coming from abroad.
In my own country of the United States, we do not have that, as you may be aware. In my country, it is something I
am working hard against. In the United States, we criminalize only the incoming proceeds of corruption, drug
trafficking and terrorism.
There are many other forms of illicit money that can come from abroad legally into the United States. That would
include the proceeds from other forms, such as racketeering, credit fraud, handling stolen property, slave trading, alien
smuggling, trafficking in women, environmental crimes, all sorts of tax evading money and so forth.
I am working hard to try to close those loopholes, and I am delighted with the leadership of Canada in having taken
a stronger position on that issue.
Senator Smith: I was not alive in the 1930s, but I remember that old Fred Astaire song I'm Putting All My Eggs in
One Basket. I know that is not your thinking when you think of the UN as being the body that will put muscle and
teeth into enforcement of this. I invite you to comment on that. I am totally sympathetic with this initiative and
philosophically compatible and supportive.
When we were in Africa on the most recent trip of the committee, we heard stories of where all of those oil revenues
from the Cameroons are going. We heard stories even from Kenya — which is better than many places — of a
Canadian mining project that has been discussed for seven years, but they cannot get it going. We even heard the
president saying wonderful things about it. If you do not peel out a little in terms of obtaining approvals, you just do
not get them.
When we left Kenya, coincidentally I was sitting beside an accountant from Johannesburg, who was the in-house
person for this company, and the stories he told me were unbelievable.
With respect to the culture, as to whether or not the U.S. can be serious about this, the committee on Zimbabwe,
which just took over chairmanship, is a joke.
In terms of other bodies that might put teeth into enforcement of this and seeing the culture at the UN hopefully get
serious, what comments would you make in response to my meanderings?
Mr. McCloskey: Could you repeat your question? I am not sure I fully understood it.
Senator Smith: We would all like to see the United Nations have more relevance to enforcing principles, convictions
and things that are important to our set of values. Yet there is a pattern where it does not happen. I used the Zimbabwe
example, with them taking over the chairmanship of an important committee. When we look at their record, it is an
utter joke. Libya had another incident a while ago in which people raised their eyebrows.
Do you feel that people at the UN will be serious about this and try to put teeth and muscle into it?
Mr. McCloskey: I do believe there is willingness there at the moment. As I mentioned, this meeting in Jordan that
took place in December was focusing on implementation and monitoring of the provisions.
There was a clear recognition that, without monitoring and reporting on the implementation, it is just words.
Basically, to my understanding — I was not at the meeting — the report I have seen indicates that there was a real
desire from most of the countries there to ensure that the provisions will actually be implemented in the various
Mr. Baker: I believe there is one additional body that can be useful in this process, and that is the Organisation for
Economic Co-operation and Development, OECD.
I believe the OECD, being a smaller body and being primarily the more industrialized countries, can take a
leadership role in the corruption issue and in the money laundering issue.
The Chairman: How can the overseas development assistance be used to help developing countries clean up their
corruption and their problems? Should we be looking at transfers of monies directly to non-governmental
organizations, NGOs, and to private corporations as opposed to government to government?
Mr. Baker: I am a strong supporter of the role of NGOs in developing countries and their ability to influence policy.
Transparency International itself, at its last global meeting in Guatemala, acknowledged the fundamental importance
of NGOs in pushing the anti-corruption agenda. I agree with that.
I do sense that corruption is an issue that needs to be fought also from the top down. It is very difficult for a country
that is perceived to be corrupt at its highest levels to achieve a lack of corruption, transparency at the middle and lower
The answer to fighting corruption, in my judgment, is not the simple process of paying the policeman more so that
they will not resort to extortive measures or paying civil servants more so they will not be holding out bribes.
In my judgment, there must be an enormous amount of emphasis on the top, and NGOs are in a position to exert
that kind of pressure. Does that make sense, Mr. Chairman?
The Chairman: It is very help. Thank you.
Mr. McCloskey: I fully agree with what Mr. Baker has said. My understanding is that in the past Canadian
International Development Agency, CIDA, has provided some assistance to some countries — I do not have the
details at my finger tips — to assist in the fight against corruption, but the idea of perhaps supporting non-governmental organizations, such as Transparency International, in some of these countries would be a positive move.
Senator Corbin: I would like to have Mr. Baker's comment on the World Bank's policies and attitudes in their fight
against corruption, generally. Could you please respond?
Mr. Baker: I am delighted that the World Bank has put the issue of corruption on its table. This was a long-fought
process, senator. Barber Conable and Louis Preston, the two preceding World Bank chairmen prior to Jim
Wolfensohn, insisted on keeping corruption off the World Bank's agenda. Jim Wolfensohn came on board and
Transparency International and the U.S. Department of the Treasury made it clear that they wanted corruption to be
an item on the World Bank's agenda. I believe it is accurate to say that Mr. Wolfensohn had to cram it down the
throats of a rather reluctant organization. However, it has become part of the World Bank's agenda, and I am
delighted with that.
The current fight within the World Bank is not centred so much on whether or not to make the fight against
corruption a key part of the program; rather, it is focused on how to do that. For example, World Bank president Paul
Wolfowitz cancelled the money that had been designated for India — as I recall the amount was about $600 million —
based on the idea that India had much corruption, which would affect the way the money would be distributed. I
believe that the Indian people reacted against that and asked them to provide names of people if they had them.
I support the fight of the World Bank against corruption. I am not sure that it has progressed as effectively as it
should have. It will be very interesting to see what happens to the fight against corruption in the coming weeks,
particularly if there is a change of leadership.
Let me re-emphasize that the fight against corruption is a two-way street. Governance is a two-way street, and we
need to recognize that changes need to be made not only in those countries but also in our Western societies.
The Chairman: Thank you Mr. Baker. Mr. McCloskey did you want to make a comment?
Mr. McCloskey: I am happy with that comment.
Senator Stollery: It is a very complicated business. Similar to Mr. Baker, I was in the African countries before
independence, 45 years ago, and have also seen some of these things as they have gotten worse and worse over the
years. I am very sympathetic.
As I recall in your book, one of the criticisms — and I do not mean to put words in your mouth if I am wrong —
was that senior people at the World Bank were too close to the commercial banking sector, and when they went
looking for a job they did not want to offend people who might be their future employers.
I notice that in this current kerfuffle over Mr. Wolfowitz, one of the senior people got a job at Citibank. I noticed
that because Citibank got some attention in your book. Is that still the case?
If oil revenues are being taken illegally, they do not put them in African banks. They put them in Western banks. If
we do not close off the system of where the money goes, I do not see how we will get very far.
We are dealing with this convention, which is the reason for our meeting, and we know that we are essentially
bringing the Criminal Code of Canada into line with the convention. We are aware of that. However, does more need
to be done to make it impossible for people to deposit large sums of money in the Western banking system, and if there
is more to be done, what suggestions do you have that the committee could consider as we pursue this matter?
Mr. Baker: I agree with the point that you were making about the World Bank. Many people in the World Bank are
extremely dedicated to curtailing poverty in developing countries. Some others are looking for the next opportunity in
the private sector and may be less aggressive in fighting corruption and money laundering; perhaps less aggressive in
taking on the kinds of problems we are talking about here.
You are correct when you talk about oil revenues going out into foreign banks. They do not go to other African
banks, but come frequently through the structure I talked about, the illicit financial structure, but ultimately into
Part of what fascinates me is that it is almost entirely a permanent outward transfer; very little turns around and
goes back in at a later date to developing countries. The little bit that turns around and goes back almost always goes
back as foreign direct investment, FDI; that is to say it has gone abroad, has acquired a foreign nationality as a
company, investment fund or trust account, and it comes as FDI with the intention of going abroad again as dividends,
interest on principal payments on loans or as transfer pricing disguised in inter-company transactions.
You used the words "make it impossible"; I use the word "curtail." I am interested in curtailing the outflow of illicit
money, not trying to stop it entirely. Curtailing it is a matter of political will; stopping it is draconian. I am not certain I
I am in favour of steps that we can take to curtail illicit financial outflows. Without going into a great deal of detail,
curtailing it is a matter of political will on the part of the West. Part of the way to do that is to ask the right questions
of the depositor who is bringing the money. Then one does a reasonable amount of due diligence. This will begin to
I have been asked before whether this simply means that it will not come to the United States but instead go
someplace else. My answer is that that is exactly what I want to happen. I want to curtail the inflow of that money into
the major Western economies. Let it go to Dubai or Bahrain, because we will soon curtail it in those places as well; but
it is leadership from us in the West that is needed on this issue.
Senator Downe: I am not familiar with how Transparency International Canada is funded. Where do you get your
Mr. McCloskey: There are some fees. We have private members, people such as myself, who pay a very small fee to
belong to Transparency International Canada. There are some corporate sponsors; some of the larger companies, for
example, will contribute to Transparency International also.
We are a shoestring organization, I have to admit. We have one person on staff, basically, who is there three-fifths
of the time and the rest is all volunteer work of board members and other people.
Senator Downe: Do you have any government funding?
Mr. McCloskey: There was some CIDA funding for three years, but that has terminated, and we understand no
more is forthcoming. I am not sure how the umbrella organization, Transparency International, is funded; they have
50 or 60 people on staff to enable them to do their work.
Senator Downe: Did CIDA fund the Canadian chapter?
Mr. McCloskey: Yes; I believe it was for some special work that was being done in places such as Nigeria and some
other efforts that were under way.
Senator Downe: For a number of countries that have ratified this — such as Cuba, Congo, Nigeria and others —
how do you monitor these countries? How do you give comfort to Canadians that by signing this, you will be able to
keep an eye on what is happening in some of these other countries?
Mr. McCloskey: Monitoring is critically important, and there needs to be a monitoring mechanism put in place with
respect to the convention. Often other countries will come in and monitor how well it is being done, rather than a self-assessment — although self-assessment is also important. Clearly, that is a critical aspect that is needed for the
convention and something to which attention is being given right now.
Senator Downe: Will your association be doing any of the monitoring?
Mr. McCloskey: That remains to be seen at this point. We will be monitoring Canada's compliance, but whether or
not we are involved in international monitoring is yet to be determined.
The Chairman: I have another question, mainly to Mr. Baker, concerning a statement in his book, which I commend
to anyone; it is very informative. You talk about the World Bank needing to put teeth into its anti-corruption efforts at
the highest level of funding states, including suggesting that borrowing countries should face a requirement that elected
and senior appointed officials declare their assets upon assuming office and pledge to declare their assets upon leaving
office. Could you comment on that? It is an interesting exercise.
Mr. Baker: Some countries have done that. That is not my original idea. I give recognition to my colleague at
Transparency International, which has encouraged that approach. While it is a good approach in theory, the question
is how do you monitor it and make it work. I lived in Nigeria for 15 years, and I am aware that declarations in Nigeria
are not necessarily to be counted on as to their accuracy. Nevertheless, it is a useful approach.
There are other useful approaches to this problem as well, particularly the emphasis on politically exposed persons
and the importance for Western financial institutions to be aggressive in accepting deposits from politically exposed
persons — or anyone connected with, or family members of such politically exposed persons.
Senator Mahovlich: Mr. Baker, you mentioned earlier that because a country is poor does not mean it will be
corrupt. In the same manner, it is much easier for the corrupt to make a country corrupt if it is poor.
In my visit to Africa, these poor people had no representation. It seemed the governments were corrupt, and it is
because these poor people have no way to protect or police themselves; they do not have the funds.
The United Nations has representatives there but only to watch or monitor certain crimes that are committed. Do
you agree with me?
Mr. Baker: I agree with you, senator. Poverty does not inevitably result in corruption. However, it certainly
commonly results in corruption. Again, I would stress that it is the lack of resources in the judicial system and police
system that is perhaps most important in that question.
Senator Mahovlich: You mentioned Saudi Arabia. You said that is a wealthy country and yet there is much
Mr. Baker: One of my closest friends was, for many years, a banker in Saudi Arabia, catering particularly to upper
level civil servants — either the top civil servant or the next level, not ministers. This friend of mine found that the
average civil servant in Saudi Arabia had $10 million to $30 million of money outside of Saudi Arabia to be effectively
managed. That was the constituency for which he worked.
Mr. McCloskey: I was a public servant for 38 years, and I have no money outside the country. My bank account is
much smaller than that.
The Chairman: I have a question that was actually asked by one of our researchers. There has been reference about
the provisions in the UN convention for asset recovery. We know the words: they are there. However, are the tools
being developed to be able to go after this money? What happens if we suspect that some money is hidden in a
Canadian financial institution that is the result of corrupt or illegal practices? Do we have the tools at the UN or
elsewhere to be able to go after these funds, other than the legal recourses we have in Canada, which likely will not be
Mr. McCloskey: I am not familiar enough with the actual provisions for the seizure of these assets to comment on
that. I have to believe that, yes, we do have in place the mechanisms through the Criminal Code and elsewhere, because
we are ratifying the convention. The convention requires that there be provisions in place for asset recovery. I do
believe that Canada currently has laws in place that enable us to do this.
The Chairman: Therefore, what you are saying — I will ask the question of Mr. Baker as well — is that with the
passage of this bill, we should be vigilant that the tools are established, that the tools are in place so it can have some
teeth. That is what I am hearing from your comments. I may be wrong.
Mr. McCloskey: That is correct, but also that they are being used.
Mr. Baker: In the laws of a number of Western countries, there are provisions that require a request to be made by a
judicial authority in the foreign country concerning what is a suspect deposit in the Western country. This becomes
Take the case of Nigeria and the funds of Sani Abacha. Speaking honestly, the Abacha family was able to
undermine the judicial process in Nigeria and delay considerably the judicial decisions that were necessary for some
countries to proceed with the shift of assets back to Nigeria.
Incidentally, Switzerland was quicker than most other countries. I believe that the Swiss have now sent $650 million
of Abacha's money back to Nigeria. Britain is rather slow, as is the United States.
One of the things that Canada can do to facilitate the return of assets is to simplify what is required in identifying
and returning those assets without placing such heavy burdens on the developing country itself.
The Chairman: That is very useful. Thank you kindly.
Gentlemen, we have come to the end of our hour, and I would like to express our gratitude on behalf of the
committee, Mr. McCloskey, for being present, and Mr. Baker, for using modern technology to be with us from
Washington. I am sure one day, as we continue our look at these issues, we may see you again. I appreciate your
I would like to suggest that we do clause-by-clause consideration of Bill C-48, and I would like to go into an in
camera meeting to discuss the Lebanon report and future business. I see no objection.
May I then request that we move to clause-by-clause consideration.
Shall the title be postponed? Agreed?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chairman: Shall I do the rest of the clauses together?
Hon. Senators: Agreed.
The Chairman: Shall clauses 7, 8, 9, 10 and 11 carry?
Hon. Senators: Agreed.
The Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Chairman: Shall the bill carry?
Hon. Senators: Agreed.
The Chairman: Shall I report the bill to the Senate without amendments?
Hon. Senators: Agreed.
The Chairman: Thank you. Now we will continue in camera.