Canada-China Relations Committee on June 7th, 2021

[Marta Morgan]

Mr. Chair, Canada's approach to China continues to evolve. We recognize that we need to contest in areas where China is a threat, that we need to co-operate in some areas, such as climate change, where we share the global commons, and that we need to compete with China. This is an approach that recognizes the way that China is changing and the way that Canada has to adjust its approach, in particular to address the challenges that we've talked about during this committee appearance.

[Jack Harris, NDP, St. John's East, NL]

I see we're very close to time. I don't even know if I have time for another question and answer.

[The Chair, Liberal, Geoff Regan]

You have 10 seconds.

[Jack Harris, NDP, St. John's East, NL]

I won't press the clock too much.

Thank you, Ms. Morgan.

[The Chair, Liberal, Geoff Regan]

Thank you very much, Mr. Harris.

I appreciate it when members manage the time they have. Of course it's up to members to do that, although I try to assist with signals about how much time is left.

I think we have enough time for Mr. Paul-Hus and Mr. Oliphant.

Mr. Paul‑Hus, we now go to you for five minutes.

Actually, you have four minutes. I have to be stricter in managing the time we have left.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Ms. Morgan, we regularly discuss our meetings with members of the G7, as well as those with our Five Eyes partners. In my first few years in politics, I attended a number of North Atlantic Treaty Organization, or NATO, meetings. I, personally, had the opportunity in Bucharest to ask the Secretary General of NATO, Mr. Stoltenberg, a question about defence.

NATO focuses mainly on Europe, but in 2018, we received threats from North Korea, and I asked Mr. Stoltenberg whether NATO was going to intervene on behalf of the western side of the alliance. He was taken aback by my question because Canada had never been one of the countries that could come under threat.

On the cybersecurity front, we rely heavily on our American counterparts. Internationally, when you speak with NATO members, do you discuss the respective capacity of members to assist Canada in defending against attacks from China?

Russia is another concern, but we are here today to focus on China.

Is Canada truly interconnected with the United States?

[Marta Morgan]

Thank you.

I'm going to defer to my colleague Daniel Costello on that question. Thank you for your question. Our relationship with NATO is extremely important to us as it relates to all national defence requests.

[The Chair, Liberal, Geoff Regan]

Go ahead, Mr. Costello.

[Daniel Costello, Assistant Deputy Minister, International Security, Department of Foreign Affairs, Trade and Development]

Thank you, deputy minister.

That's a good question, Mr. Paul‑Hus.

Indeed, NATO talks a lot about that issue. While NATO is an alliance of European and North American countries, the rise of China and its conduct around the world right now are raising a number of questions about the repercussions for the Euro-Atlantic region.

NATO is trying to better understand the repercussions of China's much more aggressive posture. The alliance wants to understand what it means. NATO is also interested in China's technologies, systems and intentions globally. That has been the subject of recent discussions and reports. Although NATO focuses mainly on the Euro-Atlantic region, it still has to have an overall understanding of the situation.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

The North Atlantic Council can have more extensive discussions on NATO's diplomatic capacity and the fact that it is Canada's ally. I was speaking to the minister earlier about the importance of the Northwest Passage to Canada.

We rely heavily on our American partners, but I would think that, as partners of the alliance, NATO member countries in Europe could also bring pressure to bear to assist us.

Mr. Costello, are NATO countries reluctant to discuss Canada's north, or is it something they talk about?

[Daniel Costello]

Thank you for your question, Mr. Paul‑Hus.

Naturally, the alliance discusses anything involving security threats or issues, including the Far North. A number of our allies in NATO belong to the Arctic Council and are, themselves, part of the Arctic region. I would say that, first and foremost, the NATO alliance is focused on defending shared values.

[The Chair, Liberal, Geoff Regan]

Thank you, Mr. Costello.

Thank you, Mr. Paul‑Hus.

Mr. Oliphant, you have four minutes, please.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you, Mr. Chair.

I want to go first to consular affairs with regard to the difficulty we have had with respect to China's respecting dual citizenship, because this issue was raised. This question is particularly with regard to Mr. Celil, whose family I personally am in contact with regularly.

Can you tell us what attempts are made by consular services in China, by the Canadian government, to try to get access to Mr. Celil?

[Marta Morgan]

Yes, the issue of dual citizenship is a challenge for us in terms of consular cases in China, particularly if citizens are travelling on their Chinese documents. Our ability to provide consular services is restricted. This has been the case with Mr. Celil. We continue to advocate for consular access to Mr. Celil, as well as access for his family. This is something that we do regularly with the Government of China.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you.

Minister Garneau announced recently that we would co-operate fully with the American government, with President Biden and his administration, with respect to their intelligence operations regarding the origins of the novel coronavirus.

Is this going to take activity from the government? Is it going to take resources? Are there co-operative activities already started, or will we be responsive in that activity?

[Marta Morgan]

I think this is an area where we are very aligned with the United States. In fact, on March 30 Canada was one of the 14 signatories to the U.S.-led joint statement on the WHO-convened COVID-19 origin studies that reaffirmed the importance of transparency in global health security and continued commitment to coordinating with our partners. We will work with the United States on this issue, whether it is through the WHO or whether it is through the collaboration of our security and intelligence agencies, as we do regularly, as requested.

That coordination and that co-operation to push for solid scientific work to trace the origins of COVID-19 will be across multiple fora and within the existing resources and partnerships that we have.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you. Those are all the questions I have.

I'd like to close with my personal thanks to the deputy, the ADM, and Mr. Epp as well, and to your whole team on the China files. It is a complex, complicated file. It takes every day and every bit of your energy to keep up, so thank you for your help to the Canadian people on that topic.

[The Chair, Liberal, Geoff Regan]

Thank you very much, Mr. Oliphant.

Allow me also to thank the witnesses. We very much appreciate your presence with us today.

We'll now take a five-minute pause to prepare the new witness and to take a health break.

We'll see you shortly. Thank you.

[The Chair, Liberal, Geoff Regan]

I call this meeting back to order.

I would now like to welcome, as an individual, Dr. Peter German, barrister and solicitor.

Thank you for being here.

Dr. German, you may now proceed with your five-minute opening remarks, please.

[Dr. Peter M. German, Q.C., Barrister and Solicitor, As an Individual]

Good evening, Chairman and members of the committee.

Last week I received an invitation to appear before this committee, and I'm pleased to do so. I appreciate that you're working late in the evening and I also appreciate the interest that you're taking in this most important topic.

I was asked to appear primarily as a result of reports that I completed at the request of British Columbia's attorney general, David Eby, in 2018 and 2019. The first, “Dirty Money”, related to allegations of money laundering in B.C.'s casinos. The second, “Dirty Money - Part 2”, related to allegations of money laundering in other sectors, including luxury cars and real estate. Both reports are freely available on the Internet.

I should also indicate that I am currently president of the International Centre for Criminal Law Reform, a UN-affiliated NGO located at the University of British Columbia. ICCLR, as it is known, was heavily engaged in an exchange with Chinese universities and government during the 1990s and well into the first decade of this century. lt was a robust program that involved lectures in China by our associates on matters related to criminal law and the rule of law, and hosting visiting dignitaries and scholars from China. We remain in contact with a fellow UN affiliate at the Beijing Normal University. If there is anything that ICCLR can do to further Canada-China relations, as we have in the past, one need only ask.

On a personal note, in 1996 I visited China with ICCLR and lectured at universities and at the procuratorate, the equivalent to our prosecution service, on the topic of money laundering. On other occasions, I visited Hong Kong and Macau. lt is an amazing country and people. I am strong in my opinion that the Canada-China relationship is of critical importance to our country. Canada is much better for its large Chinese diaspora, which has not only fuelled the economy but is hard-working, engaged in the community and proud to be Canadian. We need immigration from China and we need capital from China.

I'm also a retired deputy commissioner of the RCMP, having spent many years working on financial crime and heading that work in the force. As such, I visited numerous Asian countries and liaised with their national police services. The topic of interest to you, however, stems from my work on organized crime and money laundering, which resulted in the “Dirty Money” reports. ln the first report, I outlined and provided graphs that depict how underground bankers in Canada and China were able to euphemistically “clip their ticket at both ends” by both facilitating capital outflow from China in violation of Chinese currency controls and launder the proceeds of crime in Canada. High-worth individuals would deposit money with an underground banker in China, fly to Vancouver and be given a bag of cash on arrival. They could do with it as they wished, and many chose to gamble at casinos. The source of wealth of the Chinese individuals was, in most cases, unknown, but quite possibly legitimate. Their goal was to invest or use their money overseas. The money they were given upon arrival was primarily the proceeds of domestic and international drug trafficking. This process became known as the “Vancouver model”.

I will end by saying that China is known to be very tough on domestic drug trafficking. The issue is Chinese organized crime groups that operate around the world outside China, including the Big Circle Boys and the triads, which utilize familial connections and networks to distribute drugs manufactured in Guangdong province and elsewhere to the world. Let me be very clear, however: Canadians consume those drugs and buy the illegal commodities, so blame should not be unidirectional. Furthermore, it is important to realize that organized crime today is global in its reach, forms alliances as required, is not confined to one ethnicity and is not commodity specific.

Thank you for the opportunity to appear before you, and I am happy to answer any questions that you may have.

[The Chair, Liberal, Geoff Regan]

Thank you very much, Dr. German.

We have time for one last round.

Mr. Paul‑Hus, you may go ahead. You have six minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Good evening, Mr. German. Thank you for being here.

As you said, organized crime has a global reach, with criminal groups all over the world. Today, we are focusing on Chinese organized crime, which as we know, is firmly established in Canada. I'm curious as to whether you know much about the mechanism organized crime groups use to transfer money. One of my fellow members previously put forward legislation on foreign funding—what is known as the tunnel fund—a method that criminal organizations use to transfer money in the country.

Can you talk a bit about that?

[Dr. Peter M. German, Q.C.]

As I mentioned in my opening statement, the issue is that because of currency controls, it is difficult to move money out of China unless you have approval. It's my understanding things have tightened up in that regard over the last few years.

What you find internationally—and this is not just between China and Canada but in the world generally—is that there are underground bankers. Underground bankers are money service businesses, but they are simply unregistered money service businesses. That's the easiest way of looking at it. They're not registered with FINTRAC in Canada. They are individuals who have a connection one way or another. They may have a family connection, or colleagues, or they may be members of a drug trafficking ring. All they really have to do is send a message from one to the other, between continents, and say, “I've got money. I'm holding money. You can give the money to Mr. A.” No money actually flows back and forth. There are no wire transfers. There is a settling of accounts among the underground bankers at some time in the future, or the money they have received from a client is then sent to a third party, possibly to purchase drugs or whatever.

In answer to your question, what is most likely happening, and most common, is the use of these informal remittance providers known as underground bankers.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

I will now give the rest of my time to Mr. Chong.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Paul‑Hus.

I have a question about single-event sport betting. As you know, single-event sport betting is big business in Europe and Asia, where it's long been legal. In Europe, I've seen figures that it's worth about $40 billion Canadian a year. Bill C-218 is making its way through the Senate, and it will decriminalize single-event sport betting.

What is your view on decriminalizing single-event sport betting without putting in place any additional protections, keeping the current system we have in place for regulating gambling?