Finance Committee on March 31st, 2015

[Dr. Christian Leuprecht]

The Bank of Canada and the Department of National Defence are entities of the government where failure is not an option, and I think this is what drives these institutions, so they have to be ahead of the game. I think this is the sort of mindset we need to instill in the rest of the security sector.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

You don't think that mindset is there in the rest of the security sector.

[Dr. Christian Leuprecht]

I think there are some very dedicated individuals, but I think overall this is perhaps not the priority of what drives the overall security bureaucracy. With entities such as the private sector, where the bottom line ultimately matters and where their business model relies on the legitimacy of being able to provide a consistent and secure product and convey that to Canadians, I think there's a sense that perhaps government, especially in this country, has been behind the ball, and that they have had to move forward by themselves, because government has not been...and this is not this government; I think this is, I would say, a general perception of government. Look at Public Safety Canada's priority sectors, for instance, and how little progress we've been able to make with partnering between the public and private sectors on this.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Cullen.

I'm going to take the next round.

I want to start with you, Mr. Kennedy, and your recommendations.

Your third recommendation says that the government should reallocate the 30% federal subsidy. Perhaps you could expand on that and flesh that out a little bit for us.

[Paul Kennedy]

Since the 1950s, we've found ourselves in a model of government contracts with various provinces to provide policing at the municipal and federal levels. If it's a small community, there's a different formula. It could be up to 30% where the federal government subsidizes the provincial policing there. Usually at the provincial police level it's about 10%. The historical reason for that is that the western provinces were lightly populated and so on.

We've now found ourselves in the position where there are about 7,000 RCMP in British Columbia. Now we have the have provinces, we'll call them, Alberta, except for the little blip in oil, but it will be back up, B.C., Saskatchewan, and Manitoba. They also used to use those, and Saskatchewan leads the three of them. They were funded by tax dollars nationally through this 10% and 30% formula. That funding is coming from, let's say, Ontario and Quebec, which have their own municipal and provincial police forces. The RCMP doesn't do that role there, so taxpayers here in Ontario pay for their local police, their provincial police, and the RCMP federally, and their tax dollars subsidize policing in these other provinces. That's the model.

What I'm saying is that two-thirds of the RCMP resources are dedicated to that kind of policing, and you heard references, whether it's in the north and small communities, that that skill set cannot be called upon by the federal government to enact federal enforcement, so there's a small cadre of the total resources that are used for federal policing.

There is also pressure to rededicate federal resources frequently to backfill those contracts. You saw recently on terrorism where the RCMP had to reallocate organized crime resources to fight terrorism, because here they are moving the peas under the shell. Regarding the Treasury Board statement with reference to the resources given for terrorist financing—and I saw the last one to Treasury Board—those funds will now be pooled with other federal resources, a new form and part of federal serious and organized crime. They're being moved out of silos into a general thing, so there's the capacity to be further drawn down.

[The Chair, Conservative, James Rajotte]

Thank you.

I do want to follow up. With respect to your first recommendation on rededicating itself to its federal policing role, is the RCMP trying to do too many things? Should the committee consider the RCMP becoming similar to the FBI, including provinces like mine, Alberta, looking at an OPP model?

[Paul Kennedy]

I think we're at that point and we've gone there because crime has changed.

By the way, I have also chaired the National Coordinating Committee on Organized Crime for five years and the Canada-U.S. Crime Forum for five years, and it was obvious that the type of crime that society is now confronted with has changed because of globalization and technology. It requires a completely different set of skill sets from the officers. They're long-term, complex, sophisticated crimes. Yes, we should look at that, otherwise you are going to be passing legislation in the expectation that it's going to be enforced and it won't be enforced. Those 7,000 officers in the RCMP in B.C. are accountable to the minister in B.C. In each of the provinces they're in, that's the warm body and accountability is to that person. That's extreme pressure.

Two-thirds of the budget is dedicated to contracting. If we don't get out of that, we will not be able to fight the new kinds of sophisticated crime that this country is confronted with.

[The Chair, Conservative, James Rajotte]

I did want to get to digital terrorist financing, but I don't think I'm going to be able to in this round.

I'll again go to you, Mr. Kennedy, and then I'll go to Professor Tupman, because you as well said that the most important thing is better trained investigators.

Which countries do a good job in terms of training their investigators? What should we be looking at as a committee in terms of other countries that do this well?

[Paul Kennedy]

You mentioned the FBI and I think that's a classic example. When you see the large stock frauds that are going on with insider trading, we're talking billions and billions of dollars. The Americans take that task upon them and they can do it because they have higher skill levels from the officers and they are trained from the outset to do that. It is not a job where you need to carry a gun. If you do need those investigators, you can recruit them from provincial and municipal police forces by paying a higher packed salary dollar because you're focused on a higher skill set. That would definitely be a model to look at.

[The Chair, Conservative, James Rajotte]

I appreciate that.

Professor Tupman, I have about 30 seconds. Do you want to add anything to what Mr. Kennedy said?

[Prof. Bill Tupman]

Germany, the Netherlands, the European Police College, and the new British College of Policing all have new models that are worth looking at.

[The Chair, Conservative, James Rajotte]

Thank you, I appreciate that very much.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Leuprecht, you used the terms risk-based modelling and evidence-based assessments as opposed to the nature of risk based on perceptions. On March 15 it was reported that CSIS internal data shows that extreme right-wing and white supremacist threats are rated ahead of radical Islam threats within Canada. The reason I point that out is that the perception might be quite different. If we start with the wrong perception, we may compromise the entire investigation.

I lived in New York when the Oklahoma City bombing occurred. The first instinct of ABC and NBC at that time was to point to Islam and not to ultimately Christian fundamentalist and white supremacist Timothy McVeigh, as an example.

If the source of leads is banks, or in some cases the general public, or financial institutions, what should we be doing to better inform them as to the nature of real threats and to improve the quality of input in terms of the nature of threats from those forces?

[Dr. Christian Leuprecht]

Inherently, this is a controversial question because it hearkens at the ability to pull and to share data, both within government and between government and the private sector. I would suggest that better arms'-length work with...we have some very talented academics, both in this country and internationally, and there are mechanisms.... We have some initial mechanisms for instance with Simon Fraser University that has an agreement with Treasury Board Secretariat and gets real-time data downloads from PRIME and PROS RCMP data. That has been able to do some significant work that has significantly affected policy and strategy.

I think we need to find more creative ways of being able to have effective research, but we also need to be able to make sure that.... It seems that the people who do analysis don't understand data and the people who do data aren't allowed to do analysis. I think we have a profound misunderstanding and a profound mistrust among many agencies of data-driven work, in part because they don't understand data. The one exception to that is CSE.

[Scott Brison, Liberal, Kings—Hants, NS]

Is it a question of more resources or of the machinery of the organizations involved?

Perhaps Mr. Kennedy may have some input on this as well. Is it a question of resources, or is it a question of how we're actually...?

[Paul Kennedy]

I think it is a complex structural problem. One is one boss, one task as opposed to multiple tasks in the case of the RCMP. It's clearly skill sets and recruitment for it.

My friend here referred to the CSE. They'd be a world rival obviously in their ability to collect data and know what to do with it. We have strengths, but they are dedicated. That's why they have that expertise.

The RCMP is a multi-tasking organization and that's why I think it's failed. It has people who are accountants and so on who can do commercial crime, but then we say, “Yes, but we don't want you doing that commercial crime over there; we want you doing sophisticated crime here”. We don't have enough people; we don't have enough skilled people, and we don't give them the ability to focus on tasks that they have to do.

I don't think you'd ever find anything coming out of Canada that would identify someone playing around with LIBOR in terms of the rates and the trillions of dollars that are there. We don't look there. If you don't look, you don't find. We need people with the right skill sets, with a specific focus, dedicated, using other partnerships as well, but looking for the kind of crime that we're not looking at now.

I had a presentation done in 2004, just to show you how dated it is—10 years ago—with Americans and Canadians. We were looking at identity theft and various frauds on the Internet. We were talking in terms of tens of billions of dollars. That was then. Now God knows what's going on in terms of that particular environment of electronic frauds and thefts.

We're not looking at it and we don't have the skills to see it. If you don't have the eyes to see it, you're never going to investigate it. We have to sit back and say, what's out there? Intelligence tells us...we read the intelligence reports, but no one ever actions it. Why tell me about it if you're not doing anything about it? If it is there, let's structure ourselves to go after it.

[The Chair, Conservative, James Rajotte]

We have time for another brief question.

[Scott Brison, Liberal, Kings—Hants, NS]

You mentioned somebody fiddling with LIBOR and examples of other financial malfeasance. To what extent is there an overlap with the kinds of governance and approaches to terrorism financing that would also apply to other types of financial malfeasance, including for instance, tax evasion and offshoring money? Is there a significant overlap? Does that augment, perhaps, the importance of placing resources and increasing resources?

[Paul Kennedy]

Clearly you have multiple options. When they had the Colombians going strongly in terms of the cocaine trade, they were obviously anxious to look for ways to move their money out because they had warehouses filled with dollar-bill equivalents rotting. They looked for new technology in terms of how to transfer money.

Yes, if you get your money illicitly and haven't reported it for tax purposes, if you're a Russian oligarch you're looking to get it out and hide it in some way. If you're a drug cartel guy, you're doing it too, or if you're a terrorist you're doing it.

As my colleagues pointed out, there is an overlap between organized crime—drug trafficking or whatever you want—and terrorism. They're the first ones to adopt new technology and to use it to hide their funds for different purposes. So, yes, the lessons learned in one are applicable to the other, because these are techniques that people use.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

We'll go back to Mr. Saxton, please.

[Andrew Saxton, Conservative, North Vancouver, BC]

I have a question for Professor Tupman.

Professor, you talked about the deep web. Can you explain what the deep web is, and how does one access it?

[Prof. Bill Tupman]

It was set up apparently by U.S. naval intelligence as a special experiment. It's been used to keep dissidents in touch with each other in the west and allow them to invade the controls put upon them by their government.

Like a lot of things, it originated as an intelligence tool and as a piece of information interaction that benefited western desires to change the world. It has slowly been abused.

If you want to access it, you have to get the software. The problem is you can access the browser, but you don't know where any of the sites are unless somebody actually tells you.

You need to be very, very careful going down there, because there are an awful lot of pedophile sites. That's where they have disappeared to.

I can send you the software, and I can send you various other things, but I can't tell you where to go.

What I would recommend is to ask—

[Andrew Saxton, Conservative, North Vancouver, BC]

That's fine. I think we're just interested in the explanation.

[Prof. Bill Tupman]

Oh, okay. Was that a good enough explanation?

[Andrew Saxton, Conservative, North Vancouver, BC]

I think it was fine, thank you.