Foreign Affairs Committee on Oct. 17th, 2016

[The Chair (Hon. Robert Nault (Kenora, Lib.)), Liberal, Bob Nault]

Good afternoon, colleagues, ladies and gentlemen.

I wanted to start by reminding my colleagues and everyone here that pursuant to the order of reference of Thursday, April 14, 2016, and section 20 of the Freezing Assets of Corrupt Foreign Officials Act, statutory review of the act, we will begin this review this afternoon by hearing from some officials of the Government of Canada.

We're going to start off this afternoon with Global Affairs Canada and Hugh Adsett, the director general, legal affairs and deputy legal adviser, and Marc-Yves Bertin who is the director general, international economic policy.

I wanted to remind everyone that this is also a part of the Special Economic Measures Act and a number of other acts relating to this piece of legislation called the Freezing Assets of Corrupt Foreign Officials Act. For those who are following this, this is a section in the act that deals with an automatic review after five years. The intent of the committee is to do its legal work based on the aspects of that legislation and then to report back and recommend to Parliament, the minister, and the department as to what we think of the legislation and how it's working in the context of today.

With that, I'm going to turn it over to Marc-Yves Bertin who is going to do a joint presentation. Colleagues, this will be the first hour, and then we'll go with questions for an hour. Then we will proceed with the Royal Canadian Mounted Police and the Office of the Superintendent of Financial Institutions.

I'll turn it over to you, Marc.

[Marc-Yves Bertin, Director General, International Economic Policy, Department of Foreign Affairs, Trade and Development]

Thank you, Mr. Chair.

My colleague, Hugh Adsett, and I are delighted to be here to support the committee's work, particularly given our respective responsibilities over policy and operations under SEMA and FACFOA. We recognize that the committee is interested in issues of sanctions, a matter that is quite horizontal and may go into areas beyond areas of our responsibility and may very well be interested in covering discussions around other statutes. I'd simply like to reassure the committee that Global Affairs Canada is willing and very much able to make officials available as your deliberations unfold.

Good afternoon. On behalf of Global Affairs Canada, I want to thank the committee for having us here.

The review of the Special Economic Measures Act and the Freezing Assets of Corrupt Foreign Officials Act comes at an opportune moment.

The Canadian government is revisiting policies and programs to ensure Canada’s international efforts are adapted to current global realities. This includes a number of policy reviews that were highlighted in ministerial mandate letters.

Internationally, the current conflicts have global dimensions. For example, the war in Syria has resulted in a refugee crisis spreading from the Middle East to Europe. States such as North Korea continue to challenge international stability and security. Given this context, a review of legislative instruments is important.

The Special Economic Measures Act was introduced in 1992 to improve Canada’s ability to join other states in promptly and effectively applying economic sanctions. This was done in the context of the increasing trend by the international community to use economic sanctions as a means of maintaining international peace and security while reducing the recourse to military force.

The act allows Canada to adopt regulations to restrict or control the activities of Canadians and persons in Canada by prohibiting their engagement in what would otherwise be lawful business or economic activities with a foreign state or with persons or entities associated with that state.

The act specifically allows Canada to impose economic sanctions through regulations in two situations: first, when an international organization or association, of which Canada is a member, calls on its members to take economic measures against a foreign state; and second, when a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis.

Asset freezing—for example, the prohibition from dealing in any property held by a designated person—is one of the targeted tools that can be used to impose economic measures once an act criteria has been met. The determination of individuals and entities to designate for asset freezing is usually done in coordination with like-minded countries.

In the case of the Special Economic Measures Act, Canada typically imposes sanctions to complement existing UN-mandated sanctions, for example, in the case of Iran or North Korea, or when the United Nations Security Council is unable to reach a consensus, such as the case of sanctions against Russia for its actions in Crimea. Canada’s use of sanctions imposed under the act has increased over the past decade, growing from one regime in 2007 to nine in 2016. Canada currently has sanctions imposed under the act against Burma, Iran, Libya, North Korea, Russia, South Sudan, Syria, Ukraine and Zimbabwe.

With respect to FACFOA, I should first note that it was enacted in 2011 to response to the Arab Spring events. Accordingly, it provides a responsive tool for Canada to support a foreign state that is in political turmoil and seeks to transition towards democratic rule and governance. The FACFOA authorizes the Governor in Council to temporarily freeze the assets of allegedly corrupt foreign officials, at the request of a foreign state, to allow this foreign state the opportunity to seek the ultimate seizure and recovery of assets through mutual legal assistance frameworks. Canada currently has regulations freezing the assets of politically exposed persons in relation to Ukraine and Tunisia.

In closing, I note that while FACFOA is utilized on behalf of a foreign state, the SEMA authorizes the Governor in Council to take action against a foreign state. In this respect, FACFOA sits apart from Canada's sanctions regime.

With these considerations in mind, my colleague and I look forward to your questions.

Merci.

[The Chair, Liberal, Bob Nault]

Thank you.

We're going to go right to Mr. Kent, please.

[Peter Kent, Conservative, Thornhill, ON]

Thank you.

Thank you, gentlemen for joining us here today.

I'd like to ask if there is any legislation in place today that would allow Canada to ban the visas of individuals, individuals about whom credible evidence exists with regard to human rights abuse or corruption abroad, and their attempts to bring that money to Canada?

[Hugh Adsett, Director General, Legal Affairs and Deputy Legal Adviser, Department of Foreign Affairs, Trade and Development]

I think that question is a question of admissibility to Canada. It's a question that I think is probably better answered by colleagues from Immigration, Refugees and Citizenship Canada. I suspect it's linked to their legislation.

[Peter Kent, Conservative, Thornhill, ON]

I asked that question with the case of Vitaly Malkin in mind. Vitaly Malkin, with whom I assume you're familiar, tried for 20 years to gain entry into Canada and to gain citizenship in Canada, but was prohibited. He was associated with money laundering, arms trafficking, trading in conflict diamonds, embezzling United Nations aid monies, and allegedly using profits from organized crime to subvert the democratic process in Russia. He was interviewed by CSIS and banned by officers of Canada Immigration, a prohibition which was overturned by an Ontario judge based on a definition of Russian entrepreneurship in Canada.

I'm just wondering whether SEMA or FACFOA has any effect on prohibiting an individual like Mr. Malkin from entering Canada, bringing wealth to Canada, and becoming a citizen of Canada.

[Hugh Adsett]

I can say that neither SEMA nor FACFOA addresses questions of admissibility. There are provisions in the Immigration and Refugee Protection Act to deal with admissibility, but there is nothing in the Special Economic Measures Act that deals with questions of admissibility.

[Peter Kent, Conservative, Thornhill, ON]

I understand I'm getting into a sensitive area here, but would Foreign Affairs be aware of the reported 21 lines of secret information that the federal judge, in overturning the immigration ban, ruled too sensitive to be released to the public?

[Hugh Adsett]

I'm not—

[Marc-Yves Bertin]

The short answer is that we're not aware. I think it would be inappropriate to offer a view for a number of reasons, including the sensitivities I think you're alluding to, given the way that you've posed your question, not the least of which, though, is that IRPA is the responsibility of another department and another minister.

[Peter Kent, Conservative, Thornhill, ON]

I understand.

In the absence of what Parliament last year voted unanimously for in the form of the Magnitsky Act.... When the minister appeared before us and in other venues, he has expressed opposition to the Magnitsky Act on the grounds that it would interfere with Canada's relationship with Russia on the Arctic Council. I'm wondering whether you see any possible or potential conflict that would arise should Parliament in its wisdom pass the Magnitsky Act in the coming months.

[Marc-Yves Bertin]

We very much recognize that the Magnitsky case and potential legislative approaches to responding to that are of interest to this committee. We recognize, of course, as well, that there are a few bills in play, from both the previous session and this session, that will provide a good opportunity to debate and consider the merits of these statutes.

The work of this committee, as well, is going to be interesting and important, and we'll follow it with interest since there will no doubt be a lot of discussion of this issue over the weeks and months as your work program unfolds.

As part of our own examination of SEMA and FACFOA, of course, we'll be looking at the discussions and the public debates around these issues as we formulate our own view. Therefore, at this time, I think it would be premature for us to offer a government position on something that is still under consideration.

[Peter Kent, Conservative, Thornhill, ON]

With regard to FACFOA and the point that you made in your opening remarks, many people see as a shortcoming of FACFOA the temporary freeze on the assets of allegedly corrupt foreign officials and the fact that SEMA would not be capable of blocking an individual, such as the one I described earlier, from bringing in funds acquired through corruption and abuse of human rights abroad and placing those funds in Canadian financial institutions or real estate.

[Marc-Yves Bertin]

Hugh will have some views on this, but I may add some at the end.

[Hugh Adsett]

I will be brief. You've correctly pointed to the provision in the Freezing Assets of Corrupt Foreign Officials Act that makes the duration of an order under that act temporary. It's for five years. Those orders can be renewed if a foreign state requests that the regulation be renewed. It is a five-year limitation, but it can be renewed, and that renewal can be for more than one period of time if the foreign state requests that.

Marc-Yves, maybe you want to add more.

[Marc-Yves Bertin]

You made some points about SEMA and our inability to deal with individuals who might be coming in. Without speaking to the powers that the government would have under another statute, such as IRPA, I would note that it is important to remember that a number of the actions we take under various statutes are actually Governor in Council decisions, which by their very nature implicate a collective decision-making process, multiple ministers around the table. This means that departments have to work together and coordinate, both to support these types of decisions and to ensure a whole-of-government coherence in the way they are looking at what they may be considering under various policy and operational contexts under their own statutes.

I think the issue at the core of your question is whether we have a bit of a gap in coordination and coherence because of the statutes. You will know better than I that, in our western model of government, ministerial accountability or collective accountability of the cabinet process is an interesting dynamic, but it doesn't take away from individual ministerial responsibilities and accountabilities under statutes before Parliament. Therefore, we have to work within those constructs.

The construct or the solution to that challenge, inherently, is interdepartmental collaboration.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Kent.

I'll go to Mr. Fragiskatos, please.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Mr. Chair.

Thank you for coming today to appear before the committee.

In your remarks, you mentioned that sanctions have always been seen as an alternative to military force. With that in mind, I wonder whether you could tell the committee how effective sanctions are, in your view, as a tool in achieving restoration of international peace and security, democracy promotion, human rights protection, counterterrorism, and many other laudable goals that we would like to see in the international domain.

[Marc-Yves Bertin]

First and foremost, we do see sanctions as an exceptional tool because of the restrictions we are inherently applying to what are otherwise completely legal activities, as well as because of the risks associated with the use of sanctions. The way we look at their effectiveness is an interesting one insofar as effectiveness, in terms of persuading a change of behaviour and a policy shift, is a very difficult thing to attribute results to, in an international context.

Sanctions are a complementary instrument. We use them, generally, when other mechanisms or other steps that have been taken and tried have failed. Because we do that as part of a broader suite of interventions—whether that's negotiations, participation in peace processes, or international advocacy activities—it is difficult to know what the tipping point is.

What complicates it even further is that we tend to use this instrument, importantly, along with other countries. We harmonize our approach with other countries, which means that the relative weight of Canada's intervention, versus the relative weight of the European Union, the United States, or what have you, is difficult to discern in that context.

As I mentioned, we tend to view them as most effective when they are a selective complement linked to a clear policy outcome or a desired shift in policy and behaviour on the part of a foreign country, when they are applied universally, and when they are tailored—or “smart”, to use our internal jargon—insofar as they are focused on key decision-makers and their associates.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Well, you have avoided a lot of jargon today, so on behalf of the committee I think I can say thank you.

I have a question as far as SEMA goes, specifically. Obviously, when an international organization, the UN for example, issues a determination under chapter VII that a grave breach of international peace and security has taken place, then it is clear that this determination has been made and Canada can act in kind. I am more interested in the second aspect here, when “a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis”. It is not clear that an international organization has deemed it that way, but Canada, still under SEMA, has the power to impose sanctions.

Who determines how international peace and security are defined in that instance? Who does the determination, and how is that defined, exactly?

[Hugh Adsett]

At the end of the day, it's a decision for the Governor in Council. The Governor in Council makes the determination under the act as to whether there has been a “grave breach”. “Grave breach” isn't defined in the act itself. It really is a question of the context. Advice will be given to ministers. Ministers will then take that into consideration, make the determination, and make a recommendation to the Governor in Council. That's the process, and in a way that's the substance, too.

[Peter Fragiskatos, Liberal, London North Centre, ON]

You say there's no clear definition in the act. Do you think that is problematic or is that something that shouldn't be of concern?

[Hugh Adsett]

I won't venture an opinion because I think that would be for the committee's views and for ministers to speak to. I would say that my recollection from having looked at the parliamentary record for the time when the act was adopted is that there was a debate about various elements of the act. Part of the conclusion of the debate seemed to have been that it was beneficial to have a broad scope for possible action to allow the Governor in Council essentially to make decisions in very fluid contexts where a number of things might be at stake.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I have one last question. With everything that you've said, is it possible that human rights violations could fall under a definition of a “grave breach of international peace and security”? Could they be captured under that category?

[Hugh Adsett]

I should perhaps put a caveat on what I say because one of my roles is to provide legal advice in the department. Without my providing legal advice at all, I will say that certainly there have been situations where there have been serious violations of human rights. These have formed part of the conclusion that there was a “grave breach of international peace and security”, such as would cause an international crisis.