Foreign Affairs Committee on Nov. 23rd, 2016

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

Colleagues, I call this meeting to order. This is our 35th meeting as the foreign affairs committee.

Pursuant to the order of reference of Thursday, April 14, 2016, and section 20 of the Freezing Assets of Corrupt Foreign Officials Act and our statutory review of the act today, before us as a witness is Kimberly Prost from the Hague in the Netherlands. I understand it's about 9 o'clock at night there, or somewhere in that neighbourhood.

Kimberly, welcome to the committee. The process will be, as I am sure it's been explained to you, that you'll get some time to make some opening comments. Take the time you need. After that, we'll go to questions for maybe 40 or 50 minutes. That'll give us plenty of time to reflect on your statements, and we'll go from there.

I'll turn the floor over to you. Welcome to the Standing Committee on Foreign Affairs and International Development here in Canada.

[Kimberly Prost, As an Individual]

Thank you very much.

Good afternoon to everyone. As indicated, I will provide some comments based on my experience as Ombudsperson for the Security Council Al-Qaida Sanctions Committee for five years. I note that while that was an international role, I believe it had a lot of important lessons in terms of sanctions in a national context.

I will comment on both pieces of legislation that were referred to me. I'll start with some brief comments directly on the Freezing Assets of Corrupt Foreign Officials Act before I make some more general comments on the Special Economic Measures Act and the sanctions issue more generally. I do that because in addition to my background in sanctions, I did serve as Canada's head of the international assistance group at the Department of Justice for 10 years, working on mutual legal assistance and extradition, including assistance with asset freezing.

I've been away from Canada for several years, and I have to say that I was, and remain, a bit puzzled by the Freezing Assets of Corrupt Foreign Officials Act. I suppose my puzzlement is with regard to why, in Canada, we would need legislation of this nature when we have such a robust system for the restraint and forfeiture of assets, of proceeds of crime, and where we have a mutual legal assistance regime and a scheme of mutual assistance treaties.

I understand, because I practised in the area for many years, that dealing with the proceeds of crimes committed outside the country and dealing with freezing assets in the context of foreign officials who have corruptly taken assets is very challenging and can be very frustrating, but that's because the legislative scheme that's in place has checks and balances that even out the quest for the restraint and forfeiture of assets with the protection of individual rights. It seems to me, to address the frustrations, it would make more sense to work on amendments within the existing regimes, which have all these protections, rather than through a piece of legislation that, to me, just presents parts of restraint and forfeiture legislation and parts of mutual assistance but does not contain in any way a scheme of protections.

I would specifically note three things that struck me about the legislation: the very surprising absence of any requirement for the request from the foreign state to provide any information, if not evidence, as to the basis for the assertion that the funds were misappropriated or inappropriately obtained; the absence of any details, then, as to what the individual is said to have done in terms of misappropriation or inappropriate obtaining of the assets; and finally, the absence of the ability to challenge on the merits, as opposed to challenging status.

Those were just comments specific to that act. Now I will speak more broadly to the Special Economic Measures Act and the approach to sanctions.

As the first of two caveats, my comments will focus very much on the use of SEMA and the use of sanctions in a targeted fashion when they are directed at individuals, because that is the area where the question of rights arises. It's not in the context of state or sector sanctions, which of course bring into play political issues but not the same question of rights.

Second, I would emphasize that in principle—particularly today, with the very fractured, divided Security Council that is operating in New York—it is very useful and very appropriate for a country like Canada to have a power whereby it has the flexibility, as part of an international organization, collectively by agreement or even individually, to use a sanction power to address threats to international peace and security.

However, there are some very specific lessons I learned from working as the ombudsperson as to how that power can very much be called into question in terms of its credibility and its strength. There are three principles that certainly the Security Council has been criticized for, in terms of its sanction regimes. I think some of them have resonance in relation to this legislation and the current approach.

The first point I would make is that there are very specific purposes and policy reasons that underlie the use of sanctions, particularly in the context of international peace and security. I've looked at some of the previous testimonies. You've heard from some of the leading specialists in the area of sanctions, so I'm sure you've heard it repeated that the three basic aims of sanctions are to prevent, of course, the threat from materializing; to stigmatize the individuals; and perhaps most significantly, to change the conduct at which the sanctions are directed. Those are the policy reasons that sanctions legislation must be designed to address and must be used to address.

Unfortunately, sometimes sanctions are instead used as a replacement or a substitute for criminal investigations or criminal prosecutions, or for asset restraint and confiscation, by virtue of the fact that the restraint lasts for so long. The sanction regimes, quite simply, are not accompanied by the standards, the evidence, or the procedural protections that are central to those criminal and asset restraint processes and that provide a protection for rights.

The second and very related question is that when you're using a sanction power, it needs to be very carefully crafted, and that's particularly the case when you're targeting individuals. You need to be addressing a specific defined threat, using objective criteria that are predefined, in particular, when you're going to target individuals. It's not just about having a threat in place; there must be criteria that define when the individual becomes a part of or responsible for that threat, in whole or in part. You need to be able, then, to measure the individual's conduct against those criteria to a defined standard. That was the whole aim of the ombudsperson position. It was what I had to implement effectively in practice, and it was critically important.

The third point, of course, is that while it is at a much lower standard than in criminal proceedings, there must be very clear procedures that ensure fair process is given to those targeted individuals and entities, those listed. That includes the fundamentals of fair process: notice, although it can be after the freezing or the action is taken or the economic measure is taken; specific reasons that the individual has been listed: an opportunity to address those reasons and to be heard by the decision-maker; and, most importantly, an independent review by a body that can provide an effective remedy.

It's very challenging to try to achieve those principles at the international level, but it should not be in Canada, where there is a fully functioning legal and judicial system.

On applying those principles, I will just give a few brief comments on some of the concerns I see in SEMA and what it reflects in terms of the.... It's also applicable in many ways to the Freezing Assets of Corrupt Foreign Officials Act.

The first of the concerns is with the criteria on which the sanctions could be imposed, which are extremely broad and vague—the references to “grave breach” and “serious international crisis”, and in the other context, these concepts of misappropriation.

If you want to have this kind of broad reach, then at the very least, the orders and regulations underneath the legislation, and specific orders, must explain how the specific situation addresses or falls within the overall threat to international peace and security. I don't see any requirement for that in the legislation, and I don't see the orders doing that or explaining that connection.

Far more gravely, there are simply no criteria set out as to how the individuals then end up on the list. What are the criteria against which their conduct is measured, and, most significantly, what are the specific facts in either piece of legislation as to why that person is listed?

The second concern, and it's very related, is that if this is really sanction legislation with sanctions, aims, and purposes, you need to be demonstrating that in the legislation. I don't think this legislation does that. I put it this way—and it's something I said often when I was dealing with the AQ system—it's very difficult to use sanctions to get people to change their conduct if you don't tell them what the conduct is that you want them to change. I find that to be a glaring issue here.

Finally, on the third issue, the one that I've highlighted, the fair process requirements, I have to give a caveat. I've been out of Canada for many years, and I didn't refresh my administrative law. I suspect there is a judicial review path from a ministerial decision, because there is a ministerial review provided for. If there is not, then this legislation is worse than what I found when I got to New York in 2010 and looked at the al Qaeda regime, because it would have no objective review or effective remedy.

Even if it is available, what is very surprising is that none of the other aspects of fair process—notice, reasons, and things of that nature—are specified in the legislation, Also, you're taking actions and economic measures against individuals in foreign countries. It is appropriate to set out very clearly in the legislation, on the face of it, what the fair process protections are and what course of action that individual can take. I emphasize that a ministerial review is not going to meet the criteria of an objective and independent review as contemplated in fair process.

I'm going to leave it there because I'd much rather address whatever questions you might have. I know you've been working on this for a while and you've heard from many people. Having struggled for five years to protect these principles in an atmosphere not at all conducive to or equipped for fairness, I would simply urge this committee and the government, my government, to ensure a scheme of effective sanctions and sanction policy across both these pieces of legislation that can achieve the important policy aims while still safeguarding individual rights.

Thank you.

[The Chair, Liberal, Bob Nault]

Thank you very much, Ms. Prost. That was very helpful.

We'll go to straight to questions by members, and we'll start with Mr. Allison, please.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, Mr. Chair.

Thank you, Ms. Prost, for your testimony before us.

I was listening to your testimony. What we're trying to accomplish is that we're trying to figure out those people who are grave human rights abusers. Obviously, there probably hasn't been an investigation. The context was around a global Magnitsky law, as passed in the United States and contemplated in other countries. That's part of the problem, right? First of all, the country isn't going to have an investigation, more or less.

I guess my question to you is, how do we work around that? You say sanctions are no substitute for an investigation if there's a cover-up or those kinds of things. Our concern is those individuals who would take advantage of their country and then put those assets in Western democracies where at some point in time they or their families could have access to them. We hear the argument that it doesn't actually happen, but it does happen, maybe not as much in Canada and maybe more so in places like the United States, the U.K., or some of the European countries.

I'd like your thoughts around that. We're struggling trying to figure out how we do this, and I'm hearing you say maybe that more amendments would need to be made, more definitions, and things like that. The end that we're trying to achieve is, where there's not that due process.... I can appreciate that if this is coming from a highly democratized country and there are already issues in place that arbitrarily throw people on a list or sanction them, having not gone through due process would not always make sense. Some of these countries don't always have that in place, so I'd like your comments around that.

You gave us some good things to think about. Is there any way around that, in your mind, that would strengthen it and make it fair and reasonable?

[Kimberly Prost]

Yes, those are very good questions, because that is the dilemma. We do want to be able to take action, especially in dealing with the corruption issue. It's is a major challenge for a great many countries, and very paralyzing, so certainly we do want to assist and be able to return assets.

Just focusing on that, I'll speak a little bit about the sanctions element, because they are two very separate things for me.

If you're dealing with a situation of individuals who are suspected or believed to have taken money from their country or inappropriately obtained it and you want to go after those assets, a number of measures already exist to attack the assets. Using the criminal conviction proceeds of crime approach is very difficult when it's foreign assets, but in several provinces—when I left, I think it was three, but there are probably more now—there are mechanisms for attacking the assets.

Therefore, you bring proceedings directly against the assets. You don't need the individual and you don't need the criminal offence; you attack the assets, and there is where you use mutual assistance to try to at least get information from the country as to what they believe the individual did or how the individual took the money out. It's not easy, but at least you get a better balance then, because you can go after the assets and at the same time have some modicum of protection.

The other problem that arises in these cases, and we've seen it in many situations, is you get one political regime ousted and then there's a new political regime; it can involve corruption, but it can also just involve a political fight, if I could put it that way.

My strong urge is to look very carefully at the already existing pieces of legislation and practice that Canada has. That's also consistent with the international approach. The United Nations Convention Against Corruption has a whole chapter aimed at that. That's what I would say on that side.

Then, if you're talking about trying to sanction people whose conduct is of concern or to prevent more international humanitarian violations, there you do have a much reduced standard. We're not talking about the kinds of standards you need for criminal proceedings. You can impose the sanctions on....

I used a test of whether there was sufficient information to provide a reasonable and credible basis for listing this person. You don't have to get a lot of information, and there's often intelligence that can be used, but it's just then allowing the person, if they want to, to be able to challenge it ultimately. It's providing a mechanism that most of the time doesn't get used, but at least you have the protection there in case a person wants to try to be delisted.

Those are some of my thoughts on the questions. I hope that's of some help.

[Dean Allison, Conservative, Niagara West, ON]

Sure, and I think we certainly understand regime changes. Ukraine, I think, is a good example of different governments coming in and sometimes going after previous ones, but how would you deal with a country like Russia, where there haven't been regime changes, and quite frankly, you're not going to get any help from the state at all?

As a matter of fact, the state is the one that's actually covering it up in most cases. How do you deal with the Russians versus...?

[Kimberly Prost]

Yes. The other thing is, of course, that you can use the sanctions in a very political way. I'm talking now about the sanctions regime versus trying to freeze the assets of someone who's taken them through criminal activity. You can say, as I think has been done in some instances, that you're going to sanction all of the members of the cabinet in Russia or you're going to sanction because you feel that they're contributing towards the aggression in Crimea, for example, or annexation. There's nothing wrong with taking that as the policy basis on which you are applying the sanctions. You simply have to be very specific that this is the aim of it, and then the list is based on people who fit those criteria, people who are ministers or whatever it may be, or officials.

There's nothing inappropriate with using it in that fashion. Then you have to allow them to challenge that by saying no, they're not a minister, or challenge whether or not the particular assets belong to them in that context.

[Dean Allison, Conservative, Niagara West, ON]

Thank you.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Allison.

We'll now go to Mr. Fragiskatos, please.

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

Thank you, Chair, and thank you very much, Ms. Prost, for testifying in front of us today. It was a very interesting presentation.

I have a question that builds on Mr. Allison's question, about sanctions that would tend towards a human rights perspective.

Obviously with the legislation that we have in place now, specifically with respect to SEMA, there is a focus on international crises, a focus on violations of international peace and security. You spoke about and underlined the fact that even now, the way the legislation is phrased is quite vague. There has been an emerging current of thought, especially in the United States, that says that human rights ought to also be factored into sanctions legislation.

I wonder, though, if we go down this road, how one would phrase the wording in legislation so that it's not vague, so that it's quite specific. I wonder if we're trapped right from the outset, because human rights language is bound to be vague unless you specify it so that you're capturing quite systemic violations of human rights, the highest crimes—for example, genocide, war crimes, crimes against humanity. However, if you were so specific, those crimes would already be considered—by most, at least—to constitute violations of international peace and security, so I wonder if it even makes sense to go down that road, if you understand where I'm coming from.

I would ask you to speak to the danger of being vague in legislation if we're going to focus on human rights, and then also on the efficacy of going forward with sanctions legislation that would make human rights its primary target. I'm quite interested in those two issues.

[Kimberly Prost]

That has been a growing question in the international sphere.

Traditionally the council has generally used its powers—except in the case of apartheid in South Africa, where it was very directed at those policies—in cases of conflict and in response to conflict and in trying to end conflict, and also in the terrorism context. Increasingly, though, it has been in the context of violations of international humanitarian law and in gross violations of human rights. There is certainly scope for having sanctions legislation that gives you the flexibility to use it in human rights situations and in cases of gross violations of human rights or even violations of international humanitarian law.

The trick to it, though, is.... There's nothing wrong with having those broad terms in the legislation and including human rights specifically in those broad-scope gross violations and so on. Then if you have a system of specific orders, as you do—which I think is a good one—you can define it very specifically in the situation toward what you're aiming at, whether it's a violation of particular types of human rights or a particular scenario where you want to be more specific.

The difficulty for me is that there's nothing in between this broad statement about threats to international peace and security—which I think could include human rights, because the council certainly interpreted it that way—and an order in relation to a country. There's nothing in between explaining why it's a security breach, even just preambular language to the order, to say there have been these kinds of violations reported and we believe that's the situation. Then you take it one step further when you're targeting the individuals, and you have to say what they've done: they're leading the army or they're leading rebel groups, or whatever it might be, and in that role or that kind of thing.

I very much believe the legislation should give you the flexibility to do it, but then it becomes a decision of when you use it and how you use it, and that's probably the hardest part.

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

Let me take advantage of your expertise here. If you were counselling legislators, as I guess maybe you are here, on the sort of phrasing they might consider using when it comes to proposing changes to the SEMA, for example, or any sanctions legislation related to human rights violations, what sort of phrasing could be used so that we properly capture human rights violations on a scale that merits the imposition of sanctions?

[Kimberly Prost]

Some automatically come to mind just because of the jargon that you often see in the gross violations of humanitarian rights standards, violations of the protocol. I would suggest you take a look at some of the resolutions that exist that have dealt with these issues, both at the Security Council level to some degree, what they say in Geneva at the Human Rights Council, and also even what the European system says, although it has a lot of challenges, as I'm sure you heard from Maya Lester.

You can use broad phrases of that nature. The tricky part is then deciding when you're going to apply it, but I would look to those resources in terms of the actual language.

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

Perhaps I've misunderstood your comments from before. My understanding of what you're saying is that sanctions have a place, but there is also existing legislation that deals with things like human rights violations, very serious human rights violations. Could you speak to whether or not it makes more sense to use existing legislation that would capture very serious human rights violations, rather than going down the sanctions road? Will sanctions achieve anything beyond the existing legislation that's in place already? I wonder if we're playing a game with human rights here which no one, I think, wants to do.

When I say “playing a game”, I'm talking about trying to embarrass regimes or trying to target regimes for very political reasons related even to domestic politics, for instance.

However, please continue.

[Kimberly Prost]

On that point, I separate two things. One is that if you want to go after individuals by attacking their assets, that's where I think you have a lot of existing tools to go after them, in a way. On the other hand, it's perfectly appropriate to use sanctions. That's one of the main purposes, just to stigmatize and call out leaders and officials of governments. That's one of the main purposes of sanctions. I think that's a perfectly legitimate criterion, if Canada wants to follow that route, although it's much more effective when you're doing it as part of a multilateral organization or the UN when you're trying to stigmatize.

The problem is, of course, the tools for gross violations of human rights are in almost all cases going to constitute criminal offences. You're going to have the ability to prosecute for gross human rights violations, but that is our challenge today for the violations we see of international humanitarian law or the gross violations we see in Syria, for example. The solution to those is really prosecution and justice remedies, not sanctions. Sanctions may help to a degree.

However, maybe sanctions are the only opportunity we have in that context, especially when the international community isn't employing them at the moment. I do think there's still scope for using sanctions. I work at the International Criminal Court now. There are so many limitations to what we can do on the justice side. I think having the power to do it is still probably a good thing, but it's then choosing the situations when you're going to use it, and using it sparingly.

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

Thank you, Chair.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Fragiskatos.

I'd like to now go to Madame Laverdière, please.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much, Mr. Chair.

Ms. Prost, thank you for your presentation.

I would like to come back to the point raised by my colleague Dean Allison.

With regard to the Freezing Assets of Corrupt Foreign Official Act, you basically said that those tools already exist. Indeed, we have a mutual assistance agreement. We also have the possibility of targeting a country, ministers and so on. However, there is one situation that does not seem to quite be covered.

There have been cases, including a case of a Russian individual—I don't have his name at the moment—who was banned from entering Canada for corruption. This man is not being pursued by his own country, which is shielding him. So we cannot go through the mutual legal assistance treaty. He is part of a government whose actions people do not appreciate, but that is not why he was targeted. Rather, it was because he was recognized as a corrupt individual.

Isn't that something that is not covered by our other legislation?

[Kimberly Prost]

I think there are two issues, and let me be very clear. Canada has very good mutual assistance legislation and very good legislation dealing with proceeds of crime and freezing of assets. It's getting better, but it's never going to be foolproof. It's never going to be able to deal with all the cases, especially those involving corrupt officials who are being protected by their governments.

My view is that rather than trying to build specific pieces of legislation for every gap we run into—and we will continually run into gaps—we need to focus on fixing the regime as a whole. Is there more we could do in the mutual assistance provisions to make it clearer how we could freeze assets faster in situations where they don't have court orders? Maybe that's one thing that could be done.

Is there something that could be done in the definitions of “proceeds of crime”? Are there more things we can do in terms of going after assets and attacking assets through civil proceedings?

That's just on going after the assets, and I think that if you're talking about trying to go after the assets and corrupt officials, we have very good tools. To me, the best approach is to try to strengthen those tools, because they already have built-in protections and schemes.

The second thing that can be considered is the other side of this, which is sanctions. In the case of a corrupt official, if we're not going to be able to get to his assets, prosecute him, or get the government to properly prosecute him in the other country, then we can see whether there is a policy or a threat here that Canada wants to address.

The third option is simply to accept that it is not something that Canada can address, either through asset freezing or through a sanction, because it is outside Canada's reach. I think we also have to accept that there are some things we don't like that are just outside the reach of our legislative ability.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Right.

I simply want to point out that, in some cases, some of these assets can be here, in Canada. Often, the government may feel a moral obligation in this regard.

I'll move on to another question, not about human rights sanctions, but general sanctions against a country, leaders or other aspects. It seems to me that there is an ambiguity between wanting to be very precise in our definitions and giving ourselves the flexibility needed to act. For example, in the last 20 or 30 years, the nature of what is a threat to peace and security has changed enormously, and we don't know what to expect in the next 10 to 20 years.

Isn't there an advantage to keeping a formulation that is not excessively precise, so that we aren't confined to a straitjacket?

[Kimberly Prost]

I don't disagree at all, because the mandate of the UN Security Council is precisely described in relation to threats to international peace and security. I think you should keep the flexibility as broad.... I think it might be helpful to give examples of what can be a threat to international peace and security, saying this is what the broad mandate is and then presenting some examples of what it could be, but keeping it open. The key is that when you impose measures against a state, or particularly against an individual, it's at that point that you're very specific.

In this case, the threat to international peace and security is terrorism, terrorist attacks, a violation of humanitarian rights, or use of child soldiers. Whatever it may be, that's when you define it very specifically, but the governing legislation is always very broad.

I don't have any trouble with it as it's defined in the current SEMA. It's just that when it goes to the specific orders, it's really hard to see what precise situation falls within that. That's where I think you have to be careful to define it.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Do you think this is something that should be added to the current legislation, or that the reasons for sanctions should be specified when they are established?

[Kimberly Prost]

Absolutely. For me, that's the biggest, and on two levels. One is what the threat is in the particular situation—be it Burma, Ukraine, or whatever—and specifically defining why it's put under the threat to international peace and security. Then, very importantly, when are you going to hold an individual responsible, and why? That should be specified in objective criteria. When it's an official of that state, that's fine. At least you've said what it is, or when it's someone who's in the military, whoever it may be. To me, that's what's missing, because it's not specified. If I were the individual listed, I'd have no idea. Well, I'd probably know, but it should be specified in the order.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

It's sort of the same in civil law. When someone is accused, he has the right to know the reason for the charge, so that he can defend himself, if necessary.

[Kimberly Prost]

Precisely.