Justice Committee on Dec. 5th, 2013

[The Chair, Conservative, Mike Wallace]

I call this meeting to order.

This is the Standing Committee on Justice and Human Rights, meeting number 9. Pursuant to the order of reference of Tuesday, November 5, 2013, this morning we will be discussing Bill C-10, an act to amend the Criminal Code (trafficking in contraband tobacco).

We have two panels, two sets of witnesses. Our first set of witnesses are, from the Royal Canadian Mounted Police, Inspector Cormier; and, from the Canada Border Services Agency, Mr. Leckey. Each of them will have a presentation of about 10 minutes.

Since you were here first, Mr. Leckey, you may begin.

[Geoffrey Leckey, Director General, Enforcement and Intelligence Operations, Canada Border Services Agency]

Thank you, Mr. Chair and members of the committee, for the opportunity to provide testimony in your consideration of Bill C-10, the tackling contraband tobacco act.

I'd like to begin by noting that the specific amendments to the Criminal Code proposed in Bill C-10 will have only a slight impact on the daily activities of the Canada Border Services Agency. However, we take the issue of contraband tobacco very seriously and we are supportive of the bill's intent to signal the seriousness of trafficking in contraband tobacco.

The illicit cigarette market in Canada has changed markedly since the 1990s. Back then the majority of the contraband market consisted of duty-free and exported Canadian cigarettes. Currently, the market in Canada comprises illicitly manufactured native brand cigarettes that are transported by land, as well as Chinese and other international brands of tobacco products entering Canada through postal, marine, and air modes.

From January 2013 to October 2013, the CBSA made approximately 1,900 tobacco seizures totalling over 21,000 cartons of cigarettes, 192,000 kilos of fine cut tobacco, 29 kilos of cigars and 1,235 kilos of other tobacco products such as chewing tobacco and snuff.

The contraband tobacco trade is a lucrative one, and activities to disrupt and prevent the flow of illicit goods from entering the country require active participation with partners, both at home and abroad.

The CBSA works with other government departments, law enforcement agencies, international organizations and foreign governments on operational and analytical issues related to organized crime and contraband criminal markets. Of our many partners, the agency works daily with the RCMP and the U.S. Customs and Border Protection on enforcement matters. The cooperation and collaboration between our organizations is longstanding and transcends tobacco issues.

Together with our U.S. partners, the CBSA and the RCMP participate in integrated border enforcement teams. The CBSA and the RCMP also work side by side within a number of other joint forces operations targeting contraband. As a result, we have a common understanding of the capabilities, intentions, vulnerabilities, and limitations of organized criminal networks, and we apply that intelligence to disrupt them and their supply chains.

Disrupting the criminal networks that engage in the cross-border movement of illicit tobacco is dependent on solid information and intelligence.

The CBSA maintains a robust and comprehensive Intelligence Program, which contributes to, and is informed by, the broader intelligence community. This allows for timely, accurate and relevant information to support our enforcement activities.

Through the U.S.-Canada beyond the border action plan and the CBSA's border modernization initiative, the CBSA is modernizing its operations with the aim of having decisions sequenced and made before people and goods arrive at the border. The Government of Canada's efforts to curb trafficking in contraband tobacco are well served by this initiative, as it aims to promote better intelligence-led enforcement activities. This in turn will facilitate legitimate trade and travel. At the end of the day, modern border management is about meeting our broader responsibilities for Canada's security and prosperity.

Information and intelligence, while necessary, is not in and of itself sufficient for effective border enforcement. The agency also relies on a combination of officer training and technology to interdict illicit goods, including tobacco products attempting to cross the border.

In conclusion, Mr. Chair, the CBSA recognizes the challenges associated with the cross-border movement of contraband tobacco and the need for a multidisciplinary approach to combat it. We will continue to leverage all resources available to us to identify and interdict contraband tobacco at the border. We will continue working with our partners, particularly the RCMP, to help implement this bill when it becomes law.

I would be pleased to answer any questions you may have.

[The Chair, Conservative, Mike Wallace]

Thank you, sir, for that opening statement.

Now from the Royal Canadian Mounted Police, we have Inspector Cormier.

You have 10 minutes, sir.

[Insp Jean Cormier, Director, Federal Coordination Centres, Royal Canadian Mounted Police]

Good morning, Mr. Chair, and members of the committee. First, I would like to apologize for my just-in-time arrival.

Thank you for inviting me here today to speak about Bill C-10, the tackling contraband tobacco act. As director of the RCMP federal coordination centre, I oversee the RCMP's enforcement activities with respect to contraband tobacco. Bill C-10 would create a new offence for trafficking in contraband tobacco and increase the associated penalities.

To assist the committee in its study of Bill C-10, I would like to provide you with a general overview of the current scope of the problem from the RCMP's perspective, as well as an overview of our enforcement activities.

Contraband tobacco remains a serious threat to public safety and if left unchecked, criminal organizations will continue to profit at the expense of the safety of Canadians.

Contraband tobacco has long been a standing enforcement priority for the RCMP. As the level of criminal involvement began to rise, the Minister of Public Safety launched a contraband tobacco enforcement strategy in 2008. Known as CTES, it sets out priorities for the objective of nationally reducing the availability and decreasing demand for contraband tobacco. The RCMP's CTES has had a positive and measurable impact on the contraband tobacco market in Canada. Since its inception in 2008, the RCMP has laid approximately 4,925 charges and has disrupted approximately 66 organized crime groups involved in the contraband tobacco market.

Criminal organizations are involved in the production, distribution, and trafficking of contraband tobacco and are exploiting first nations communities. Violence and intimidation tactics continue to be associated with illegal tobacco in first nations communities.

In addition to the tobacco smuggling encountered at Canada-U.S. ports of entry, extensive smuggling continues to occur in the Cornwall-Valleyfield corridor area, with the majority of activities occurring between the ports of entry, presenting unique enforcement challenges for law enforcement. In 2012, tobacco products seized while in transit involved automobiles, snowmobiles, all-terrain vehicles, and boats.

The RCMP has also seen contraband tobacco transported using postal delivery and air services.

Cornwall, Ontario is within the most active region for tobacco smuggling in Canada. Because of this, the RCMP participates in a number of joint investigative units with partner agencies. For example, in Cornwall the RCMP works with the Akwesasne Mohawk Police, the Ontario Ministry of Finance, and CBSA to combat organized crime and its involvement in contraband tobacco and other forms of criminality.

In April 2010, the RCMP established a combined special enforcement unit contraband tobacco initiative. Based in Cornwall, the unit was specifically mandated to target organized crime involved in the manufacturing and distribution of contraband tobacco, and works with its law enforcement partners.

In 2011 the government committed to addressing contraband tobacco by establishing a new RCMP Anti-Contraband Force (ACF). The RCMP is in the process of implementing the ACF and it is expected to be fully staffed and operational by the spring of 2014. The ACF will increase the RCMP's capacity to investigate organized crime and cross-border smuggling as well as target unscrupulous tobacco growers and illicit manufacturers. The ACF will also establish a dedicated outreach team to engage tobacco growers and suppliers of raw materials used in the tobacco manufacturing process.

As I have just outlined, the RCMP works with other law enforcement partners on multiple fronts to address the problem of contraband tobacco.

I would like to thank you for this opportunity, and I look forward to answering your questions.

[The Chair, Conservative, Mike Wallace]

Thank you, Inspector.

Our first questioner is Madame Boivin, from the New Democratic Party.

[Françoise Boivin, NDP, Gatineau, QC]

Thank you, Mr. Chair.

I would like to thank the two witnesses for being here with us this morning and for arriving on time. You never have to apologize for being on time, but anyway.

Inspector Cormier, my first question is for you. The RCMP already has the power to make arrests. How will Bill C-10 change the work that you are already doing in the area of contraband cigarettes?

[Insp Jean Cormier]

The work itself will not necessarily change. This is an additional tool that we will have. This is how the bill will be helpful for the RCMP. It will allow us to institute proceedings under the Criminal Code, including for proceeds of crime. In order to prosecute for proceeds of crime, there has to be an offence in the Criminal Code called “primary offence”. The other advantage under this bill is that it gives powers to police services, powers that they do not currently have.

[Françoise Boivin, NDP, Gatineau, QC]

That will not change anything for the RCMP.

[Insp Jean Cormier]

No, that will not change anything for us.

[Françoise Boivin, NDP, Gatineau, QC]

However, it will allow the Quebec provincial police and municipal police services to participate in trafficking investigations.

[Insp Jean Cormier]

Yes, that is another advantage to this bill, given that we often work as partners in these kinds of investigations.

[Françoise Boivin, NDP, Gatineau, QC]

This question is for you both, perhaps more so for Mr. Leckey.

Is cigarette trafficking a plague that is increasing or decreasing? On Tuesday, a woman who testified before us said, if my memory serves me well, that the extent of cigarette trafficking was not high as one would believe. Cigarette manufacturers are those who tend to imply that there is considerable cigarette trafficking because they want to prevent the government from increasing taxes. You get the idea.

I would like to hear your opinion because you work on the ground. From the perspective of border services and the RCMP, has trafficking stabilized? Is it increasing or decreasing?

[Geoffrey Leckey]

Thank you for the question.

We feel that it is a plague that is increasing. I can give you numbers to that effect. With your permission, I will continue my answer in English.

[Françoise Boivin, NDP, Gatineau, QC]

Fine. That is not at all a problem for me.

[Geoffrey Leckey]

In the calendar year 2011, CBSA seized just short of 35,000 kilograms of fine-cut tobacco. That more than quadrupled in calendar year 2012 to 148,000. In the first 10 months of this year, it's 33% higher than that; it's 192,000 so far this year, so it's on track to be about 250,000, which would be about seven times higher than it was two years ago.

[Françoise Boivin, NDP, Gatineau, QC]

The numbers are quite telling.

Mr. Leckey, in your opening remarks, you spoke about collaboration. I think that is necessary given the number of stakeholders involved. I did not hear you refer to first nations. In his opening remarks, Inspector Cormier said that a large quantity of contraband tobacco is produced on first nations reserves. Is there an effort to collaborate?

Mr. Leckey, you did not refer to this in your opening remarks. Would the first nations not be ideal participants, given that criminal groups are apparently trying to establish themselves within reserves and exploit certain individuals?

[Geoffrey Leckey]

You are absolutely right, they are ideal participants.

We do cooperate with native police. In Cornwall alone, we are involved in a number of—I think it's three or four—joint forces operations that involve the Akwesasne Mohawk Police Service.

The integrated criminal intelligence section in Cornwall, for example, involves both Canadian and U.S. law enforcement agencies, ourselves, the RCMP, the Ontario Provincial Police, the Ontario Ministry of Revenue, and the Akwesasne Mohawk Police Service.

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Cormier, there is talk of collaboration and police services joining forces, but do you have the necessary resources? We know there have been significant cuts to border services. Do you have the necessary resources required to act under Bill C-10 when it is passed, with respect to increased penalties, repeat offences and so on?

[Insp Jean Cormier]

Yes. When we have to comply with new laws, we have to set priorities. Tobacco legislation enforcement has always been a priority but we may have to readjust our resources.

I am certain that the RCMP will be able to respond.

[The Chair, Conservative, Mike Wallace]

Thank you.

Our next questioner is Mr. Wilks from the Conservative Party.

[David Wilks, Conservative, Kootenay—Columbia, BC]

Thank you very much, Mr. Chair, and thank you to the witnesses for coming here today.

Inspector Cormier, you mentioned criminal organizations that have been involved on first nations communities and have exploited those first nations communities. I wonder if you could explain a little further on how that exploitation has happened and what you see from the front line as to what some of the opportunities are for police and for us to slow that down or potentially even stop it.

[Insp Jean Cormier]

Definitely. There would be a benefit coming with the implementation of the new law for one thing. As I spoke about in my opening remarks, over 66 groups were identified through the course of investigations that have already taken place. Some of those groups are present on first nations communities, and some of those groups are from outside the first nations communities.

Criminal organizations will exploit any contraband market that will bring them a profit essentially. I think, yes, there are groups that are not from the reserves that do take advantage of the tobacco industry and the illicit tobacco industry that is taking place on the native reserves.

The laws being proposed here would help us because it would also help us establish charges and build charges up to lay charges of participating in criminal organizations for the groups that are involved. Adding additional criminal charges is certainly an asset in that regard.

[David Wilks, Conservative, Kootenay—Columbia, BC]

You also mentioned that in 2011 this government created an anti-contraband task force, which you said will be fully staffed by 2014. Could you elaborate a little more on that? Is this going to be a centralized task force? Will it be across Canada? What are you focusing that on?

[Insp Jean Cormier]

I would probably refrain from describing how the teams are going to be created or dispersed.

[David Wilks, Conservative, Kootenay—Columbia, BC]

I understand: from an operational standpoint.