Evidence of meeting #28 for Public Safety and National Security in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cbsa.
A recording is available from Parliament.
Director, Borders Intelligence Division, Intelligence Directorate, Enforcement Branch, Canada Border Services Agency
That was just in the last year.
C/Supt Mike Cabana
In terms of heads of organizations, I would respond that it's both. Ultimately our aim is to arrest and bring to justice the head of the organization, not necessarily the person who is managing whatever manufacturer is operating in Canada or in the U.S. As I explained earlier, it's a balanced approach. We are targeting the different levels of the organization, but ultimately we realize that if we don't interdict the person who is actually responsible for the operation, the operation will continue.
NDP
Penny Priddy NDP Surrey North, BC
Did people who were charged last year go to jail? I know about fines, that we fine and do whatever, and I've heard people say that people will pay their fines anyway. Did anybody go to jail as a result of a charge?
NDP
Penny Priddy NDP Surrey North, BC
I'm not asking if it was six or whether it was seven, but maybe if it was 10 or 300.
C/Supt Mike Cabana
Ma'am, in terms of sentencing, there's a wide range of sentences, depending on the jurisdictions, depending on the circumstances of the case. It can range anywhere from a fine of $500 to $1 million and, I believe, up to five years in jail.
Liberal
The Vice-Chair Liberal Roy Cullen
Thank you, Mr. Cabana and Ms. Priddy.
I'll go now to Mr. MacKenzie.
Conservative
Dave MacKenzie Conservative Oxford, ON
Thank you, Mr. Chair, and thank you to the panel.
I think it's important that we focus on going forward. I think we can always look back and see some shortcomings. Certainly that's been true of most of us, including some organizations. I think the problem has now obviously developed to the point where more and more people are well aware of it. So as we go forward, how do we put an end to it?
Mr. Bertrand, I know in your opening statement you indicated that part of your role is to investigate prior to issuing the licences and so on. How often do your inspectors make site visits to those sites that you indicated are the aboriginal sites? Are they able to make a thorough inspection of the facilities and the books of those operations?
Director General, Excise and GST/HST Ruling Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Thank you for your question, sir.
As I mentioned in my introductory remarks, we do have an audit program that deals with the licensees. We monitor and audit the legal part of the business.
Basically, we have two parts to our audit program. In one part we go in and do full audits. Through our funding that we received through the tobacco compliance strategy in budget 2005, every licensee, on reserve and off reserve, receives a full audit once a year.
We also have what we call regulatory visits. We can visit in order to check on the inventory. We can be called and we will examine a container that is being loaded, and seal it prior to it being shipped. On average, every licensee will receive four visits per year.
To answer a previous question about what we do when we find the records on imports or purchases of tobacco do not match production, we raise assessments for the tax not paid.
Conservative
Dave MacKenzie Conservative Oxford, ON
So you raise assessments, but there's no penalty other than the assessment they would then pay. They end up paying that amount--what they should have paid--as opposed to a penalty or being shutting down.
Director General, Excise and GST/HST Ruling Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
There are penalties and interest attached to the amount of tax that is owed, according to the penalty and interest regime in the legislation. We do make sure that when the licence comes up.... Depending on the seriousness, we do have the possibility of revoking or suspending licences.
Conservative
Dave MacKenzie Conservative Oxford, ON
That's good.
When you do your audits, does that also include audits on the tubes they have purchased and the material for the filters to correlate to the tobacco they...?
Phil McLester Director, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
If I might, we certainly look into the amount of raw leaf purchased relative to how much was manufactured, how many tobacco products. As well, we look at imports of raw leaf to verify if it's considered appropriate for the amount of production on which excise duty was paid. If we deem that to be considerably different from what should have been paid, we will raise deemed assessments.
Conservative
Dave MacKenzie Conservative Oxford, ON
Do you match the raw tobacco to the amount of tubes purchased?
Director, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
No, we don't actually match it to the tubes purchased, but we do monitor the amount of products that go into manufacturing tobacco. We monitor equipment, the raw leaf, the paper, the filter, that sort of thing. We have not yet started correlating filter material and paper with tobacco production.
Conservative
Dave MacKenzie Conservative Oxford, ON
As we go forward, might that be one of the solutions? Obviously it doesn't apply to production somewhere other than in Canada, but in Canada alone might that be part of a solution to the problem?
Director, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
One aspect I would mention is the recent proposed budget item for tobacco manufacturing equipment. That will allow us to now require that records be given to us. Of course, that affects the possession and import of that equipment, which means the less equipment that is available to illicit manufacturing, the less contraband we'll see.
Conservative
Dave MacKenzie Conservative Oxford, ON
Chief Superintendent, as we start to look at the bigger picture, sometimes we see a focus on the aboriginal community. It certainly seems that there is some connection, but it would seem to me that in many cases they may only be the enablers. The beneficiary of all of this is actually organized crime. In the U.S., they've indicated that it goes beyond organized crime to other offshore entities.
We've heard from some folks that if you have tobacco being smuggled, the same pipelines are being used for drugs, guns, and human smuggling. In most common-sense minds, all of those things tend to go back to organized crime. Could you comment on this philosophy from a law enforcement perspective? Is it a likely connection?
C/Supt Mike Cabana
Absolutely, sir. What you've just explained is exactly what we've been observing over the past several years.
It's important to understand that a lot of the organizations, the heads of the organizations who are actually driving these ventures, are not located on native territory; they're operating from major centres in Canada and abroad. Some of the funds that are being generated from these activities are also being funnelled abroad or to the organization itself in the major centres. Those organizations are in business for one thing—to make money. This is one of their ventures. You're absolutely right, if they've created a pipeline that enables them to bring the contraband into Canada, they're using the same pipeline for other ventures.
The best example of that would be the Shiprider program that was implemented between August and September of last year. During these two months, there were 40,000 cartons of cigarettes seized, together with fine-cut tobacco and marijuana. Clearly it is not a one-commodity type of organization.
Liberal
Sue Barnes Liberal London West, ON
Thank you for attending today.
Was the Shiprider program a pilot? Or was it something that's going to be continued?
C/Supt Mike Cabana
It was a pilot. A number of pilots were implemented, culminating in August 2007 with a two-month pilot project that was held in the Cornwall area and on the west coast.
Liberal
Sue Barnes Liberal London West, ON
This was a joint project—U.S. Coast Guard and RCMP. I take it that since they were in the same vessels they would be on both sides of the border, going in and out of the sovereignty of the United States and Canada. Is that correct?