Public Safety Committee on May 17th, 2022

[The Chair, Liberal, Jim Carr]

Thank you very much.

I would now like to invite Mr. Noormohamed to take the floor for a six-minute block of questions.

Over to you, sir.

[Taleeb Noormohamed]

Thank you very much, Mr. Chair.

Again, thank you to the witnesses for being with us today.

Mr. Browder, I had the privilege of meeting your father and actually your uncle when I was an undergrad. Obviously you come from a long line of people who have done a remarkable service in a variety of different areas.

Your story struck me on a variety of different levels in terms of how you've personally become a target for Mr. Putin. I guess I'm wondering, given the fact that you probably know the world of the oligarchs better than many do, whether you believe the financial pressure that is being put on the oligarchs by Canada and by other countries is going to have the impact that we all hope it will in terms of putting pressure on Mr. Putin. If so, what do you think the time horizon on that is?

[William Browder]

Thank you for that question. It's an excellent question.

One of the things I would point out now—and it's very important that everybody understand this—is that the oligarchs don't have political power in Russia. They are subordinate to Vladimir Putin. They're scared of Vladimir Putin. At any point, if they were to criticize him in any way, they could be impoverished, imprisoned or killed. He's done that to other oligarchs to make a point, and everybody is terribly afraid of him.

So the purpose of sanctioning oligarchs is not to get them to rise up and replace him, because that's not going to happen.

We sanction the oligarchs because they are custodians of Vladimir Putin's money. When we sanctioned Vladimir Putin at the very beginning of this process—and I think Canada was either the first or the second country to do that—it was all very satisfying. It was symbolic. But Vladimir Putin doesn't hold money in his own name. He holds the money in the name of other people, these oligarchs. If you look at an oligarch who's worth $20 billion, $10 million belongs to the oligarch and $10 million belongs to Vladimir Putin.

So the purpose of sanctioning the oligarchs is to sanction Vladimir Putin. That's the main purpose. But if we take a step back and we say, “Okay, how is this going to work and what's it going to achieve?” then I think the main objective has to be to cut off his financial ability to fight this war. We have done some good things in terms of doing that. The west and Canada have sanctioned Russia's central bank reserves, which are equal to about $350 billion, which is excellent. The west has sanctioned 35 oligarchs. When I say 35 oligarchs, I mean either the U.S., Canada, the EU, the U.K. or Australia has sanctioned 35 oligarchs. Not necessarily all of them have sanctioned all of those oligarchs. That's also very helpful.

That being said, there are 118 oligarchs on the Forbes' wish list, so we're not there yet. But even with those two categories, which represent a lot of money and a lot of assets all over the world, we've hit only what I would call the savings of Russia. What we haven't hit is the income of Russia. The income of Russia is a billion dollars a day that Russia receives from the sale of oil and gas. Now, most of that goes to Europeans. It goes to Germany and France and Italy and so on. But that's really problematic, because every day Vladimir Putin gets a billion dollars and every day he spends a billion dollars on the war killing Ukrainians. So one could argue that if we don't get that under control then having frozen the assets doesn't mean anything because he continues to have the income to do this.

So that's the major elephant in the room that needs to be dealt with. It's not so much within the capability of Canada, but that's the key to the whole thing. And then the timing very much depends on that. If we were to achieve that, he would quickly run out of money.

[Taleeb Noormohamed]

I appreciate your saying that, because I think where Canada has been able to play a role, as you noted, is in leadership on the financial side. I think we also have to recognize the limitations of our role, particularly as it relates to issues around Europe's importation of Russian oil, and the necessity, I suppose, that they continue to depend on Russian energy.

If you were to look at this on a go-forward basis, obviously cutting off the money supply, cutting off the savings, as you talked about, are important. Cutting off access to SWIFT has I think been very, very important.

What needs to happen with Europe, in your view, to be able to put on enough pressure for them to now cut off the oil resources? I mean, we're not going to be able to replicate energy supply from Russia with other resources overnight. That's not going to happen. What else is available to Europe, beyond moral suasion, to kind of push this end? Is there any role that Canada can play on the moral front to help Europe, because we're not going to be able to solve this in any other way. We're not a superpower, obviously.

[William Browder]

There's one other thing we haven't talked about, which is that Russia is not the only oil supplier in the world. There are other oil suppliers. There's one big oil supplier that could solve a big part of this problem for us. On one hand, we're talking about restricting the purchase of Russian oil and gas, but you have Saudi Arabia, which sits out there as the sort of swing factor in OPEC. However, Saudi Arabia historically has been willing to turn on and turn off oil to keep oil prices stable for the U.S. and allies around the world.

Saudi Arabia, in theory, if they were willing to be a responsible player in this whole thing, could add an extra two million barrels of oil a day to their oil supply. If they did that, I estimate it would push the price of oil down by 25% to 30%, which means that—

[The Chair, Liberal, Jim Carr]

Thank you very much.

I would now like to invite Ms. Michaud to take us through the next six-minute block of questions.

Ms. Michaud, the floor is yours, whenever you're ready.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you very much, Mr. Chair.

I thank the witnesses for being here.

Mr. Browder, hearing my colleague Mr. Van Popta talk about the book you wrote and my colleague Mr. Noormohamed talk about your family members, we see that the committee members have a great deal of admiration for you. I should definitely read the book myself. I will continue somewhat along the same lines as my colleague by talking about sanctions imposed on Russia.

You were saying that the goal of the sanctions imposed on oligarchs was to affect Vladimir Putin himself and that Canada and the west have done a good job in that respect. We know more or less when that will have an impact. Supposing that the conflict ends, how do you think Russia may react to those sanctions imposed by Canada and the west, once everything is done in Ukraine?

Is there a risk of repercussions for a country like Canada?

[William Browder]

I think that the general way in which Russia tries to create repercussions is by singling out individual countries. In this particular case, everybody—and when I say everybody, I mean just the western world, because India and Brazil aren't involved—has been involved on a combined basis—every country in Europe, Canada, Australia, United Kingdom, the United States—and so I don't see how Russia, on an economic basis, can respond to any of this stuff.

I think we absolutely should be expecting Russia to be doing what they've always done, which is trying to manipulate the political processes in all of our countries. Professor Mendes mentioned interference, hacking and so on and so forth. We should absolutely expect that and be prepared for that, and hopefully have countermeasures to deal with that.

We should absolutely expect that they will try to send out assassins and do other terrible things, like we heard about in Berlin and other places. I think that there probably needs to be tight and thoughtful security of Russians coming into Canada.

As I mentioned in my opening remarks, they've weaponized the price of wheat, oil and gas. Wheat is a particularly important one. This is something that I think is very important to put on the front table, which is that our military—and by “our”, I mean allies—should make sure that Ukraine is able to export wheat and protect any boats that leave ports in Ukraine. If Russia attacks that, it could create a food crisis which could have unbelievable consequences around the world.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Hearing your comments is not reassuring, Mr. Browder.

You were saying that you were still hopeful that Canada will be ready to implement countermeasures should Russia respond. Do you think Canada is ready to respond to those kinds of potential or future attacks, be they cyber-attacks other types of attacks?

[William Browder]

Well, I don't think Canada has to think about these issues on its own. Canada is part of a coalition of the willing that so far has done a great job in putting in place all of these measures against Russia, so these are conversations that you don't have to think about by yourself. These are conversations that should be thought about in conjunction with the U.S., the EU and the U.K., etc. If there's an attack on one, there's an attack on all, whether it be a military attack, a cyber-attack or any other type of attack, so I don't think.... Just because I paint a bleak picture doesn't mean that we're not in a strong position.

Russia is in the weak position here. It has been humiliated militarily. It has shown that it's incapable of doing even the most basic things that one would have been fearful of it doing. I don't think we should overestimate their capabilities, but at the same time, we shouldn't ignore some of the things that are happening right now. I really stress this. The price of oil, the price of gas and the price of food can dramatically change the situation, the democratic situation in Canada. You could end up in a very difficult political situation where all sorts of actors can act out because of this.

I think one needs to understand that the big weapon, the major attack, has already happened, which is, how do we deal with these hugely high costs, which affect every household in Canada and every household everywhere else in the world?

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

What I understand from your comments is that it is good to have allies and organizations like NATO, but article 5 of the North Atlantic Treaty stipulates that, if a member country is attacked, everyone is expected to intervene. Isn't there a concern of global conflict should a NATO member country be counterattacked by Russia in response to the economic sanctions imposed over the past few months?

[The Chair, Liberal, Jim Carr]

I'm sorry, but we're going to have to wait for that answer.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

[The Chair, Liberal, Jim Carr]

Perhaps, Mr. Browder, you could write that answer—

[William Browder]

Yes.

[The Chair, Liberal, Jim Carr]

—and send it to members of the committee so that we will have the benefit of your wisdom.

I now would invite Mr. MacGregor to take his six-minute slot of questions.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for helping to guide our committee through this study. Your testimony has been very helpful.

Mr. Browder, I'd like to start with you. It was quite an eye-opening figure when you mentioned the trillion dollars that the Putin regime has stolen from the Russian people and which you've said is held in various countries in the west.

You have a significant amount of experience in the banking sector. You know how people can use intricate ways of hiding their wealth, of using various holding companies and so on. Canada has had its own problems. We've coined the term “snow-washing” here in Canada because of the ease with which people can set up shell companies.

While there have been significant announcements recently, such as creating a beneficial ownership registry and, hopefully, in the near future, the creation of a financial crimes agency, I guess what I'd like to ask you is this: From your perspective, how can countries take the lead on this? How easy is it to employ forensic accountants to really try to uncover where the oligarchs have their wealth held? Do nation-states have the ability to do that easily if they put their mind to it?

[William Browder]

No. The answer is simply no, and this is a big problem. The oligarchs have spent the last 22 years assuming that one oligarch is going to steal from another oligarch, or a government is going to try to expropriate their money, so they've bought the best asset-protection advice that money can buy. They'll run circles around us. However, I have an idea—and this is something that I've presented to the British Parliament, I've presented to the U.S. Congress and I present to you today—which is that the only way we will ever know how they put their stuff together, how they put these schemes together to hide their money, is to have the people who put them together tell us.

These people aren't in the business of telling us the information they have, because they would claim lawyer-client confidentiality or something similar. So my idea or proposal to you is to put an amendment into the sanctions law, and that amendment should be very simple. It would say that any professional service firm, whether it be a law firm, a banker, an accountant or any other firm that has provided information, advice or consultation on the holding and structuring of assets of a person who has been sanctioned by the Canadian government is under a duty of law, and under penalty of law, to come forward and explain the information that they have on that oligarch—that person, that sanctioned individual—so that the government then is effectively taking these individuals who structured these things and turning them into whistle-blowers by law.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Yes, and it's really putting the pressure on them.

You, sir, have detailed quite well your fight with Mr. Putin. I appreciate your words on how quickly the west has come together to put this sanctions package together. From your contacts and from the intelligence that you have gathered—the open-source intelligence—I want to know just how the sanctions are starting to have an effect on Russian society. We know that since the collapse of the Soviet Union, the standard of living in Russian society, particularly in the big cities like Moscow, has risen. I think many Russians, the growing middle class, have become used to material wealth. Do you have any knowledge about how the sanctions and cutting them off from western imports—the ability to travel, the ability to spend their money overseas—are starting to have an effect?

[William Browder]

When we talk about sanctions, there is a whole range of sanctions. We've been focusing on the oligarch sanctions, but I think the most relevant sanctions have been what I call “self-imposed” sanctions, which have been in the form of western businesses leaving Russia. Most self-respecting western businesses have divested in the same way western businesses did in South Africa to protest apartheid. This has been a much more accelerated divestiture.

The average Russian can't use their credit cards anymore. They can't subscribe to Netflix. They can't get on a flight to any country other than Turkey, Israel or the United Arab Emirates. This has completely changed their life. The IMF estimates that the Russian GDP will contract by 10% to 15%, but I would argue that the number is going to be much higher than that. I think the Russians will face a full-scale economic depression as a result of these sanctions.

[The Chair, Liberal, Jim Carr]

Thank you very much.

We now move into a second round of questions. To lead us off will be Mr. Lloyd with a five-minute block.

Go ahead whenever you're ready, sir.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

I was told that it would be Mr. Stewart leading off.

[The Chair, Liberal, Jim Carr]

It's whomever you want. It says Mr. Lloyd in my notes. If Mr. Stewart wants to take it away, he can go ahead.

[Jake Stewart, Miramichi—Grand Lake, CPC]

Thank you, Mr. Chair.

My questions are for Bill Browder. Thank you so much for being here today. You have a wide range of experience.

Earlier you talked about how we're hitting the savings but not the income. You also mentioned how the Russian oligarchs don't have any particular political power inside of their own country.

My question is still along the lines of national security in our country, because that is a primary concern of this committee as well. I think you mentioned that there are well over a hundred Russian oligarchs living in our country, across Britain and in the United States, according to the Forbes list. I want to know how many Russian oligarchs still living in our country have not been sanctioned. I'd like to have some insight into that number. I'd also like you to touch on how we can combat the money laundering that Russian oligarchs do to fund Vladimir Putin's regime.

[William Browder]

On the oligarch question, as you mentioned, there are 118 oligarchs who are on the Forbes' rich list, and 35 of them have been sanctioned. A number of these people have not been sanctioned.

On top of that, with the way the oligarchs conduct their affairs, they hold things in the names of nominees, trustees and other people. For example, when Roman Abramovich was sanctioned by the U.K., they didn't just sanction him, but they sanctioned one of his associates, a man named Eugene Shvidler, another person who worked with him named Eugene Tenenbaum, and one further person. It caught people in his web more broadly than just him.

When we look at these oligarchs who have been sanctioned, a lot of them don't have that same situation where their associates have been sanctioned. I think it's a very important part of the next step.

Everything has happened very quickly. Generally I'm very critical of all governments wanting more and more, but I have to say that I am complimentary of all the work that was done and what's been achieved so far by the Canadian government and other governments under the sanctions. However, now it's time to up the game, to then say, okay, let's now look after the sort of spiderweb surrounding the oligarchs, so we don't end up just getting part of their financial arrangements and not the whole thing.

Can you just remind me of the second question, please, really quickly?