Canada to seize and forfeit Russian oligarch’s assets

by Dan Fournier, published Friday, Dec. 23, 13:06 EST on fournier.substack.com

Photo of Roman Abramovich by Marina Lystseva. Image source: Wikimedia Commons.

According to a December 19 news release by Global Affairs Canada, Mélanie Joly, Minister of Foreign Affairs, announced that Canada will seize and pursue the forfeiture of US $26 million from Granite Capital Holdings Ltd., a company owned by Roman Abramovich, a Russian oligarch.

Though the news release begins with the announcement that Canada will “seize and pursue the forfeiture of US $26 million from Granite Capital Holdings Ltd., a company owned by Roman Abramovich—a Russian oligarch sanctioned under the Special Economic Measures (Russia) Regulations,” Mr. Abramovich does not appear in their related document under the Individuals section of the sanction list, nor does Granite Capital Holdings appear in the Entities list.

Next, the news release declares “If forfeited, the proceeds that are generated will be able to be used for the reconstruction of Ukraine and compensation to victims of the Putin regime’s illegal and unjustifiable invasion.”

The release, however, does not specify which specific laws, either domestic or international, were violated by Mr. Abramovich or his company.

Moreover, Global Affairs Canada does not elaborate on what is meant by “unjustifiable.” The use of such terms can be highly subjective, particularly in matters as complex as international conflicts.

“Putin’s oligarchs are complicit in Russia’s illegal and barbaric invasion of Ukraine,” continues the news release. Yet, Global Affairs Canada fails to provide any evidence with regards to Mr. Abramovich’s “complicity” in the Russian invasion of Ukraine.

Though Minister Joly is considering “making a court application to forfeit the asset permanently to the Crown” to further release the funds for the “reconstruction of Ukraine and compensation to victims”, there is no mention of the legal due process by which Mr. Abramovich or officers of his Granite Capital Holdings company may be entitled to, as per the news release.

In other words, it appears that Mr. Abramovich is deemed guilty without a complete judicial review.

According to Fasken, a business and litigation law firm founded in Canada in 1863, the Minister [of Foreign Affairs] can apply to a superior court to seek forfeiture of the seized property. But it is the judge that must issue the forfeiture order.

During this process, however, Fasken further notes that:

“the court may hear from any person who, in the court’s opinion, appears to have an interest or right in the property.”

Accordingly, it is unclear whether Mr. Abramovich or officers of his company have had or will have the opportunity to do so.

Fasken further notes:

“As the process for seeking forfeiture under the SEMA requires that notice be given to those with interests in the property and opens the possibility that they may make representations to the court, an application by the Minister to seek forfeiture may be expected to give rise to legal challenges under the SEMA.”

SEMA refers to the Special Economic Measures Act which in June of this year gave the government significant new powers.

Back in April of this year, Bill C-19 was introduced (sponsored) by Finance Minister Chrystia Freeland who has personal ties to the Ukraine.

The bill sought expanded powers under the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law).

C-19 has been approved by both the House of Commons and the Senate.

Orders-in-Council

Specifically, among the amendments to the act figures a “mechanism that authorizes the Governor in Council to make an order restraining or seizing property situated in Canada that is owned, held or controlled directly or indirectly by or on behalf of a foreign state, any company in that foreign state, or a national of that foreign state who does not ordinarily reside in Canada.”

An “order” is short for a federal order-in-council which is an “executive order”, similar to that the U.S. President has, which is carried out by the Governor in Council on the advice of the Privy Council.

In practical terms, advice really comes from the ministers, such as Minister of Foreign Affairs Mélanie Joly, who are part of the federal Cabinet.

“In Council” simply signifies that the order is formally made upon the authority of the King-in-Council, or the reigning Monarch, now King Charles III, through his representative in Canada, the Governor General.  

While it is unclear where the order originated from, matters treated and debated upon in the Privy Council are kept secret, as is affirmed by the oath of the Members of the Privy Council.

Will such actions create a precedent deterring foreign investment into Canada?

As the Financial Post recently noted, this would mark “the first time Canada is using a law that allows for sanctioned assets to be forfeited by a court order,” and it would be the first G-7 country to impose such kind of measure against Russia.

Many argue that such measures could create a significant deterrent for foreign investment into Canada. For, the potential for sanctions leading to asset seizure and forfeiture represents a critical risk factor foreign businesses would need to consider before setting up shop in Canada.

This very sentiment was also noted by Fasken:

“Consequently, acquiring companies and those seeking to enter joint ventures are on notice to have sanctions clarity on beneficial ownership of corporate targets or partners. Sanctions due diligence and risk arises not only regarding activities abroad, but to wholly domestic transactions involving foreign beneficiaries who have assets in Canada.”

Human Rights abuses committed by Ukraine ignored

The December 19 news release by Global Affairs Canada also mentions that “many of these sanctions have been undertaken in coordination with Canada’s allies and partners.”

It is safe to presume that the United States of America figures among these allies and partners.

What is controvertible about the broader sanctions imposed on Russia by Canada, the United States, and other “allies and partners” is that none of these partners have reprimanded the Ukraine for its own illegal actions.

A report produced by the U.S. State Department titled UKRAINE 2021 HUMAN RIGHTS REPORT has outlined numerous such illegal activities in the form of human rights abuses committed by members of the Ukrainian government, including many towards its own people in the Donbas region of the country which is predominantly of Russian ethnicity.

As per the report these include, but are not limited to the following (verbatim):

• unlawful or arbitrary killings, including extrajudicial killings by the government or its agents

• torture and cases of cruel, inhuman, or degrading treatment or punishment of detainees by law enforcement personnel

• harsh and life-threatening prison conditions

• arbitrary arrest or detention

• serious restrictions on free expression and media, including violence or threats of violence against journalists, unjustified arrests or prosecutions of journalists, and censorship

• refoulement of refugees to a country where they would face a threat to their life or freedom

• serious acts of government corruption

• lack of investigation of and accountability for gender-based violence

• crimes, violence, or threats of violence motivated by anti-Semitism

• crimes involving violence or threats of violence targeting persons with disabilities, members of ethnic minority groups, and lesbian, gay, bisexual, transgender, queer, or intersex persons

• the existence of the worst forms of child labor

Unlike with Russia, Global Affairs Canada has not created a sanction list against individual members of the Ukrainian government, nor its entities, despite such apparent illegal and “unjustifiable” human rights abuses.

This author requested comment from the Media Relations Office of Global Affairs Canada about these human rights abuses committed by the Ukraine as well as some of the aforementioned points in question, but has yet to receive their input. Should they reply, an addendum may be added to this article.

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Addendum:

On January 3, Clyde do Something put out a video on this subject of seizing assets (even of ordinary Canadian citizens) with comments from lawyer Wes Mussio which is definitely worth the watch:

- Asset Forfeiture - The Erosion of Property Rights in Canada - with Lawyer Wes Mussio

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