Bill C-19: The Frozen Assets Repurposing Act and the Effective and Accountable Charities Act are Included in the BIA

On June 15, 2022 Senator Omidvar spoke to Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures. Watch her speech:

Hon. Ratna Omidvar: Honourable senators, I rise today to speak on the Budget Implementation Act, and I will focus my remarks on areas that I have directly interacted with.

Before I go there, I want to thank a few outstanding female parliamentarians in this chamber and on the Hill. At the top of my list is Senator Moncion. This is not the first time she has sponsored a complicated Budget Implementation Act with many moving parts. She has done that with her thoroughness, her grace and her elegance and brought us up to the point today.

I also want to thank Senator Marshall, who has always helped us understand different money matters, whether they are the BIA or the budget or the different supply bills. I continue to listen to her with great attention.

Finally, I want to thank another woman, again on matters of finance. It’s not an accident that I am thanking women on matters of finance. This is the Honourable Minister Chrystia Freeland, Minister of Finance, who has embraced proposals that may not be part of the government platform but come from private impulses either in the House or in the Senate. I really hope that there will be a time when I will want to thank the more than a few good men on the Hill on the same item.

The BIA includes four measures that first found life either in the Senate or in Commons public bills. They include Bill C-241 by Conservative MP Chris Lewis, which sought to amend the Income Tax Act for travel expenses for tradespersons. We have heard Senator Moncion comment on this.

The second is Bill C-250 by Conservative MP Kevin Waugh, who would amend the Criminal Code to provide a prohibition on the promotion of anti-Semitism. We have just heard Senator Simons on this.

The third and fourth measures reflect proposals that I tabled here in the Senate which were debated, studied and approved by this chamber.

I also want to thank Senator Wetston and his contribution to the BIA in terms of the Canadian Competition Act, which has already been noted. I think this is proof that some good ideas — I would say “not all good ideas” after having heard from Senator Simons, but some good ideas — no matter from which party or corner of the Senate or the Hill they emanate from, can and do find a home in government legislation. It requires hard work, the patience of Job and a good measure of good luck. Above all, it demonstrates yet again that good ideas have long legs.

I would like now to turn to the two measures in Bill C-19 that are voiced on the two bills now included in different ways in the BIA: Bill S-217, the Frozen Assets Repurposing Act; and Bill S-216, the Effective and Accountable Charities Act.

Let me start with Bill S-217, the Frozen Assets Repurposing Act. I want to remind myself and all others who are listening in that this gem of an idea did not come from me. It came from civil society, the World Refugee & Migration Council. They have been integral as thought leaders and influencers in this important initiative.

I welcome the measures that the government has put forward in this bill. They are very similar to Bill S-217. Therefore, I have decided that my bill will not move forward once their bill becomes law because the government’s proposal follows the principle of my bill, which is to repurpose already sanctioned assets held in Canada to benefit the victims of the criminal activities, whether these victims are individuals, communities or nation states.

However, there are a few differences that I believe deserve to be highlighted. The BIA, the government’s proposal, not only covers corrupt individuals, as I proposed, but also extends to entities such as corporate entities. I support this improvement in the bill as it casts a wider net to catch those who are aiding and abetting corrupt regimes. It also includes a measure to include crypto-currencies as assets, which I had not thought about. In this way, the government has actually improved on the proposal that we sent to them.

Another principle of the bill was transparency and accountability. Here, the government’s proposal takes a slightly different route. One of the key components of my proposal was the use of the courts to determine if the assets could or should be repurposed, how they should be repurposed and to what accountability. This was designed to ensure due process for everyone involved, including the corrupt official.

In the government’s version of this proposal, the courts will be involved, but their participation will be limited to the verification and ownership of the assets. They will not be tasked with redistribution of the assets to the victims. Once the courts have completed their investigation and made a decision, the assets will be liquidated and paid into the government for redistribution. The government will then be responsible and accountable to the victims and to Canadians.

Colleagues, I believe this is one area that needs a bit of further thought by think tanks, by stakeholders and by government. The government must repurpose the assets in an open, transparent and accountable way and take — as much as they can — politics out of this equation.

Big questions need to be asked, such as: Who should receive the assets? Should it be the countries of origin or a country that is seeking restitution, such as Ukraine? Or would it be individual victims as opposed to communities or nation states? How would the assets be distributed? What accountability mechanisms are needed? These are important questions that need to be answered, because the government surely does not want to be accused of inappropriate distribution of funds or, worse, appropriation of funds for their own use. Although I’m sure it won’t go that far.

The last difference I would like to highlight is actually a bigger reason for concern. The budget implementation act, or BIA, does not include a public registry which would list the individual entity or the assets they held in Canada. Instead, the information would remain under lock and key. I know that the government is moving forward with a beneficial ownership registry in 2023, which may alleviate some of our concerns. However, I fear this may not be enough. Indications, at this stage, are that the registry will cover only federally regulated businesses, and this would likely create a loophole as entities that incorporate provincially would not be included. We should keep this in mind when their proposal for a beneficial ownership registry comes our way.

Finally, on this point, we learned recently from the RCMP that over $123 million in assets in Canada has been effectively frozen in the last six months alone. That does not cover all the assets frozen under the Special Economic Measures Act or the Justice for Victims of Corrupt Foreign Officials Act, also known as Sergei Magnitsky Law. It just covers a small slice of them. I’ve always been challenged when people have asked me how much money there is. Now, we know. It is not billions of dollars, but it is not chump change either.

We also know that the concept I have tabled is not new. Switzerland has been repurposing assets for the last 10 years and has repurposed roughly US$22 billion worth of assets. France brought into force a similar law a few years ago, and neither of them has been accused of breaking international law.

Let me now shift to Bill S-216, a bill that was debated, studied, approved and sent to the House of Commons and whose aim is to enable accountable and empowered relationships between charities and non-charities. In the BIA, the government went so far as to say their amendment reflected the spirit of Bill S-216, the proposal that I tabled.

I would like to, again, remind colleagues that it was the charitable sector — and by that I mean the many charities spread across our nation in every corner, in every sector — that was squarely behind the efforts of Bill S-216. They included Imagine Canada, Canada’s umbrella group of charities; Cooperation Canada, which deals with international development; the Canadian Centre for Christian Charities; and the United Way Centraide Canada, as well as 42 of Canada’s top charity lawyers who, in two open letters, all called for a change to this law. I want to say, again, that I was simply the parliamentary instrument to move their ideas forward. They worked, advised and pushed parliamentarians to take note of this issue. I tip my hat to them.

The government’s proposal adopts the principle of my bill, which is to enable charities to work in an empowered, yet fully accountable manner, with non-charities. However, once again — and it is their right to do this — the government used a different route, and this different route had, frankly, a bit of a rocky start. It was surprising to us that the government’s original language in the BIA was more prescriptive than the current law. It put into law a number of prescriptions, as opposed to leaving them as guidance, that the charity must fulfill when working with a non-charity. This was problematic in many ways.

As I have mentioned before, charities want and need to have strong accountability measures. However, the government, in its original version of the amendment in the BIA, provided a list of prescriptions that had to be met no matter the size, scope, type or purpose of the charity’s partnership with a non-charity. This was problematic because not all partnerships are the same, and not all accountability measures fit those partnerships. We heard from the ground that this prescriptive way would make it riskier for charities to work with non-charities, and no responsible director on the board of a charity would authorize their charity to take the risk of going down a path which could result in the delisting of their charitable status.

After much mobilization in April and May by the sector and through my collaboration with the Minister of Finance’s office, with Conservative MP Philip Lawrence, who sponsored Bill S-216 in the House of Commons, and NDP MP Daniel Blaikie, the House of Commons Finance Committee unanimously amended the BIA to get rid of these prescriptions. Instead, the accountability measures will be determined in consultations and in guidance. This will better fit the size and the complexity of the sector as it goes forward.

Once again, I thank the government for being open to and flexible in listening to this last-minute hurrah that we had to engage in and for being prepared to change and adapt their response. I want to commend the government for keeping their lines of communication open.

However, as always, there is no complete path to perfection, colleagues. There is a new amendment, which has given rise to some concern. It is the new anti-directing rule. Directed gifts are fairly common, but the new amendment will put a stop to this. For example, there are a lot of Canadians and organizations who want to help fund aid efforts for the situation in Ukraine. As drafted in this amendment, it is conceivable that all donations given to the Red Cross that are directed by donors to efforts in Ukraine could be grounds for the loss of charitable status, because those are directed gifts. A directed gift is when I give money to a charity, and I direct the charity to give money to x,y and z somewhere else.

I have, however, in further conversations with the Minister of Finance’s office, been assured that the government will take a soft approach to this amendment, that it will be applied in a reasonable way by the CRA and that it would not limit the creation and participation of Canadian charities in pooled funds. I believe and I sincerely hope that the government will follow through on this promise, but the sector and I will continue to work with the government and monitor the progress to ensure that it follows through with the amendments or else someone in this chamber, likely me, will table an amendment at some time in the future.

In conclusion, I support these measures in the BIA. I’m encouraged that the government has recognized individual actions by parliamentarians. Good ideas, a lot of hard work and persistence, and, above all, the voice and leadership of civil society can move issues that we care about a long way. Thank you, colleagues.

Hon. Brent Cotter: Would Senator Omidvar take a short question?

Senator Omidvar: In 30 seconds, absolutely, senator.

Senator Cotter: I was impressed by your presentation and I thought there was only one absence. In your list of women senators who are contributing to this, I thought there was one shortcoming, and I’m asking whether you would be open to adding the name Ratna Omidvar to that list?

Senator Omidvar: I am not in the same class as my colleagues Senator Marshall and Senator Moncion. I’m happy to take their lead. Thank you.

Some Hon. Senators: Yes, you are.