Senator Peter Boehm on Bill S-259: Corrupt Foreign Leaders Hurt the Forcibly Displaced and Erode Canada’s Tax Base

On May 9, 2019 Senator Peter Boehm added his voice in support of Billl S-259, the Foreign Assets Repurposing Act. In his speech, Senator Boehm outlines the urgent need for a tool to repurpose the frozen assets of corrupt foreign officials, citing examples of Venezuela’s President Nicolás Maduro. He also argues that Canada’s financial institutions can be home to the assets of individuals whose actions or inactions forcibly displace their people. Senator Ratna Omidvar is the sponsor of this legislation. 

Watch some highlights from Senator Boehm’s speech or read the full transcript below.

Hon. Peter M. Boehm: Honourable senators, I rise today to speak to Bill S-259, an act respecting the repurposing of certain seized, frozen or sequestrated assets.

I want to offer my support for this legislation and I commend Senator Omidvar for her work in bringing it to the floor. This bill comes at a critical point in world history. I will not go into great detail on the reasons for this as Senator Omidvar and Senator Pate have already done so quite eloquently, but I wish to underscore the crisis which makes this bill an unfortunate reality.

As the preamble to Bill S-259 states:

. . . there is a greater number of forcibly displaced persons than ever before in the world today . . .

Armed conflict and persecution, often the result of or inflamed by bad governance, has led to roughly 70 million people around the world being forced to flee their homes. That is a staggering number — two displaced persons for every Canadian citizen.

Although there is a record number of refugees and displaced persons around the world right now, we must remember that this problem is nothing new, just like war, violence and persecution. For thousands of years, these scourges have forced innocent people the world over to seek refuge in distant lands.

Events of just the second half of the 20th century alone, from World War II and conflicts that flowed from it to the battles of independence that marked the end of the colonial era and proxy wars post-Cold War left at least 210 million people displaced. To reiterate, that is just the period from 1940 to 2000.

As I have said before in this chamber, my own parents count themselves in that number, having come to Canada as refugees of the second “war to end all wars” from what is now Romania. I thank Senator Omidvar for sharing her own story with us.

What has not changed over thousands of years and what will not change regardless of where in the world vulnerable people are forced to flee from is the fact that none of them want or wanted to. Nobody who fled Europe because of the Nazis and later Stalin and the wars in the former Yugoslavia, or Vietnam because of the Vietnam War, or Cambodia because of the Khmer Rouge, or Uganda because of Idi Amin, or Afghanistan because of the Taliban, or Syria because of ISIS and Bashar al-Assad, or Yemen because of the war and dire humanitarian crisis there, or the Rohingya people because of the genocide perpetrated against them by Myanmar or Venezuela because of Nicolás Maduro, none of them wanted to leave their homes. They were all forced to do so.

My parents did not want to leave their ancestral home of 800 years. Senator Omidvar did not want to leave her home in Iran. Senator Ngo did not want to leave his home in Vietnam. Senator Jaffer did not want to leave her home in Uganda.

I say that, dear colleagues, to challenge the unfortunately all-too-common and growing misconception that asylum seekers who want to leave their home country often do so in order to have access to different or better economic opportunities.

Yes, of course, some of them do leave their country for that reason, which is perfectly valid, but they are not part of the group covered by this bill.

Colleagues, this bill seeks to provide another tool through which perpetrators of the conditions that lead to mass displacement may be held to account. As Senator Omidvar said in her second reading speech on April 9, Bill S-259 “. . . stands on the shoulders of the Magnitsky Act.” Of course, it was another of our exceptional colleagues, Senator Andreychuk, who led the way on that legislation.

Inspired by the World Refugee Council of the Centre for International Governance Innovation, this bill would, in essence, make the bad guys pay.

As was pointed out at a recent briefing session, there is a tragic symmetry to the underlying problem that gave rise to this legislation. The foreign entities whose assets would be frozen by Canada are frequently the same entities whose actions or even inaction caused the circumstances that would lead to their assets being frozen in the first place. It is a vicious cycle of greed, theft, corruption, violence, persecution, human flight and displacement. Bill S-259 seeks to break that cycle by freezing and then repurposing the ill-gotten gains of dictators and other bad actors who are at the root of the global displacement crisis and use these various reclaimed assets to help people forced from their homes as well as their hosts in new countries.

Based on the principles of accountability, justice, due process, openness, compassion and good governance, this bill would bring an end to the impunity corrupt foreign actors have enjoyed for far too long and will bring relief to those these officials have so grievously harmed.

The situation in Venezuela is the best recent example. It has captured the attention of the entire world.

As Senator Omidvar mentioned in her speech, President Maduro’s regime has forced over three million people to flee their country since 2014, when the economic crisis hit.

This mass migration had an impact on Venezuela’s neighbouring South American countries.

Colombia alone took in millions of immigrants, while Peru welcomed 500,000. Although in most cases Venezuelans were warmly welcomed into those countries, their hosts are facing many challenges.

It is not just migrants and displaced peoples themselves who would be helped by repurposed assets. The money could also be given to the government of the host country to help it handle the influx of people or even to NGOs in the impacted region. How assets would be distributed would be outlined in the ruling of the provincial Superior Court in Canada to which the Attorney General applied for an order to confiscate the assets in Canada of a foreign official. The use and ultimate decision-making authority of the judicial system is critical to the effectiveness of the legislation as it ensures politics are not at play.

Also of note is the well-considered stipulation that any proceeds stemming from the order be paid to the court rather than the government. This not only keeps politics from the equation but also ensures there could be no allegation that the Senate initiated a money bill.

In the case of Venezuela, Canada has already taken the step of freezing assets held here by President Maduro. This bill would allow the courts, if it is deemed appropriate based on due process and reasonable evidence, to seize these assets and then distribute the funds to Venezuelans displaced by the regime, to host countries and/or to NGOs working to help.

One of the greatest advantages of this bill is the creation of a public registry.

Under clause 4, the Minister of Foreign Affairs must make public the names of persons or entities associated with a frozen asset and the value of that asset.

Knowing not just who but also what and how is a crucial element of this legislation and speaks to its principle of openness and transparency. It also leads to the next point I wish to highlight, that of good governance.

This principle applies not just to the foreign official or entity but also to Canada. Our own country, and many others around the world, harbours in various forms the wealth stolen from institutions by dictators and other corrupt officials. Bill S-259 would be but one tool at our disposal to prevent and punish the damaging practice of base erosion and profit shifting  — a.k.a. BEPS. We heard about that earlier today.

There is also the issue of beneficial ownership, which the Panama Papers brought to the world’s attention in 2016. While not illegal in and of itself, beneficial ownership has been used to hide illegal activity. The Panama Papers brought into stark focus the prevalence of its use for nefarious purposes.

Canada has become a tax haven largely because of the positive reputation of our governmental and financial institutions and our generally strong economy. Corrupt foreign officials steal and embezzle from institutions in their own countries and thus take from their fellow citizens. They then negatively use beneficial ownership to create shell companies in Canada to pay less tax on their assets and/or to hide their ill-gotten gains.

By shifting profits, legitimate or otherwise, from higher-tax jurisdictions to ones with lower taxes like Canada, the tax base in the originating country is eroded. This further hurts populations suffering at the hands of corrupt leaders. It also means that the lower-tax country benefits from the theft of the first nation’s wealth and resources.

Those rules need to be strengthened, but until they are, the fact remains that plundered assets, in various forms, are being housed and enriched in our country. This legislation will go a long way toward reversing the trend and doing some good in the world by helping to alleviate the suffering of far too many people.

In closing, I would like to remind senators of another important aspect raised by Senator Omidvar, namely that this type of legislation may be rather rare, but it does exist.

Switzerland passed similar legislation in 2015. France and the United Kingdom, two of our allies, are considering doing the same.

If Canada passes this bill, then other countries around the world will surely also implement the necessary measures in their own jurisdictions.

We have a chance, colleagues, to be leaders on a vitally important issue that could have a hugely positive impact on some of the world’s most vulnerable people. I applaud Senator Omidvar for taking the first step and encourage all my fellow senators to support this bill. Thank you.

Click here to watch highlights from Senator Omidvar’s speech on FARA.