Canada’s Approach to Seizing Frozen Assets and Holding Corrupt Leaders to Account
A working paper produced as part of the World Refugee & Migration Council’s Groupe de travail canadien contre la grande corruption by Robert Currie, Fen Osler Hampson and Allan Rock.
Introduction
Bad governance often causes forced displacement and is almost always associated with corruption. Grand corruption, defined as “the abuse of high-level power that benefits the few at the expense of the many and causes serious and widespread harm to individuals and society”,[1] weakens and distracts governments, making it less likely that they will meet their responsibility to protect their population.[2] Furthermore, corruption discourages donors, compounding the difficulty in funding efforts to assist refugees and the internally displaced.
The World Refugee & Migration Council addressed the scourge of grand corruption in its 2019 report, Appel á l’action : transformer le système mondial d’aide aux réfugiés, stressing accountability and proposing that when stolen funds are found offshore, they ought not only to be frozen but also confiscated and repurposed for the benefit of the displaced.
At the time, the Council believed that financial measures should be used to hold governments accountable for displacing people, specifically by repurposing frozen assets and working with international financial institutions to redirect those assets to help those who had been forcibly displaced. While these were seen primarily as measures to strengthen accountability, the Council also recognized that forfeited assets could ease financial shortfalls in host countries and affected communities, including those who have been forcibly displaced.
The idea of confiscating and repurposing forfeited assets to help those who have been forcibly displaced is not an entirely new concept. In one iteration, Guy S. Goodwin-Gill and Selim Can Sazak argued that “the State of origin could be held financially liable […] and subjected to sanctions” for generating refugees.” Focusing on the case of Syrian refugees in Turkey, they proposed that frozen assets of refugee-generating countries should be used to provide humanitarian assistance (while noting that the idea dates back to 1939). They argued that “those countries that drive people from their homes should pay the costs of providing them with a humane life. An important step in this direction would be to allow refugee-receiving states or competent international institutions to draw on the assets of refugee source countries.”[3]
In a series of working papers, the Council refined the concept and rationale for asset forfeiture and demonstrated, using the example of Canada, the kind of legislative framework that would be required at the domestic level to go beyond traditional sanctions legislation, which involves asset freezing, to actual asset forfeiture, in a manner that is consistent with existing constitutional, international treaty and legal, due process safeguards.[4]
Additionally, by addressing the issue of accountability, the Council drew a clear connection between forcible displacement and grand corruption. The Council argued that “Violent or oppressive regimes, or those that fail or refuse to protect their populations, are responsible for much of the forced migration in the world today. Those regimes are also often corrupt, stealing from their treasuries and placing the money and other assets offshore or for the rulers’ and associates’ unlawful benefit.” In drawing this clear line, the Council argued that the ill-gotten gains of regimes responsible for forcible displacement should be legitimate targets of confiscatory action by those countries where the assets are held.
The Council also recognized that asset forfeiture, unlike asset freezing, is a form of punishment and that such action should be used sparingly and only in exceptional cases where states have violated the fundamental rights of their citizens and caused untold human suffering through state-sanctioned violence, which includes rendering citizens homeless and stateless. Traditionally, the imposition of sanctions against an offending state or its leadership has been viewed as a way to encourage behavioural change. Accordingly, sanctions will be lifted and assets “unfrozen” and returned to their owners when the offending party has changed its behavior or mended its ways. However, the Council recognized that there are clearly instances where this will not happen, and the only recourse may be punishment through asset forfeiture followed by restitution of the proceeds of crime to the victims, including those who have been forcibly displaced.
As for the target of confiscation, the Council framed its recommendation in terms of the privately held assets of a regime’s leaders, family members, and its immediate supporters, specifically those who directly or indirectly have been involved in illicit or criminal activities and/or human rights abuses and have acquired their ill-gotten gains with the active support or collusion of their country’s rulers. The Council did not call for or contemplate the seizure of state assets, including the holdings of central banks or state-owned companies held abroad.
The Council also recognized that asset forfeiture for these purposes would be setting a new precedent in international law because, as Yi Chao argues, “the liability of RGEs (refugee-generating entitles) for refugee-generating still does not exist in treaties or customary international law…. international refugee law has been focusing almost exclusively on the responsibility of receiving States since its birth. No provision in the 1951 Convention relating to the Status of Refugees (“1951 Convention”), its 1967 Protocol, or the OAU Convention Governing the Specific Aspects of Refugee Problems in Africa (“OAU Refugee Convention”) addresses RGEs’ liability. Due to the lack of widespread State practice and opinio juris, finding RGE’s liable in customary international law is unconvincing. As Flavia Giustiniani noted in 2015, ‘[p]ractice shows that host States, rather than openly invoking the responsibility of source countries, have found it more practicable to limit their own [responsibility to protect refugees].’”[5]
As discussed below, the Parliament of Canada recently passed legislation that implemented the Council’s proposal,[6] but in an even more expansive manner. This paper examines the precedent-setting nature of Canada’s new legislation on foreign-owned asset forfeiture and some of the legal issues raised following the adoption of this new legislation. It also discusses some of the policy and legislative initiatives underway in other countries following upon Canada’s ground-breaking legislation and how the current global context is shaping these initiatives, specifically Russia’s invasion of Ukraine. As the paper argues, it is still an open question whether Canada’s independent initiative will set a new framework and precedent for asset forfeiture that will change customary international law on this matter or whether formidable political and legal hurdles domestically and/or internationally will thwart its development and usage.
[1] “Grand Corruption”, Transparency International, online: <https://www.transparency.org/en/corruptionary/grand-corruption>.
[2] For a good account of the related crime of “grand theft,” see Lys Kulamadayil, “Grand theft in international law” (2022) 10: 3 London Review of International Law 427.
[3] Guy S. Goodwin-Gill and Selim Can Sazak, “Footing the Bill: Refugee-Creating States’ Responsibility to Pay,” (29 July 2015), Foreign Affairs, online: <https://www.foreignaffairs.com/articles/africa/2015-07-29/footing-bill>.
[4] “Repurposing Frozen Assets to Assist the Forcibly Displaced –Research Paper”, (14 September 2020) Conseil mondial pour les réfugiés et la migration, online: <https://www.wrmcouncil.org/publications/research-paper/repurposing-frozen-assets-to-assist-the-forcibly-displaced/>. Also see, Michael J. Camilleri and Fen Osler Hampson, “No Strangers at the Gate: Collective Responsibility and a Region’s Response to the Venezuelan Refugee and Migration Crisis”, (31 October 2018), Centre for International Governance Innovation, online: <https://www.cigionline.org/publications/no-strangers-gate-collective-responsibility-and-regions-response-venezuelan-refugee/> and Michael J. Camilleri and Fen Osler Hampson, “Seize the money of Venezuelan kleptocrats to help the country and its people”, (29 January 2019), The Washington Post, online: <https://www.washingtonpost.com/opinions/2019/01/29/seize-money-venezuelan-kleptocrats-help-country-its-people/>.
[5] Yi Chao, “The Need to Establish and Enforce the Liability of Refugee-Generating Entities: Addressing the Normative Lacuna in the Intersection between International Refugee Law and the Law of International Responsibility” (Montreal, Qc: SSRN, 2018).
[6] In 2022 the Council created the Canadian Task Force Against Global Corruption, a body dedicated to researching and promoting anti-corruption measures (and of which the current authors are members). See WRMC, “Canadian Task Force Against Global Corruption,” online: https://www.wrmcouncil.org/canadian-task-force-against-global-corruption/.
