Remedies for Organized
Crime and Other Unlawful Activities Act, 2000,
Bill 155, Mr Flaherty / Loi de 2000 sur les
recours pour crime organisé
et autres activités illégales, projet de loi
155, M. Flaherty
Ministry of the
Attorney General
Honourable David Young, Attorney General
Mr Jeffrey Simser, project director, legal services division
Canadian Civil
Liberties Association
Mr Alan Borovoy
Office for Victims of
Crime
Mr Scott Newark
Mr Hillel Gudes; Mr
Andy Réti
Freedom Party of
Ontario
Mr Paul McKeever
Ms Karen
Selick
Canadian Bankers
Association
Mr Gene McLean
Toronto Police
Service
Mr Julian Fantino
Nathanson Centre for
the Study of Organized Crime and Corruption,
Osgoode Hall Law School
Dr Margaret Beare
Advocates'
Society
Mr Anthony Moustacalis
Kroll Lindquist
Avey
Mr Roddy Allan
STANDING COMMITTEE ON
JUSTICE AND SOCIAL POLICY
Chair /
Présidente
Ms Marilyn Mushinski (Scarborough Centre / -Centre
PC)
Vice-Chair / Vice-Président
Mr Carl DeFaria (Mississauga East / -Est PC)
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr Michael Bryant (St Paul's L)
Mr Carl DeFaria (Mississauga East / -Est PC)
Mrs Brenda Elliott (Guelph-Wellington PC)
Mr Garry J. Guzzo (Ottawa West-Nepean / Ottawa-Ouest-Nepean
PC)
Mr Peter Kormos (Niagara Centre / -Centre ND)
Mrs Lyn McLeod (Thunder Bay-Atikokan L)
Ms Marilyn Mushinski (Scarborough Centre / -Centre
PC)
Substitutions / Membres remplaçants
Mr Garfield Dunlop (Simcoe North / -Nord PC)
Mr Raminder Gill (Bramalea-Gore-Malton-Springdale PC)
Mr John Hastings (Etobicoke North / -Nord PC)
Mr David Tilson (Dufferin-Peel-Wellington-Grey PC)
Clerk / Greffier
Mr Tom Prins
Staff / Personnel
Mr Avrum Fenson, research officer, Research and Information
Services
The committee met at
1005 in room 151.
REMEDIES FOR ORGANIZED CRIME AND OTHER UNLAWFUL
ACTIVITIES ACT, 2000 / LOI DE 2000 SUR LES RECOURS POUR CRIME
ORGANISÉ ET AUTRES ACTIVITÉS ILLÉGALES
Consideration of Bill 155, An
Act to provide civil remedies for organized crime and other
unlawful activities / Projet de loi 155, Loi prévoyant des
recours civils pour crime organisé et autres activités
illégales.
The Chair (Ms Marilyn
Mushinski): I'm going to call the meeting to order.
There are members outside still but we are on a very tight
schedule today.
STATEMENT BY THE MINISTER AND RESPONSES
The Chair:
Good morning, ladies and gentlemen. This is a meeting of the
standing committee on justice and social policy to consider Bill
155, An Act to provide civil remedies for organized crime and
other unlawful activities. We're going to start the day with the
Honourable David Young, Attorney General. You have 10 minutes, Mr
Young.
Hon David Young
(Attorney General, minister responsible for native
affairs): Thank you, Madam Chair. I do appreciate the
opportunity to speak about the Remedies for Organized Crime and
Other Unlawful Activities Act.
As most of you know, this
bill was introduced by my predecessor, the Honourable Jim
Flaherty, who did a great deal of groundwork on this bill when he
was the Attorney General of this province.
Our government introduced
this bill to protect Ontario's communities, to protect the people
of Ontario, and to assist victims. The threat of unlawful
activity to the security of the residents of this province can
take many forms.
We are all aware of the
violence alleged to be perpetrated by organized crime in other
provinces and in other countries. What we don't tend to see and
what we don't tend to hear about are the unseen harms caused by
this kind of activity. Other jurisdictions acknowledge this
threat and other jurisdictions have moved to address it. In this
province, we need a made-in-Ontario solution that will give us
the means to fight unlawful activity effectively.
A great deal of research was
conducted before the drafting of Bill 155. Experts on organized
crime and civil asset forfeiture were consulted. These are
experts that came from Ontario and elsewhere in Canada, as well
as other jurisdictions, including the United States, Ireland and
South Africa.
We learned that civil asset
forfeiture works. As Detective Chief Superintendent Felix McKenna
of Ireland's Criminal Assets Bureau told us, a significant number
of high-level criminals left that country as a result of the
bureau's efforts in this area.
Madam Chair, we have put
forward a made-in-Ontario solution to take the profit out of
crime. What we have done, plain and simple, is to clarify the law
of property in Ontario. We have created another tool that can be
exercised under our constitutional power of civil law.
I look forward to the input
of this committee and I look forward to the input of the public.
My hope is that the comments and advice that are provided over
the next two days will help us to refine and strengthen this bill
so that it can be an effective tool.
The aim of the proposed
Remedies for Organized Crime and Other Unlawful Activities Act is
to take the profit out of crime and to protect victims.
Specifically, it would enable the province to ask the courts to
freeze, seize and ultimately forfeit to the crown the proceeds of
unlawful activity and instruments likely to be used in unlawful
activity.
It would also allow the
province to launch civil actions in court against two or more
people who conspire to engage in unlawful activities, and it
would create a special fund, a fund that would consist of the
proceeds from civil forfeitures, from which people directly
victimized by these unlawful activities could be compensated.
Unlawful activity is
indiscriminate. It hurts every resident of this province and it
hurts our economy. This bill would attack that activity and, more
importantly, it would help victims.
Ontario is open for business,
but not the business of organized crime.
We can't be naïve about
this problem. Organized crime is picking the pockets of everyone
in Ontario. A federal study estimated that organized economic
crime costs Ontario between
$5 billion and $9 billion each and every year. To put that into
perspective, that is roughly equivalent to the value of Canada's
exports to Japan. As the most populous province in this country
and the economic engine of this country, it is only reasonable to
assume that Ontarians bear the largest share of the economic cost
of that unlawful activity.
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Michel Auger, the courageous
Quebec crime reporter who narrowly survived an attempt on his
life last year, has said that organized criminals stay out of the
United States and flock to Canada because of inefficient and
ineffective laws in this country. While our proposed legislation
is civil law, Ontario has also asked the federal government to do
what it can in the criminal field. We have asked Ottawa to amend
the Criminal Code to: broaden the definition of "criminal
organization"; prohibit recruitment and participation in criminal
organizations; and attach consequences to the wearing of badges
and other manifestations of membership in criminal organizations.
We'd like them to amend the Criminal Code to expand police powers
to detain and search suspected members of criminal organizations
and to establish a mandatory minimum sentence for organized
criminal activity to help fight organized crime and biker
gangs.
Our government believes that
we have a responsibility to act in the best interests of the
people of this province. It is clear that action can be taken
against unlawful activity that falls under provincial
jurisdiction. Ontario clearly needs new and innovative tools to
fight unlawful activity and to help victims. Bill 155 is our
government's response.
While the bill would give us
more effective tools to fight unlawful activity, the rights of
individuals have to be and will be protected. Safeguards to
ensure due process and to protect the rights of people who
legitimately and responsibly own their property are part of the
bill.
The standard of proof that
would be used in a civil forfeiture action would be the same as
now exists for all civil cases: it will be the balance of
probabilities. It would have to be proven in court that the
property in question was a proceed of unlawful activity before it
could be frozen, before it could be seized or before it could be
forfeited.
I also want to stress that
under this bill the burden of proof would remain with the
province. The province would be required to prove its case in
court. The burden of proof is not reversed. In addition, Bill 155
would also balance the privacy of personal information with the
need of investigators to gather information for a civil asset
forfeiture proceeding.
It has always been our
commitment to protect the privacy rights of Ontarians. I'm
pleased to say today that I am reaffirming our government's
commitment to protect personal health information. We will
propose an amendment that will clearly state that personal health
information protected by Bill 159 cannot flow to the Attorney
General under Bill 155 in the absence of a court proceeding or a
summons.
We continue to consult on
privacy matters related to this bill. I've had an opportunity to
speak to Dr Ann Cavoukian, the Information and Privacy
Commissioner, and I will be meeting with her over the next short
while. I look forward to her advice; I look forward to receiving
the advice of this committee.
The court, under this
proposed piece of legislation, would have different remedies
available to it. For example, the court may choose to award
damages equal to the losses experienced by the public, or it
could issue an injunction to prevent future unlawful activity.
This provision would provide the province with a powerful tool to
prevent further victimization.
I think it's important to
remember that our key objective through this legislation is to
prevent further victimization where people are exposed. We want
to ensure that victims will have an opportunity to be compensated
for their loss.
The feature that makes this
bill truly unique is the compensation fund for victims. If there
is unclaimed money in the fund, participating police services,
government ministries and others would be able to use that money
to fund programs to help victims or to prevent further
victimization.
In conclusion, our goal is to
take the profit out of crime. And we'll help victims of unlawful
activity if this bill is passed. We are developing a
comprehensive organized crime strategy. We made a budget
commitment last May of $4 million for the strategic deployment of
specialized police forces and dedicated legal resources to focus
on organized crime. This funding was split between my ministry
and that of the Solicitor General.
Ontario is committed to doing
what it can under the provincial jurisdiction that it has. Bill
155 is one component of our strategy, and if it's passed, it
would allow the province to establish a strike force of
investigators, civil lawyers and forensic accountants. The strike
force would enable us to achieve our goals without creating
another level of bureaucracy.
Ladies and gentlemen, I'm
proud that Ontario is the first jurisdiction in this country to
develop a new approach that would stop further victimization and
help existing victims. The Remedies for Organized Crime and Other
Unlawful Activities Act, if passed, would disrupt and disable
organizations that victimize Ontarians. I encourage all members
to support this bill so that we can work together to make Ontario
a safer place to live, a safer place to work and a safer place to
do business.
I thank the members of the
standing committee for their time today and I look forward to the
discussions you'll have over the next two days on this very
important piece of legislation.
The Chair:
Thank you, Minister. We'll now turn to the official opposition
for a 10-minute statement, with questions if there's time.
Mr Michael Bryant (St
Paul's): Let me say at the outset that Dalton McGuinty
and Ontario Liberals want to provide law enforcement officials with
effective and legal tools to crack down on organized crime.
Ontario has lost billions of dollars to organized crime under
Mike Harris's watch, so we need constructive measures to reverse
this embarrassing trend.
The stated purpose of this
bill was to make Ontario somehow not open for business to
organized crime, yet in fact since the bill's introduction it
would seem that organized crime has been flocking to the
province. Biker gangs seem not to be shaking in their boots when
faced with this paper tiger. I'm particularly concerned that the
Harris government, instead of investing the necessary resources
into enforcing the law already on the books, is engaging in
another public relations stunt to fool Ontarians into thinking
that they're doing something about organized crime. Even the
National Post editorial board has trashed this bill as nothing
more than, in their words, "a headline grabber."
We have a law that permits
the seizure of mobsters' assets. We need to enforce the law on
the books. Instead, what we're seeing today is the government
trying to steer its resources away from the criminal courts and
toward the civil courts, which are already totally overburdened.
There is no reciprocal assistance to the civil courts that would
deal with prosecutions through this new bill. But of course that
would assume that the bill is actually going to have the
necessary resources to be used.
And on that front we heard
today, yet again, of a commitment to inject $4 million, I believe
it was, into police strike forces. Well, I've got news for the
people of Ontario: this is another ruse. This is not new money;
this is money that was first committed in the May 2000 budget.
This is not new money; this is a reannouncement of money that was
put in the budget nearly a year ago.
I'm concerned, furthermore,
that the Harris government's approach to organized crime has
involved conferences, pamphlets, several press conferences, and
yet at the end of the day we don't have any investment in a real
crackdown on organized crime. That's an enormous waste of
taxpayers' money. The holding of a summit on organized crime in
August 2000, after the Attorney General had attended four other
summits on this issue, in Vancouver, New Jersey, Delaware and
Washington-this bill might be renamed not the current title of
the bill but rather "A Bill to Forfeit Taxpayers' Money for a PR
Stunt."
1020
Lastly, I want to say
something about the announcement that was made today. Of course,
it goes without saying that amendments to bills at the committee
stage are always welcome, but let's put this in context. The
Attorney General of Ontario stood up in the House time and time
again and lectured opposition MPPs that they had nothing to worry
about with respect to the seizure of Ontarians' private health
information by the Ministry of the Attorney General. "Don't
worry; all is in hand with this bill," said the Attorney General.
He had a briefing and thought that this briefing was going to
somehow create a smokescreen that would fool everybody into
thinking that all was right with this bill. Yet, after all of
that, after all of those cries of "Trust me, the bill is right,"
now we hear from the Ontario Attorney General, "Well, as a matter
of fact, the bill wasn't right and you were right, Ontario
Liberals, that it's wrong for Ontarians' private health
information to be seized by the ministry without some element of
due process hovering over it."
This is a major concession by
this government, albeit it's not being brought in too late; it is
before the bill is being passed. We're going to be taking a close
look at this bill, looking forward to hearing from the
submissions. I would just close by saying that I hope the legacy
of Princeton's prince of paper tigers is not a series of bills
which have no effect in this province. I look forward to Minister
Young bringing forth an approach that doesn't just talk about
crime but does something about organized crime in the province of
Ontario.
The Chair:
Thank you, Mr Bryant. You have a couple of minutes for questions,
if you would like.
Interjection.
The Chair:
OK, then we'll turn to Mr Kormos. You have 10 minutes.
Mr Peter Kormos
(Niagara Centre): First, to Mr Young, congratulations.
This is your first, I suppose, legislative function as Attorney
General. I do wish you well during your term as Attorney General.
Look, I'm not doubting the personal commitment of you or any
other member of this assembly to want to confront criminal
activity and cut it off at the knees. I have some concern with
the partisan colouring of this and other so-called law-and-order
initiatives.
Forgive me if I'm overly
suspicious at times when I see your predecessor, the Solicitor
General and the Premier, playing the law-and-order card in a very
partisan way. Perhaps it's just my cynicism that drives me to see
it as partisan-driven. Perhaps the people of Ontario look at it
from a totally different perspective, a far more benign one. But
I'm troubled. I've got to tell you, sir, I'm troubled when I see
the law-and-order card, the fear-of-crime card, being played.
Having said that, nobody
doubts the need to confront crime. You make note, as I heard you
in your press conference this morning, about wanting to prohibit
the wearing of badges, I suppose, insignia that presumes
membership in some sort of criminal group or another. Some folks
where I come from would think that blue pinstripe suits would
fall into that same category. I trust you don't advocate
abolishing those as well.
I've got some real concerns
about the utilization of the civil test, the mere balance of
probabilities. Again, I and New Democrats will support you or any
other Attorney General in any effort to fight crime. Our
concern-we hope we have a chance to address that during the
course of this committee process-is that the civil test of
balance of probabilities is such that it has the capacity to
embrace or encompass people who aren't in fact criminals,
whereas, as you know, in the criminal law the test is proof
beyond a reasonable doubt. In fact you, and more importantly your
predecessor, have talked about how that's too high a standard, that's going to
make it too hard. But, quite frankly, that test or that standard
for criminal culpability is one that's a very important part of
our whole social makeup and our history.
We have concern about the
failure of the legislation to understand, when it speaks about
relying upon convictions as-perhaps I've phrased this wrong-prima
facie evidence, that there are places in the world outside Canada
where the legal system does not have the same standard of proof,
where people can be convicted of criminal convictions with
sometimes the flimsiest and most capricious of evidence and,
quite frankly, where the criminal courts are used as a means of
political persecution.
I want very much to hear from
you and witnesses who appear before this committee about the risk
that's entailed with the reliance upon a conviction, be it in
Canada or outside of Canada, in relying upon an outside-of-Canada
conviction which may be based on a corrupt criminal justice
system-"justice" would be oxymoronic in that regard-or upon a
system where the criminal courts are used for political
persecution, basically to get people or to force them out of the
country or to punish them in a way that couldn't be effected
through other means. I have real concerns about the impact of
this in view of the incredible diversity of the Canadian
population and the fact that people find refuge in Canada from
some of the most oppressive and persecutorial regimes in the
world, where I dare say yes, the criminal courts are used for the
purpose of political persecution.
Real concerns about your
comments this morning on health records: We haven't got the
amendment; I trust it's forthcoming. We haven't got the briefing
books yet; I'm sure those are forthcoming. Folks out there are
incredibly concerned about the state getting the powers you
described, and I want to hear more about summonsing, because I
was a little confused with this. You can say, "Well, of course
you were," but I was a little confused about your use of the word
"summons." Some of the press gallery asked you about that as
well. You didn't have a chance to elaborate. You'll have a chance
here, because I do want to hear about that.
The public is incredibly
concerned about the prospect of the state, its police, its
Ministry of the Solicitor General and its Ministry of the
Attorney General accessing health care records. One would hope
that this government, as any government, would be doing
everything it could to ensure the integrity and security of
health care records, rather than open them up to yet more
opportunities. I, quite frankly, have concerns about the
rationale you gave for that this morning. I'm not sure I buy it,
but I'm prepared to listen. I'm prepared to listen carefully.
Niagara region, where I come
from, is one of the regions-and I don't want to create the
misimpression that somehow the Niagara region is rife with
criminal activity or organized crime activity, but it's an area
that's a border community, is part of the Golden Horseshoe-that
has certainly been impacted, as we read in the papers at least,
by the inflow of biker gangs, among others.
I want to refer you to the
struggle that the Niagara Regional Police force and, I believe,
police forces across the province are having in a time when the
downloading on to the municipalities is showing its colours, is
having its impact: the incredible crisis the city of Toronto
faces in terms of budgeting and similar crises down in Niagara
region and, I trust, across the province. Policing is a
labour-intensive activity. Good cops deserve decent pay-I have no
quarrel with that-and good cops are prepared across this
province, certainly in the Niagara region, to go out there and
investigate, using all of the possible avenues, be it
surveillance, be it following paper trails, be it infiltration,
but they need the resources to do that.
It seems to me that the first
line of attack, and, again, I know about the announcement that
you reannounced this morning, because you referred to it from
your last budget, leaving the impression-is it going to be
announced again come April or May? Cops and police forces need
the resources to conduct what can be very expensive, very
time-consuming investigations. They're prepared to do it. I say
they need the support of this government, because municipalities
are cash-strapped, increasingly so. They need the support of this
government to enable them to do that. Quite frankly, the numbers
you spoke of may well not be adequate, and we haven't seen any
sort of plan or strategy from this government about targeting
particular criminal activities or particular areas in the
province that may be hardest hit by criminal activities.
Similarly, the courts need
the resources, crown attorneys offices and the court system in
general, to handle what can become increasingly complex trials
that last longer and longer, and to do it in a timely way.
Earlier today, you talked about the huge time gap between
investigation and prosecution. That should be of concern. Askov
and Melo are not that distant in the past so as to be out of the
realm of serious concern by you as Attorney General, sir.
1030
Do we support your efforts or
anybody's efforts to suppress organized crime? You bet your boots
we do. But are we going to support what amounts to your partisan
grandstanding? Are we going to support what amounts to yet
another announcement, trying to appear tough on law and order
while all hell is breaking loose out there and families and
individuals are being impacted by crime on a daily basis? Are we
going to support an attack on the integrity of health care
records? I think not, Mr Attorney General.
I'm eager to work with you in
a spirit of co-operation and non-partisanship. I'm like that. I
want our relationship-you, as the new Attorney General-to start
off on a good, firm footing. But, please, focus your attention on
the areas that are going to be most effective rather than the
areas that are simply going to grab the biggest and best
headlines.
The Chair: We'll now turn to
presentations from the Ministry of the Attorney General. If you
would like to come forward and give us your name, please. You
have an hour. Hopefully, you will leave us some time for
questions.
Mr Jeffrey
Simser: I'll do my very best. We have 25 clauses.
My name is Jeffrey Simser. I
am a lawyer with the Ministry of the Attorney General. This
morning I am going to give you a very brief context for the bill.
I'm going to take you through the basic architecture of the six
parts of the bill and then I'll turn to the various clauses in
the bill. I am mindful that this is a bill and not an act, and I
will endeavour not to misspeak and assume otherwise in the course
of my comments.
On August 2 and 3, the
government held a summit entitled Taking the Profit Out of Crime:
The Ontario Government's Summit on New Approaches to Fighting
Organized Crime. Following that summit, the government issued a
report entitled Lessons Learned, and among the recommendations of
that report was one which suggested that Ontario could consider
civil asset forfeiture as an option.
Bill 155, which is before
this committee, is, without question, unique. It is the first of
its kind in Canada. We did, however, learn from a number of other
jurisdictions that are active in this area. The United States has
had one form or another of civil asset forfeiture for over 200
years. Australia passed a number of civil asset forfeiture
provisions starting in 1990, and a 1999 Australian Law Reform
Commission report recommended an expansion in this area.
Following the deaths of a
police officer and a journalist in 1996, the Irish government
enacted civil proceeds-of-crime legislation. In 1998, South
Africa passed a number of legislative proposals to address
organized crime, including civil asset forfeiture. Finally, in
June 2000, Prime Minister Blair endorsed a policy proposal in
this area for the United Kingdom.
We move on now to the
architecture of Bill 155. Bill 155 consists of six parts.
Part I is a purposes section.
This section is designed to guide the courts and to help them
understand the intent of the Legislature. The first purpose is to
compensate victims. Bill 155 is unique in this respect: the
proceeds of a Bill 155 action will be preserved and made
available to the victims of unlawful activity giving rise to a
proceeding.
The second purpose is
essentially to regulate property. If someone has property that
derives its origin in unlawful activity, Bill 155 states that
they will be denied title to that property.
The third purpose is to
protect public safety; that is, to prevent certain property from
being used to engage in certain unlawful activities.
The final purpose is to
prevent injury to the public that may arise from conspiracies to
engage in unlawful activities.
Part II permits the Attorney
General of Ontario to launch a civil proceeding in the Superior
Court of Justice to seek an order to forfeit property to the
crown in right of Ontario if the court finds that the property is
the proceeds of unlawful activity.
I want to talk just very
briefly about what that means and, more importantly, about what
that does not mean.
All of the civil remedies in
Bill 155 require court approval to be implemented. There are no
police powers and there are no administrative seizure powers
bestowed on the Attorney General or anyone else to seize or
freeze or forfeit property. The court must approve every
step.
Part III addresses
instruments of unlawful activity. The Attorney General may launch
a civil proceeding in the Superior Court of Justice to seek an
order to forfeit property to the crown in right of Ontario if the
court finds that the property is an instrument of unlawful
activity.
Part IV creates civil
remedies to address conspiracies. Bill 155 amends and extends the
common law tort of conspiracy to make it available to the
Attorney General, who can bring a proceeding in the public
interest.
Part V of the bill deals with
several matters, including proof of facts in a proceeding and the
collection and disclosure of information.
Part VI of the bill makes
amendments to the Freedom of Information and Protection of
Privacy Act and the Municipal Freedom of Information and
Protection of Privacy Act.
We now go to clause-by-clause
analysis of the bill. There are 25 clauses in the bill, but I'm
going to focus particularly on part II of the bill because, as
you will see, a number of the provisions in parts III and IV
replicate sections in part II. What I propose to do when I get to
III and IV is only highlight the sections that are different.
Section 1, as I've noted, is
the purposes section of the bill. If there is any ambiguity or
uncertainty, we expect that the courts would make reference to
this section in aid of interpretation of the bill. Section 1 says
that the purpose of this act is to provide civil remedies that
will assist in:
"(a) compensating persons who
suffer pecuniary or non-pecuniary losses as a result of unlawful
activities;
"(b) preventing persons who
engage in unlawful activities and others from keeping property
that was acquired as a result of unlawful activities;
"(c) preventing property from
being used to engage in certain unlawful activities; and
"(d) preventing injury to
the public that may result from conspiracies to engage in
unlawful activities."
Part II of the bill, as
I've noted, deals with proceeds. We start with section 2, which
has a number of definitions, the first of which is "legitimate
owner." This is a very important safeguard in the bill. As you'll
see in subsection 3(3) of the bill, it allows someone to assert
and requires the court to protect the interests of a legitimate
owner of property. The definition reads:
"`legitimate owner' means,
with respect to property that is proceeds of unlawful activity, a
person who did not,
directly or indirectly, acquire the property as a result of
unlawful activity committed by the person, and who,
"(a) was the rightful owner
of the property before the unlawful activity occurred and was
deprived of possession or control of the property by means of the
unlawful activity,
"(b) acquired the property
for fair value after the unlawful activity occurred and did not
know and could not reasonably have known at the time of the
acquisition that the property was proceeds of unlawful activity,
or
"(c) acquired the property
from a person mentioned in clause (a) or (b)" above.
Section 2 goes on to define
"proceeds of unlawful activity." It means "property acquired,
directly or indirectly, in whole or in part, as a result of
unlawful activity, whether the property was acquired before or
after this part came into force, but does not include money paid
under a contract to which section 2 of the Victims' Right to
Proceeds of Crime Act, 1994 applies."
I would note for the
committee that there is a different bill in the House, Bill 168,
and if Bill 168 were to pass, it would replace the Victims' Right
to Proceeds of Crime Act. It has in it a consequential amendment,
so it's clear that this section applies there as well.
"Property," as you will
see, has a very broad definition. It means "real or personal
property, and includes any interest in property."
"`Unlawful activity' means
an act or omission that,
"(a) is an offence under an
act of Canada, Ontario or another province or territory of
Canada, or
"(b) is an offence under an
act of a jurisdiction outside Canada, if a similar act or
omission would be an offence under an act of Canada or Ontario if
it were committed in Ontario,
"whether the act or
omission occurred before or after this part came into force."
You'll see with that
definition that it carries through all of the three operative
parts of this bill. The important thing is that if there is
something that is an offshore offence, it must also be an offence
in Ontario. If it's not, there's no right of action for us under
this bill.
Subsection 3(1) is the
heart of part II and it allows for a forfeiture order. It
says:
"In a proceeding commenced
by the Attorney General, the Superior Court of Justice shall,
subject to subsection (3) and except where it would clearly not
be in the interests of justice, make an order forfeiting property
that is in Ontario to the crown in right of Ontario if the court
finds that the property is proceeds of unlawful activity."
Subsection 3(2) allows the
proceeding to be commenced by action or application.
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Subsection 3(3), as I noted
earlier, is the protection afforded to legitimate owners. It
says, "If the court finds that property is proceeds of unlawful
activity," which is again a precondition for an action under this
part, "and a party to the proceedings proves that he, she or it
is a legitimate owner of the property, the court, except where it
would clearly not be in the interests of justice, shall make such
order as it considers necessary to protect the legitimate owner's
interest in the property."
So again, there's no
reverse onus here. Before anyone is required to assert a
legitimate owner defence, the Attorney General must make its case
before the Superior Court of Justice.
Subsection 3(4) gives the
court flexibility to protect the interests of a legitimate owner.
It states, "Without limiting the generality of subsection (3), an
order made under subsection (3) may,
"(a) sever or partition any
interest in the property or require any interest in the property
to be sold or otherwise disposed of, to protect the legitimate
owner's interest in the property; or
"(b) provide that the crown
in right of Ontario takes the property subject to the interest of
the legitimate owner."
Subsection (5) has a
limitation period. It says, "A proceeding under this section
shall not be commenced after the 15th anniversary of the date
proceeds of unlawful activity were first acquired as a result of
the unlawful activity that is alleged to have resulted in the
acquisition of the property that is the subject of the
proceeding."
Section 4 deals with
interlocutory orders that the court may make in advance of a
final ruling under subsection 3(1). It states, "On a motion by
the Attorney General in a proceeding or intended proceeding under
section 3, the Superior Court of Justice may make any or all of
the following interlocutory orders for the preservation of any
property that is the subject of the proceeding." You'll see that
the court has a range of orders, from intrusive to very
unintrusive, that it may make, and the object of the order must
be to preserve the property. The orders are:
"1. An order restraining
the disposition of the property.
"2. An order for the
possession, delivery or safekeeping of the property.
"3. An order appointing a
receiver or a receiver and manager for the property.
"4. An order giving the
crown in right of Ontario a lien for an amount fixed by the court
on the property or on other property specified in the order to
secure performance of an obligation imposed by another order made
under this subsection.
"5. An order that notice of
the proceeding or of any order made under this subsection be
registered in a land registry office against the property or any
other property specified in the order.
"6. Any other order for the
preservation of the property that the court considers just."
Subsection 4(2) states,
"Except where it would clearly not be in the interests of
justice, the court shall make an order under subsection (1) for
the preservation of the property if the court is satisfied that
there are reasonable grounds to believe that the property is
proceeds of unlawful activity."
Subsection (3) allows that
order to be made under subsection (1) without notice, but not for
a period exceeding 10
days. What you'll see with subsections (3), (4) and (5) is that
those track the existing rules of civil procedure that exist now
in the province for all litigation.
Subsection (4) does permit
an extension: "If an order under subsection (1) is made on a
motion without notice, a motion to extend the order may be made
only on notice to every party affected by the order, unless the
court is satisfied that because a party has been evading service
or because there are other exceptional circumstances, the order
ought to be extended without notice to the party."
So the general rule is that
if there is an interlocutory proceeding and it goes ex parte
without notice, it will be for a very short period.
Subsection (5) allows
extension for a further period not exceeding 10 days.
Subsection 4(6)-perhaps I
won't read all of these-makes technical amendments to make
operative the possibility of a lien being ordered under
subsection 4(1), paragraph 4.
Section 5 deals with legal
expenses. It states, "Subject to regulations made under this act,
a person who claims an interest in property that is subject to an
interlocutory order made under section 4 may make a motion to the
Superior Court of Justice for an order directing that reasonable
legal expenses incurred by the person be paid out of the
property."
Subsection 5(2) has some
restrictions on the order:
"The court may make an
order under subsection (1) only if it finds that,
"(a) the moving party has,
in the motion,
"(i) disclosed all
interests in property held by the moving party, and
"(ii) disclosed all other
interests in property that, in the opinion of the court, other
persons associated with the moving party should reasonably be
expected to contribute to the payment of legal expenses;
"(b) the interests in
property referred to in clause (a) that are not subject to the
interlocutory order made under section 4 are not sufficient to
cover the legal expenses sought in the motion."
Section 6 is rather
technical but it's very important for the operation of this part
and of the whole bill. The essence of section 6, if I may, in
plain language, is that if there is a successful proceeding under
Bill 155, rather than the proceeds of that proceeding going into
the consolidated revenue fund-in other words, into the general
revenues of the government-they will go into a special purpose
account. They will be segregated and they will be made available
for the purposes talked about in subsection (3).
Perhaps I'll just go there
to focus on that. You'll see that "the Minister of Finance may
make payments out of the account for the following purposes."
The first and most
important is,
"1. To compensate persons
who suffer pecuniary or non-pecuniary losses, including losses
recoverable under part V of the Family Law Act, as a result of
the unlawful activity."
Then,
"2. To assist victims of
unlawful activities or to prevent unlawful activities that result
in victimization.
"3. To compensate the crown
in right of Ontario for pecuniary losses suffered as a result of
the unlawful activity, including,
"i. expenses incurred in
respect of any proceeding under this part that relates to the
unlawful activity, and
"ii. expenses incurred in
remedying the effects of the unlawful activity.
"4. To compensate a
municipal corporation or public body that belongs to a class
prescribed by the regulations made under this act for pecuniary
losses that were suffered as a result of the unlawful activity
and that are expenses incurred in remedying the effects of the
unlawful activity.
"5. If, according to the
criteria prescribed by the regulations made under this act, the
amount of money in the account is more than is required for the
purposes referred to in paragraphs 1 to 4, such other purposes as
are prescribed by the regulations."
So now we'll go through the
other parts. As I noted earlier, what I'm going to do is try and
focus on the sections that are distinct, although I welcome
questions if I've glossed over something that anyone isn't quite
comfortable with.
Subsection 7(1), again, is
definitions. The first defines what an "instrument of unlawful
activity" is. It means "property that is likely to be used to
engage in unlawful activity that, in turn, would be likely to or
is intended to result in the acquisition of other property or in
serious bodily harm to any person." So you'll see that
instruments have a fairly limited definition here.
"Property" has the same
definition.
You'll note on the owner
defence that it's different here. Here we have a "responsible
owner"; in part II we had a "legitimate owner." The reason for
the difference is that we're dealing with very different kinds of
potential proceedings here.
"`Responsible owner' means,
with respect to property that is an instrument of unlawful
activity, a person with an interest in the property who has done
all that can reasonably be done to prevent the property from
being used to engage in unlawful activity, including,
"(a) promptly notifying
appropriate law enforcement agencies whenever the person knows or
ought to know that the property has been or is likely to be used
to engage in unlawful activity, and
"(b) refusing or
withdrawing any permission that the person has authority to give
and that the person knows or ought to know has facilitated or is
likely to facilitate the property being used to engage in
unlawful activity."
"Unlawful activity" itself,
again, is a very similar definition.
Subsection 7(2) is a
different section; it doesn't appear in part II. Remember that in
this part, everything must be forward-looking. We have to prove
that it's likely to be used. What subsection 7(2) states is, "For
the purpose of the definition of `instrument of unlawful
activity' in subsection (1), proof that property was used to
engage in unlawful
activity that, in turn, resulted in the acquisition of other
property or in serious bodily harm to any person is proof, in the
absence of evidence to the contrary, that the property is likely
to be used to be engage in unlawful activity that, in turn, would
be likely to result in the acquisition of other property or in
serious bodily harm to any person."
Subsection 8(1) is the
heart of this section, and it's similar to its counterpart in
section 3. "In a proceeding commenced by the Attorney General,
the Superior Court of Justice shall, subject to subsection (3),"
which protects responsible owners, "and except where it would
clearly not be in the interests of justice, make an order
forfeiting property that is in Ontario to the crown in right of
Ontario if the court finds that the property is an instrument of
unlawful activity."
Again, subsections 8(2),
(3) and (4) operate substantially in the same form as they did in
section 3 earlier.
Subsection (5) is
different, though. That says there is no limitation period. Every
action under this part is prospective. We must show future use.
So we did not feel that a limitation period had, in that context,
any utility.
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Section 9, which deals with
interlocutory orders, is the same as the approach taken in the
previous part. I don't propose to go through it unless there are
questions. We have precisely the same kinds of remedies that are
there.
Section 10 deals with legal
expenses in a similar way. Section 11 deals with the special
purpose account in a similar way. The only thing I would note
there is that if you want to qualify as a victim for
compensation, the property must be of such a nature that it was
used in the past, because that establishes the nexus to your
claim.
Part IV deals with
conspiracies that injure the public. This is a slightly different
kind of drafting, because we're dealing with a different kind of
proceeding. So section 12 has definitions. The first and very
important definition is "injury to the public." That
includes,
"(a) any unreasonable
interference with the public's interest in the enjoyment of
property,
"(b) any unreasonable
interference with the public's interest in questions of health,
safety, comfort or convenience, and
"(c) any expenses or
increased expenses incurred by the public, including any expenses
or increased expenses incurred by the crown in right of Ontario,
a municipal corporation or a public body."
"Property" has the same
definition. "Public," you may note, "includes any class of the
public." "Unlawful activity" is defined as it was similarly in
the previous sections.
The heart of this part is
subsection 13(1), and it states,
"13(1) In a proceeding
commenced by the Attorney General, the Superior Court of Justice
may make any order that the court considers just if it finds
that,
"(a) two or more persons
conspired to engage in unlawful activity;
"(b) one or more of the
parties to the conspiracy knew or ought to have known that the
unlawful activity would be likely to result in injury to the
public; and
"(c) injury to the public
has resulted from or would be likely to result from the unlawful
activity."
Again, these kinds of
proceedings can be brought by action or application.
Subsection 13(3) is a
little different. It has a special provision requiring that the
Attorney General give notice of the proceeding, and I'll explain
that in a minute in the context of subsection 13(5).
Subsection 13(4) defines
the orders that a court may make. It says,
"(4) Without limiting the
generality of subsection (1), an order made under subsection (1)
may,
"(a) for the purpose of
preventing or reducing the risk of injury to the public, require
any person to do or refrain from doing anything specified in the
order; or
"(b) require a party to the
conspiracy referred to in clause (1)(a) to pay damages to the
crown in right of Ontario for any injury to the public resulting
from the unlawful activity."
Now, subsection 13(5)
provides a slight wrinkle here. What this section 13 does is it
amends and changes the commonlaw tort of conspiracy that exists
now for private plaintiffs. So subsection 13(3) and subsection
13(5) were specifically designed in the architecture of this bill
to deal with potential conflicts between a claim in a proceeding
by the Attorney General on behalf of the public and a private
litigant's claim. Subsection 13(5) says,
"(5) Despite subsections
(1) and (4), no order shall be made requiring the payment of
damages to the crown in right of Ontario if,
"(a) another person gives
the court written notice that the other person claims a right to
those damages and has commenced or intends to commence a separate
proceeding seeking payment, by a defendant to the proceeding
under this section, of those damages; and
"(b) the court is satisfied
that the claim referred to in clause (a) is not frivolous or
vexatious."
Subsection 13(6)-and this
operates similar to a provision I talked about earlier-has a
presumption of risk of injury to the public, and it states,
"(6) For the purpose of
clause (4)(a), proof that, during the period that began five
years before the day the proceeding was commenced, a defendant
engaged in or conspired to engage in unlawful activity on at
least two occasions and, in each case, injury to the public
resulted from the unlawful activity, is proof, in the absence of
evidence to the contrary, that similar unlawful activity would
create a risk of injury to the public."
The limitation period is
similar here to the one that was in part II, which is the 15th
anniversary.
There are interlocutory
orders. What you'll see here is that they're not listed in the
same way that they were previously, but that's simply because
we're dealing with a different kind of proceeding.
"14(1) On motion by the Attorney General in a
proceeding or intended proceeding under section 13, the Superior
Court of Justice may, for the purpose of preventing or reducing
the risk of injury to the public, make such interlocutory order
as the court considers just."
Subsection 14(2) applies
subsection 13(5), as modified for this section. Subsection 14(3),
again, allows ex parte orders-motions-to be made, and then we
have a similar process as we did in the other two parts
there.
The special purpose
account: again, that is a very similar process, but you'll see
that the first head is broader. It just says, "To assist victims
of unlawful activities"-this is under subsection 14(3)-"or to
prevent unlawful activities that result in victimization."
This takes us to the last
two parts of the bill. Part V is a general part. Section 16
states, "Except as otherwise provided in this act, findings of
fact in proceedings under this act shall be made on the balance
of probabilities," which, as you know, is the civil balance of
proof.
Section 17 is proof of
offences. It says,
"17(1) In proceedings under
this act, proof that a person was convicted, found guilty or
found not criminally responsible on account of mental disorder in
respect of an offence is proof that the person committed the
offence."
Remember, here again
unlawful activity, even if it's an offshore unlawful activity,
must be a crime or unlawful activity in Ontario for any of this
to apply.
Subsection 17(2) says,
"(2) In proceedings under
this act, an offence may be found to have been committed even
if,
"(a) no person has been
charged with the offence; or
"(b) a person was charged
with the offence but the charge was withdrawn or stayed or the
person was acquitted of the charge."
Section 18 is designed
specifically to deal with the issue of contraband. As you know,
there are certain kinds of property that it is unlawful to
possess, but we have in this bill legitimate owner and
responsible owner defences, so we wanted to ensure that those
defences couldn't be misused to make claim to possession of
property where it wasn't lawful. It states,
"18. For the purposes of a
proceeding under this act, a person cannot claim to have an
interest in property if, under the law of Canada or Ontario, it
is unlawful for the person to possess the property."
Section 19 deals with
personal information. Subsection 19(1) states,
"The Attorney General may
collect personal information for any of the following
purposes:
"1. To determine whether a
proceeding should be commenced under this act.
"2. To conduct a proceeding
under this act.
"3. To enforce an order
made under this act."
I would note, and I haven't
noted to this point, that only the Attorney General may bring
these actions. Even though the scope of unlawful activity is
broad enough to pick up an act administered, say, by the Ministry
of the Environment or the Ministry of Natural Resources, it is
only the Attorney General who may bring these actions, so we have
to have a collection right in here.
Subsection 19(2)
states,
"Manner of collection
"(2) Personal information
may be collected under subsection (1) directly from the
individual to whom the information relates or in any other
manner."
Subsection 19(3) deals with
"disclosure to assist in administration or enforcement of the
law." It says,
"(3) The Attorney General
shall disclose information collected under subsection (1) to a
law enforcement agency or another person engaged in the
administration or enforcement of the law if the Attorney General
is of the opinion that the disclosure would assist in the
administration or enforcement of the law, would be in the public
interest and would not be contrary to the interests of
justice."
Subsection 19(4) is an
"obligation to disclose information" and it states,
"(4) A person who has
knowledge of personal information or other information to which
the Freedom of Information and Protection of Privacy Act or the
Municipal Freedom of Information and Protection of Privacy Act
applies and who acquired that knowledge in the circumstances
prescribed by the regulations made under this act shall, despite
those acts and despite any confidentiality provision of any other
act, disclose the information to the Attorney General if the
person believes that the disclosure would assist in,
"(a) determining whether a
proceeding should be commenced under this act;
"(b) conducting a
proceeding under this act; or
"(c) enforcing an order
made under this act."
Subsection 19(5) provides
for an exception and it states,
"(5) Subsection (4) does
not require a person to disclose information if the person
believes that the disclosure would unduly interfere with the
administration or enforcement of any act of Canada...."
Subsection 19(6) really
deals with a person who has disclosed information under
subsection 19(4). Certain kinds of individuals may not be
compellable in a civil proceeding, so this section states,
"(6) Despite any
confidentiality provision of any act, a person who disclosed
information under subsection (4) may be required to give evidence
related to that information in a proceeding under this act."
Finally, subsection 19(7),
and this is fairly important, says,
"(7) In this section,
"`personal information'
means personal information within the meaning of part III of the
Freedom of Information and Protection of Privacy Act."
So the only kind of
information subject to that regime, under section 19, is FIPPA
personal information.
Section 20 deals with
protection from liability. It states,
"20. No action or other
proceeding may be commenced against the Attorney General, the
crown in right of
Ontario or any person acting on behalf of, assisting or providing
information to the Attorney General or the crown in right of
Ontario in respect of the commencement or conduct in good faith
of a proceeding under this act or in respect of the enforcement
in good faith of an order made under this act."
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Section 21 deals with
regulations and states,
"21(1) The Lieutenant
Governor in Council may make regulations,
"(a) providing that orders
under section 5 or 10"-that's the provision for legal
expenses-"may only apply to legal expenses incurred for the
purposes prescribed by the regulations and are subject to
monetary limits prescribed by the regulations;
"(b) governing payments out
of accounts referred to in section 6, 11 or 15, including
governing the circumstances in which payments may be made,
governing the amounts of payments, governing procedures for
determining what payments are made and, in the case of payments
under paragraph 1 of subsection 6(3) or paragraph 1 of subsection
11(3),
"(i) providing that
payments be made only with the approval of the Criminal Injuries
Compensation Board or another person or body specified in the
regulations;"-so this is how the victims will claim-"and
"(ii) providing that a
decision made under subclause (i) to approve or not approve a
payment is final and not subject to appeal, and shall not be
altered or set aside in an application for judicial review or in
any other proceeding unless the decision is patently
unreasonable," which applies the administrative law standard.
"(c) governing the giving
of notice to the public of a proceeding under section 13," which
is the conspiracy section, and the purpose of that notice is to
make sure that potential private plaintiffs are aware.
"(d) prescribing
circumstances for the purpose of subsection 19 (4)," which again
is very important, that there will be regulations that refine and
define how 19(4) is to operate.
"(e) respecting any matter
that the Lieutenant Governor in Council considers necessary or
advisable to carry out effectively the purpose of this act."
Subsection (2) states,
"(2) A regulation made
under subsection (1) may be general or particular in its
application."
I'll now go to part VI, and
specifically to section 22. Rather than read this, because it's a
little confusing, I thought I'd just try and give a
plain-language explanation.
Under the Freedom of
Information and Protection of Privacy Act, a record must be
disclosed unless FIPPA stipulates otherwise. Section 14 does
provide an exemption for law enforcement which deals with
policing investigations or inspections leading to a prosecution
or to fines, but Bill 155 is not a bill that provides for law
enforcement in any of these respects. The bill only applies civil
remedies. It's not penal; it's remedial and it's compensatory.
Further, given that this bill is directed at organized crime, we
were concerned that disclosing the fact of a record would tell
organized crime a lot of information, ie, whether they are or are
not under investigation. For that reason, we've established here
that the Attorney General has the right to refuse to confirm or
deny the existence of a record under Bill 155. That's 22(1).
Subsection 22(2) conforms
the previous section with the requirements of FIPPA. Where
there's a refusal to confirm or deny, the head must state (a)
that the head refuses to confirm or deny the existence of a
record; (b) the provisions of FIPPA on which the refusal is
based; (c) the name and office of the person responsible for
making the decision; and (d) that the person who made the request
may appeal to the Information and Privacy Commissioner.
I believe the remaining
sections in part VI are consequential to that for the most part,
and they deal also with the Municipal Freedom of Information and
Protection of Privacy Act.
Section 24 deals with
commencements, as this act comes into force on a day to be name
by proclamation of the Lieutenant Governor.
Section 25 provides that
the short title of this act is the Remedies for Organized Crime
and Other Unlawful Activities Act.
The Chair:
We still have about 20 or 25 minutes for questions, so I'll allow
probably about eight minutes for each party.
Mr Bryant:
Thank you very much for coming. I just want to talk to you about
what the bill does, but I also want to clarify what the bill is
not going to do.
There's going to be some
question as to overlap, whether or not this in fact is trying to
do indirectly what the provincial government can't do directly,
so we're going to hear from presenters on violation of the
charter and violation of division of powers.
Let's just talk about
division of powers for a moment. I don't need to explain to you
that obviously there can be some overlap between the code and
provincial powers, but the province can't boldly go where they're
not allowed to go.
What's the ministry's
position as to how this could survive a division of powers
challenge when there are already powers under the Criminal Code
for the seizure of assets?
Mr Simser:
I think the best way to answer that is to briefly go into my
understanding of how the Criminal Code works, not in great
detail, what it's intended to do, and then how this bill works
and what it's intended to do. I would posit to you that they are
very different things.
The Criminal Code has a
number of forfeiture proceedings that can be brought under it.
The two primary ones that are dealt with are criminal
organization offences and drug offences. The forfeiture
proceedings there are penalties that follow the conviction of
someone.
The process generally is
this: the police would lay a charge; the crown then lays a
restraining order against the property; there is a prosecution of
the individual. If, and only if, the individual is convicted, then there
is a forfeiture hearing that follows that as part of the penalty.
It's separate from the sentencing of the individual but it is, in
our view, part of the penalty. The Criminal Code is quite
properly a penal sanction to activity.
Mr Bryant:
I'm sorry to cut you off. I've only got about six minutes, so
maybe I could just get right to the heart of my question.
A civil remedy, as I have
always understood it, is something which repairs an injury to
someone personally or to their property. A civil remedy is not a
tool for enforcing a government scheme. How is this a civil
remedy in that sense?
Mr Simser:
With respect, I think that posits a civil remedy in a very narrow
way. Certainly there are torts that are out there designed to
repair and restore. You could talk about the conspiracy section
as one that does that.
But one thing the civil
courts do every single day is allocate disputes on rights of
property. They do it every single day. If you've bought a house
or if you have a house and there's an overlap between you and
your neighbour, there is no injury per se necessarily there.
They're not remedying an injury, but they are going to resolve
the dispute on title to property.
This bill really talks
about title to property. For example, in part II it says that if
the provenance of property is unlawful activity, it denies title
to the person who has the property. It has other provisions to
protect legitimate owners, but the problem that creates at law is
that that then creates a void.
If you say, "You can't own
it," there's a void in law. The law doesn't like a void and the
way the void is filled here is through the forfeiture process.
The most important section here is that we will then take the
proceeds of that unlawful activity and return it to victims. The
purpose here from a civil law perspective is it's remedial and
it's compensatory.
Mr Bryant:
Thank you. One author said in 1998 in a national study that 80%
of all money laundering cases have a foreign component. Does that
sound about right? This bill doesn't address money that has a
foreign component, because of course you couldn't enforce it in
Ontario. Right?
Mr Simser:
It depends. If the money is situated in Ontario-a typical money
laundering is that the money is moved around.
Mr Bryant:
Realistically, you'd park it somewhere else other than
Ontario.
Mr Simser:
If it's parked somewhere else other than in Ontario-
Mr Bryant:
You can't get it.
Mr Simser:
-we can't get it.
Mr Bryant:
Fair enough. I just want everybody to understand the scope of it.
There is nothing in this act that provides for a means to create
the net worth profiles for the suspects.
Mr Simser:
I'm sorry. I'm not sure I understand that question.
Mr Bryant:
The mobsters-we need to find out what the assets are, how much
money etc. This does it one at a time; in other words, one case,
one piece of property at a time. Is that right?
Mr Simser:
It's an in rem action so it does focus on property.
Mr Bryant:
I know this is obvious, but the bill doesn't address the issue of
resources in and of itself. In other words, the bill doesn't
commit to an army of forensic accountants being brought in.
Mr Simser:
No, the minister has made that commitment but it's not in the
bill.
Mr Bryant:
Right. The minister said today in the press conference that this
bill isn't a panacea-fair enough-that it's a parallel process to
the criminal provision.
Do I take it that the
ministry is now going to move away from enforcing the Criminal
Code with respect to the Criminal Code provisions on organized
crime and instead devote its resources to this civil remedy once
the bill is passed?
1110
Mr Simser:
No. I'm not the expert on what the ministry may do and what the
criminal law division will do, but my understanding is in fact
they're beefing up their process rather than knocking it down.
One of the problems is that the nature of things has changed and
there's more work to go around than can be done in this area. But
this bill doesn't change the priority. There are often going to
be situations where you'll want to go through the Criminal Code
process, it's appropriate to do so and you will do so, and this
does not take away from that all.
The Chair:
One minute, Mr Bryant.
Mr Bryant:
You said something about beefing up. Leaving aside the issue of
money allocation, because there's no new announcement today-the
money is from the May 2000 budget-there's nothing in this bill
that deals with transaction reporting by financial
institutions.
Mr Simser:
Which for the most part are federally regulated institutions.
Mr Bryant:
Just to be clear, because this goes on the record, you shook your
head; the answer was no.
Mr Simser:
Right, thank you.
Mr Bryant:
That's fine.
Also with respect to the
sharing of information between police forces, because we talked
about how this is a national and in fact an international issue,
the bill doesn't address that information-sharing component, does
it?
Mr Simser:
No, the bill does not address that.
Mr Bryant:
It looks like my time is up.
The Chair:
Yes, your time is up. Mr Kormos, you have about eight
minutes.
Mr Kormos:
Part VI: run that past me again.
Mr Simser:
Part VI?
Mr Kormos:
Yes, the amendment to the Freedom of Information and Protection
of Privacy Act.
Mr Simser:
Right. What it says here is-
Mr Kormos: I've read it.
Mr Simser:
I beg your pardon. This gives the ability for the head of
whatever the enforcement arm is here to refuse to confirm or deny
the existence of a record.
Mr Kormos:
Give me an example.
Mr Simser:
For example, there may be a proceeding against an outlaw
motorcycle gang-I don't want to prejudge or-
Mr Kormos:
Or me or any member of this Legislature.
Mr Simser:
I was thinking specifically about something that is thought of
perhaps as organized crime and perhaps under the conspiracy
section. If that proceeding is in its formative stages, if we're
looking at seeing whether we could convince a judge, we're
worried about telling that particular organization that they may
be a target of our activities. They're likely to know that if
they're a target of our activities, that may impact on the
policing side and there may be sensitive investigations. So
that's why this provision is here.
Mr Kormos:
I was reading some of the material Mr Fenson obtained for us-and
my gratitude to him. He makes reference to a comment by the
second circuit appeal courts in the United States with respect to
the forfeiture legislation there, and the second circuit stated,
"We continue to be enormously troubled by the government's
increasing and virtually unchecked use of the civil forfeiture
statutes and the disregard for due process that is buried in
those statutes." I appreciate that it's just an excerpt and it's
an observation over the course of some 20-plus years of
experience in the United States with forfeiture, but when I read
that, you understand why my antennae go up, right?
Mr Simser:
Yes. Do you know when that comment was made? Is there a date to
it?
Mr Kormos:
It's not cited.
Mr Simser:
Just so you know, there's been a lot of controversy, especially
at the federal level in the United States, and on April 25, 2000,
President Clinton signed a bill called the Civil Asset Forfeiture
Reform Act. It was the biggest reform in that area in 200 years
and it substantively changed-Congress felt that there were
problems and it dealt with it through that Civil Asset Forfeiture
Reform Act.
Mr Kormos:
For instance, you know when you refer to the bill that it
includes part V, section 17: "An offence may be found to have
been committed even if ... a person was charged with the offence
but the charge was withdrawn or stayed or the person was
acquitted of the charge." I could be charged with an offence and
found not guilty by a court, yet your legislation permits the
Attorney General to have a second kick at the can.
Mr Simser:
The legislation doesn't deal with you, per se. There's not what I
call an in personam-that's Latin-but it wouldn't be Ontario v Mr
Kormos, if I may. It's an in rem action so it deals with the
property itself. What the Attorney General must do is establish a
nexus between the property-and let's say there's a part II
allegation in a proceeding, so we're saying it's proceeds. What
the Attorney General must do is prove that that property and the
unlawful activity are connected such that the provenance of the
property is as the proceeds of unlawful activity. There's no
provision in here to fine or convict anybody; it deals with the
title to the property. There are all kinds of ways that you can
assert defences to that allegation if it's proven, once it's
proven, but only once it's proven.
Mr Kormos:
Some of the report provided by Mr Fenson refers to-and this is
the Clinton legislation you were speaking of-the issue of the
need for reform and talks about the matter of burden of proof and
the suggestion that the general civil standard of proof is too
low a standard to assign to the government in this type of case,
property forfeiture. Was that contemplated or considered in the
drafting of this bill?
Mr Simser:
Yes, it was. We looked very seriously at the issue.
Mr Kormos:
So flesh that out.
Mr Simser:
We looked very seriously at the standard of proof, but we felt at
the end of the day that, at every stage, the court has to approve
everything that goes on in terms of an action. We've added, if I
may, to the standard of proof that where there's something that
needs the standard of proof but is not clearly in the interests
of justice, because that's in all of the operative sections that
I went through, the court may refuse to make the order. So there
is the civil standard of proof, and even if that balance of
probability is met, the court has an inherent jurisdiction where
it is clearly not in the interests of justice to make an order to
refuse to make that order.
Mr Kormos:
Mr Bryant referred, and so did you, to the Criminal Code. Is it
section 430?
Mr Bryant:
Show-off. Are you talking about 462?
Mr Kormos:
It's 462.3. What's the policy in the province of Ontario, so far
as you're aware? If you aren't, just-how is the crown attorneys'
office approaching those sections in the Criminal Code? How many
times have they been utilized? Are there investigative resources
being put into enforcing 462.3 of the Criminal Code?
Mr Simser:
I apologize. I'm not qualified to give you a proper answer to
that question.
Mr Kormos:
What's being contemplated? Who's going to conduct these actions
under this legislation?
Mr Simser:
I believe what the Attorney General has said is that he wants to
create a specialized enforcement unit and it will consist of
civil lawyers-obviously that will be the heart of it-it will
consist of a forensic accounting capacity and it will consist of
investigators, not police investigators but investigators in the
traditional sense that most plaintiff lawyers use investigators,
just to make sure that they establish all the facts of their
case.
Mr Kormos:
Are you aware of any drafting of guidelines or policy as to
priorities for investigation and-I guess "prosecution" isn't the
right word, is it?
Mr Simser:
Under Bill 155?
Mr Kormos:
Yes.
Mr Simser: We'll have to see
whether the Legislature sees fit to pass it before we-
Mr Kormos:
No, I didn't say that. I said, has there been any contemplation
of what's going to be targeted?
Mr Simser:
I don't think I'd be prepared to say. We certainly are trying to
contemplate in the eventuality that the bill is passed, but I
don't think we're as far as saying we're going to target
telemarketing activity or prostitution activity or outlaw
motorcycle gangs or anything like that. I don't think we're that
far down the road yet.
The Chair:
About one more minute, Mr Kormos.
Mr Kormos:
You made reference to the foreign conviction issue. You looked at
me because you were sort of saying, "That's the answer to your
question." I wasn't talking about somebody convicted elsewhere of
something that isn't a crime here; I was talking about somebody
being convicted of, let's say, a theft in some other
jurisdiction, which is a crime here, where that conviction was
the course of a political persecution. Yet the conviction stands
as proof, doesn't it, notwithstanding how it was obtained?
Mr Simser:
It creates a presumption of proof, but if we're truly talking
about a hypothetical fact situation where it truly is egregious,
that the theft is really political persecution and the defendant
can make that case, the court can always say that it's clearly
not in the interests of justice in that circumstance to make an
order under this bill and they can refuse to make the order.
1120
The Chair:
Mr Tilson, you have eight minutes.
Mr David Tilson
(Dufferin-Peel-Wellington-Grey): The paper prepared by
Mr Fenson has been referred to, which was dated yesterday. I
don't know whether you've had an opportunity to review that.
Mr Simser:
No, I haven't.
Mr Tilson:
I'm sure you haven't. It deals mainly with the proceeds-of-crime
legislation in the United Kingdom and the United States. You
mentioned the different jurisdictions that you, as a staff person
involved in this legislation, have looked at. It's difficult to
talk about that, because these are completely different types of
jurisdictions, but having said that, can you tell us how you may
have improved on those specific pieces of legislation,
acknowledging how you've emphasized that this legislation we're
putting forward isn't criminal legislation, that it has other
intents?
Mr Simser:
Absolutely. One of the challenges whenever you engage in
something that's innovative and becomes the first of its kind in
Canada is what you look to, to learn from. We started with the
United States, primarily because it has the longest history in
this area. They've been active with this area since 1789 and
there's a long, long line of cases in the United States Supreme
Court and at all of the circuit court levels to learn from. I
believe there are at least 140 federal US statutes that deal with
civil asset forfeiture. To my knowledge, virtually every state
has a civil asset forfeiture provision of one kind or another,
although, to be honest, we focused in detail on New York and New
Jersey, simply because they provided a nice comparative base for
us to study. We not only went through their laws, but we met with
their officials to talk about where they had problems and where
they had successes. Mr Flaherty, the Attorney General as he was
then, was quite committed to learning not only what worked but
what didn't.
The United States is
particularly challenging in some respects because it has had such
a long history. We took great interest in looking at Australia,
which has been active in this area since 1990, particularly New
South Wales; the republic of Ireland, which has been active in
this area since 1996; the republic of South Africa, which has
been active in this area since 1998; and then there was the
United Kingdom. They have not actually enacted laws that are
similar to those that are in Bill 155, but in June 2000 Prime
Minister Blair endorsed as a question of policy this approach. We
understand that they're likely to look closely at, for example,
the model in the republic of Ireland, and follow through. To my
knowledge there is no legislation that has been introduced yet in
the United Kingdom on this front.
Mr Tilson:
I've had an opportunity to look at some of the criticisms of the
legislation, much of which we'll hear in the
hearings-constructive criticism, I would hope. One of the
criticisms that comes forward is the fear that this legislation
will go beyond organized crime, that it will deal with the
average citizen. Some of it may have been referred to by members
of the opposition, that this legislation will have an effect
either by the investigation by the police authorities or indeed
the applications that are made by the Attorney General. How can
you assure the committee that this legislation won't do that?
Mr Simser:
There are two parts to the question. One is, what is the scope of
the legislation? I think the more important part, and the part
I'd like to start with, if I may, are the safeguards that are in
the legislation. There are numerous safeguards. Some of them are
very technical. They're almost buried in the legislation, in the
sense that a court may refuse to make an order where it's clearly
not in the interests of justice. Other protections are much more
up front, the first one being that every step here must be
approved by the Attorney General and every proceeding must be
brought by the Attorney General, and then it must be brought and
approved by a court.
Coming back to your
previous question, when you look at some of the problems, some of
the bigger problems, for example, in the United States, have not
been with judicially authorized actions in this area; they've
been with administrative actions, where a police officer, for
example, is empowered in certain circumstances to do what is in
essence civil forfeiture, and take the property, then force you
to prove that it was lawfully yours. We're not going there; we're
not going down that route at all. That's the first thing.
The second thing is that
organized crime in and of itself as a statutory matter is very
difficult to define. This is something we learned particularly
from the South Africans. They said that, as a matter of
legislative drafting, it's a very difficult challenge to define
that and yet capture
what you want to capture. So what we've done is we have focused
on property and its connection to unlawful activity. That's the
approach to drafting, if you will, that we've taken in this
bill.
Mr Tilson:
People in the legal community in particular have talked about,
which the minister contradicted today, the topic of reverse onus.
In other words, the onus is on the person who is being accused of
having property that's going to be used for illegal activity. My
understanding is that that reverse onus does not exist. Can you
clarify that topic, anticipating what's going to be said in the
hearings?
Mr Simser:
Absolutely. There is no reverse onus in this bill. Before
anything can come forward, the Attorney General must satisfy the
court of its case.
There could be confusion in
this area with some lawyers because in some American laws there
is in fact a reverse onus, and some of them have been quite harsh
in their application. We deliberately chose not to go down that
route.
Now, there is a positive
defence that you can assert either as a legitimate or a
responsible owner, but that's not a reverse onus at all. The
Attorney General must still make their full and fair case, and
the court must be convinced of it, before you're ever
required-and then, once the Attorney General has proven its case,
you have the opportunity as part of your defence to assert a
specific statutory defence that's in the bill.
The Chair:
You've got one more minute, Mr Tilson.
Mr Tilson:
The other criticism that seems to come forward, that has been in
the media at least, is why in the world is the province of
Ontario getting involved in this topic? In other words, it's the
constitutional issue. It's been raised this morning, that this is
something that is the exclusive jurisdiction of the federal
government, and why is the province getting involved in this? Can
you, in a nutshell, comment with respect to that criticism?
Mr Simser:
Our view is that Bill 155 invokes the jurisdiction of the
province over property and civil rights. In fact, I'd be
interested to see whether the federal government could do this. I
don't think so, because this is a civil right of action and it
deals with title to property. That's one of the main components
in here. The province regulates that in all sorts of ways. It
deals with compensation for victims. Again, the province deals
with that in all sorts of ways.
There are no penal
provisions in the statute; there are no fines; there are no
penalties; there are no convictions or charges laid under Bill
155. It is not a penal statute. It's remedial and it's
compensatory. For that reason, we think it invokes our inherent
jurisdiction in the province.
The Chair:
Thank you very much, Mr Simser.
CANADIAN CIVIL LIBERTIES ASSOCIATION
The Chair:
We're now moving to public submissions. The first speakers are Mr
Alan Borovoy, general counsel, and Stephen McCammon, associate
counsel, of the Canadian Civil Liberties Association. Good
morning, gentlemen. You have 20 minutes.
Mr Alan
Borovoy: I'd better start talking. Thank you very much.
I'm Alan Borovoy, and on my left and your right, physically if
not politically, is Stephen McCammon from our organization.
Since the federal Criminal
Code already contains provisions very similar to the ones at
issue here, there are of course some serious constitutional
questions as to whether the province has the jurisdiction to
enact the bill at issue. Since, however, the Canadian Civil
Liberties Association does not have as part of its mandate to be
concerned about the distribution of power between the federal and
provincial jurisdictions, our submissions today will assume the
constitutionality of this bill, at least for those
purposes-charter purposes is another issue, but at least for
those.
Having said that, quite
apart from the constitutional matters, it is our view that there
is very little in this bill that is worthy of enactment. Those
few matters that arguably are worthy should be substantially
amended.
1130
As a general proposition,
it is acceptable to seize property that has been obtained through
crime. It is even acceptable for the state to initiate procedures
for such seizures. What is not acceptable, in our view, is, as
between alleged perpetrators and alleged victims, for the power
and resources of the state to be marshalled against one in favour
of the other on the basis of a judgment made at the political
level, and then for the state to have to do nothing more than
prove its case on a balance of probabilities. This represents far
too much weighting against the interests of the citizen who
happens to be disfavoured by the state for whatever reason that
citizen is disfavoured.
In our view, the
prerequisite for such action against any of our citizens is a
court finding beyond a reasonable doubt that a crime has been
committed by an identifiable offender and that offender owns the
property in question. Only a set of circumstances of that kind,
in our view, would justify the kind of state-instigated
procedures for seizing citizen property.
But then to go a little
further into the bill, it talks about proceeds of unlawful
activity. It defines "unlawful activity" as any offence against
any federal or provincial statute. Do you really wish, for
example, to be able to seize the profits of a merchant who stays
open in violation of Sunday closing laws? This bill would enable
you to do precisely that. In our view, there is no excuse for an
overbroad definition of that kind. The definition of "unlawful
activity" for these purposes should be confined to the most
serious offences associated with organized crime and not just
open it up to anything.
The second part of the bill
deals with instruments of unlawful activity, property that is
used in one way or another to facilitate the commission of
certain crimes. Our view is that this section is fundamentally
unfair.
We heard a few moments ago
some talk about what an owner has to do in order to demonstrate
that he's a responsible
owner. Consider the case, if you will, of some restaurateurs
whose premises are being used for drug dealing. Now, they know
it. The bill says they must notify the authorities as soon as
they know or ought to know that these activities are occurring.
Suppose these restaurateurs know very well that it's happening,
but they're frightened, they are afraid to report. Do we then say
that we are prepared to divest those people of their sources of
income for reasons like that? I suggest that this is an obvious
injustice.
But let me press it even
further. Property very often serves many functions and many
persons. In our view, there is something improper about rendering
that property seizable simply because one of those persons may be
an offender and one of those functions may be unlawful. After
all, property that can be used this way can include an awful lot.
It could include cars, homes, even clothes. I suppose it will
take not very much imagination to conceive of some pretty absurd
outcomes from trying to use this. As questionable as it may be to
go after property in this way that has been used for unlawful
activity, to go after it because it's likely to be used-now we're
talking about the future and we're talking about getting evidence
of future activity. This, I'm afraid, has the capacity to
transform at least this part of this into impoverishment by
clairvoyance.
I go to the third part of
the bill, the part that deals with conspiracies that injure the
public. Here the problem is the overbreadth and dubiousness of
some of the remedies available. It says that a court may issue
virtually any order in order to rectify. Then it goes on and, in
trying to be more specific about it, it says, for the purpose of
preventing or reducing the risk of injury to the public, a court
may require anyone to do or refrain from doing anything. To what
extent can this include ordering people not to do legal things as
well as illegal things? The obvious example one thinks of is the
next time there is an international trade conference in Ontario
and we are concerned that some people may misbehave and that
misbehaviour will injure the public. To what extent then may a
court, on the application of the Attorney General, prohibit
lawful demonstrations as an effective way of getting at
potentially unlawful behaviour? In our view, this section should
be limited, where court orders are concerned, to unlawful conduct
and nothing beyond that.
Finally, on the issue of
damages, you have a situation where damages can be awarded to the
crown for injuries done to the public. In our legal system, we
don't have much precedent for giving one party damages for
injuries that are done to somebody else. Our legal system usually
contemplates giving the damages directly to the injured parties.
The problem here becomes, what kind of damages? What is the
measure of damages? What are the criteria? Not a word. Could you
have a situation where one party can be wiped out in order,
presumably, to compensate for what has been done to another
party? This doesn't make it clear how far it could go. At the
very least, then, it is our view that there ought to be
guidelines and criteria written into the bill for the computation
of damages if damages are to be awarded at all.
Just to summarize these
recommendations, first, where it concerns the proceeds of
unlawful activity, we suggest that a prerequisite be a finding by
a court beyond a reasonable doubt that a crime has been committed
by an identifiable party who owns the property. Less may be
acceptable for purposes of temporarily freezing the property,
pending the outcome of those proceedings, but that ought to be at
least the prerequisite for the state going after people's
property for such purposes in this way.
1140
Second, the definition of
"unlawful activity" for these purposes should be confined to the
most serious offences associated with organized crime.
Third, the part dealing
with instruments of unlawful activity should be removed.
Fourth, the power to order
people to do or not to do things should be focused on unlawful
conduct only and there ought to be no damage provisions unless
there are criteria and guidelines to indicate to a court what the
appropriate measure of damages in these circumstances might
be-all of which is, as always, Madam Chair, respectfully
submitted.
The Chair:
Thank you, Mr Borovoy. We have about eight minutes, maybe seven:
two minutes each.
Mr Bryant:
Do you want me to go first?
The Chair:
Yes.
Mr Bryant:
Mr Borovoy, thank you for coming, as ever. I wonder if you could
just let us know, or maybe your colleague in justice could let us
know, whether or not the past use of similar legislation in other
jurisdictions has resulted in any injustices in those
jurisdictions. I'm wondering, instead of the hypothetical of the
merchant being harassed, about examples of where that's actually
happened, or talk about the abuses of similar legislation in
other jurisdictions.
Mr
Borovoy: This issue has been a considerable controversy
in the United States. The presentation made by our colleagues in
the American Civil Liberties Union documents case after case
after case of pretty awful injustices perpetrated under their
counterpart to this legislation. As a consequence, there were
bills on the table that would severely restrict the scope of the
power at issue. We'd be pleased to send this on to you, if that
would be helpful to you.
Mr Bryant:
It would. Just so I understand, is it your position that in fact,
arguably, section 8 of this bill is in violation of the
charter?
Mr
Borovoy: I think some of this could raise charter
issues. As a result of recent decisions by the Supreme Court of
Canada, I have become increasingly reluctant to make predictions
about judicial behaviour. But suffice it to say that I think that
there would be some serious charter arguments available under
some parts of this bill.
Mr Kormos:
The matter of the standard of proof, the balance of
probabilities, the civil standard: it's my understanding from
some of the material received that in the United States this has
been of concern that the historical civil standard, balance of probabilities, is too
low a standard. The suggestion has been made that an intermediate
standard between that civil standard and proof beyond a
reasonable doubt, one of clear and convincing evidence, is more
appropriate. Would you comment on that, please?
Mr
Borovoy: I think, yes, clear and convincing would be a
more appropriate standard than on a balance of probabilities. But
remember that our recommendation that the prerequisite for moving
ahead at all is basically a finding by a criminal court that
beyond a reasonable doubt a crime has been committed by a
discernible offender. So while I would agree with you that upping
the standard that way is better than not upping it, I would
suggest that the prerequisite for the state marshalling all of
this against the citizen-I think what we have to remember about
all this is not what a court ultimately has to decide, but what a
citizen initially has to face, that is, that citizen faces the
powers and the resources of the state, has to take on the state
in this proceeding. The state simply then has to prove on a
balance of probabilities.
That's what we say becomes,
from our standpoint, the awful thing to face citizens with on the
basis of no criteria at all that are in the bill. It's just the
choice of the Attorney General to move against this one rather
than that one. We say then that the prerequisite for that
Attorney General judgment should be the finding of a criminal
court. Then it's a different story.
Mr Tilson:
Just on that point, because I must confess I'm not clear where
you're looking. You were very critical of clause (b), in
particular, of unlawful activity in section 2, which says that
"`unlawful activity' means an act or omission that ... is an
offence under an act of a jurisdiction outside Canada, if a
similar act or omission would be an offence under an act of
Canada or Ontario...."
Mr
Borovoy: I didn't address that one. I was addressing
only the earlier part that dealt with an offence under a
provincial or federal statute.
Mr Tilson:
OK. Can you be clear as to what standard you support? I assume
you support some standard.
Mr
Borovoy: I'm not sure now what your question is.
Mr Tilson:
The question is specifically on the balance of probabilities
versus beyond a reasonable doubt or something in between, as was
suggested by Mr Kormos. Can you be clear as to what you think the
province should be doing?
Mr
Borovoy: I could live with a balance of probabilities
for civil seizure if the prerequisite were met, that is, a
criminal court has already found beyond a reasonable doubt that a
crime has been committed by an identifiable offender and that
offender owns the property in question. Then you can go after him
for that.
Mr Tilson:
The problem is, of course, the province doesn't have the
jurisdiction to get into criminal activity. The province has the
capability of civil seizure.
Mr
Borovoy: I'm sorry, that is not accurate, sir. The
province enforces the criminal law and decides who they're going
to go after in what kind of cases. Those decisions are made at
the provincial level. The feds decide what the criminal law shall
provide, but the province administers and enforces the criminal
law.
Mr Tilson:
You gave some different types of provincial offences and criminal
offences that may be unlawful activity. Breaking the law is
breaking the law. That's what the province is concerned with:
breaking the law is breaking the law. If I understand what you're
saying-and this is what I'd like you to be clear on-are you
saying that this legislation, if it's enacted, and of course, I
get the impression you're skeptical whether it should be enacted
at all, but if it is enacted, and I hope it is, quite frankly,
are you suggesting that there be different categories of breaking
the law?
Mr
Borovoy: You bet.
Mr Tilson:
What are they?
Mr
Borovoy: I've already suggested that. If I'm not being
too clear, forgive me. I thought my language was quite clear. I
suggested that the definition of unlawful activity for purposes
of seizing people's property should be confined to the most
serious offences, that not every minor transgression should be
able to lead the state to go after that person's property. I gave
the specific example for those purposes of the merchant who sells
some goods in violation of Sunday closing laws and I asked the
question, "Do you really want to be able to seize whatever that
person sold?" Yes, it's unlawful. Yes, a person would face a fine
for that illegality. But how much more do you want to be able to
do to him for something that really isn't all that serious? If
you're interested in organized crime, then by all means use stuff
like this for the serious things and not for those things.
The Chair:
Mr Borovoy, thank you very much for coming.
We will recess for lunch
and return at 1 o'clock. Please, gentlemen, try to be on time.
Thank you.
The committee recessed
from 1150 to 1301.
OFFICE FOR VICTIMS OF CRIME
The Chair:
We'll get started. The first submission for this afternoon comes
from Scott Newark, special counsel, Office for Victims of Crime.
Mr Newark, good afternoon.
Mr Scott
Newark: Good afternoon. Madame Chair, copies of our
brief have been given to the clerk for distribution as well. I
would like to thank the committee for the opportunity to come and
make a presentation before the committee, this time on Bill
155.
Our office was invited to
attend the organized crime summit, referred to earlier, in
August. I actually have a semi-accidental background involved
with organized crime as a prosecutor in Alberta dealing with
bikers and then subsequently the Canadian Police Association on
the criminal context of it.
The summit opened up areas
in relation to civil forfeiture that this bill captures that I
think are an important addition to what can be done in relation
to not only organized crime but also property deprivation.
Obviously, what the
bill specifically does is provide a collection of civil remedies
to deal with people, or an attempt to compensate people, who have
had property taken from them as a result of unlawful activity. It
does other things, but it does that specifically.
Our office was actually
involved in some consultation with the ministry, with Mr Simser,
specifically in relation to a couple of areas, which is what I'd
like to focus on today, as opposed to the other areas that I know
you will be discussing with other witnesses; about the importance
of victim compensation, where possible; about dedicated funds
that are created as the means of getting at specific revenues;
and then finally, what you actually do with those revenues once
you get them, or the means of distribution of those forfeited
proceeds. I want to just very quickly, because I'm aware of the
time constraints, go through some of those points and leave some
time for questions.
Bill 155 obviously has a
capacity to provide some compensation for people who suffer
property loss, or other losses, as a result of unlawful activity.
In that sense, obviously it's a welcome addition insofar as it's
able to do that. I would also suggest to you that there is some
real significance in the notion, the phrase that is used to
describe some of this stuff about taking the profit out of crime.
It's not just a snazzy title. It actually is a very sound
strategy. Certainly in my experience that is particularly
relevant when you are dealing with attempting to deter criminal
conduct or anti-social conduct or unlawful conduct, that you're
taking the means or the motive for which something is being done
out of it.
As you know, the bill
creates in effect what are dedicated funds. It's a very good idea
generally to do that, in our experience. It's similar to what is
contained in the Compensation for Victims of Crime Amendment Act
or the Victims' Bill of Rights Amendment Act, so I included a
copy of it as a tab in the brief so you can see a comparative
kind of fund.
In section 6 of the bill,
which actually lists the purposes for which the payments can be
made, I would just make a couple of comments about that, and
perhaps you may wish to pursue this with other witnesses as
well.
It's a very good idea
generally to have those kinds of specific purposes for which
funds can be paid out, but I think what you want to do is take a
look to make sure that there is the infrastructure and a
commitment within administration to get the funds out the door,
so that it lives up, if you will, to what the proper intentions
and promises of the Legislature are in this stuff. I use, as the
example of that, the equivalent fund, the victims' justice fund,
which has not been able to do that. It has accumulated, as you
know, a surplus, because the funds, although coming in and
required to be spent on specific purposes, have not been getting
out the door to where they should. So it's a good idea to do
this, but I think you want to pay careful attention to the fact
that we actually have the means by which we're going to be able
to disburse the funds out to meet those goals set out in section
6.
In subsection 6(3), I also
am not entirely sure what those funds are for, "to assist victims
of unlawful activities." I am not exactly sure what that means in
the context of what subsection (1) says. I presume that the rest
of that section, "to prevent unlawful activities," essentially
would be a vehicle by which you could fund, in effect, ongoing
investigations necessary to do this, which is a very good
idea.
I should also point out
that it appears that the criteria about this, how you're going to
actually be able to use this money and the specifics of how it
goes out, appear to be something that will be contemplated in the
regulations set in section 21. I, at least, don't have a copy of
the regulations. I don't know whether or not they've been
provided or drafted. My experience suggests that is something the
legislative branch may well wish to have a good eye on, because
frequently that is where the real essence of how you get to what
it is that the legislation intends is actually met or not met. In
a related subject, that was specifically the case in a federal
statute called the Seized Property Management Act that set out a
very laudable scheme, but when you actually got down to the
regulations, the intent of how it was done was somewhat different
than I think a lot of people actually had foreseen.
The second part of dealing
with the notion of funds is who gets to make the decisions in
relation to that and on what basis that's done. Again, that is to
be established, pursuant to section 21, by the regulations, so I
think you want to be alert to looking at exactly what they
say.
I would make one comment in
relation to that based on the experience that we've encountered
so far. In subclause 21(1)(b)(i), there is a reference that it
may be the Criminal Injuries Compensation Board that's involved
in paying that out. I would add a word of caution to that. One of
the most frequent comments we have from people around the
province, either as crime victims or victims' service providers,
is that there is a significant delay in being able to get what
the Criminal Injuries Compensation Board does now in its mandate.
So if we are going to add more things to it, you want to keep a
close eye on that because there is already a delay about
that.
Obviously the idea of an
independent, or done by regulation-third party involvement in
those kinds of decisions is quite important, but you want to make
sure there is not something that causes undue delay or defeats
the purpose of what is otherwise laudably intended in the
bill.
I watched a little bit this
morning, and I saw both Mr Borovoy and Mr Bryant make the point
that what is contained in here has a property focus obviously,
but this is not in any sense to be viewed as a replacement of
Criminal Code enforcement. I would like to echo that. In
particular, if we're dealing with attempting to compensate people
who have lost property or suffered damages as a result of
unlawful conduct, I would suggest, if that's part of the overall
goal of this bill, something like enforcing is the administrative
priority of fraud prosecutions or credit card prosecutions or enforcing
restitution orders; indeed, actually making that part of an
existing victims' service. We might even spend some of the $50
million, perhaps, on augmenting victims' services so that you can
actually help people get the restitution orders that are already
out there. That too would be, I would think, a laudable
complement to this bill, using the organized crime provisions and
the enterprise crime proceeds provisions contained in the
Criminal Code. All of those things I think are subjects that need
to be taken in combination if the intention is to follow up with
this, at least insofar as the notion of compensating people who
have suffered loss.
1310
I know there were some
suggestions at a national level on this kind of approach about
the wisdom of making sure that wherever possible you co-ordinate
the approach of the enforcement and implementation of this so
that you don't have different bodies doing that. I very much
recommend that. It was something, to a certain extent, that we
were involved in earlier, and that should include all of the
components that would be involved in this so that people aren't
operating in isolation and you know what is available and who's
doing what.
The final point I'd like to
make-and it's really just a housekeeping thing but it's something
I think I'm probably right about. Subsection 14(2) of the act
deals with the interlocutory orders. It says that subsection
13(5) applies. Unless I miss my guess, that's a misprint. I think
that should probably be 13(6) that applies, so I think you may
want to just-unless I'm wrong about that.
Mr Tilson:
Subsection (2)?
Mr Newark:
Yes, it's 14(2). I actually had a clue because it said,
"Presumption of risk of injury to the public," which was the
title on it. I think what it means to apply is subsection (6),
because that is the presumption of risk in the interlocutory
order. I think it's just a misprint.
Those are all of my
submissions. This bill clearly has some content in it which would
facilitate compensation of crime victims who've suffered loss as
a result of unlawful activity and in that sense is a welcome
addition.
Thank you very much. I'll
attempt to answer any questions anybody has.
The Chair:
Thank you, Mr Newark. We have about three minutes from each
member, starting with Mr Kormos.
Mr Kormos:
No, thank you.
The Chair:
No? Mr Tilson.
Mr Tilson:
I think it's appropriate that you be here today because obviously
one of the main purposes of the legislation, if not the main
purpose, is to help compensate victims of crime for losses that
have been sustained as a result of unlawful activity.
You made some comments with
respect to section 21-
Mr Newark:
Regulations.
Mr Tilson:
Sorry, the regulations, and specifically the comment about
approval being given by the Criminal Injuries Compensation Board.
You raised a caution that you were concerned, from experience in
dealing with that board, that there might be delays in getting
monies out. If you didn't use that vehicle, is there another
vehicle that you would recommend?
Mr Newark:
I'd actually probably include somebody from that board or
individuals off of that board and some of the other players that
are involved in the system that are contemplated in section 6,
the different parties that would be involved.
There's nothing in the act
and we don't know the regs yet to see how you're going to balance
the priorities of payment, so I think what I would probably do is
approach it from the basis of having some kind of subject
knowledge, in other words, some relevance, about the purpose of
the payment and some notion of independence or arm's length so
that you don't have, just to use the example, a police service
that would have a direct benefit from having the dollars paid
that way.
To a certain extent you'll
probably be able to get at some of that by the priorities you set
out in the regulations as to-I don't know if that's
contemplated-who takes first charge or something like that, as
opposed to assigning it formally to a body that already has a
very heavy caseload.
Mr Tilson:
Mr Borovoy raised some comments this morning. You indicated you'd
heard him with respect to the tests, the debate whether it should
be beyond a reasonable doubt, on the balance of probabilities, or
something in between. You're a lawyer?
Mr Newark:
Yes.
Mr Tilson:
Do you have any comments on those remarks?
Mr Newark:
Sure. It's a in rem proceeding; it's a property-related
proceeding. Frankly, I did listen to some of what Mr Borovoy had
to say and I must admit that if you went down some of the road
that he was attempting to suggest it should go, that would take
you into criminal jurisdiction. Frankly, I think this has been
very carefully drafted so that it confines its applicability to
areas over which the province has jurisdiction. It doesn't matter
whether or not, in my opinion-if there's a deficiency, for
example, as I think there is in the federal legislation, that
doesn't open up automatically a hole that the province can jump
into. The province can only act appropriately within its own
jurisdiction.
So I don't agree with his
conclusions about changing the standard. The standard is
appropriate when you're dealing specifically with a property
focus. That's a significant difference, obviously, from what the
Criminal Code provisions are about, where it's targeted to a
specific individual, with specific property linked directly to
that. So I would say there has obviously been some fairly careful
analysis of this, and it seems to me they're on the absolutely
correct track about keeping it very carefully defined and
defensible, ultimately, in court.
The Chair:
Mr Bryant.
Mr Bryant:
Thank you for coming, and thank you very much for these written
submissions. Maybe you can explain, as a former prosecutor, why it's
necessary for this government to make a significant investment in
terms of investigative resources, an army of forensic
accountants, because as I understand it, in order to execute
these tools it's enormously complicated; it's not a simple
matter. Can you explain why that is?
Mr Newark:
Not really, is the short answer. I've never been involved in any
organized crime prosecutions in relation to assets. Mine have
been more about dealing in bike gangs, specifically in relation
to some of their activities. It wasn't directed at property.
I think your general
statement is correct, though, that it's recognized as being a
complicated, precise process that generally requires, as you put
it, the army of forensic accountants. I think that's probably the
reason why.
Mr Bryant:
So if we don't get the regulations, if we don't get the army of
forensic accountants, if we don't get all the resources necessary
that have been called for by this committee, then in fact the
purposes of this bill are not going to be fulfilled.
Mr Newark:
I don't think that's unique to this bill. We've spoken before
about that, where passing legislation is one part of the
exercise; the other part of the exercise is making sure that when
you do that, you anticipate and plan for what's necessary to put
into effect the laudable ideas that you've got here. From the
care that has been taken with this legislation, I think people
have figured that out, in my sense.
Mr Bryant:
I didn't understand something in section 6 of your submission,
conspiracies that injure the public. In the last paragraph you
said, "Of interest, the directed expenditures do not include
compensation for victims of the unlawful activity." Can you
explain that?
Mr Newark:
If you look at the-
Mr Bryant:
Let me put it this way: do you have any concerns there?
Mr Newark:
No, because I think it's covered off in the legislation as to why
that is the way it is.
Mr Bryant:
I think this was raised in the question by Mr Tilson, but in
order to achieve the independence desirable, ideally, how would
we do that, addressing recommendation 7?
Mr Newark:
I'm sorry. Do you mean the people essentially making the
decisions about what happens with the money?
Mr Bryant:
Sorry. I wasn't very clear. Under subsection 21(1), I guess the
Criminal Injuries Compensation Board is going to be used. They're
already totally overburdened, yet at the same time we want to
have some arm's length mechanism in order to get the money to the
victims. What's the best way to keep the independence but at the
same time execute the purposes of the bill?
Mr Newark:
Traditionally the institution that has an interest in receipt of
the funds is not specifically and exclusively involved in making
the decision, so I'd involve the parties there. Subsection
21(1)(b)(i) only mentions the CICB as a possibility; it doesn't
say that it's going to be the CICB. To reiterate, frankly I would
think you would include crowns, police officers; I'm anticipating
there's going to be some kind of a coordinated unit involved in
this stuff; our office is there with a mandate in a similar kind
of thing. Those kinds of people, probably acting in concert, are
better, I would think, than just the ministry staff involved in
it or any specific agency in effect making decisions about
potentially their own funding.
Mr Bryant:
Back to resources: in addition to investing and executing it in
terms of the law enforcement side, would you agree that in order
for this bill to work, the civil courts themselves are going to
need some assistance. Because now they're going to get all kinds
of new remedies which they're going to have to deal with, and the
civil courts, as you know, are totally overburdened right
now.
Mr Newark:
Logic does tell you that if you're going to add what is in effect
a new process or application, there has to be some recognition
that it may take some time.
Mr Bryant:
What involvement do you think your office ought to have in
perhaps ensuring, in terms of monitoring or otherwise, that the
purposes of this bill are fulfilled?
1320
Mr Newark:
During the consultations, we offered to participate in the kind
of panel that's contemplated in section 21 in the regulations. I
spoke, actually, with the chair this morning, and it's something
that we would very much like to be involved in. We're doing that
already on other things specifically related to victims out of
the victim justice fund. It would seem logical that if you're
dealing with a fund that has that kind of purpose, an office like
ours, with the mandate that it has, would logically be involved
in it. So just specifically that? Yes, we'd very much like to be
involved.
Mr Bryant:
A last question?
The Chair:
Yes.
Mr Bryant:
Just so I'm clear on this, the office in fact supports the
ministry's vigorously pursuing the Criminal Code remedies, and
this bill does not in any way signal an abandonment of that. Is
that right?
Mr Newark:
Yes, I've not sensed that in any fashion whatsoever.
Mr Bryant:
What does the office want?
Mr Newark:
Enforcement of all the tools available in the tool chest, one of
which I think is a new one right here, but not abandonment of it
by any stretch of the imagination. It's why I included
specifically that it might be nice if we used some of the funds
currently available out of the victim justice fund to actually
get the victim standard in place that included an obligation to
help victims enforce restitution orders, which is not done
now.
Mr Bryant:
A $50-million surplus? David, you're going to be busy. Mr Tilson
is going to be busy.
The Chair:
Thank you very much for coming.
Mr Newark:
Thank you.
HILLEL GUDES
ANDY RÉTI
The Chair:
The next presenter is Hillel Gudes.
Mr Hillel
Gudes: Good afternoon, Madam Chair. My name is Hillel
Gudes. My friend here, Mr Andy Réti, will speak on my
behalf.
The Chair:
Oh, yes. Sorry, Mr Réti; I didn't recognize you.
Mr Andy
Réti: Madam Chair and committee members, just like
the previous speaker, we appreciate the opportunity to address
you. We have also distributed copies of our brief.
As a brief introduction,
please bear in mind that both of us are naturalized or, as you
can tell, accented new Canadians, and very proud of it, I might
add-ordinary little people. In fact, we're in the taxicab
business. The purpose of our submission is to alert the
distinguished members of this committee to the dangers of some
aspects of Bill 155 in its present format. We will attempt to do
so by highlighting the sections that we feel should be revisited,
as well as some general comments.
You understand we are not
lawyers, and if because of that we misunderstood or
misinterpreted something in this proposed bill, we apologize.
We would like to make it
clear from the onset that we are not against fighting organized
crime. We are not speaking in defence of organized crime, but
rather in defence of democracy. There is, however, a fine line
between passing laws to fight crime, and subverting, however
remotely, democracy.
Please allow me to make a
personal comment, which is not in the deputation. I am a child
Holocaust survivor. I am a Holocaust educator and I volunteer at
the Holocaust Centre here in Toronto. In each of my
presentations, I make sure that I address the students and the
visitors with the following: if there was one lesson of the
Holocaust, it was to speak up when you see something wrong. So
please allow me to practise what I teach.
Hitler rose to power by
democratic means. Once in power, he started by passing the
infamous Nuremberg laws that led to the establishment of a police
state, which enabled him eventually to do all those horrible
things. By no means are we suggesting any comparison, God forbid;
but we are trying to make a point by way of a historical fact.
Our feeling, based on personal experience, is that if we have to
choose between limiting democracy and living with organized
crime, however reluctantly, we should choose the latter.
There is no doubt in our
mind that there are good intentions behind the introduction of
Bill 155. However, it is our opinion that it gives too much power
to the government or the police. Therefore, it is incumbent on
you, our duly elected legislators, to amend this bill to ensure
that it protects all citizens from possible abuse by any
government or the police. It seems to us that Bill 155, in its
present format, could be used to fight more than organized
crime.
The following are several
examples of what concerns us. On page 5, under part III,
subsection 7(1) defines "property" as "real or personal property,
and includes any interest in property." That definition is so
broad that it probably includes everything under the sun.
Subsection 7(1) on page 6
defines "unlawful activity" as "an act or omission that, is an
offence under any act of Canada, Ontario or another province or
territory of Canada." Again, we are concerned as to the broad
scope of this bill.
We are concerned as to the
standard of proof proposed in this bill as stipulated under part
V on page 12, section 16. "Except as otherwise provided in this
act, findings of fact in proceedings under this act shall be made
on the balance of probabilities." This is, of course, is versus
or opposed to "beyond reasonable doubt."
We are also concerned about
subsection 17 (2), which states:
"In proceedings under this
act, an offence may be found to have been committed even if,
"(a) no person has been
charged with the offence; or
"(b) a person was charged
with the offense but the charge was withdrawn or stayed or the
person was acquitted of the charge." What happened to the idea of
innocent until proven guilty?
We are also concerned about
section 20 on page 14, which states, "No action or other
proceeding may be commenced against the Attorney General, the
crown in right of Ontario or any person acting on behalf of,
assisting or providing information to the Attorney General or the
crown in right of Ontario in respect of the commencement or
conduct in good faith of a proceeding under this act or in
respect of the enforcement in good faith of an order made under
this act." Who is going to be accountable if this bill is used in
an abusive manner?
We are also concerned about
subsection 9(3) on page 7, which states, "An order under
subsection (1)"-which is an order for the preservation of any
property forfeited-"may be made on motion without notice for a
period not exceeding 10 days." Are we not going to give the
accused a chance to put up a defense?
To illustrate our concerns,
please consider the following scenario: A homeless person rode
his old bicycle to the supermarket. He left it outside, walked
inside and eventually stole an apple. All along a policeman was
watching him. When he tried to climb on his bicycle to run away,
the policeman arrested him. He was charged with shoplifting but
eventually was acquitted. Yet the crown asked the court for an
order confiscating the bicycle. Is this a reasonable reflection
of Bill 155? Or to put it in our background, the taxicab
business, currently-and we are both Toronto cabbies-there are
hundreds, if not thousands of illegal, unlicensed cabs coming
into Toronto. Are you going to confiscate their vehicles for
being in Toronto without a licence? Think about it. Is that
really the meaning or spirit of this proposed bill?
We urge the committee
members to have a strong, serious look at this bill. Please take
our concerns seriously. Please make sure that amendments
will be made to this bill in order to protect the average citizen
and to preserve and protect democracy. Let us preserve the
principle of innocent until proven guilty and the principle of
proportionate penalty. Do not take the word of the Attorney
General that this bill is good as it is and should not be
amended, nor believe that there is enough protection in it for
the average citizen. Right now there is not enough such
protection from overzealous police or an overzealous Attorney
General.
Again, I might add that we
have been in this building trying to enlist your support against
the autocratic former Metro Licensing Commission, and if you have
the next two days, I could give you some stories, but we
don't.
It is up to you, our
elected members of provincial Parliament, to stand on guard and
to ensure that democracy will not be subverted, however
well-intentioned this bill is meant to be.
The Chair:
Thank you, Mr Réti and Mr Gudes. Unfortunately, we don't
have time for questions because, as individuals, you only had 10
minutes. Thanks very much.
The next presenter is
Malcolm Cairnduff. Mr Cairnduff? Is Karen Selick here? Daniel
Mader?
1330
FREEDOM PARTY OF ONTARIO
The Chair:
I understand Mr McKeever of the Freedom Party of Ontario is here.
Would you mind making a presentation now?
Mr Paul
McKeever: No, that's fine.
The Chair:
Thank you. You have 20 minutes.
Mr
McKeever: Yes, and I've brought 30 copies of my
presentation, as per the request. I should just add that I spoke
with Ms Selick a few days ago and she did intend to be here. She
planned to be taking the train in.
The Chair:
I called her name. It's a little early for her. The only reason I
called her name is because the next presenter is not here. We'll
hear from you and then go back to see if she comes.
Mr
McKeever: Sure. My name is Paul McKeever. I'm a lawyer
in practice in both Toronto and Oshawa in employment law. I'm
here as a member of the Freedom Party executive to make
submissions on behalf of the party.
The Freedom Party of
Ontario is a political party registered pursuant to the Elections
Act. The Freedom Party's statement of principle is that every
individual, in the peaceful pursuit of personal fulfilment, has
an absolute right to his or her own life, liberty and property.
The Freedom Party is in favour of laws that discourage the
initiation of coercive physical force by any person against any
other person, of the use of coercive physical force only in
response to and as a consequence of the coercive use of physical
force. Examples include laws that punish a person for stealing a
person's property or causing physical injury to a person without
their consent.
The Freedom Party strongly
objects to Bill 155 in its current form. Some of the Freedom
Party's objections are philosophical and some are legal, and they
are set out in the following pages.
First, the philosophical
objections: in considering the philosophical objections listed
below, it's important to keep in mind that were it made law, Bill
155 would essentially allow a person to be punished without
having committed any offence except the one which, as explained
below, is actually implied by Bill l55 itself: the simple
possession of property. In short, rather than being a response to
the initiation of coercive physical force, Bill 155 would promote
and legalize the initiation of coercive physical force. It would
promote and legalize the commission of an immoral activity.
For hundreds of years, our
legal system has recognized that every person has unalienable
rights of life, liberty and property. Indeed, our criminal laws
are designed primarily to protect those rights. Property in this
context has not its formal legal meaning but its informal
meaning: property refers to money and other goods, as opposed to
services. Some people, including some Freedom Party members,
believe these rights are God-given. Others believe that they are
the result of utilitarian or objectivist philosophies. But one
thing is certain: in our society, the protection of the right to
one's property is necessary if a person is both to survive and to
thrive. Indeed, the right of life is meaningless in our society
if it does not imply or otherwise include the rights of property.
As will be discussed below, under the "Legal Objections" section,
it is our submission that Bill l55, were it made law, would
violate the right of persons to their property.
The Freedom Party disagrees
fundamentally with the notion that the moral righteousness or
wrongfulness of taking another person's property by the use of
coercive physical force depends upon who is so abusing physical
force. Theft is theft, no matter who may be the thief. It is
morally wrong for B to steal from C, whether B is Her Majesty the
Queen, one of her ministers or simply one of the Queen's
subjects. Moreover, it is no more defensible to commit a theft
indirectly, or via an agent, than it is to commit a theft
oneself. It is never morally defensible for person A to have
person B steal person C's money for person A's benefit. That B
may be Her Majesty or one of her ministers, acting on the advice
of A's and C's elected representatives, does not somehow make the
theft morally righteous.
The Freedom Party submits
that it matters not to what purpose Her Majesty or her finance
minister would put the property taken under Bill 155. A theft
cannot be morally excused or justified by the theft's decision to
use his booty for noble causes. Were a mugger to steal from one
person in a dark alley but to subsequently give the stolen money
to victims of crime, or to the police so as to prevent muggings,
such expenditures could not negate the fact that the mugger's
theft was morally wrong. Nor could the mugger's theft be made
morally righteous by the fact that she, while mugging a person in
a dark alley, held the
title of Queen or finance minister, and, most certainly, the
immorality of such a theft could not be negated were the mugging
to occur in a well-lit courtroom instead of a dark alley. That
Bill 155 would allow Her Majesty, through her Minister of
Finance, to use the so-called special purpose account only for
laudable purposes is no answer to the moral wrongfulness of
taking a person's property by force without their consent.
History is rife with men of
the people who have made their fortunes through crime but whose
crimes have been excused or justified by the public because such
men of the people have spent some of their ill-gotten gains in
philanthropic ways. It is inexcusable for Her Majesty to join the
lowly ranks of such cons and to seek an excuse or justification
for the theft via a promise to spend the proceeds of forcefully
taken property on such things as victim compensation and crime
prevention. But that is precisely what Her Majesty will be doing
if Bill 155 is passed into law.
Moving on to the Freedom
Party's legal objections, there are certain points within the
bill to which we think attention should be brought.
First, the term "unlawful
activity" includes any offence, whether an offence under federal
jurisdiction or under the jurisdiction of any province. The
offensive activity or omission in question need not constitute an
offence in Ontario at all. The term "unlawful activity" includes
not only acts but omissions. Thus, as examples, a failure to file
one's tax return, to file a party's election finances returns or
to carry on business under a name that has not been duly
registered under the Business Names Act is unlawful activity
under Bill 155.
The term "proceeds of
unlawful activity" includes not only property acquired as a
result of unlawful activity but also property any part of which
was acquired as a result of unlawful activity. For example, a
bank account of $250,000 or a house purchased with such money is
"proceeds of unlawful activity" if only $1 of that money was
acquired as a result of unlawful activity.
The term "proceeds of
unlawful activity" includes property acquired indirectly as a
result of unlawful activity. Thus, as an example, property
acquired via a business that violated Quebec's signage language
laws would arguably be proceeds of unlawful activity. As noted
above, the unlawful activity need not constitute an offence in
Ontario.
A court may make an order
allowing Her Majesty the Queen to take a person's property even
without attempting to prove that the person was at all involved
in an offence of any sort, except that implied by the bill
itself, as I'll explain in a minute. Bill 155 would allow Her
Majesty to take property that has never been involved in any
offence at all. For Her Majesty to take the property, it need
only be of the type of property that is likely to be used to
engage in forms of unlawful activity that would involve the
acquisition of property or the infliction of bodily harm. The
most obvious targets, of course, are such things as money,
because it is likely to be put to any purpose known to man,
computers, firearms, communications equipment, boats, trucks,
well-guarded or remote tracts of land etc.
Having looked at those
particular sections, these are our legal submissions.
Bill 155 imposes not a
compensatory remedy, but a fine. This is evidenced most
persuasively by the fact that the term "proceeds of unlawful
activity" includes property only a minute part of which was
acquired as a result of so-called unlawful activity. Were the aim
merely to ensure that no person possessed ill-gotten gains, Bill
155 would not seek to take legitimately obtained property as
well. In Canada, fines are imposed only for the commission of an
offence.
The offence imposed by Bill
155 is an absolute liability offence. The crown need not prove
that the accused knew or intended to possess or own proceeds of
unlawful activity or instruments of unlawful activity; the crown
need not prove that the accused had mens rea. The crown need only
prove that the accused possesses or owns the property in
question.
1340
Bill 155 would not require
the crown to prove its case beyond a reasonable doubt but merely
on a balance of probabilities, in other words, a
more-likely-than-not standard. In Canada, the commission of an
offence, even a moving violation, for example, must always be
proven beyond a reasonable doubt. Thus, Bill 155 involves a
colourable attempt to impose the more-likely-than-not standard or
the balance-of-probability standard to convict persons of an
unnamed, undefined, absolute liability offence without proving
them guilty beyond a reasonable doubt and without proving they
had any intention to possess or own proceeds or instruments of
unlawful activity.
Freedom Party submits that
this is not in accord with fundamental justice under section 7
and related sections of the charter.
It is noteworthy that,
pursuant to section 462.37 of the Criminal Code, which is a
federal statute, a forfeiture order of the sort sought by Her
Majesty under Bill 155 can be obtained only when the person from
whom it is taken has been convicted of an enterprise crime. Under
the federal regime, it is expressly noted that a forfeiture order
is a part of one's sentence for having committed an enterprise
crime. Moreover, if the enterprise crime is not proven on a
balance of probabilities to have been done in relation to the
property in question, the property can be taken by Her Majesty
only if the crown proves beyond a reasonable doubt that the
property was nonetheless proceeds of crime.
Clearly, Bill 155 is a
shameless and colourable attempt to circumvent the hurdles
associated with the federal proceeds-of-crime regime. Indeed, a
forfeiture order under subsection 3(1) of Bill 155 could be made
under circumstances that would not allow Her Majesty to take the
proceeds of crime pursuant to section 462.37 of the Criminal
Code.
Freedom Party fully expects
that if the crown attempts to impose liability on a balance of
probabilities, its attempt will not survive scrutiny by the
Canadian Charter of
Rights and Freedoms, in particular, section 7 of the charter and
the legal rights which serve to elucidate those rights.
Because legal proceedings
under the bill would be commenced via the commencement of an
action, the rules of civil procedure would apply. That being the
case, an accused would be required to make full disclosure of all
documents relating in any way to the offence and would be
required to answer all relevant questions put to him under oath
during examinations for discovery. The bill would require an
accused to provide evidence against himself, rather than leaving
it to the crown to collect evidence in the same way it is
required for any other offence.
Freedom Party submits that
this would violate an accused's rights under section 7 of the
charter. Not only would the charter be violated by the absence of
a requirement that an accused be proven guilty beyond a
reasonable doubt, but the section 7 right to "life, liberty and
security of the person" could be found to include, as a necessary
aspect of the right to life or the right to security of the
person, the right to property. In connection with the latter
point, former Attorney General Flaherty's public statements that
the charter does not protect property rights are, to say the
least, premature. The Supreme Court of Canada did not conclude,
in the leading on-point decision, which is Irwin Toy, that the
charter does not protect property rights. To the contrary, it
stated that it would be premature to rule out that security of
the person encompasses some economic rights for humans but not
for corporations. Moreover, the court had nothing to say about
the scope of the right to life.
Freedom Party submits that
there are strong arguments that the charter protects a right to
property, which Bill 155 could not withstand were it made
law.
As noted above, Bill 155
imposes a penalty for an offence which it chooses not to name.
Specifically, the offence in question is the possession of
proceeds of an offence or instruments of unlawful activity.
Freedom Party submits that
such a law is criminal in nature. Indeed, Bill 155 would make
section 462.37 of the Criminal Code redundant. Freedom Party
submits that if the crown attempts to make Bill 155 law, it will
fail on the basis that the criminal law is a matter falling under
the exclusive jurisdiction of the federal Parliament.
Furthermore, Canada has a
Constitution which is "similar in principle to that of the United
Kingdom," as can be seen in the preamble of the Constitution Act,
1867, and is governed by the same crown that has agreed to the
terms of the Magna Carta and the Bill of Rights. As evidenced by
the crown's signing of the Magna Carta and decisions made in the
crown's courts since that time, including Ontario's courts since
the imposition of the charter or the coming into force of the
charter, the crown has given up its power to take a person's
property without immediate payment to, or the consent of, the
person from whom the property was taken.
What I'm saying is that the
Ontario courts have recognized that the Magna Carta is still in
force and still part of our Constitution and that the common law
still gives us a right to property.
If Bill 155 does not impose
a fine, in other words, if it's not a punitive or an
offence-oriented bill, then the crown lacks authority to act on
the advice of the provincial Legislature to make Bill 155 law.
Her Majesty doesn't have the power any more to take property
without giving compensation, so the Legislature can't advise her
to pass such a law.
Quite apart from
constitutional arguments, it should be obvious to anyone that the
threshold for the granting of a forfeiture order under Bill 155
would be so low, the scope of the terms "proceeds of unlawfu1
activity" and "instrument of unlawful activity" so wide and the
possible value of forfeited property so high, that government
will find it irresistible to seek forfeiture of property
connected in no way with an offence. This is, of course, one of
the points made to this committee or that will be made to this
committee, I presume, in detail by Ms Selick, and we won't expand
on those.
If there's any time and if
there are any questions, I can-
The Chair:
There's about two or three minutes, if there are any questions.
Mr Tilson.
Mr Tilson:
With respect to subsection 3(3), and that is the section that
talks about legitimate owners-
Mr
McKeever: Responsible owners.
Mr Tilson:
Yes. Your comments about that issue, about seizing property, I
think you gave the example of one dollar that may be illegal and
the rest of it isn't.
Mr
McKeever: Right.
Mr Tilson:
Isn't there a way under this bill-at least I believe there is-to
sever that?
Mr
McKeever: The bill actually imposes a new duty on all
people who own any sort of property that might be used in any
sort of offence, be it a speeding offence or not filing one's
party returns, that if they don't take all reasonable steps
necessary to prevent the use of that property in the commission
of any offence, then they are not entitled to have that property
back.
Mr Tilson:
Subsection (3) says the judge, "where it would clearly not be in
the interests of justice," can make an order to "protect the
legitimate owner's interest in the property." I believe that
satisfies your concern, but you can tell me whether it does it or
not.
Mr
McKeever: In part II of the act, "responsible owner" is
defined-I think it's "responsible owner." In any event, it's
defined in such a way as to impose a duty on a person. Now, it
may be that part I allows a judge in his discretion to award a
legitimate owner-
Mr Tilson:
A judge can protect that property. That's what that section
says.
Mr
McKeever: That's what it says, but part II does not give
the judge that similar protection. In fact, it only gives the
judge authority to return the property to the rightful owner if
the rightful owner of the property, be it a rifle, a car or
whatever, has taken all reasonable steps to prevent its use in
the commission of an offence.
The Chair: Thank you. We really
don't have time for any more questions of this speaker. Thank you
for coming this afternoon, Mr McKeever.
KAREN SELICK
The Chair:
I understand Ms Selick is here. If you'd like to come forward.
Sorry, we're a little late. One of our deputants isn't here yet,
so we moved forward with the last speaker.
Ms Karen
Selick: Good afternoon. My name is Karen Selick. I'm a
lawyer in private practice in Belleville, Ontario. I also write a
regular monthly column for Canadian Lawyer magazine, and I
contribute occasionally, not regularly but from time to time, to
opinion pages of the Globe and Mail, the National Post and
various other newspapers. I'm here today at my own expense, not
representing anybody else, just on my own time, because I think
Ontario would be making an enormous and irrevocable mistake if it
enacted Bill 155. I'm here to ask you, in fact to beg you, not to
pass this bill and not to pass any variation of it.
I have my remarks prepared
in written form and I will give them to Mr Prins to distribute
afterwards, but I'm just going to speak here directly to you at
this point.
I'm not here to tell you
that this bill could be tweaked in any way or amended in any way
that would make it OK. That's not my position at all. I think
it's plainly and simply wrong from start to finish, and it simply
must not proceed. I don't think there's anything you could do,
any minor amendment, major amendments, that would make this
OK.
1350
I've actually written two
pieces about this in the newspaper. One of them was in the
National Post that appeared in December and one was in the Globe
and Mail that appeared in January. I won't have time in the 10
minutes I've got today to go into everything I said in those
articles. Some of you may have read them, but if you would like
to read them again, I've posted them on my Web site. It's a very
easy URL to remember. It's just my name, www.karenselick.com.
I've highlighted that in all the copies of my remarks today that
are going to be distributed to you. I've put a special link on my
home page to those articles, so if you would like to read further
beyond what I can tell you today, please go to my Web site.
The most important thing I
want to stress to you today is this: in my view, Bill 155 is one
further step down the already slippery slope that Canada is
taking towards becoming a police state. This bill will give the
government a stake-a very big stake-in the continued existence of
organized crime. Money is a big motivator, whether for
individuals or for governments. This bill promises to pour money
into government coffers. In effect, it will make the government a
senior, silent partner to organized crime. Once government can
seize the proceeds of crime, or assets suspected of being used in
a crime, it will become addicted to that source of funds, just
like any junkie. Then we'll never be able to repeal this law, no
matter how much evil we see it doing, no matter how many police
officers or judges it corrupts and no matter how many innocent
people lose their houses, their money or even their lives.
You probably know that
asset forfeiture has become big business in the United States
since about 1984 when they beefed up their racketeering laws.
Hundreds of asset seizure laws have been passed since then and
literally thousands of property seizures take place every
week-yes, every week. Many of these seizures are based on the
flimsiest of suspicions, and in a huge percentage of cases the
people whose money or other assets get seized don't even try to
get their property back. They can't afford a lawyer or they can't
afford to take time off work to go to court, so they simply throw
in the towel. Every time this happens, the cop who made the bust
gets some brownie points and he becomes emboldened to do it
again.
Here are some of the
grounds on which American citizens have had their property
seized. One really common situation has been when they've been
stopped on the highway for minor traffic violations or even for
routine alcohol or seatbelt checks. Just imagine here in Ontario
police stopping people under the RIDE program. They have a cute
little spaniel with them, trained to sniff for drugs. Did you
know that in the US and Britain, they've done studies that have
shown that between 80% and 96% of all the paper currency in
circulation has traces of cocaine on it? I've never seen any
statistics for Canada, but I have no reason to believe it would
be any different. In the US, 15% of the paper currency leaving
the mint, leaving the US treasury department, straight off the
printing presses, has traces of cocaine on it. So just turn those
sniffer dogs lose at any RIDE checkpoint and there's a good
chance they'll smell drugs in just about any car they care to
target.
I wrote a letter about this
bill to Mr Flaherty a few months ago and he wrote back to me on
January 15, stating that the bill contains "an important number
of safeguards." Foremost among these safeguards, he said, is "the
requirement of court approval at every step." With all due
respect to Mr Flaherty, I can only consider that answer to be a
joke. Who says judges are any more impervious to the lure of
money than police officers? The money doesn't have to be making a
beeline directly into the judges' own pockets in order for judges
to be tempted by this. Money going into the court system will
mean they can hire more staff, have their offices redecorated,
get upgraded notebook computers, get new courtrooms built, get
salary increases or longer vacations. There are a lot of reasons
why judges will be just as anxious as police officers to get
their hands on the proceeds of organized crime.
But Mr Flaherty told me
there's another reason I shouldn't worry about this bill. It's
because, and I'm quoting exactly from his letter, "More
importantly, the proceeds of forfeiture are first made available
to victims." I have two problems with this answer. First of all,
it isn't even true. The bill does not make proceeds available first to victims.
There's a list in subsection 6(3) of the bill of five different
uses to which this money can be put. While compensation to
victims appears at the top of the list, this use is not given
priority over the other uses; they all have equal status. Two of
the five uses refer to giving money to the province of Ontario, a
municipality or other public body. Then the fifth item lists some
other uses that are going to be prescribed by regulation. I can
hardly wait to see what those might be.
But even if we supposed
that the money were going to go first to victims of organized
crime, as Mr Flaherty said, unfortunately this still does not put
my mind at ease because the truth is that most of the activities
of organized crime either have no victims at all or have no
victims who would be willing to step up to claim their so-called
compensation. The largest single activity of organized crime
today is drug dealing. Who are the victims here? Do we really
expect someone to come cap in hand to the Ontario government and
claim compensation from this fund because the marijuana he bought
turned out to be oregano or, because he paid for a shipment of
cocaine and it never got delivered, it had been seized by the
cops?
What are the other major
activities of organized crime? Smuggling liquor is a another big
one. Who's the victim who's going to come and claim compensation
here? Some guy who got cirrhosis of the liver by drinking too
much untaxed booze?
Smuggling illegal
immigrants is another big racket of organized crime. Who's the
victim who's going to come and claim compensation here? Some
Chinese refugee whose snakehead promised to get him to the US,
but abandoned him here in Ontario?
Ladies and gentlemen, ask
yourselves this question: what is it that the average Ontario
taxpayer really wants the police force in his neighbourhood to do
for the taxpayers? The answer is really quite simple. Taxpayers
want to sleep soundly at night, knowing their houses aren't going
to be burglarized. They want to be able to go out during the day
to work, knowing they don't have to install an alarm system just
to protect their possessions. They want to be able to walk down
the street without getting mugged or raped. If someone commits a
fraud using their bank account or credit card, they want the
police to get their money back for them.
These are the things
taxpayers are willing to pay taxes for, but these are precisely
the things the police tell us over and over again they can't do
for us. How many of you know someone whose house has been broken
into? I'll bet everyone in the room does. What did the police say
when they were called: "Sorry, there's not much we can do about
it." A friend of mine recently had $16,000 stolen from his line
of credit. It was probably an inside job involving someone from
the bank, but what did the police say when he reported it?
"Sorry, but for individual frauds we won't look at anything under
$250,000 and, for businesses, the limit is $1 million."
The average taxpayer really
doesn't give a hoot that someone's importing marijuana into the
country. A huge percentage of average taxpayers have smoked pot
themselves. Probably half the people in this room have tried it.
But we can only afford a limited number of police officers and
each of them can work only so many hours a day. We have to make
choices about how best to deploy those police man-hours. The
average citizen, I'm sure, would say, "Get the burglars and
muggers off the street and forget about the guys importing drugs
and alcohol."
It's bad enough that our
police already demonstrate the opposite priority, but if Bill 155
comes into effect, they will have an additional incentive to
divert their resources to crimes that taxpayers consider low
priority, because the cops and the police departments and the
courts are going to be among the people on the list who get to
drink from the trough, once all those tasty crime proceeds start
flowing in.
I wish I had more time to
tell you what's wrong with this bill. I don't know how much of my
10 minutes I've used already, but I must be pretty close to the
limit.
The Chair:
It's getting there.
Ms Selick:
Yes. I urge you once again to read the articles on my Web site. I
will distribute my handout here. I urge you, please, don't
proceed with this bill. Abandon this one. This is one US import
we can do without.
The Chair:
Thank you, Ms Selick.
Mr Kormos:
On a point of order, Madam Chair.
The Chair:
If you're going to mention you'd like some time for
questions-
Mr Kormos:
No, no.
The Chair:
-because I'm going to allow that.
Mr Kormos:
OK. Then I better ask for some time.
The Chair:
Mr Cairnduff, I gather, is not here, and we do have a
cancellation. I think there's some interest in asking questions.
I'll allow maybe five or 10 minutes for questions, Mr Bryant.
1400
Mr Bryant:
Thank you for your presentation. I think it speaks for itself,
and I appreciate that you put on the record that interested
Ontarians can go on to your Web site and read further. Thank you
for coming and thank you for making this contribution. I
understand you're a citizen just coming here to speak your
mind.
You raise a point-and
perhaps Mr Tilson in his questions can respond-about who the
victims are here who are in fact going to be compensated. Do I
take it that it's your view that this is a façade, that
there are no victims of organized crime who could get
compensation from this?
Ms Selick:
There might be the occasional one. I'm sure organized crime is
into other things. They are into credit card frauds, for example,
but I think you're going to have a very difficult time
identifying the individuals who have suffered from this. Most
people who are victims of a credit card fraud won't really be
victims, because their credit cards are insured to a certain
level. It will really be the insurers or the banks that end up
having to pick up some of that tab that perhaps will have some
claim on this compensation fund.
I just think this idea of compensating those
victims in comparison to the other bad things that can happen
with this bill, it's just not worth taking those risks because
the other risks of this bill are so enormous.
Generally speaking, most of
what organized crime does is what we call victimless crime. It's
stuff that has been made a crime only because someone has chosen
to take a vice and interpret it as a crime. People are there
voluntarily engaging in these activities, voluntarily on both
sides of the transaction.
Mr Kormos:
I'm sympathetic to some of your arguments. I don't know. Again,
we're going to be hearing from policing, but when you talk about
if organized crime indeed is controlling things like women being
transported so that they can be housed as prostitutes or working
in strip clubs, that's where it's just sort of a little grey
area.
But the concern expressed
by Alan Borovoy earlier today was the standard of proof, that
this uses-and it was spoken to in the presentation prior to
yours-the civil standard on the balance of probabilities whereas
a conviction for a criminal offence-thank goodness, because even
with that high standard of proof beyond a reasonable doubt we've
witnessed a tragic number of unjust convictions. Thank goodness
we don't have the death penalty. You really haven't spoken about
that part. Do you want to?
Ms Selick:
I did mention those. In the first article that was in the
National Post I mentioned that. I think you're really going to
have problems with the constitutionality of this. In pith and
substance this is criminal law. The statements that were made by
Mr Flaherty and Mr Tsubouchi months and months ago, before this
bill even came in, made it quite clear that this is directed
toward criminal law, and I think you're going to have a big
problem with that. Once it is criminal law, then yes, you have a
problem with the fact that it's this lower standard of proof.
Mr John Hastings
(Etobicoke North): Ms Selick, thank you for coming here
today. I have read some of your articles in the Post. I would
describe you as a champion of property rights in Canada. Would
that be a correct depiction?
Ms Selick:
I would be pleased to be described that way. Thank you.
Mr
Hastings: Could you supply to committee clerk specific
examples, if you have them, at a later date-I don't really want
you to do an inordinate amount of work since you are a barrister
who works on her own, and you've got to make a dollar like
everybody else-in the United States under RICO or under similar
state statutes that tried to get the forfeiture of property
connected to criminal activities and any articles you've come
across regarding the corruption of the policing function?
Ms Selick:
I did mention some of that.
Mr
Hastings: Yes, you did.
Ms Selick:
In the first article I wrote about this in the National Post, I
mentioned that. There's a very famous one in the US. It was a
series of articles published in a newspaper that was then called
the Pittsburgh Press. The name of that has now changed. I think
these articles appeared in about 1993 or 1994, maybe even
earlier, but a long investigative series about people whose
property was being taken with very little grounds, people who
couldn't afford to get it back.
In the National Post
article, I think I mentioned the case of a man in California. He
was quite a wealthy man, a multi-millionaire, whose ranch was
broken into. It was quite clear they were deliberately hoping
they could find drugs there so that they could seize this
property. As it turned out, they killed him in the raid and there
never were any drugs on the property. There have been people
killed for this sort of thing. There have been all kinds of
people who have lost property, lost houses because their child
made a phone call, was dealing dope or something. The abuses have
been horrendous.
In the US, they recently
passed some amending legislation-I think it was in about March or
April of last year-that was designed to deal with some of these
abuses, but from what I've read, it wasn't very effective in
dealing with the abuses-
Mr
Hastings: By the US Congress?
Ms Selick:
Yes. It got watered down along the way. That's why I'm concerned
about the addictive nature of this type of legislation for the
Legislature. Once they had this passed, then the battle to get it
changed was horrendous. All these police associations came
forward and said, "It's a wonderful thing, and you shouldn't
change it." The amending legislation, the restricting
legislation, was watered down severely, so that I don't think it
did much good.
Mr
Hastings: Do you have any examples, Ms Selick, of
states, governments, the US government, the FBI or whatever
agency you can think of in the literature or where I could come
across some, where the people who had their property seized under
these civil measures sued back, sued the state government, the
state police or whatever agency-
Ms Selick:
I'm sure there must have been litigation of that kind. I don't
have any specific knowledge of any.
Mr
Hastings: Do you expect that would be one of the other
unintended consequences coming from this stuff?
Ms Selick:
I'm quite confident that here in Ontario it will be, just because
of the constitutional issue. People aren't going to take this
lying down when there's that big, glaring gap there that they can
take a run at it with. I'm sure here it will be a problem.
The Chair:
Mr Kormos.
Mr Kormos:
I just wondered, Madam Chair, whether as a matter of course the
participants from out of town are advised of their right to claim
for mileage etc.
The Chair:
Yes, they are.
Mr Kormos:
OK, fine.
Ms Selick:
I wasn't advised of that.
Mr Kormos:
Oh, well, I'm glad I raised it.
Mr
Hastings: Yes, for mileage.
Mr Kormos:
Before you leave, why don't you just speak to the clerk?
Ms Selick: Thank you.
The Chair:
Thank you very much for coming in.
We do have a couple of
no-shows. The next delegation is at 2:40, so I think we'll take a
half-hour recess.
The committee recessed
from 1407 to 1439.
CANADIAN BANKERS ASSOCIATION
The Chair:
I'll call the meeting back to order. The next presenter is Mr
Gene McLean, director of security for the Canadian Bankers
Association. Mr McLean, would you like to come forward, please?
You have 20 minutes.
Mr Gene
McLean: Madam Chair, committee members, good afternoon.
My name is Gene McLean. I'm the director of security for the
Canadian Bankers Association. In this role, I am responsible for
working with our member banks on the development and execution of
strategies to prevent, detect and reduce criminal activity
against banks.
Prior to joining the
Canadian Bankers Association, I served with the Royal Canadian
Mounted Police for more than 25 years. While with the RCMP, I was
responsible for numerous investigations of organized crime and
international frauds. I also occupied the role and office of RCMP
liaison officer in England and Switzerland for a number of
years.
On behalf of the banking
industry, I'm pleased to be with you today to discuss organized
crime against banks. I cannot comment on the remedies contained
in the proposed legislation, as CBA's member banks have not yet
completed their review of the bill in detail. However, I welcome
the opportunity to provide you with an overview of the problem of
organized crime against banks and to confirm the industry's
commitment to prevent and protect bank personnel and customers
from the effects of organized crime.
The Canadian Bankers
Association is pleased that the Ontario government recognizes the
need to better combat organized crime, which is indeed a serious
problem. There are a number of criminal organizations in Canada.
Many of them are active here in Ontario. Each year, criminal
activities cost Ontario residents and businesses millions of
dollars in losses. I'm here to discuss organized crimes against
banks and how the proceeds of those crimes are used to finance
other criminal activities, including the importation and
distribution of narcotics, the sale and use of firearms and human
smuggling, to name a few. These crimes filter down to where we
live and should be cause for general concern.
I would like to note that
Canada's banks have a long history of working with government and
law enforcement to deter criminal activity against banks and to
protect bank employees and customers from these crimes. Together,
our efforts are effective, but we must be constantly vigilant in
our fight against criminal activity, as these organizations are
now operating globally and have access to vast resources and
technical capabilities.
Money laundering, bank
robberies, credit card fraud and counterfeit monetary instruments
are a few examples of the types of organized crime against banks,
their employees and customers. Bank robberies are the most
visible form of crime against the banking industry, its personnel
and customers. Bank robberies amount to approximately $5 million
in annual losses. The industry, through the good efforts of law
enforcement, combined with the deterrence, detection and
investigation by the banks themselves, has a very high success
rate in the apprehension of bank robbers: a percentile of 85% to
90%.
However, the banking
industry's primary concern is the safety of our employees and
customers. Where credit card fraud and counterfeiting may appear
to the untrained eye to be victimless crimes, bank robberies
often have a traumatic effect on our personnel and customers. In
some cases, despite post-robbery counselling, employees and
customers continue to suffer trauma for extended periods of time.
Sometimes, depending on the severity of the robbery, they can
suffer for years after the incident. This is hardly a victimless
crime.
Credit card fraud is a
sophisticated form of organized crime against banks. The industry
is dedicated to the security of the credit card system and to
protecting customers' credit cards, but fraud does occur. In
fact, for the year ended December 31, 1999, losses due to credit
card fraud totalled $227 million for the Canadian issuers of
Visa, MasterCard and American Express. The use of counterfeit
cards is the most common form of credit card fraud and accounted
for 54% of the dollars lost in 1999. Thanks to the efforts of the
industry and law enforcement, dollar loss figures have gone down
from the $227 million reported at the end of 1999 to
approximately $203 million for the 12-month period ending June
30, 2000.
Customers are protected
from credit card fraud and are not financially liable for any
fraudulent use of their cards. In addition, banks work to
identify and prevent credit card fraud through various means.
Banks contact card holders when transaction irregularities occur.
For example, if you've never used your credit card to make a
telephone call and this afternoon you find yourself without a
quarter and use your card instead, this irregular transaction
could be flagged and a representative from your bank would no
doubt call to confirm that your card was not being used
fraudulently by someone else. Similarly, the credit card fraud
prevention and detection system would identify if your card was
used in two different cities on the same day. Again, your bank,
to confirm that your card was not being used fraudulently, would
contact you. Also, bank customers are normally contacted if their
credit card has been compromised in a known fraud.
In addition to these fraud
prevention and detection efforts, the banking industry, in
conjunction with the credit card plans, is continually working on
methods to improve credit card security by reviewing existing
security features and examining possible new solutions, such
as secure chip
transactions. Certainly, the banking industry invests millions of
dollars in sophisticated fraud detection systems, and the various
processes are reviewed on an ongoing basis to ensure that our
prevention and detection methods are current and effective.
The banking industry also
works closely with law enforcement, governments and the legal
system to deter criminal activity against banks and bank
customers. A recent result of this co-operation was the arrest of
several people in Vancouver who were part of an organized crime
group in one of the largest counterfeit credit card operations in
North American history. This past January, Vancouver law
enforcement seized equipment and credit card data used to produce
thousands of counterfeit cards with a combined possible credit
exposure of $200 million. The crime syndicate recruited employees
at several restaurants, gas stations and other establishments in
the Vancouver area to skim the credit card data of thousands of
unsuspecting customers. The credit card data was then used to
manufacture counterfeit cards that were distributed to cities
across North America and as far away as Brazil, Taiwan, Singapore
and Saudi Arabia.
The production and passing
of counterfeit monetary instruments is another form of organized
crime against banks. As you may have heard in the news, just last
week an organized crime group attempted to secure a letter of
credit for counterfeit monetary instruments, bearer bonds, with a
face value of US$25 billion with a Canadian bank here in Toronto.
The RCMP credited the banking industry with good detection
processes that prevented this fraud and enabled them to apprehend
the criminals.
The banking industry,
working in co-operation with government and law enforcement, is
effective at preventing and protecting banks, their personnel and
customers from a great deal of organized crime. But crimes
against banks do occur and take many forms, and while some view
large-scale organized fraud as a non-violent, white-collar crime
that does not impact on ordinary citizens, law enforcement
experts indicate that these monies are used to finance other
criminal activity, much of it of a violent nature.
These crimes affect all of
us where we live. The multi-millions of dollars defrauded from
banks on an annual basis becomes foundation money to finance
further criminal activity, such as the importation and
distribution of narcotics, the sale and use of firearms, human
smuggling and prostitution, to name a few. These crimes filter
down to our neighbourhoods and, according to law enforcement, add
to the growing violence in our streets that is reported on a
regular basis.
The Canadian Bankers
Association is pleased that the Ontario government recognizes the
need to more vigorously combat organized crime. The banking
industry looks forward to ongoing co-operation with government,
law enforcement and the legal system to prevent and protect bank
personnel and customers from criminal attacks against banks.
On behalf of the Canadian
Bankers Association and the member banks, I would like to thank
you all for your attention.
I should have introduced Mr
Michael Green from the CBA at the beginning, but he and I are
here today to answer any of your questions.
The Chair:
Thank you, Mr McLean. We have about six minutes left for
questions, starting with Mr Kormos.
Mr Kormos:
What is down the road, in terms of being planned, to control
credit card fraud? I'm talking about the way cards are
manufactured. As I understand it, they can be reproduced with
similar types of machinery. What's being looked at? Are photo
credit cards being looked at? What's being looked at to respond
to that?
Mr McLean:
What's being looked at, next generation, would be an encrypted
chip card, to protect the authorization and transaction on cards,
which is designed to prevent the counterfeiting or skimming, as
it's called, of the mag stripe, which is the back of the credit
card, where the data is. So a chip card or a smart card will be
the next generation of card that we would see.
1450
Mr Kormos:
When we talk about organized crime and organized criminal
activity, I suspect that means several things to as many people.
What are you talking about when you're talking about organized
crime, as compared to disorganized? I'm being silly, but what are
you talking about when you're talking about organized crime?
Mr McLean:
When you've got the latest statistics, ending June 30, 2000,
about $203 million in losses on credit card fraud, 53% of that is
counterfeiting or skimming. This is done with sophisticated
equipment and people with a certain knowledge. These people come
together in an organized activity to conduct this work; it's not
something that's done by somebody in their basement at home at
night. So there is an organized activity to that. These criminals
have used this process to generate some funds that they then can
use for other aspects of criminal activity. Again, it's not
necessarily a commodity; they're just looking at an opportunity
to make money.
Mr
Hastings: Mr McLean and Mr Green, thank you for coming
in. I assume you're in touch with the managers of security in the
different credit card companies across our country.
Mr McLean:
Yes, I am.
Mr
Hastings: As far as you know, have they adopted the most
effective, up-to-date, most sophisticated security methodologies
to reduce fraud?
Mr McLean:
What I can tell you is that we meet on a regular, ongoing basis
and we discuss best practices. Obviously, it's an ongoing,
continuous review of our systems and our best practices. We look
at this as a very non-competitive issue: criminals will attack
one bank or the other or one card or another. They really have no
customer loyalty and will attack more than one institution. So we
work very closely together to ensure that from an industry
perspective we're all on the same page and adopting best practices, with the best
systems in your own networks in place.
Mr
Hastings: So as far as you're concerned, they do have
the most current and up-to-date technological security?
Mr McLean:
Without knowing each system intimately, I would say yes, that
everyone is working in best practices and the best ways of
detecting fraud with fraud detection systems in place to both
deter and detect and prevent fraud.
Mr
Hastings: You say on page 3, "Customers are protected
from credit card fraud and are not financially liable for any
fraudulent use." Surely you're not telling me that I believe in
Santa Claus, because inevitably is it not true that the consumer
will pick up the cost of your fraud, whoever the fraudsters are,
in any given year; that the eventual cost, whatever it is yearly,
gets translated down to the individual consumer? He or she
doesn't know that there's an additional amount; the percentage is
probably encapsulated in the monthly charge. They get you back
for the money you lost.
Mr McLean:
What I can say to that is that obviously there's a cost to doing
business, and fraud is obviously part of that formula. From a
business perspective, I wouldn't be able to answer that. My role
is security, and I couldn't comment on that.
Mr
Hastings: Could Mr Green, perhaps, or have we gone
over?
The Chair:
I'm sorry to have to tell you that.
Mr Michael
Green: If I could just make one very quick comment,
Madam Chair. Certainly when you talk about credit card business,
it's a very, very high-volume business, hence the loss ratio.
Certainly the pricing on a credit card is a bit higher than a
normal loan, simply because it's unsecured, high-volume
business.
Mr Bryant:
Thank you for coming. I understand from your comments that you
had said basically the association wasn't going to comment yet on
the remedies contained in this bill. How are the victims of
organized crime that you've discussed going to be assisted by a
remedy that targets Ontario property holders if in fact, as you
described, organized crime can just set up shop across the
border? In other words, how are these victims going to be
assisted by a bill that only deals with Ontario property
holders?
Mr McLean:
Again, I can't comment on that because we and the member banks
certainly haven't reviewed the bill in detail. I guess until that
time arrives we couldn't provide a proper response to that.
Mr Bryant:
Given your experience, could you talk about the international
aspect of organized crime?
Mr McLean:
International organized crime is truly that. It really is global
and they can be situated anyplace and attack systems or
individuals across borders and around the world. I guess what
we're trying to do, certainly within the banking industry, is to
develop a very high-level security protection system that
protects people personally and their assets.
Mr Bryant:
Just to confirm, you work with other organizations, obviously,
across the country, but in other nations as well?
Mr McLean:
We work internationally.
Mr Bryant:
Right. All my questions have to do with the bill, so I'll just
thank you for coming.
The Chair:
Thank you very much, Mr McLean and Mr Green, for coming this
afternoon.
TORONTO POLICE SERVICE
The Chair:
The next delegation is the Toronto Police Service, Chief Julian
Fantino, Staff Superintendent Rocky Cleveland and counsel Jerry
Wiley. Good afternoon to you.
Mr Julian
Fantino: Good afternoon.
The Chair:
You have 20 minutes in which to make your presentation, Chief, in
the hope that we can also ask some questions in that time.
Mr
Fantino: Thank you very much.
As chief of police of
Canada's largest municipal police service, I and my colleagues
appreciate the opportunity to speak to you about Bill 155 and
what we believe to be an issue that is being addressed here, and
that is the whole aspect of public safety and security and as
such relates to organized crime.
It is a well-established
fact that organized crime is profit motivated and that if you
take the profit out of organized crime-or crime generally, but in
the context of this discussion organized crime-you have in effect
cut the head off of the dragon and the body, hopefully, will then
die.
Unfortunately, measures
taken at the federal level at this point in time to combat
organized crime have been, mostly, ineffectual. Even though the
battlefield in the fight against organized crime in the main
falls within the jurisdictions of municipal police services, not
only in this province but in this country, oftentimes the views
and advice of police leaders in those very municipalities where
organized crime is very much impacting communities and
flourishing have all too often been discounted or considered
irrelevant in the debate.
In Ontario, we have in the
law enforcement community the people, we have the talent, we have
the will, and we certainly have the desire to fulfill our public
safety mandate, and that includes, of course, tackling the most
intricate and intimate and most difficult challenges that are
posed by an ever-growing, ever-sophisticated organized crime
network that is global in nature. I believe as well that there is
no question in our resolve to do everything we can within our
scope and our mandate and within the parameters of the law.
But to paraphrase a Winston
Churchill comment, someone must give us the tools to, in effect,
do our job. At the present time the tools available to us are
inadequate and we are sadly lacking in organized-crime-specific
legislation and efficient justice system procedures which would
enable us to effectively disrupt and dismantle the entrenched and
sophisticated organized crime enterprises that in essence victimize all
of us in one way or another: everything we buy, everything we use
or acquire, every service is well impacted by the added costs
that are being incurred because of the impact of organized crime.
That goes right down, as well, to the quality of life that is
available to every citizen of this country, this province, this
city and certainly neighbourhoods and how they're impacted.
If I can talk about crime
and disorder for instance, some people don't believe there is a
link between that which happens at the community level and that
which has a direct link back to organized crime.
1500
The one example I can make
that is probably most evident to all of us is the whole issue of
drug distribution, the impact of drugs in our community and our
society on our children. One has to believe, as I do from
experience, that the drug subculture operates at a very high
international, global level. Those who import, manufacture,
distribute drugs at the high level obviously have a
profit-motivated endeavour. That then, of course, trickles right
down to the community level. The most vulnerable communities, the
most vulnerable people, are then impacted by what goes on, and
much of that is initiated by the ruthless profits that are made
by organized crime enterprises. The victims in all of that, as I
stated earlier, in a very direct sense are all of us as citizens,
and more particularly the most vulnerable components of our
community, neighbourhoods that by virtue of their conditions are
somewhat disenfranchised. Then there is all that residual crime
that is associated with the whole drug subculture. All of that
has a direct link back to organized crime.
That is why, although this
piece of legislation may not be perfect in every sense, nor will
it, of course, deal with every eventuality and every issue,
nonetheless I am pleased that the government of Ontario has taken
the initiative to provide law enforcement agencies and
communities and all of us as a society with an added piece of
legislation, an added tool to help us take the profit out of
organized crime.
Granted, we can dwell on
what the bill can't do. I would like more to dwell on the things
that it can do. Everything that the bill can do is a tremendous
help to us. It lifts our spirits and it helps us focus on the
issues that are very critical to us, which is to make a powerful
statement with legislation that hopefully will attain the desired
results: to absolutely make profitable illegal activities a
non-profit activity. So taking the profit out of crime, as this
bill endeavours to do, is very important.
Bill 155 provides a method
for the forfeiture of assets which have been obtained by unlawful
activities. It has a number of advantages from our perspective,
from a policing point of view.
First and foremost, it is
aimed at the profits of organized crime and it has the potential
of addressing that. As I said earlier, taking the profit out of
organized crime is essential to the war on organized crime.
Secondly, Bill 155 is
structured so that the profits from unlawful activity are seized
through the use of the civil rather than the criminal process. It
is not a criminal trial process; it is a civil asset process. The
use of civil lawyers and associated professionals in carrying out
the provisions of the bill, with a minimum of police involvement,
will free up scarce police resources to do other, much more
needed work in the trenches for our people.
Thirdly, the bill provides
a mechanism for compensating persons who suffer monetary loss or
other damages as a result of unlawful activity.
Most importantly from a law
enforcement perspective, the bill provides a method of preventing
those persons who engage in unlawful activity from keeping
property that was acquired as a result of that unlawful activity.
In other words, ownership and use of property obtained through
illegal means does not constitute lawful colour-of-right
ownership.
Finally, the act recognizes
the need to compensate municipalities for losses-that is
important to us-for the expenses incurred in the investigation
and enforcement of this law, and presumably some of the proceeds
then derived can be directed to deferring the expenses of police
services.
There are a few other good
points. It's important to also appreciate that through this bill
there's a very public recognition by the government of the day
that there is a need to address this issue. There's a recognition
that there is independence of the police in this regard, and the
criminal process will take precedence over the civil process. The
procedures will be developed to keep the criminal and civil
processes separate and, as I understand it, the issue of criminal
information will be protected.
The provisions of the act
which are, I suppose, somewhat in debate I can cite. Those are
that proof is on balance of probabilities and not beyond a
reasonable doubt. There seems to be an issue that there does not
have to be a conviction or even a charge laid before the act can
be invoked. There is the intent in conspiracy, that one of the
parties knew or ought to have known that the activity would be
likely to result in injury, for instance. The act is very broadly
worded and does cast a wide net. The bill will face, from what I
understand, some challenges, but again that's a given with any
new piece of legislation, that there always are certain aspects
that need to be ironed out and fine-tuned. We welcome the
opportunity to participate in that process as well, such as we're
doing here today.
In closing, I would like to
say again that the government should be applauded for its
initiative in creating this legislation to take the profit out of
organized crime. It makes good moral and ethical sense. It's the
right thing to do. It is a much-needed and long-overdue measure
which has been, I believe, neglected at the federal level. Our
goal should not be to wipe out organized crime; its international
nature precludes that. Instead, the goal of an organized crime
strategy should be to make Canada the absolute worst place in the
world for organized crime to operate. I believe this legislation is a giant
step forward in achieving that goal, at least in the province of
Ontario.
The Chair:
Thank you, Chief Fantino. We'll turn to the government side. Mr
Tilson, you have about three minutes.
Mr Tilson:
Thank you for coming. The issues that have been raised,
particularly in the media lately, of stakeouts of police
detachments and threats to reporters and murders-we had former
speakers in the banking business talking about the increase of
credit card fraud, a whole group of things which I'm sure you
could tell us a lot about and which we don't have the time for,
unfortunately.
Yet we have had some people
come to us-one of the earlier speakers this afternoon who came to
us, a person who writes, said, "The impact on the average
citizen-they're not really concerned about those things." We're
talking about the average person with a credit card, because they
call up the credit card company and they're protected and they
don't really get involved in the stakeouts of police detachments.
Dogs can smell drugs on all money. You know what I'm saying? She
said there's not really a great deal that you can do.
My question is, talking
specifically about the impact on the average citizen-I don't,
quite frankly, agree with her, but talking about that-how can we
build community support for initiatives like this to fight
organized crime generally?
Mr
Fantino: To begin with, I'd like to make the absolutely
truthful statement that organized crime is in all of our pockets.
It impacts all of our lives and we're all threatened by it.
There's also an element of
violence associated with what we're talking about here. It isn't
just the impact on the financial aspect, losses and so forth. We
have real living, breathing, innocent people being killed. The
impact of violence, which I didn't even address in this
particular presentation, is all part and parcel of what organized
crime is all about: the predisposition to do whatever it takes to
acquire illegal profits. It's all profit motivated.
I think what we need to do
and probably have not done very well in the past is articulate
the issues well enough to receive the ear of the public, and in
some cases the policy-makers, not only to this very significant
economic threat to our nation but the whole issue of public
safety as well. They go hand in hand.
1510
A lot of the violence we
experience front-on day in and day out is not insulated or
isolated from other causal impacts and other factors. A lot of it
is the turf wars over drugs, distribution networks, fighting for
basically blocks of sidewalk where business is done.
The out-and-out assault on
vulnerable communities: look at the distribution of crack
cocaine, for instance. Where does it most impact communities? The
most vulnerable citizens of society. Who is doing this? I can
guarantee you that there's a direct link back to organized crime.
Why are they doing it? Because of the profits. I can go one step
further: it's because of a very soft system of justice that we
have in this country that so many of these things have been
allowed to flourish.
Mr Bryant:
Thank you for coming. As a result of downloading, there may be a
situation where you're going to have to try to get by with less,
not more, which is what you need to fight organized crime. Can
you talk a little bit about why it is so expensive for law
enforcement to tackle organized crime and what's different about
it that people might not be aware of?
Mr
Fantino: That's a very good question, actually. We're
talking about very sophisticated activities that are global in
nature, greatly enhanced by world travel being what it is and the
use of technology. But more than anything else, I believe, is the
extraordinary profits that can be realized with very little, if
any, fear of consequences. So you have a significant imbalance
with regard to our ability as law enforcement people to tackle
those issues.
It goes to
organized-crime-specific legislation, or the lack thereof. It
goes to our ability to sustain long-term, prolonged
investigations to dismantle these organizations and not just
tinker with them; our ability to work with our colleagues not
only in Canada and Ontario, and certainly in Canada, but on the
international playing field, if I can put it that way.
You're quite right: it's
all resource-difficult situations for us. It's all
labour-intensive work. The technology piece is very difficult, as
is the ability to sustain long-term investigations that in effect
will dismantle these organizations, which I think is the most
effective way to do prevention anyway.
Having said all of that,
the problem we have is one of competing interests and agendas and
also mandates. At the very same time, we have to deal with this
extraordinary demand on us, this very serious public safety
issue, we also have the constant demands for service otherwise:
in the city of Toronto, about 1.8 million calls for service
annually that probably have no relationship to this at all, other
than the after-effect.
So you're quite right, sir:
it's a resource issue, it's a legislation issue and it's also a
policy issue, our willingness as a nation, if you will, to tackle
this issue. It can't be done at the local community level; it
can't be done at any one government level. We all have to believe
that this is a very significant threat that impacts all of
us.
Mr Bryant:
Are we falling behind internationally in this sense? It has been
said that Canada is a safer haven-
Mr
Fantino: I think I said that yesterday.
Mr Bryant:
It has been said, then. Between the lack of intergovernmental
co-operation and in terms of provincial and municipal
downloading, in terms of the changes to the federal spending
power as well: in all that, we're falling behind. Can you talk
about the importance of intergovernmental co-operation and how
these competing agendas are causing us to fall behind?
Mr
Fantino: The way I look at things is, all of the things
we do, be it in law enforcement, be it in governments, be it wherever, when it
comes to dealing with public safety issues, greater-public-good
issues, everything should be transparent. We all need to work
together. That also goes to us as law enforcement people. We need
to work better together: the ability to share information, the
ability to join in tackling critical strategic targets that will
attain the hoped for result, which is to dismantle these
organizations. We all have to revisit what it is that we do and
how we're doing it. We all have to look at this issue as a shared
responsibility.
I can just give you this
example. For many years we've been talking about community-based
policing. As you know, it has been a glorious model for how
things should be done. I would like to suggest that we now need
to talk about community-based government, where everyone comes to
the problem-solving table and everyone has a responsibility and
an accountability for the outcomes. No longer can we defer to
other people to do the things that need to be done collectively
and co-operatively-integrating our collective resources, the
policy-making, the laws-the law enforcement community, all of us,
coming to bear on this issue because, as I stated earlier, it's
foolishness for anybody to believe that we're not impacted
severely by all of this.
In some places-the outlaw
biker movement, for instance, in Quebec, the body count there is
well over 150 killings. In that there have been innocent people
killed-the young DesRochers boy, 11 years of age, about six years
ago. So we're all impacted by it and we're all concerned about
it. I certainly am. If that were not the case, I wouldn't be
here.
Mr Kormos:
What is the Toronto police services' experience with the existing
Criminal Code provisions for forfeiture of proceeds of crime?
Mr
Fantino: We do use it and the experience is, to the
extent that we can, we are embracing every piece of legislation
to go after the proceeds. But that's a criminal process and there
are a lot of complications there. As well, it's labour-intensive,
and there are all kinds of issues of liability and being able to
effectively and quickly seize the assets before actual due
process is concluded. This legislation has been modelled
elsewhere and it's through civil process. In other words, we
don't have to wait for all of the other things that we need to do
with respect to the criminal process.
As I stated earlier, Mr
Kormos, and I think it's a fair statement on my part, this does
not have the ultimate answer for us. It's just one more tool, and
we welcome the opportunity to use any tool to, in effect,
accomplish the lawful outcome, to take the profit out of
crime.
Mr Kormos:
I'm down from Niagara region, and our Chief Nicholls is coming up
here over the next couple of days. Unfortunately, I'm not sure,
but I haven't seen the OPP CIB anti-rackets on the list of
participants. The press earlier today was suggesting that somehow
Niagara is unique, that Niagara has special problems, and I felt
a little bit of resentment about that. I wanted to reassure
people.
We're all impacted, and I
agree with you on your observations about crime and organized
crime. And you heard the bankers' association talk about
organized crime from the broadest definition of "organized,"
literally. Crime that is organized as compared to literally
disorganized crime, the individual who goes out there and commits
a crime. Who should we be concerned about? What is the organized
crime? You talked about bikers and that's high-profile in the
news. Who should we, as a community, be worried about when we're
talking about organized crime?
Mr
Fantino: We have to do our own homework with regard to
picking priorities or targeting priorities. The whole issue of
organized crime is something we need to tackle, period, because
it's commodity-driven. It doesn't really matter what the activity
is; it's wherever there is money to be made. One day it will be
drugs, the next day it will be the sex trade, the next day it
will be extortion, and on it goes. There is an ebb and flow of
activities now, so you can't say that we will only deal with this
one entity who may be a gang of criminals who are, for instance,
committing frauds with fraudulent credit cards while that
activity may in essence be also funding a whole lot of
drug-dealing activities. In other words, it's all interconnected.
My suggestion would be that we obviously need to target; we need
to do that strategically. We need to do intelligence-driven kinds
of investigations. But if you start attacking it, at some point
there's a vulnerability that the house of cards will and in fact
has folded many times.
With regard to Niagara, I
don't know where the bad rap on Niagara has come from.
Mr Kormos:
Not from me.
Mr
Fantino: Niagara is no less and no more impacted than
any of us. I can tell you that with some authority.
The Chair:
Thank you very much, Chief Fantino, for coming this
afternoon.
1520
NATHANSON CENTRE FOR THE STUDY OF ORGANIZED
CRIME AND CORRUPTION, OSGOODE HALL LAW SCHOOL
The Chair:
The next presenter is Dr Margaret Beare, of the Nathanson Centre,
Osgoode Hall Law School.
Dr Margaret
Beare: I thank you very much for the opportunity to come
and speak to you today. Unlike Chief Fantino, this piece of
legislation does not lift my spirits. I guess I'm somewhat
surprised, in the sense that my thinking is that the hearing is
about a piece of legislation that's specific to one kind or one
strategy, as opposed to all of the other strategies against
organized crime. It is not a hearing to emphasize the seriousness
or the gravity of organized crime. At the Nathanson Centre, we
accept the fact that organized crime, or crimes of all sorts, are
in fact serious, but what seems to be happening recently is that
virtually any and every additional piece of power, legislation, resource, whatever, is
sold to us under the umbrella of an ever-growing threat of
organized crime. Somehow, if you make that threat big enough, you
can justify whatever you're saying underneath that rhetoric. I
find it distressing because from the point of view of the
Nathanson Centre, we want organized crime to be taken seriously,
but we don't want it to become the fodder for what we would argue
in this case could be much worse than the situation it's meant to
correct.
I know you've had people
come in all day long and you probably have heard a lot of the
points I am making. I have just handed out to you a sheet of
paper that says that I'm going to address very briefly four key
issues, four issues that I think are particularly important.
First of all there's this
notion of the creeping erosion of our protections. I had
officials from the Ontario government call Osgoode and virtually
gloat that the beauty of this is that you didn't even have to
charge the person. That is the beauty of civil forfeiture: you
don't even have to charge the person. In fact, as your
legislation says, even if the person is acquitted of the charge,
you can still go after them civilly. This is based very firmly on
the belief that "We know who is guilty; we just can't prove it."
As you've all been reading in the newspapers in the last number
of days, even the Supreme Court of Canada has come to the
conclusion that no, sometimes we don't know who is guilty, even
though we really think we do. So I am concerned with the
potential abuses that would seem to be built into this.
One of the people I talked
to, a supporter of the legislation, used the example of
telemarketers as being something that is very serious, definitely
ruins large numbers of vulnerable lives, and that the civil
forfeiture could be used to go after. When I said to them, "Yes,
but if you know who these people are, why then would the police
not be building criminal cases?" The answer was that it's hard to
get the police to prioritize some of those kinds of criminals and
some of those kinds of criminal activities. In fact, Chief
Fantino just supported that notion when he said something to the
effect that, "This allows the police to get on with the much more
needed work of the police."
To me, that is faulty
reasoning. If we're bringing in a powerful piece of legislation
like this and then we're justifying it on the basis that we can
then allow the police to get on with something that's more
important, it doesn't stand up, as far as my thinking goes. It
has been compared by colleagues to quasi-criminal legislation, in
the sense that it allows Ontario to do via civil legislation that
which, in terms of jurisdictional divisions between the federal
and provincial government, could perhaps not normally be
done.
Chief Fantino eloquently
talked about the powerful organized criminal that you would be
stripping the proceeds from. Experience in other countries, and
somebody here asked about experience in other countries in terms
of the kind of legislation, tells us that civil forfeiture tends
to go after the most vulnerable. You do not go after the person
who has the very expensive, costly lawyers and who could sort of
turn the case back upon the justice system. You tend to target
the most vulnerable. So again, in terms of dismantling organized
crime, yes, we'd all like to "dismantle" organized crime; that
isn't the issue here. The issue here is the use of civil
forfeiture to do it.
I guess I'm particularly
excited around the notion of the hypocrisy of this bill. The
rhetoric gets all confused. We talk about taking the proceeds
away from organized crime as if Ontario has just had a brand new
notion that this is the way to dismantle organized crime. Yes,
taking the proceeds away from crime is an excellent way to hurt
organized criminals, but fortunately we have had, as Chief
Fantino acknowledged, criminal proceeds-of-crime legislation in
place since 1989. Further, Ontario is the province that tends to
use it less than some of the other provinces, and they use it
less for a very real reason. They use it less because it requires
that the Attorney General of the province sign an undertaking to
take responsibility in those cases where a mistake is made, in
those cases where somebody's life is unfairly disrupted.
Again, the beauty of this
legislation, as it appears in draft, is that "No action or other
proceeding may be commenced against the Attorney General, the
crown ... or any person," blah, blah, blah, based on sort of a
"conduct in good faith" clause. Chief Fantino acknowledged that
there were certain liability things that hindered the use of
criminal forfeiture, and he's absolutely right. Those liability
things are not part and parcel of this legislation, and I would
argue that it's to the detriment of the legislation that that is
so.
The need for this
legislation is based in part on the summit that was held. I find
the Lessons Learned document a bit upsetting from the point of
view that critics were not invited to that summit, so it was not
an open debate about what the legislation might mean. To some
extent it mimics the United States experience and yet, as we
know, at least at the federal level, the United States is backing
away from some of the injustices of civil forfeiture.
I think that from a police
department's point of view, there should be some concern about
this legislation. Looking at experiences in other places, we see
not only the biasing of justice but also the corruption of police
as being associated with this kind of legislation. Now, a
supporter of the legislation might say that's only in those other
jurisdictions because they directly get the money back. Then
again, to my surprise, I guess, because I had heard all the
rhetoric about how victims' groups are getting it in this
legislation, I read in the legislation and in the draft release
that the money could also go back to pay for "programs that
prevent victimization by organized crime." As I kept reading,
"prevent victimization by organized crime" struck me as money
going to the police to help cover the costs of their organized
crime enforcement. So there is a vested interest in what will be
the quick, simple seizure, and, as I said right at the very
beginning, the beautiful part of it being that you don't even
have to charge the individual.
Those are the concerns I have with the
legislation. My concerns are backed up by the fact that I think
we have in place powerful legislation. Unlike Chief Fantino, I
would argue that that powerful legislation is not being fully
used at present, and there I am talking about the criminal
seizure of the proceeds of crime. I am fully in support of the
idea that taking the proceeds of crime away from criminals is
perhaps one of the best ways to tackle this kind of criminal
activity, but it's already on the books and it requires that a
person be found guilty. Thank you very much.
1530
The Chair:
Thank you very much, Ms Beare. We have about three minutes each
for questions.
Mr Bryant:
Thank you very much for coming. Are you able to say whether or
not the federal provisions were used in Ontario more before 1985
than after 1985?
Dr Beare:
Is that 1985?
Mr Bryant:
Sorry, 1995.
Dr Beare:
No, I can't tell you. All I know and my understanding is that
even to the present it is not used in Ontario as much as it is in
BC and in Quebec. It takes a while for any of the provinces to
get up and running on a new piece of legislation; 1995 would have
been fairly soon. But the answer to your question is no.
Mr Bryant:
One of my concerns is that this is now being pushed off to the
civil courts and there has been no compensation, if you like, or
no addressing of the resource needs of the civil courts, which
are already backlogged, of course. Do you have any concern that
this is just pushing the problem off into another court and that
it should better be pursued in a criminal court?
Dr Beare:
From a resourcing point of view in terms of it being shunted off
to civil court, no, I don't know anything about that. It is a
whole area that I do not think ought to be shunted off to the
civil court. The resources that are seized might conceivably be
used to help provide some of the resources for the concern you
are discussing. I just think it's dangerous to be shunting this
off in that direction.
Mr Bryant:
Lastly-or maybe lastly-can you talk a little about how the United
States is moving away from this type of legislation.
Dr Beare:
There are three or four aspects that they brought in at the
federal level, and perhaps some of the states are picking up on
the federal level, but a lot of the states have not; they've kept
it wide open. One of those conditions, and in fact it's the only
one I can think of right now, is an important one: it's the
reverse onus. They put the onus back on the federal government to
prove that in fact the seized items were the proceeds of crime,
whereas before so much of the violation hung on the fact that you
seized the product and then made the person prove otherwise. That
is what has been reversed at the federal level.
The Chair:
Last question.
Mr Bryant:
We heard before, in terms of the presentation from the ministry,
I think I'm right to say, that there is no reverse onus in this
legislation. Do you agree with that?
Dr Beare:
As I understand it, the items are seized; the person has to argue
why they ought not to have been seized.
Mr Bryant:
And that's a reverse onus.
Dr Beare:
I think so.
Mr Bryant:
It sounds like it.
Mr Kormos:
This whole concept of organized crime has been tossed around and,
as I said a few minutes ago, depending on who's presenting, it
seems to be a different thing. If you want to use biker gangs,
you can use biker gangs, rackets, the whole nine yards. Can you
help us, then, in terms of what is organized crime in Ontario, as
you understand it?
Dr Beare:
Oh, no.
Mr Kormos:
I only have three minutes and I want to ask you something
else.
Dr Beare:
I guess the only thing I can say to that is that if I were
arguing for this piece of legislation, I would be arguing for it
from the point of view of serious financial frauds. Again, I'm
sure a lot of the speakers who spoke would have called that
organized crime. I've increasingly come to the conclusion that
organized crime is the umbrella protection-intimidation-extortion
structure, whereas the activity is very often, unlike what we
often hear, individual criminal entrepreneurs doing something
serious and bad. This legislation, I would argue again, even if
you didn't worry about all of the dangers of it, might take money
away from these individual, serious criminal entrepreneurs; it is
not going to be dismantling anything.
Mr Kormos:
If you had been consulted about what this or any government could
do to develop a strategy to really take on organized crime, what
would you have told the government?
Dr Beare:
I would have said what I've said on a number of occasions: use
the legislation that we have; make up for some of the cutbacks in
police resources that have been going on and now are sort of
being rectified in some jurisdictions. That was a serious
situation. The police really were cut to the bone. A lot of good
work at fighting organized crime, I would argue, happens at the
street level by traditional police work doing good, traditional
policing. You need to have adequate police resources to do that.
Have that coupled with criminal forfeiture and I think you're
OK.
The Chair:
One more question.
Mr Kormos:
In that regard, I'm listening to people and my sense is that if
you really are-maybe it's just my TV imagination running
rampant-some huge crime lord, and this law is passed, you're
going to make sure your assets are wherever people like that put
them: Cayman Islands, not to be unfair to Cayman Islands.
Reference has been made that all the little operators, the little
nickel-and-dime dealers-that's not unfair-are going to be the
easy targets for this type of legislation. Is that a fair
observation?
Dr Beare: It certainly is my
belief, that that is the person you are going to target. Again,
the legislation as it's drafted doesn't talk about organized
crime or whatever. You're going to get the welfare frauds. You're
going to get the vulnerable little person, the person who either
cannot or will not or doesn't have the resources to fight, to
intimidate the state into withdrawing from their intention. It's
not going to untangle these big, organized criminal
operations.
Mr Tilson:
I have a brief question and then Mr Hastings has a question.
Just to clarify, I can
assure you that there is no reverse onus clause in this
legislation. Categorically, there is no reverse onus clause. I
just wanted to make that clear to you because you seemed to
be-
Dr Beare:
So if I am not charged and you seize my house based on the
balance of probabilities-
Mr Tilson:
I'm not going to debate it with you. I'm telling you that we've
had the Attorney General and we've had a staff person from the
Ministry of the Attorney General come here today and say there is
no reverse onus clause. I have one question for you. I don't want
to get into an argument with you. I'm just telling you that's
what's been said today.
My question is with respect
to helping victims, with respect to preventing injury to the
public. You are a lawyer, correct?
Dr Beare:
No.
Mr Tilson:
You're not a lawyer?
Dr Beare:
No, I'm not.
Mr Tilson:
Good for you. Can you tell us what remedies you believe the
province does have with respect to dealing with organized
crime?
Dr Beare:
I thought your question was going in the opposite direction. In
terms of remedies regarding organized crime, again, when we think
of organized crime, a lot of organized crime does not in fact
have victims. Chief Fantino was talking about drugs. A lot of it
is consensual. You can get into a debate that obviously there are
some consequences of those activities. But in terms of financial
frauds and things like that, is that the kind of restitution
areas you're talking about?
Mr Tilson:
I'm just asking for your observations.
Dr Beare:
Again, in terms of your question regarding remedies for organized
crime, I think it's still the criminal court that we should be
going to.
Mr
Hastings: Ms Beare, do you understand why this
legislation is here? I think people from the law community don't
meet with the people from the enforcement community. My thesis
would be that one of the reasons this legislation is here is
because of the extra-high standard of "beyond a reasonable doubt"
in the criminal law when you're dealing with the seizure of
property, when in point of fact there seems to be little
endeavour from the feds, particularly in a number of areas-money
laundering, immigration smuggling, telemarketing and
commercial-corporate fraud right across the globe.
It seems to me, then, you
believe that the criminal approach, with its high standard of
"beyond a reasonable doubt," is more than sufficient to deal with
the so-called mythical-you haven't ascribed that, but I get an
impression that you think Fantino's approach is a little
overdone, that it's not as organized and not as comprehensive as
it is from what I can see and what I've read and what I've seen
with a few people in my office just in the whole area of
telemarketing who have been defrauded, and not just seniors.
Could you focus on that?
1540
Dr Beare:
Those activities that you mentioned are very serious, but our
system of justice in Canada has been one where you find people
guilty of them. You build a good case, you charge the person, and
then again, with proceeds-of-crime legislation in place, you take
away their proceeds. If in fact it is a criminal organization,
you do it on that rather than a balance of probabilities where
you haven't even brought a charge. As Chief Fantino explained,
you possibly have very little involvement by the police
community. Yes, you do save up resources so that the police can
go off and do something else, but that's unlike traditional
justice in Canada. It's remarkably different than anything we
have had.
Mr
Hastings: I just have a different perspective, I guess,
than you do on traditional justice in this country.
The Chair:
Thank you, Mr Hastings, and thank you very much for coming in, Dr
Beare.
ADVOCATES' SOCIETY
The Chair:
The next speaker is Anthony Moustacalis, member of the criminal
law committee, the Advocates' Society. Good afternoon.
Mr Anthony
Moustacalis: Good afternoon.
Just a quick response:
there is no reverse onus in the legislation. As a criminal
lawyer, reverse onus refers to the onus being on the accused
person, the defendant, to establish their innocence, as it were.
This legislation makes it clear that the burden of proof is on
the applicant, who's the Attorney General, on a balance of
probabilities, which is a low standard but is still a recognized
legal standard.
But I'm here on behalf of
the Advocates' Society essentially to go over some concerns that
our committee has with the legislative scheme. I've presented an
outline of that submission with particular areas of concern;
really, there are five.
I take it from what I've
heard from members or other people making submissions that
several of these have been covered. I'm not going to touch too
much on the constitutional problems. Obviously when there's a
scheme put forward that covers potentially criminal activity,
then it might be open to scrutiny under both the Charter of
Rights as well as plain constitutional rights. My focus is going
to be more on the balance of the particular concerns which I've
got listed there.
When I say "Overlap with
federal scheme," I've filed with my submission copies of the
Criminal Code section that at least outlines what crimes are
covered by the proceeds-of-crime, enterprise-crime type of
legislation that the
federal government has in the Criminal Code, as well as under the
Controlled Drugs and Substances Act. Essentially, for anything
that's significant, murder down to theft, those types of
activities are covered. Similarly, although simple possession of
drugs is not, anything related to sale, cultivation, and so forth
of narcotics is covered and those proceeds can be seized. So
there is an overlap with that, and what we mean by an overlap
really ties in with my fifth point, which is that there is a
potential conflict therefore as to what scheme should be used by
the police.
For instance, one of the
potential difficulties may be that depending on which police
force is looking to solve a problem-let's say there's a drug
transaction where the police want to attack the proceeds. Do they
go under the Criminal Code? If it's the OPP, are they going to be
more inclined to use this legislation to do that? Is the
Solicitor General going to direct that this legislation gets
priority over the Criminal Code? What if it's the RCMP? And,
lastly, what if it's a municipal organization? So there's a
potential conflict as to what scheme should be used by the
police.
Our other main significant
concern is number 3, which is that it's really too broadly
defined and there is potential for abuse. As I've outlined in
italics, under part II of this legislation, section 2 defines
"unlawful activity" to include essentially breach of a provincial
offence, any type of provincial offence. Not to appear
ridiculous, but being a lawyer I looked at the beekeepers' act.
If you sell bees without a licence, that's an offence and
potentially could come under scrutiny in this case. We would all
hope that a responsible Attorney General, being responsible to
the Legislature, would be criticized roundly by the public for
something like that. But the question becomes, where do you draw
the line as to what type of activity comes under scrutiny,
considering it covers any type of provincial offence? For
instance, if a restaurateur is charged under the Liquor Licence
Act repeatedly, they could lose their restaurant potentially.
That would be covered under unlawful activity. In other words,
it's very broad, and that in itself means it could be subject to
legal scrutiny and challenge.
I should mention that our
organization has over 2,000 lawyers, who cover the gamut from
representing victims, representing persons who are charged, as
well as people in the justice system, such as crown attorneys and
so forth.
The next concern and the
next section that I have is subsection 6(3). Essentially that
says that when the money is taken, the Minister of Finance can
provide compensation to victims of crime. Part V of the Family
Law Act is referred to. I understand that is, for instance,
relatives of people who have been harmed traditionally can sue
civilly and obtain damages. But this scheme doesn't provide for
any itemization or indication as to how much would be paid,
whether it would be equal to what could be recovered from
somebody suing civilly. Is it going to be tied in to the criminal
injuries compensation type of rate, where the maximum is
$25,000?
I'll give an example from a
colleague who had a situation where a father was found not
criminally responsible for killing his spouse. He then conducted
a lawsuit on behalf of the surviving children and recovered over
$300,000 on their behalf because he had assets and so forth. Is
that person still going to be in a position to sue and recover
damages in that amount under this legislation? It's not clear,
and that's a potential difficulty for victims.
If I can refer to the last
page of my submission, you will note that "Proof of offences,"
section 17 of the legislation, indicates that "proof that a
person was convicted, found guilty or found not criminally
responsible on account of mental disorder," is proof that a
person committed the offence. Again, in my notes to you I note
that this may create unfairness by including mental disorder and
may limit the recovery. I have already given an example of how a
recovery might be limited by a person seeking damages against
someone who is found not criminally responsible.
When we talk about how it
may create unfairness by including mental disorder, that's really
I guess a legislative judgment call, that persons in that
situation should be covered by this scheme. I just point that out
as to whether that's something that is fair or not.
Those are essentially the
submissions I wanted to make.
Mr Rosen, who is supposed
to come after me on behalf of the Canadian Bar Association,
wanted me to extend his apologies and regrets. Their organization
wasn't able to develop a submission that they wanted to put
forward at this time, so he won't be coming. I guess that's the
good news, that you've got a break after me.
The Chair:
Thank you very much, Mr Moustacalis. Questions, Mr Kormos?
Mr Kormos:
No, thanks.
The Chair:
The government?
Mr Tilson:
I'll ask you the question I asked the last witness, who I thought
was a lawyer, and she wasn't.
Mr Kormos:
And you never apologized.
Mr Tilson:
You are critical of the legislation. My question is, what
remedies does the province have in dealing with organized crime,
specifically when we're concerned with assisting victims and
assisting members of the public? I understand that there are
charter issues and constitutional issues. Those have been
referred to by lawyers, and I'm sure before these hearings are
out there will be other lawyers who will come and talk about the
charter and the Constitution and whatever else they can talk
about. But from your perspective, as a representative of the
Advocates' Society, can you tell us what remedies the province
does have?
1550
Mr
Moustacalis: Not directly but indirectly the province
has remedies through their own agents-the crowns, the police
prosecuting matters and using the Criminal Code provisions for
proceeds of crime and enterprise crime. It's not my mandate to
indicate what changes could be made, but there are other pieces
of legislation, like
the Highway Traffic Act, to use a simple example, which provides
for seizure of motor vehicles by the police for people who are
driving under a suspension for a second or third time, whatever
it is. So there could be something structured in such a way that
it's not so broad that it covers everything, but it's aimed at
more specific groups of organized crime in that context. I don't
really want to go beyond that and speak personally as opposed to
who I'm here for, but those are the sorts of areas that could be
pursued. Our mandate in reviewing this is to point out some of
the difficulties that we see as lawyers with experience in
litigation in a broad area, including representing victims,
prosecutors and defence attorneys.
Mr Tilson:
Not getting into a legal debate, but your comments did talk about
the overlap between the Criminal Code and this bill. This bill
has been addressed by the Attorney General and by a staff person
from the Attorney General's office, who have said that this bill
deals specifically with property issues whereas the Criminal Code
deals specifically with penal provisions on these types of
matters. In this bill there are no penal provisions.
Mr
Moustacalis: That's correct.
Mr Tilson:
Having said that, do you still feel the same way?
Mr
Moustacalis: Yes, I do, but because of what I talked
about, the overlap. I still don't think that resolves the
conflict over what scheme the police should use in a situation
where there is a crime and charges are going to be laid. Perhaps
if there isn't a crime, then I think the other problem with the
legislation is that it is very broadly defined and can cover too
much and has the potential for abuse there, as I mentioned.
Mr
Hastings: Mr Moustacalis, thank you for coming. How
would you strengthen, then, or reinvigorate the unlawful activity
section so that it's tightened, creates the objectives in the
bill, realizes them, but doesn't produce the unintended
consequences the other way, some of those other offences that you
can get charged with under the Highway Traffic Act and so on?
Mr
Moustacalis: Again, that's kind of outside my mandate
here, but to answer your question and not to avoid it, as a
lawyer, there are a number of ways of approaching these issues.
For instance, certain pieces of legislation that target serious
offences like securities legislation for insider trading
fraud-that's provincial legislation-or legislation for
environmental offences could have these provisions put in
them.
Mr
Hastings: It should be spelled out specifically?
Mr
Moustacalis: Yes, or it could say, "This applies to the
following breaches of the following pieces of provincial
legislation," for example.
Mr
Hastings: Could you briefly elaborate upon what you
alluded to earlier about the potential policy conflict among the
various police forces in the administration or the implementation
of this legislation?
Mr
Moustacalis: Let's say you're a police officer and
you've come across a crime; let's say a sale of drugs. In the
second attachment I've given there's a copy of the Controlled
Drugs and Substances Act, which says that if you sell drugs, then
any profit or anything related to that can be seized. It's also
an unlawful activity under this legislation, which means that you
could advise the Attorney General that you've come across an
unlawful activity and does the Attorney General want to bring an
application to seize that money? What do you do as a police
officer when you're faced with that? Presumably if you're with
the OPP, maybe the Solicitor General might give you a standing
directive that says, "When you come across these situations, let
us know so that the Attorney General can bring an application."
But if it's a drug matter, then ordinarily that would be
something dealt with by the federal Department of Justice
prosecutors, who might want to get their hands on that money.
That's what I'm talking about when I say there could be a
conflict over which scheme a police officer would use. It's not
clearly spelled out and you do have a definite overlap between
both of those areas, in my submission.
Mr Bryant:
If the act works as the ministry wants it to work, there's a
flood of litigation using this bill off to the civil courts.
Would that not necessarily mean, given the backlog right now,
that we're going to need some assistance on the side of providing
resources to civil courts?
Mr
Moustacalis: I would think so, yes, because as you
mention, the civil courts are busy. There's always a concern
about access to justice. There's obviously going to have to be
some forms developed for the Attorney General to bring these
applications. The legislation does provide for notice, obviously,
to affected parties. It does say that the Attorney General has a
choice as to whether he or she brings the action by way of an
action or an application. What that means practically is that an
action means you end up having discoveries and it prolongs the
procedure. An application is a document that's brought with
affidavits so you don't go through as much rigmarole. But still
it's going to add, obviously, to the impact; how much, I guess,
depends on how aggressive the Attorney General's office is in
bringing these applications.
Mr Bryant:
Actually, nobody has talked about the division of powers. The
Canadian Civil Liberties Union just dealt with the charter. As
has been said, there are always going to be challenges with new
legislation, but my concern is that all this time and money is
going to be spent on legislation that just gets struck down
because it intrudes in federal jurisdiction, if in fact it does.
Is this a big concern or is this a hypothetical concern with this
legislation?
Mr
Moustacalis: I think the best I can say on behalf of the
Advocates' Society is that we felt it was a concern.
Unfortunately, we didn't canvass it in as much detail as we would
have liked, but we're aware of the general principles. As we all
know, the federal government has jurisdiction over criminal law,
the province over property and civil rights, but the federal
government has sort of occupied the field here as far as proceeds
with respect to criminal law, so they would have priority.
Secondly, the Supreme
Court of Canada has said that when the Department of Justice
wants to prosecute, they can take over any type of prosecution or
case over the province. Those are some of the principles that are
going to come into conflict that we would identify.
Mr Bryant:
Back to conflicts again, you talked about the conflict between
the use of the civil remedies, as envisioned in this bill, and
the criminal remedies under the Criminal Code. As you know, the
Attorney General's ministry has a civil department, if you like,
and a criminal side. Can you imagine there actually being a
conflict with the Ministry of the Attorney General whereby the
civil folks are saying to the criminal folks, "No, don't
prosecute because we can do it easier on the civil side"?
Mr
Moustacalis: I suppose that's a possibility. They would
probably work out their own protocols as to when to do those
things or not, but it will require a liaison and that is a good
point as well. Much as I pointed out that the police would have
some conflict over how to use the scheme, they might have some
difficulty. But in fairness to them, they have good lawyers there
and they would figure out a protocol.
Mr Bryant:
But they're going to need one; they're going to need some kind of
protocol. I agree, they have great lawyers there, but they're
going to need some kind of protocol.
Mr
Moustacalis: That's right.
The Chair:
Thank you very much, Mr Moustacalis, for coming in this
afternoon.
KROLL LINDQUIST AVEY
The Chair:
The last speaker for the day is Mr Roddy Allan, principal of
Kroll Lindquist Avey. Thank you for coming in a bit earlier to
fill in for the next timeslot, Mr Allan.
Mr Roddy
Allan: I have a relatively brief submission or
presentation to make to you today. That's perhaps appropriate as
I'm the last person.
I'm a principal in a firm
that's involved with forensic accounting matters. Often we are
involved with civil and criminal fraud investigations and
consequently we have some insights on very practical issues that
might come to the fore on implementation of the proposed act. I'm
going to stay well away from legalistic issues, as I'm not
qualified to comment upon them.
I'm going to stick to three
relatively straightforward and practical issues for your
consideration, as follows. I'm going to talk briefly about the
linkages I've described between unlawful activity and property,
the resources required to establish that link and the related
costs, and also some issues related to compensation that might be
payable to victims under the act which I think are worthy of
consideration.
1600
On my reading of the act,
the bill seeks to prevent retention of property acquired as a
result of unlawful activity, proceeds being defined as property
acquired directly or indirectly as a result of unlawful activity.
There are obviously provisions for forfeiture or preservation of
that. The drafting of the bill creates a need to establish the
linkage or relationship between the unlawful activity that's
being investigated and the property that results from it. The
question arises, how do you establish that linkage?
Organized crime is a
business, and it's run as a business by the people who operate
it. That business must be understood fully, firstly to determine
that it's unlawful activity or that unlawful activity is taking
place, and secondly to determine the cash flows or the benefits
that are resulting from that business.
In its simplest form, the
direct linkage is quite simple. For example, unlawful activity
takes place and funds are deposited into a bank account. It's
relatively straightforward to establish that those are the
proceeds of that activity. In a simple example, an illegal
telemarketing operation solicits cheques from its victims and the
funds are deposited into a bank account.
Unfortunately, the reality
is that some of the investigations that are going to provide
evidence for proceedings under the bill are a little more
involved, particularly when we talk about indirect linkages. What
I mean by that is situations where unlawful activity takes place
and proceeds or some other form of consideration is created.
Money may be laundered through a number of bank accounts. It may
be used to make related-party transactions. It may be manipulated
in any number of ways before it becomes engendered in the types
of property that you are seeking to forfeit or preserve under the
act.
Advancements in technology
and communications have made instantaneous transfers of money and
other assets through multiple jurisdictions very easy.
Consequently, on a very practical level, there are significant
complexities in effectively investigating complex, as opposed to
simple, organized crime business.
Notwithstanding the ease
with which property or other assets can be moved around, there
are other complicating factors. For example, if a business is
being conducted which contains a mixture of lawful and unlawful
elements, how do you separate the unlawful proceeds from the
lawful ones?
Secondly, unusual
transactions may take place in the unorganized crime environment
which would further obfuscate the trail of where the benefit from
that unlawful activity is going; for example, barter
transactions, lending transactions and things of that nature.
Finally, poor or incomplete
business records would significantly hinder an investigation.
Just to give you an example
from our firm's experience and my personal experience, our firm
was retained on behalf of a US agency to investigate a very large
illegal telemarketing operation in Toronto that was preying on
elderly US citizens. Those citizens were solicited by telephone
to provide Visa or other credit card numbers, and the resulting
slips that were written up by the telemarketer were shipped to
Australia for processing through a front company which deducted a
30% commission for processing the money. The money was then
redirected through a
number of other entities, through Mauritius, and ultimately back
to Ontario, where it was used to purchase racehorses, houses,
cars, you name it.
In that simple example, you
can see that in the more sophisticated organized crime business,
creating a direct or an indirect linkage between the actual
activity, on the one hand, and the proceeds, on the other, can be
quite involved.
The reason I bring this to
your attention is that I think that for the police and the
lawyers who will be taking this legislation forward and working
with it, creating that indirect linkage may be a disincentive to
take on some of the more complex cases.
In my attendance at the
organized crime summit that Minister Flaherty organized in August
last year, one of the overriding themes was that different types
of expertise must be brought to bear in order to create those
linkages and make the investigations happen. My conclusion on the
issue of linking property and proceeds is that, to the extent
possible, if there's any facility to allow for additional
expertise to be brought to bear in these types of investigations,
I think that would actually assist in expediting certain
provisions of the act.
The police, in our firm's
experience, are not provided the necessary training to deal with
the most complex cases. Unfortunately, neither are they provided
the budgets required to retain that outside expertise. As the
proposed act does not have what I would describe as a reverse
onus provision, the onus is definitely on the investigative
agency to establish the connection between property and unlawful
activity. What I mean by "reverse onus" is the proposition that
was discussed at the summit I mentioned earlier that property be
seized and it be incumbent upon the owner of that property to
prove that it was obtained by legitimate means. So my suggestion
to you is that a proper investigation of the complex, as opposed
to straightforward, organized crime may not be accomplished
without some additional expert input.
This takes me to my second
point, concerning the use of forfeited property. One of the uses
of forfeited property envisaged in the act is to make payments to
victims, which is clearly a very worthwhile activity. There are
other provisions as well, including one to make payments to
compensate the crown for pecuniary losses suffered either as a
result of the unlawful activity itself or in commencing the
actual proceeding. These expenses are not defined. My suggestion
is that they ought to be defined as reasonable expenses in order
to provide the greatest possible scope for repayment to
victims.
However, it's also likely
that in some cases, for example in drug cases, no victims will
come forward, for obvious reasons. By broadening the definition
of "reasonable expenses," it may be possible to remove some of
the disincentive I mentioned earlier in taking on the more
complex cases. For example, if reasonable expenses were to
include reasonable investigative expenses with the approval of
the Minister of Finance, then that might provide some additional
resources to police in the more complex cases. I should add that
this is not self-serving. Our firm has plenty of work and we're
not looking for it through this mechanism.
Finally, I'd like to talk
briefly about compensation that may be paid to victims. There are
some housekeeping points that I think are worthy of
consideration, either as part of the act or as part of any
accompanying regulations.
The proposed bill provides
for compensation to be paid to victims who suffer pecuniary or
non-pecuniary losses. Those losses may be straightforward. For
example, if there has been adequate investigation of the unlawful
organized crime business, there may be financial information from
that business that would identify victims and establish what they
may have taken from them. Getting back to my telemarketing
example, telemarketers keep lists of the people who provide them
the greatest money, so those records may be readily available.
However, the act doesn't provide for situations where the
property forfeited is not sufficient to pay all victims. So my
suggestion would be that it provide, or any accompanying
regulation provide, for a pro rata distribution in that
circumstance.
1610
Secondly, there does not
appear to be a limiting clause in terms of the amount of
compensation that might be paid. For example, in the event that
consequential losses were suffered, as opposed to an immediate
and direct loss, there's no provision stating whether that would
be included within the compensation scheme or not.
Thirdly, I'd also suggest
that any accompanying regulations, or the act itself, should
provide for proper and thorough authentication procedures to
validate any claims that may be made. I'm sure that when the
first successful case is made under this act there will be many
people who will come forward seeking compensation, and it would
be worthwhile to have an appropriate process in place to validate
those claims.
To recap, I think the
drafting of the bill as it's currently presented does create
potentially some disincentive to take on the more complex cases
where proceeds may be quite far removed from the original
unlawful activity. Secondly, subject to reasonability and
approval from the minister, it might be worthwhile to consider if
investigative costs could be funded from the returns from seizure
of property, as long as that doesn't impair significantly the
repayment of funds to victims. Thirdly, some further clarity or
supplementary regulation is required in connection with the
definition and terms governing payment or compensation to
victims. That's essentially my submission to you today.
The Chair:
Thank you very much, Mr Allan. Mr Hastings.
Mr
Hastings: Sir, thank you for coming in. You made a
pretty interesting point about reasonable expenses to cover
investigative costs. We had a couple of earlier people submit
that there would probably be very few people come forward under
the victim category, in especially the drug situation.
I'd like to ask you if you think the term
"victim" should be assigned to more than just an individual or a
family or a group of people; that it could be widened to include
a neighbourhood, especially when you take into consideration
Chief Fantino's contention that, in the case of drugs at least,
the poorest neighbourhoods are usually the biggest victims of
this kind of activity in terms of the distribution networks. I'm
wondering what your thoughts would be as to whether a definition
of "neighbourhood" could be put into the regs or a policy if they
were ever to have distribution of the funds coming from this
bill.
Mr Allan:
I think there are two parts to my answer on that question. You
mentioned that your expectation might be that in many cases
victims would not come forward-
Mr
Hastings: This was a contention from a previous
presenter.
Mr Allan:
Right. I think that depends very much on the type of unlawful
activity. My own experience is related very much to illegal
telemarketing. Information relating to victims was readily
available and making repayment to those victims was not
problematic, which in fact happened in two cases that we had in
British Columbia, which was very satisfying.
As to the definition of a
neighbourhood as a victim, I think the more you broaden the
definition of "victim," the more problematic it becomes to
determine the amount that ought to be paid. Maybe it's just my
training as an accountant, but I'm not sure how I would quantify
the amount that ought properly to be paid to a neighbourhood
because there has been an ongoing level of drug activity there. I
think there is a clause within the act, and I'm sorry I don't
remember it exactly, that speaks to victims of a specific
activity who suffer pecuniary or non-pecuniary losses. Then
there's a further clause which talks about other victims in a
broader sense. That may be the clause that can be explored in the
situation you're describing.
Mr Bryant:
Thank you for coming. How does it work right now in Ontario for
these investigations under the Criminal Code? Are forensic
accountants, say from your firm or other firms, retained, or is
it all done internally, or is it a bit of both?
Mr Allan:
It depends what you're talking about. We do a lot of just regular
corporate fraud stuff. That's how I make my living.
Mr Bryant:
Yes.
Mr Allan:
The police forces have people in-house. Typically, these are
people who are on secondment from firms similar to mine. Based on
my understanding of it, which is second-hand information from the
police, people I know, these in-house people are swamped with
work. For example, if I were to go to them with a client who had
a very large, complex fraud and say, "Are you able to investigate
that?" usually the response is, "No, we can't because it's too
complex" or, secondly, "Yes, we can, but it's going to be a year,
18 months, before we get to it," which is not much use to the
victim.
In the organized crime
element, as opposed to the regular corporate fraud element, there
may be fewer resources, but there is that hurdle. I think it's an
impediment to getting to the bottom of what has happened and
clearing up the situation. We see it all the time. If those
impediments weren't there, then I'd be doing something else for a
living. I'm very busy, so that tells me there's something that's
not right.
One point I should clarify
is that when I talk about reasonable expenses of investigation,
that could be police expenses as opposed to retaining an outside
firm, such as ours or one of our competitors, for example, if
they had to draw somebody else into their group, maybe it's
overtime or maybe it's just something else, to get over that hump
and get away from this issue of exceeding tight budgets, which
are in operation today for police forces. It's too bad something
like that would get in the way of making this work.
Mr Bryant:
My question is, if on the law enforcement side we need, but we
don't have, an army of forensic accountants and they're
overworked and overburdened right now, on the flip side to it, I
take it organized crime does have an army of forensic accountants
arranging their affairs, which makes it complicated for
police?
Mr Allan:
They have a lot of people who are making sophisticated
arrangements to manage the funds that are obtained as a result of
their activity, absolutely. In the summit that occurred last
August, I believe I was the only forensic accountant who
attended. I just sat at the back and listened very carefully.
Almost without exception, the speakers got up one after the
other-Commissioner Zaccardelli, who's now head of the RCMP and at
that time was assistant commissioner, was very strong on this
point, that he needs resources and budgets and the capability in
order to deal with that problem. Really to reinforce that point
was why I came along today.
Mr Bryant:
On that front, thank you very much for coming.
Mr Kormos:
I seem to recall now the trial of last year, the major fraud,
where the Toronto police wouldn't even investigate it, where the
victims had to hire their own forensic accountant, Brian
Patterson. You remember that? What was that case?
Mr Allan:
I don't recall that.
Mr Kormos:
The Toronto accountant who scammed a bunch of people, including a
couple of high-profile ones, where the judge chastised the police
for not undertaking the investigation. That's consistent with
what you're saying. My problem is that the police don't even have
the resources or the means to investigate the crime. Good
grief.
Chief Fantino was here
earlier, and he didn't show a whole lot of confidence in the
Criminal Code provisions. I wish we had had more time, because,
heck, if they can't investigate the crime itself, it would be
even more difficult with a sophisticated operation to get down
behind it and track down the money.
Mr Allan:
I'm sorry, I don't recall that particular case, but there are so
many of them out there.
Mr Kormos:
That the police aren't investigating?
Mr Allan: I don't know what
they're investigating and what they're not. I'm not going to
answer that one.
There is a distinction
between crime and unlawful activity in the corporate environment
versus what we're looking at under this bill and the organized
crime environment. In the corporate environment, you may have a
wealthy corporation that has the financial capability to retain
people from outside even after it has been defrauded. You'll do
some investigation and take it up to the police with a nice
report with a ribbon on it. But in the organized crime
environment, where you're dealing with crime which, not
exclusively but in large part, is perpetrated against
individuals-and certainly I've seen this again in telemarketing,
where they've been completely cleaned out by these people-they
don't have a capability or a willingness to pony up additional
funds to finance any kind of investigation. The difficulty is
greater on this side than perhaps it is on the corporate
site.
The Chair:
Thank you very much for coming here this afternoon, Mr Allan.
That concludes today's
proceedings. We will reconvene tomorrow morning at 10 am in
committee room 1, which for the purpose of anyone-
Mr Kormos:
No television coverage?
Mr Tilson:
On a point of order, Madam Chair: My understanding is that that
has been changed and we will be meeting in this room, but I trust
you'll be talking to the Chair, Mr Beaubien, and that-
Interjections.
Mr Tilson:
Mr Kormos agrees with me.
The Chair:
OK.
Mr Tilson:
Madam Chair, we will find it, but my understanding is that this
committee will be in this room.
The Chair:
OK. What I will do, members of committee, is, I will check with
the other Chair and I will let each office know.
Mr Kormos:
It's in one or the other.
The Chair:
It's in one or the other.
Mr Tilson:
I agree with Mr Kormos.
The Chair:
Unless you hear from me otherwise, it will be in this room
tomorrow morning. Thank you. Meeting adjourned.
