Ottawa did nothing to seize millions from the Russian oligarchs

Two years after Foreign Minister Mélanie Jolie Announce It was taking the unprecedented step of moving to seize millions of dollars from a sanctioned Russian oligarch with assets in Canada, and the government has not actually begun court proceedings to seize the money, let alone hand it over to Ukraine’s reconstruction — and it may never happen.

The federal government announced on December 19, 2022, that it had ordered the freezing of $26 million held by an offshore investment fund in a Canadian bank account, saying the money ultimately belonged to Roman Abramovich, a prominent ally of the Russian president. Vladimir Putin.

This was Ottawa’s first use of New legislative powers Not only imposing sanctions on certain people and companies, but also confiscating their money and selling off their assets based solely on those sanctions – something no other major Western economy has attempted to do.

The government pledged that Abramovich’s alleged money would go to “the reconstruction of Ukraine and compensation for the victims of the illegal and unprovoked invasion of the Putin regime.” The oligarch, who owned the English Premier League football team Chelsea and had a stake in a steel company that had factories in the prairies, had already been Hit with penalties By Canada earlier in 2022.

However, more than two years later, the Liberal government has not taken any of the necessary steps, including applying to the Supreme Court, to seize the $26 million, which it said was in an account at Citco Bank Canada.

“We haven’t seen any of that, and it’s definitely a mystery,” said independent Senator Donna Dasko, who has a hand in the Russian sanctions file as the Senate’s point person. “I wish I knew what was going on.” The now-defunct Bill S-278, which would have increased the government’s sanctions powers.

“It took a lot of time,” Dasko said. “And we really need some transparency on this.”

Canada may have to compensate the few

Global Affairs Canada has not explained why it has not yet moved to confiscate the funds. In a brief email statement last month, she simply said she was not obligated to do so “within a specific period of time.” It did not provide further information, due to privacy concerns, although the administration did Put out a press release About its plans to confiscate Abramovich’s assets.

A US law firm representing Abramovich did not respond to emails seeking comment.

A number of lawyers with experience in sanctions and international trade said the government may have bitten off more than it could chew when it announced it would confiscate millions.

There is a risk that because the money, according to Ottawa, is in an account belonging to an offshore investment fund called Manticore Fund (Cayman) Ltd., it cannot be linked directly enough to Abramovich.

“The issue of ownership and control is a difficult one,” said Clifford Sosno of Canada-based Fasken International. “There’s a series of bushes they have to work through to act on this.”

Then there is the possibility that Abramovich will challenge any asset seizures on grounds such as the 1991 case. Investment Protection Agreement between Canada and RussiaSosno noted that its terms required Canada to compensate him for any “expropriation” or “nationalization” of his investments.

The fact that Canada is taking the unprecedented step has other countries “watching to see how we succeed,” which may explain the delay in taking action, said John Boscariol of Canadian law firm McCarthy Tétrault.

“I think the Canadian government is probably being very cautious in the steps it takes, knowing that this is a precedent case,” Boscariol said.

Other countries are using Russian assets abroad to help Ukraine, but in a less direct way. The European Union, for example, has Directed profits It was generated from Russia’s central bank’s frozen funds to Ukraine for its military and reconstruction, but so far the funds themselves have not been confiscated.

As did the G7 countries Announce A $50 billion US loan package to Ukraine ($68 billion CAD), secured against interest earned on frozen Russian central bank assets. Canada has provided US$3.7 billion ($5 billion CAD) to make this happen.

A giant cargo plane won’t be flying away anytime soon

Nearly C$140 million in assets have been frozen in Canada under sanctions the country imposed on Russia. RCMP said In its latest estimates.

But the Liberal government has only committed to seizing Russian assets one more time: in June 2023, I ordered the confiscation An Antonov An-124 transport plane parked at Toronto’s Pearson Airport, belonging to Russia-based Volga Dnepr Airlines.

The cargo plane, one of the largest in the world, has been idle on the runway for nearly three years, potentially amounting to more than $1 million in parking fees. The Ukrainian government has She indicated desire To acquire the plane, but any transfer will face many obstacles, including that the plane has not flown since 2022 and may no longer be airworthy.

Meanwhile, the Russian company that owns it has filed multiple disputes with the Canadian government. As the first Reported by the Toronto Star Last week, it filed a motion in November in federal court asking a judge to lift Canada’s sanctions on the company, and also says it has filed a $100 million U.S. arbitration claim under the Canada-Russia Investment Agreement.

Orest Zakhedalsky, a senior policy adviser to the Ukrainian Canadian Congress, said the lack of progress in actually seizing these Russian-owned assets was disappointing.

“We’re talking about years of the government saying this is a priority, and then frankly we haven’t seen a lot of movement on it — or any movement, frankly,” he said. “There was a press release and not much else after that.”