LexSage

Canada's Magnitsky Act Takes Important

Step Forward On October 2, 2017

Written By: Cyndee Todgham Cherniak

Date: October 1, 2017

October 2, 2017 is an important day for those following Canada's Magnitsky Act.  Bill S-226 "An Act to provide for the taking of restrictive measures in respect of foreign nationals responsible for gross violations of internationally recognized human rights and to make related amendments to the Special Economic Measures Act and the Immigration and Refugee Protection Act" to be known as "Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law)" (we have linked the April 11, 2017 version of the bill, which will be updated on October 2, 2017) is scheduled for concurrence at report stage in Canada's House of Commons on Monday, October 2, 2017 at 5:30PM.  What this means is that the House of Commons will adopt the changes to Bill S-226 recommended by the House of Commons Standing Committee on Foreign Affairs and International Development (FAAE) in June and a new version of the bill will be published.

There is bi-partisan support for Bill S-226 in Canada's House of Commons. Bill S-226 fundamentally changes Canada's economic sanctions laws and adds another tool to change undesirable behaviour of foreign officials.  In particular, Bill S-226 enables Canada's Governor-in-Council (that is Cabinet), to list foreign officials who engage in gross human rights abuses or corrupt activities.  If one reads "Red Notice" written by Bill Browder, it will be easy to understand what types of activities may be sanctioned. If a foreign government official orders the torture and murder of a person or people, they can get listed under Canada's new sanctions law.  If a foreign government official uses his/her position to expropriate a company to divert tax dollars for personal gain, they can get listed under Canada's new sanctions law.  These are just two examples of how Canada's new sanctions law may work in practice.

It is expected that the FAAE Report will be adopted and Bill S-226 will proceed to Third Reading and be passed by Canada's House of Commons.  Third Reading is scheduled for October 4, 2017 in the House of Commons.

Since Bill S-226 was amended by the FAAE Committee, the Bill will have to return to Canada's Senate.  Since the Senate has already passed Bill S-226 at Third Reading (as originally drafted) and Bill S-226 is a Private Member's Bill, the amendments approved by the House of Commons will have to be adopted.  Bill S-226 may go to a Committee of the Whole or to the Senate Committee that originally reviewed Bill S-226 and wrote the Senate Report.  Bill S-226 may be approved without further review or significant debate.  The changes may simply be adopted by the Senate.  If the Senate objects to any amendments (which is unlikely in this case), there will be back-and-forth with the House of Commons.

Royal Assent (by Canada's Governor General) will take place after acceptance of the Amended Bill by the Senate (after review by the Committee of the Whole or the Senate Committee that originally reviewed Bill S-226). It is expected that Canada's Magnitsky Act will enter into force before the end of this year.  Bill S-226 passed in Canada's Senate before the amendments and it is expected to pass with ease and bi-partisan support. The Amendments improved the Bill, such as adding a penalty for non-compliance (which was not in the original version). Canadians from all political parties can support justice for Sergei Magnitsky.

Also, if you have read Red Notice, the book by Mr. Browder about Sergei Magnitsky, you will see a familiar name - Chrystia Freeland.  She has yet to write the next chapter in Mr. Browder's book and the Sergei Magnitsky story.  Ms. Freeland, formerly a reporter in Moscow, is now Canada's Minister of Foreign Affairs.  Ms. Freeland is the person who will draft the first list of names of corrupt foreign officials who will be subject to Canada's Magnitsky Act.  Canada's Cabinet, of which Ms. Freeland is a senior member, will promulgate the first list by way of a regulation.  The naming of names will not require a Parliamentary vote.  The regulation may be changed by the government of the day and new names can be added at any time (names can also be deleted).

Bill Browder spoke to my University of Windsor, School of Law/University of Detroit Mercy, School of Law class recently and spoke about why Canada should pass Bill S-226.  Bill Browder remarked that "Canada is a champion of human rights in the World ... Canada's image in the World is that it upholds human rights" (or is working hard to uphold human rights). "It is one thing for the United States to sanction people" says Bill Browder.  "Canada is not seen [as a bully on the World stage] ... Canada is seen as an ethical country" and brings its "moral reputation" says Browder.  It is the right thing to do morally.

Bill Browder is right. There is a moral imperative to speak out against human rights abuses.  Canada's voice is just one voice and Canada should join this chorus. Not because Canada has moral superiority (which we do not); but because Canada strives to be better.

While it can be argued that businesses bear the brunt of sanctions enforcement, in this case Canadian companies will benefit from sanctions imposed under Canada's Magnitsky Act. Any name listed in Canada's regulation will be a person who has committed gross human rights abuses in their own country. Canadian companies should know those names in order to prevent harm to their own people (management, employees, representatives, agents, lawyers, accountants, etc.).  It is difficult to know who are the corrupt foreign public officials in the World who might order your imprisonment and, possibly, death in prison.  If the Canadian government makes a list after careful consideration (and access to confidential inter-governmental reports), you probably should think twice about doing business with the named persons.

Canada's Magnitsky Act will enable the creation of a global list of names - not just Russian officials. It will not only list officials who do harm to their own people.  Canada's Magnitsky Act will allow the Canadian government to react if a Canadian citizen or a Canadian resident is imprisoned in a foreign jurisdiction and tortured and/or murdered in prison by foreign officials.  For example, Zahra "Ziba" Kazemi-Ahmadabad, a Canadian-Iranian freelance journalist, was imprisoned in Iran and tortured and murdered.  Canada could list the Iranian officials who ordered her imprisonment and participated in her torture and murder.  Canada could list names of current foreign officials who torture and murder Canadians.  This will be of great benefit for Canadians - foreign officials will think twice before committing gross human rights abuses against Canadians for fear that they will be listed by the Canadian government and any assets they own in Canada will be seized and held as forfeit by the Government of Canada.

Canada's Magnitsky Act will be a tool that can be used along with the Corruption of Foreign Public Officials Act (Canada's Foreign Corrupt Practices Act) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.  Corrupt foreign officials will not be able to hide their ill-gotten gains in Canada.  If a foreign public official engages in gross human rights abuses against Canadians or their own people, they may find their assets in Canada seized.  This is an important disincentive to committing gross human rights abuses.

For more information about Canada's economic sanctions laws or to arrange for a diagnostic of your compliance program, please contact Cyndee Todgham Cherniak at 416-307-4168 or at Cyndee@LexSage.com. If you would like assistance in managing the process, Heather Innes, formerly in-house counsel at a company with export controls processes, would be happy to assist. Please call Heather at 416-350-1234.