Bill Browder was once Russia’s biggest foreign investor, but in 2005 Vladimir Putin declared him a "threat to national security."Christopher Katsarov/The Globe and Mail
Canada stands with Ukraine, but Ottawa’s inability to fight financial crime is enabling Russia’s war machine.
That stark assessment comes from Bill Browder, a man who has risked his life to expose how Russian President Vladimir Putin has enriched himself through corruption, money laundering and flagrant violations of human rights. The U.S.-born British citizen, who co-founded hedge fund Hermitage Capital Management, was once Russia’s biggest foreign investor. But these days, he’s considered an enemy of the Russian state.
Not familiar with his story? Let me catch you up so it’s clear why the Canadian government must heed his call.
Mr. Browder made his fortune in Moscow during the 1990s and the early aughts by investing in newly privatized Russian companies. But his time in the “Wild East” came to an end in 2005 when Mr. Putin declared him a “threat to national security.”
His transgression? Mr. Browder was naming and shaming oligarchs who were stealing from Russian companies – and Mr. Putin was allegedly getting a cut of the action.
After his expulsion, Mr. Browder’s Russian holding company became the target of a massive fraud. After hiring tax specialist Sergei Magnitsky to investigate, the two men exposed a US$230-million corruption and money laundering scandal that had links to Mr. Putin. Some of those illicit funds ended up in Canada, according to Mr. Browder.
Mr. Magnitsky, 37, was beaten to death in a Russian prison in 2009. Mr. Browder, who was convicted in absentia of trumped-up criminal charges by a Russian court, is still in danger. But he’s made it his mission to push countries to adopt legislation to sanction foreign officials who commit human-rights abuses and financial crimes.
About 35 countries, including Canada, have adopted Magnitsky laws. Trouble is, even with that legislation on the books, Canada rarely takes action to find and freeze dirty money – even though Russia’s invasion of Ukraine has led to heightened concern over illicit money flows.
“Canada doesn’t have the capability to investigate money laundering, in my opinion,” Mr. Browder said in an interview this week. He was in Toronto to promote his latest book, Freezing Order: A True Story of Money Laundering, Murder, and Surviving Vladimir Putin’s Wrath.
“Perhaps they can deal with low-level drug dealers. But when it comes to international dictators, kleptocrats and Russian gangsters connected to Putin, this country is wholly lacking in enforcement capabilities.”
He’s right.
Yes, Canada has sanctioned Russian oligarchs in response to the attack on Ukraine. But it’s still far too easy for those individuals to stash their cash in our country with little prospect of getting caught.
In fact, international consultants, including those targeting Russian clients, are promoting Canada as an ideal place to set up anonymous shell companies because Ottawa is unable to unmask their true owners, according to Transparency International Canada, a non-governmental anti-corruption organization.
Although Canada plans to create a corporate beneficial ownership registry to reveal who owns and controls millions of private companies, there’s a hitch. The database, which is scheduled to be operational in 2023, will include only federally incorporated companies. It’s a ham-fisted approach because the vast majority of companies are incorporated in the provinces.
“Canada is riding off the vapour trails of a good reputation that it has internationally. Everyone loves Canada internationally and Canada has this moral leadership position, but they need to live up to it,” said Mr. Browder.
“If Canada doesn’t have the skills in money laundering investigations, they should bring them in from abroad. There’s no shame in that. And if there is legislation that needs to be updated, they should update it. But to just sort of sit there and do nothing is not a strategy.”
Ottawa does plan to update our anti-money laundering and anti-terrorist financing legislation, but its efforts appear to be an exercise in incrementalism.
The government, for instance, has no plans to allow banks to engage in protected information sharing with each other about crooked clients who use their accounts to launder the proceeds of crime. And it has made no commitment to close the loophole that exempts lawyers from reporting suspicious transactions to our national financial intelligence agency.
Mr. Browder, who has provided advice to the Canadian government about Russian sanctions in recent months, was blunt: “Right now, the money is too hard to find in most cases because these really special and professional lawyers have helped the bad guys hide their money.”
While there are efforts afoot to strengthen Canada’s Sergei Magnitsky Law (it received royal assent in 2017), it’s unclear whether those endeavours will actually succeed.
Conservative Senator Leo Housakos, for one, is sponsoring Bill S-247, which seeks to give the government an audit function to more easily identify the holdings of listed individuals and their family members.
Separately, Conservative MP Philip Lawrence is sponsoring a private member’s bill, C-281, which proposes to amend the Magnitsky Law (along with other legislation) to compel the government to take swift action against human-rights abusers.
Sure, the government already has the power to slap sanctions on the perpetrators of these crimes. But there are far too many instances when it simply fails to react.
Lax enforcement is a quintessential Canadian problem. No wonder Mr. Browder has voiced support for both bills.
“They sanctioned Magnitsky’s killers, they sanctioned [Washington Post journalist Jamal] Khashoggi’s killers, they sanctioned some Venezuelans and some Myanmar baddies. And that was the last that anything ever happened,” Mr. Browder said.
It’s embarrassing that Canada continues to take such a lackadaisical approach to combatting financial crime.
Mr. Magnitsky lost his life to expose Russian corruption, and Mr. Browder, who is still being hunted by Mr. Putin, did the right thing at great personal cost.
Our federal officials, meanwhile, lack the will to solve a problem that’s taking place on Canadian soil.
As Mr. Browder told attendees at a dinner that was crawling with police on Tuesday night, it’s not enough for Canada to provide Ukraine with weapons and other aid. Ottawa must also cut off Russia’s dirty money.
“The world of money launderers is highly sophisticated, highly advanced and it feels like Canada is like 25 years behind the times,” Mr. Browder said.
Indeed.