James Cohen is the executive director of Transparency International Canada
B.C. Attorney General David Eby talks about the details found in a recent report done by an expert panel about billions in money laundering in the province during a press conference at Legislature in Victoria, B.C., on Thursday, May 9.CHAD HIPOLITO/The Canadian Press
Canada tries to portray itself as a good neighbour on the world stage: We like to talk about ethical and values-based practices in our global conduct, including signing on to global anti-corruption initiatives. But the truth is we have been riding on this reputation for far too long, to cloak our ghastly position of actually enabling global corruption.
In recent months, Canadians have been exposed to explanations of how dismal our track record is in tackling companies committing corruption abroad and in preventing dirty money from landing in Canada.
Transparency International‘s 2018 report “Exporting Corruption” delivered the hit on Canada’s lack of compliance with the OECD Convention of Bribery of Foreign Officials. The report showed that Canada had fallen from “moderate” enforcement of our Corruption of Foreign and Public Officials Act (CFPOA) in 2015, to “limited” enforcement by 2018.
The explosion in the news over the charges against SNC-Lavalin of allegedly bribing Libyan officials opened Canadians’ eyes. A Canadian business person can potentially commit bribery overseas, playing the odds that law enforcement and the justice system will not go after them. Now we see corruption allegations by the World Bank against Bombardier over a contract in Azerbaijan.
Canada’s role in contributing to corruption in some of the worst performing countries on Transparency International’s Corruption Perception Index should not be played down. To believe otherwise is a slap in the face to my colleagues around the world who put their lives on the line to dismantle corrupt regimes.
But, of course, the money that is offered in bribes does not always stay in the country where it is given. A vast global money-laundering system lets the corrupt hide and enjoy the bribes and funds they stole from their people. Canadians have been treated to an avalanche of headlines showing that we are a welcome mat for dirty money.
When the Panama Papers story broke in 2015, journalists found that the intermediaries of illicit funds sold Canada to their clients through the concept of “snow-washing”: bring your dirty money to Canada and it will be cleaned like the pure white snow. Why are we such a desirable safety deposit box for the crooked? First, who suspects Canada? Second, once again our laws are incredibly lax to keep these funds out.
Transparency International has flagged Canada’s weak regulations and enforcement on money laundering since Canada signed on to the G20 High Level Principles on Beneficial Ownership Transparency in 2014. Again, our track record is not good. While a number of countries started out with a “weak framework,” by 2017, Canada remained at the bottom of the pack. This means that money launderers can hide behind layers of secret corporate, trust and nominee identities to evade detection. Last week, the British Columbia expert panel on money laundering conservatively estimated almost $50-billion being laundered in Canada, while a C.D. Howe Institute report put the number at $130-billion.
Again, this is not a victimless crime. These illicit funds help inflate property prices in Canadian real estate, up to 5 per cent on average in B.C. according to the expert panel. They also mix with domestic crime such as the opioid trade and sex trafficking. Internationally, kleptocrats and criminals from some of the most impoverished and conflict-prone countries are storing their money here, allowing the suffering of the very people Canadians try to help through foreign aid. To put the problem into context, an African Union panel conservatively calculated that the African continent loses $50-billion to illicit financial flows, dwarfing what it receives in foreign aid annually.
While Ottawa does contribute funds through foreign aid to anti-corruption advocates and institutions globally, including to Transparency International chapters who provide legal aid to citizens in some of the most corrupt countries in the world, we need to address corruption holistically, making sure Canadian companies aren’t the ones facilitating corruption and we are not an easy hiding spot for illicit funds. Our enforcement of both the CFPOA and our national anti-money laundering law need to drastically improve and have gaps filled in, such as establishing a pan-Canadian publicly accessible registry of beneficial ownership.
Many Canadians already knew we weren’t as innocent about global corruption as our reputation might project. Now constant headlines and cases make the problem unavoidable to ignore any longer.