Michael Spavor reaches multimillion-dollar settlement with Ottawa for Chinese imprisonment

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The federal government has reached a multimillion-dollar settlement with Michael Spavor to compensate him for the nearly three years he was incarcerated under harsh conditions in a Chinese prison.

The mediated settlement came after Mr. Spavor threatened to sue Ottawa and fellow prisoner Michael Kovrig, alleging he was arrested by China because of information that he unwittingly shared with Mr. Kovrig. That information, he alleged, was later passed on, unbeknownst to Mr. Spavor, to the Canadian government and its Five Eyes intelligence partners in the course of Mr. Kovrig’s duties as a diplomat with Global Affairs Canada’s Global Security Reporting Program (GSRP).

A statement from Mr. Spavor’s lawyer, John K. Phillips, confirms a settlement has been concluded but he offered no further details. “I am only able to say that the matter between Mr. Spavor and the Government of Canada has been resolved,” Mr. Phillips said.

The federal government declined to discuss the agreement but put out a statement about Mr. Spavor and Mr. Kovrig’s “unbelievably difficult ordeal.”

“While the 1019 days in which they were arbitrarily detained by China will never be erased, the Government of Canada is committed to supporting them in their efforts to turn to a new chapter in their lives based on their individual circumstances and impacts, and in acknowledgement of their ordeal and the suffering caused by their arbitrary detention by China,” Charlotte MacLeod, a spokesperson for Global Affairs Canada, said in a statement.

A source said Mr. Spavor’s settlement is worth about $6-million, not including legal fees and expenses. Confidential negotiations took place between Mr. Phillips and Patrick Hill, executive director and senior counsel at the federal Department of Justice and Global Affairs Canada. The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.

It is not known whether Mr. Kovrig also received a compensation package. In late December, Mr. Kovrig acknowledged that he was in talks with Ottawa over compensation. He told The Globe that he would donate to charity any money from a financial settlement that goes beyond income and other losses he incurred for the nearly three years spent in a Chinese prison.

Reached on Wednesday, he declined to say whether he has reached a settlement himself.

In the past, he has told The Globe that he acted properly in his dealings with Mr. Spavor and followed the “standard of laws, rules and regulations governing diplomats.”

Both men were arrested and charged with espionage in December, 2018, shortly after Canada detained Huawei senior executive Meng Wanzhou on a U.S. extradition warrant. They were freed from Chinese jails in September, 2021, after the U.S. government worked out a legal deal with Ms. Meng.

Canada flatly denied at the time that the two Michaels were involved in espionage, with Prime Minister Justin Trudeau, cabinet officials and then-ambassador to China Dominic Barton saying that Beijing had arbitrarily incarcerated the two Canadians on trumped-up charges in retaliation for the arrest of Ms. Meng.

Fluent in Korean, Mr. Spavor is one of the few Westerners who travelled extensively in North Korea and had a personal relationship with dictator Kim Jong-un. He has been pictured sharing cocktails with Mr. Kim on board one of his private yachts, after they had been jet-skiing in the bay next to Wonsan, one of Mr. Kim’s pet economic development areas, and has met senior ministers in the hardline Communist regime.

Mr. Spavor was charged by Chinese prosecutors with spying for a foreign entity and illegally procuring state secrets. In August, 2021, more than one month before a deal was reached to send both men home, Mr. Spavor was convicted.

China subjected Mr. Spavor to lengthy interrogation sessions, according to one source. He was drugged, forced to sit in a chair for long hours and subjected to threats of execution, the source said. Mr. Spavor admitted to the Chinese interrogators, the source said, that he had provided information to Mr. Kovrig. The Globe is not identifying the source because they were not authorized to discuss the matter publicly.

Mr. Spavor’s lawyer had been negotiating a settlement for at least five months, and their bid was likely bolstered by the release of a sharply critical examination of the GSRP by the National Security and Intelligence Review Agency, which serves as a civilian watchdog over federal security agencies.

The NSIRA report, released before Christmas, was completed in December, 2020, but deliberately held back from release because, as the watchdog explained, of “high sensitivities” about a public examination of the GSRP while Mr. Spavor and Mr. Kovrig were held in Chinese prisons.

The NSIRA review found “an absence of risk assessments, security protocols, and legal guidance specific to the increased scrutiny that GSRP officers may attract due to the nature of their reporting priorities.”

The partially redacted report does not mention Mr. Kovrig by name, but the watchdog warned about the overlap between GSRP officers and CSIS agents at missions abroad. It concluded that inadequately trained GSRP officers do not appreciate the risks and dangers associated with overseas contacts and sources.

The report at one point appears to allude to Mr. Kovrig, who had taken a leave of absence from Global Affairs in 2017 to work for a global conflict analysis group in Hong Kong. On a trip to China in 2018, he was arrested by China after the detention of Ms. Meng.

“It was not clear if all officers understood that once they are no longer afforded diplomatic immunity, a receiving state may seek retaliatory measures against them,” the report said, adding former GSRP officers “may be liable to prosecution for illegal acts they performed during the mission if they later re-enter the receiving state without the protection of diplomatic immunity.”

The NSIRA report noted that “the more sensitive a GSRP officer’s conduct, the more likely a receiving state will perceive interference. This is particularly true with respect to officer interactions with contacts.” The report added: “It is important to underscore that the assumed diplomatic protections granted to the GSRP officer do not apply to contacts,” stressing how vital it is for these diplomats to avoid raising “unnecessary suspicion about this interaction.”

The Globe has also reported that Canadians Kevin and Julia Garratt were detained by Chinese authorities in 2014 after Mr. Garratt met a GSRP officer. Beijing accused the couple of participation in espionage, an incident widely regarded as another case of Beijing’s practice of hostage diplomacy. Mr. Garratt said he would not have spoken to GSRP officer Martin Laflamme had he known the discussions would be passed on to CSIS and its Five Eyes intelligence partners, the United States, Britain, Australia and New Zealand.

The Department of Global Affairs says GSRP officers are not covert intelligence operators and do not recruit, handle or pay sources. But NSIRA found that there were no internal policies and protocols in place to provide guidance to GSRP officers, particularly those in countries where there is a “high degree of mistrust for outsiders; often take a hard line on internal security matters; and, tend to deploy mass surveillance on foreigners and citizens.”

NSIRA discovered cases where GSRP officers engaged with local intelligence agencies in the countries where they were posted and instances where these Canadian diplomats collected what appeared to be classified information from sources. “The contact mentioned serious consequences if he was caught with the information,” the review recounted. It discovered another case where a GSRP officer even requested, and received, classified information from a contact.

NSIRA concluded that the GSRP is operating in a “distinctly grey zone” and said the matters raised in its report would likely spark a “renewed conversation” about Canada setting up a foreign human-intelligence collection agency.

Mr. Phillips, Mr. Spavor’s lawyer, is an experienced litigator in these kinds of national-security cases. In 2017, he obtained a $10.5-million settlement for former Guantanamo Bay inmate Omar Khadr. Mr. Khadr was arrested at age 15 by U.S. forces in Afghanistan and accused of killing an American soldier.

The Supreme Court ruled in 2010 that Canada breached his rights by sending CSIS agents to interrogate him and sharing the results with the United States. He was returned to Canada in 2012 and was released from prison in 2015.

Mr. Phillips also represented a group of five CSIS agents and analysts who filed a lawsuit in 2017, accusing the agency of Islamophobia, racism and homophobia. CSIS reached a $7-million settlement later that year.