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Money laundering report a wake-up call for Canada, but some provinces skeptical

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VANCOUVER — The authors of a report that found $47 billion was laundered across Canada last year debated whether to include a graph that indicated Alberta, Ontario and the Prairies were hotspots for dirty money, says the lead writer.

Maureen Maloney said her expert panel used the best mathematical model available to reach the estimates, but it’s more reliable at a national level than a provincial one, so they questioned whether to publish the figures.

“But we thought, ‘No, we need to do this, because people need to know it’s not just a B.C. problem,’ ” said Maloney, the province’s former deputy attorney general and a public policy professor at Simon Fraser University.

“It’s a big B.C. problem, but it’s everybody’s problem. And to the extent that B.C. starts fixing our problem or at least makes our province less enticing to money launderers, they’re going to go elsewhere. They’re not going to disappear.”

The report, one of two recently released by the B.C. government, aimed to sound a nationwide alarm about money laundering. But some provinces have reacted with skepticism, as Alberta questioned the numbers and Ontario said it will monitor the issue.

Maloney said there is no reliable data on money laundering in Canada, so the panel used what’s known as the gravity model, which estimates the flow of dirty money between countries based on characteristics including GDP per capita and crime rates. The panel divided Canada into six regions and treated each region as a country.

The panel estimated that Alberta led the country for money laundering in 2015 with $10.2 billion, followed by Ontario with $8.2 billion and the Prairies — Saskatchewan and Manitoba combined — with $6.5 billion.

To the surprise of many, B.C. came in fourth with $6.2 billion, scuttling its reputation as the money laundering capital of Canada.

The authors noted that the relatively high estimates in Alberta and the Prairies might arise from the importance the model places on crime rates and GDP levels, which were high prior to the oil downturn.

“If money laundering in Alberta and the Prairies have been overestimated … that implies that money laundering in B.C., Ontario and Quebec have likely been underestimated,” the report said.

Still, the panel concluded that money laundering is corroding “the very fabric of society” across Canada, and laid out a vision for it to become a national priority. Multiple recommendations call for the B.C. government to persuade its provincial and federal partners to take action.

Other provinces have yet to confront the issue with the zeal of B.C., which announced this week it will hold a public inquiry.

Alberta Justice Minister Doug Schweitzer said the province takes criminal activity seriously, but the figure presented in the report is the product of modelling that may not be completely reliable.

“We use intelligence from front-line law enforcement agencies, not data we can’t verify. We will continue to work with our law enforcement partners to protect law-abiding Albertans,” he said in a statement.

Money laundering is nearly impossible to quantify because, by nature, it’s hidden, but the report’s estimate for Alberta seems high, said Greg Draper, a national lead of valuations, forensics and litigation support with law firm MNP LLP and a former RCMP investigator based in Calgary.

“I would expect that Vancouver has a bigger issue than Alberta, which is not to say that Alberta does not face its own money laundering risks,” he said, adding illicit money is being washed through the province’s casinos, housing and cash businesses.

Ontario’s real estate association was so alarmed by Maloney’s report that it contacted its provincial government to call for a beneficial ownership registry. B.C. has already announced plans for such a registry, which collects the names of people buying property using corporations, trusts and numbered companies.

“Today, drug lords, gun runners and other criminals can hide behind the veil of Canada’s privacy laws,” said Tim Hudak, chief executive officer of the Ontario Real Estate Association and a former provincial Progressive Conservative leader.

Ontario Finance Minister Vic Fedeli wasn’t available for an interview and in a statement his department didn’t indicate it was planning to take any urgent action.

“What I can tell you is that we are discussing this issue with our federal and provincial partners — most recently at the last meeting of Canada’s finance ministers. This is something we will continue to monitor,” said spokesman Peter Spadoni.

Both Saskatchewan and Manitoba said they are taking measures to combat money laundering and pointed to their civil-forfeiture programs, which enable provinces to seize assets believed to be the proceeds of crime without laying criminal charges.

Saskatchewan added that it will pursue legislative amendments to ensure that corporations hold accurate and up to date information on beneficial owners. But it noted it was difficult to draw conclusions about the province from the Maloney report.

“The report itself states there are limitations on the methodology, so it isn’t clear what proportion of the Prairie figure in the report applies to Saskatchewan,” it said.

Jason Childs, an economics professor at the University of Regina, said he would expect money laundering to be worse in B.C. due to its sky-high real estate market, but Saskatchewan’s gaming industry is extremely vulnerable.

“We have a lot of comparatively small casinos that are going to be operating with different levels of oversight,” he said. “And then you’ve got, also, a lot of cash business going on in Saskatchewan still.”

As for the federal government, Prime Minister Justin Trudeau described the reports as “alarming” and said his government has strengthened audits on real-estate transactions and is working with provinces to do more.

Maloney said better data is needed, but if anything, the panel’s estimates might actually be lower than the reality.

“Our numbers are not definitive. Nobody’s numbers can be definitive. But we think at the moment, given the data that is available to us, this is probably the best guesstimate there is,” she said.

“But I would say if we were erring on any side, it would be on a cautious, conservative side.”

— Follow @ellekane on Twitter.

Laura Kane, The Canadian Press


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COVID-19

Most unused COVID-19 vaccines will expire at the end of the year: auditor general

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By Laura Osman in Ottawa

Tens of millions of doses of COVID-19 vaccines are likely about to expire and go to waste because of a failure to manage an oversupply, Canada’s auditor general reported Tuesday — a failure with an estimated price tag of about $1 billion.

Karen Hogan has released the results of her office’s investigation into the government’s efforts to get ahold of COVID-19 vaccine doses in the early days of the pandemic, and track how many people got them.

The auditor gave the Public Health Agency of Canada and the Procurement Department a thumbs up when it came to quickly getting enough doses into the country to meet vaccination goals, but said the government did a much poorer job of managing all that supply.

“We found that the Public Health Agency of Canada was unsuccessful in its efforts to minimize vaccine wastage,” Hogan wrote in the report.

The government knew that by signing advanced purchase agreements with a number of pharmaceutical companies there was a risk of buying up more COVID-19 vaccines than Canadians needed.

PHAC and the federal government signed deals with seven companies that were developing vaccines in 2020 and 2021, in case only a few them were approved by Health Canada.

So far six of those have been authorized by the drug review agency.

“In my view, it was a prudent approach given all the uncertainty back in 2020,” she said at a press conference Tuesday.

The auditor found that about half of the 169 million doses the government paid for have made it into the arms of Canadians between December 2020 and May 2022.

The federal government announced plans to donate some 50 million surplus doses to other countries, but as of May 31 only about 15 million had been given away and another 13.6 million expired before they could be donated.

Canada has offered the remaining 21.7 million doses to other countries but so many countries are now offering donations that the market is saturated, Hogan said, and those vaccines will be wasted if they are not distributed soon.

There were also 32.5 million doses in federal and provincial inventories by the end of the audit period in May, worth about $1 billion, based on the auditor’s estimate.

Hogan said in her report that the majority of those doses will expire by the end of 2022.

Hogan said the public health agency informed her that another 10 million have expired since the end of the audit and another 11 million were donated.

Part of the problem, she said, was that provinces and territories did not communicate and share data with PHAC.

“Although some provinces and territories consistently reported to the agency, the agency was unable to obtain complete data from most. This meant that the status of these doses was unknown and reduced the agency’s ability to predict supply needs and plan for donations,” the report said.

The auditor general’s office and the public health agency itself warned for a decade before the COVID-19 pandemic that there were serious gaps in the federal and provincial health data sharing plans.

In January 2021, Deloitte Inc. was awarded a $59.1 million contract to come up with a national vaccine management system called VaccineConnect to share timely information about vaccine distribution, coverage and safety.

Some elements of that program were up and running on time, but others were delayed and the auditor found that PHAC was instead using spreadsheets to manually track expiration dates and waste as of June 2021.

The information silos made it difficult for vaccine companies to monitor national safety indicators of their products, as they’ve been ordered to by Health Canada.

“Companies cannot entirely fulfil this requirement when they do not have access to the necessary data on adverse events,” the report said.

Hogan found two incidents in 2021 where companies learned of adverse effects to their vaccines from the media and urgently requested the data from the government, but couldn’t get access to it for three months.

Canada is also the only G7 country that does not follow World Health Organization guidance to share case-level information about patients who have adverse effects after immunization, and instead sends only summary data.

This report by The Canadian Press was first published Dec. 6, 2022.

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Military was told to prepare to intervene in ‘Freedom Convoy’ protests: official

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OTTAWA — The Defence Department’s top official says he directed the military to prepare to intervene in the “Freedom Convoy” protests earlier this year, but the resulting plans were never seriously considered — in part due to concerns about another Oka Crisis.

Deputy minister Bill Matthews and another top defence official also said the Canadian Armed Forces was prepared to fly police officers to demonstration sites across the country, but that its tow trucks were too big ⁠— and too old ⁠— to help with the protests.

Matthews and Defence Department associate deputy minister Stefanie Beck made the comments in an August interview with lawyers for the public inquiry looking into the Liberal government’s decision to use the Emergencies Act to end the protests.

A summary of that interview is among thousands of documents released by the Public Order Emergency Commission, which will ultimately determine whether the government was justified in invoking the act in February.

Neither was called to publicly testify before the commission.

The Liberals faced public calls in January and February to deploy the military as thousands of protesters opposed to vaccine mandates and pandemic restrictions gridlocked Ottawa and border crossings with the United States for three weeks.

The inquiry was also shown text messages in recent weeks in which federal Justice Minister David Lametti and then-Alberta premier Jason Kenney raised the prospect of using the military alongside police to clear protesters.

In one text exchange, Lametti and Public Safety Minister Marco Mendicino raised the idea of using a tank to end the protests. Lametti told the commission last week that the exchange was a joke.

Lametti and Defence Minister Anita Anand instead told the commission that the military was always considered a last resort — a position that Matthews and Beck echoed in their interview with commission lawyers.

Both defence officials “strongly emphasized that CAF members are not police officers,” the summary reads.

“They are trained to use lethal force, not do crowd control. Indeed, the domestic use of military force is, and in their view should always be, seen as a last resort.”

Matthews did say he asked defence officials to prepare “for the possibility that the CAF might be called out to intervene in the protests,” with a number of scenarios and internal plans subsequently drawn up.

“These plans considered the use of military equipment, infrastructure and deployment of CAF members.”

Yet Matthews and Beck said it was clear throughout the planning process that the government and the minister did not want to use the military due to fears “deploying the military in any way would inflame tensions with the protesters.”

The two officials “noted that the shadow of the Oka Crisis still looms large,” reads the summary.

On July 11, 1990, Quebec provincial police moved in on a barricade near the small town, which is about 50 kilometres northwest of Montreal. The barricade was erected by Indigenous activists to protest the planned expansion of a golf course and development on ancestral land.

After a police officer was killed, the situation escalated into a tense, 78-day standoff between Mohawk and thousands of Canadian soldiers that captured the country’s attention and raised enduring concerns about using the military in protests.

Matthews and Beck told the commission lawyers that they shared their concerns about a possible repeat of the crisis with senior officials in other departments, but that the military’s actual plans were not shared with them or with Anand.

“It was a necessary planning exercise, but the option of deploying the CAF was never seriously considered.”

The military did end up providing limited support to law enforcement efforts, with Ottawa police using the Cartier Drill Hall in downtown Ottawa as a staging area. It also provided 1,200 ration packs to the Parliamentary Protective Service.

The Defence Department and Armed Forces expected and considered requests for military planes to fly police to various parts of the country, but Matthews and Beck said domestic flights ended up being adequate.

Officials also considered whether the military could be used to clear protesters’ trucks from downtown Ottawa, the border crossing in Coutts, Alta., and other places where local officials were having trouble getting local tow companies to help.

However, Matthews and Beck said that ultimately wasn’t an option as the military’s own tow trucks weren’t designed for the types of vehicles involved in the protests, and using them would damage not only those vehicles but also any roads driven upon.

There were also concerns that moving the military’s tow trucks would represent a “significant logistical effort” and could have “drawn significant attention to themselves and the CAF members operating them.”

“Third, the trucks are quite old and require frequent maintenance,” the interview summary adds. “DND has plans to replace these trucks.”

This report by The Canadian Press was first published Dec. 1, 2022.

Lee Berthiaume, The Canadian Press

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