Ottawa expedites special law to freeze foreign assets

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Ottawa is moving to give itself new powers so it can act on requests to freeze the assets of more than a dozen Tunisians and Egyptians tied to those countries' ousted regimes.

The special law being rushed through the Commons was drafted to fill a legal gap that stymied attempts to freeze millions held in Canada by relatives of Tunisia's former dictator who have taken refuge in Montreal.

But Egypt, too, has asked several countries, including Canada, to put a hold on any assets belonging to a dozen people, including former president Hosni Mubarak, six of his family members and five former government officials. So far, none have come to Canada, an official said.

In some circumstances, the new law would give the government broad powers that will make it easier to freeze the assets of any ousted dictator, at times when their country's new government is struggling amid transition to find evidence that the funds were pilfered.

But the first target is clearly relatives of former Tunisian president Zine El Abidine Ben Ali who are now in Canada, including wealthy brother-in-law Belhassen Trabelsi, who fled to Montreal with his family on a private jet on Jan. 20, six days after Mr. Ben Ali fled Tunisia.

It's not clear how much of those assets will be left by the time the special law passes; all parties have said they will rush it through the Commons, there will be expedited committee hearings with expert witnesses, and it must also pass the Senate.

Sources have previously told The Globe and Mail that members of the Ben Ali clan, accused of using their influence to amass billions, have between $10-million and $20-million in assets in Canada.

Mr. Trabelsi, who has held permanent-residency status in Canada since the 1990s, is fighting the government's efforts to strip him of that status and expel him. Mr. Ben Ali's son-in-law, Sakher el-Materi, came to Canada in 2008 and bought a $2.5-million home in the tony Westmount enclave of Montreal; the current occupants say he sold it, but land registry documents still list it in his name.

Tunisia's new government has asked Canada to seize the assets of the Ben Ali relatives, but the government says it didn't have the legal power to do it. "That's why, after doing that analysis, we decided we need to put this tool in place," Foreign Minister Lawrence Cannon said.

The law that allows Canada to impose sanctions and asset freezes, the Special Economic Measures Act, was invoked to freeze $2.3-billion in assets belonging to Moammar Gadhafi's Libyan regime on Feb. 27.

But in the case of Tunisia and Egypt, the law could not be invoked because their new regimes didn't represent a threat to international security. Efforts to freeze the money under criminal laws failed because Tunisia, scrambling through transition to a new government, couldn't provide evidence it was misappropriated.

Under the new law, the government could impose a freeze on just about anybody in a foreign government, or relatives of leaders, if the government of their country asks in writing and asserts the money was misappropriated, or obtained improperly through business or family ties to the regime. The law is supposed to apply only when a foreign government is in a state of turmoil - creating a reason why it can't produce evidence to back up the claims.

But the move to pass the new law had critics complaining that the government acted slowly.

"Why wait so long?" asked Vincent Valaï, a Montreal lawyer for a Tunisian-Canadian coalition seeking a freeze on the Ben Ali clan's Canadian assets. "There are millions and millions of dollars that might have been lost to the Tunisian people."

There were also concerns over whether the hastily drafted legislation could sustain court challenges.

"It all looks good on paper until it gets to court and some lawyer invokes the Charter," said security consultant Chris Mathers, a former RCMP officer and former forensic investigator for the KMP accounting firm. "Once we freeze some assets, we are going to have a protracted court battle."