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The Canadian Security Intelligence Service flouted the rule of law by providing payments to its sources infiltrating terrorist groups, according to a new judicial ruling ordering a “comprehensive external review” of the spy service.

“It is difficult to overstate how disturbing these circumstances are,” Federal Court Justice Patrick Gleeson writes in a 151-page ruling released on Thursday. In it, he castigates CSIS and its leaders for disregarding warnings from federal lawyers who characterized CSIS’s counterterrorism payment practices as very likely unlawful.

“The circumstances disclosed here suggest a degree of institutional disregard for – or, at the very least, a cavalier institutional approach to – the duty of candour and, regrettably, the rule of law,” Judge Gleeson’s ruling says.

Justice Gleeson was reviewing several past CSIS applications for warrants to use invasive surveillance powers.

The Federal Court holds closed hearings into such warrant applications. But it became concerned that the information used in these applications came from sources to whom they made potentially illegal payments, and Judge Gleeson’s ruling aimed to settle this matter.

Details about specific cases are being withheld, but they all centred on CSIS payments to sources who the service had asked to infiltrate groups of jihadists, potentially ones inspired by al-Qaeda or the Islamic State.

The Federal Court ruling highlights seven instances in which CSIS provided money to individuals known to be close to terrorist causes who had helped Canadian intelligence officers. One involved payments “totalling less than $25,000, to an individual known to be facilitating or carrying out terrorism.” At the lower end of the scale, CSIS gave one person “a financial benefit valued at less than $20.”

It is common for government intelligence officers to compensate their moles. But Canada had no legal protections for such activity.

In 2019, Parliament amended the CSIS Act to shield CSIS counterterrorism officers from prosecution for paying their agents.

For several years before that, federal Department of Justice lawyers had warned CSIS that ongoing payments ran a “high risk” of violating anti-terrorism-financing provisions added to the Criminal Code in the early 2000s.

Judge Gleeson said CSIS should have interpreted Justice Canada’s advice as a red light. But the service continued moving money even though its legal shield was not yet in place. “If the proposed service activity is not authorized by the CSIS Act … the activity is illegal and cannot proceed.”

Although ministers, intelligence officials and Justice Canada lawyers had been debating about payment legalities for years, no one ever told the specialized class of judges who supervise CSIS’ warrant applications. “It appears only the court was left in the dark,” Judge Gleeson writes, emphasizing that such lack of candour is corrosive and causes the court to lose faith in CSIS.

This is the third strike against CSIS’s credibility in recent years after a Federal Court warrant-application review.

In 2013, a judge ruled that CSIS made “strategic” omissions about the reach of its international spying partnerships. In 2016, another judge ruled that CSIS verged on contempt of court by failing to tell judges about a data analytics centre where it warehoused telecommunications information.

In a conference call with reporters on Thursday, Public Safety Minister Bill Blair and Justice Minister David Lametti said they are moving on the court’s demand to initiate reviews of CSIS and Justice Canada.

But they did not criticize anyone for wrongdoing. “CSIS relies on the assistance of human sources,” Mr. Blair said. “At times it involves such measures as providing a cellphone or other electronic devices to a source. And I believe that in the case at hand, CSIS carried out its mandate in good faith and acted at all times in the public interest.”

The ruling says that between 2017 and 2019, CSIS director David Vigneault directly approved more than 10 “potentially illegal activities.”

Several CSIS officials testified behind closed courtroom doors during the judicial review. The ruling says Mr. Vigneault told the court that he wasn’t initially well briefed on the legality-of-payments issue.

Judge Gleeson took issue with responses like that. “Were impacted service employees and human sources made aware that they were at ‘high risk’ of violating provisions of the Criminal Code?” the ruling asks. “If not, then what authority, legal or moral, did the director and senior service management rely upon in assuming the risk on their behalf?”

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