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Canada Prosecutors may seek videos of Globe sources in Canada-China fraud probe

Edward Gong, the man accused of fraud, is seen here at the CNTV studios and offices in August, 2018.

Fred Lum/the Globe and Mail

Ontario prosecutors are considering seeking a production order to compel The Globe and Mail to hand over videotaped interviews with confidential sources who allege they were coerced by Chinese authorities during a joint securities probe with Canada.

The Globe drew on the interviews for a report on a Canadian citizen accused of fraud in both Canada and China, and subject to an investigation in which Canadian investigators have worked with Chinese police.

The story, published in November, revealed the concerns of Edward Gong, the accused man, and his lawyers that Ontario’s case against him was built partly on threats and other forms of coercion of witnesses by Chinese police. The interviews were conducted by a private investigator retained by a law firm representing Mr. Gong, and shared with The Globe.

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Read More: Chinese evidence, Canadian charges: Accused businessman says fraud case built with coercion

The Crown Law Office says in a letter to Mr. Gong’s lawyers, Scott Hutchison and Paul Stern of Toronto, that it “has not yet decided” whether to ask a court to compel The Globe to produce the interview materials.

The letter is dated Jan. 7, as tensions were growing between Ottawa and Beijing over Canada’s arrest of Chinese business executive Meng Wanzhou, in response to an extradition request from the United States. Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland have been attempting to rally support from international allies for Canadians detained by China in the wake of the arrest of Ms. Meng.

The prosecutors said in their letter that before they decide whether to seek a production order against The Globe, they wish to know whether Mr. Gong’s lawyers will file the interview materials in court, or make them available directly to the Crown. A precondition for requesting a production order, they said, is to show that no other source of the information is available. The Supreme Court made that point, they added, in its unanimous ruling in November that Vice Media, an online publication, had to turn over electronic exchanges with a suspected terrorist to the RCMP.

“If you can confirm that you will not be making production of any of the material, it would assist in making out one of the preconditions to obtaining a production order,” said the letter, signed by Robert Hubbard, counsel for the Crown Law Office.

Mr. Hubbard declined to comment and referred The Globe to the Attorney-General’s communications office, which also would not comment, citing the ongoing proceedings.

Mr. Stern told The Globe that he will not make the interviews available to prosecutors, either in a court application or by handing them over on request.

Mr. Stern sent the Crown’s letter on to Peter Jacobsen, a lawyer for The Globe and Mail. In an interview, Mr. Stern said he wished to make clear that he contacted The Globe’s legal counsel, not its newsroom, and for the sole reason of protecting confidential sources that he believes would be at risk in China if their identities were known.

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“It’s a very troubling situation and we’re very concerned about the risk of retribution to the brave people who spoke,” he said in an interview.

The Globe said it would consider challenging any requests to turn over information that could compromise safety or identify sources from the story written by Craig Offman, Steven Chase and Xiao Xu.

“The state should not be forcing the media to become an agent of the state,” Mr. Jacobsen, The Globe’s lawyer, said in an interview.

“We don’t want to be responsible by handing over documents, for somebody being punished, in China or anywhere.”

Mr. Gong left China in 2002 and became a Canadian citizen in 2008. He has built a business portfolio that includes hotels in Toronto and Michigan, and Chinese-language TV channels in Canada. After a joint investigation by the Ontario Securities Commission and the RCMP that involved collaboration with China’s Ministry of Public Security, Mr. Gong was arrested late in 2017. Canadian prosecutors are accusing Mr. Gong of overseeing the fraudulent sale of hundreds of millions of dollars of stock in a health-supplements company he owns, known as O24. Chinese authorities accuse him of running an illegal pyramid scheme. The alleged victims are in China; the alleged criminal activity occurred in Canada.

Craig Hannaford, a former capital-markets investigator for the RCMP, interviewed Mr. Gong’s associates, customers and distributors on a retainer from defence lawyers. Two former associates in Mr. Gong’s company told Mr. Hannaford that they were subjected to threats of indefinite jail time in China, and held for two years in dreadful conditions, as a means of coercing them to give testimony against Mr. Gong.

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The Crown letter to Mr. Gong’s lawyers offers several reasons for wishing to see Mr. Hannaford’s interviews: “If they are relevant to the defence, they will likely be relevant to the Crown;” the information would help ensure none of the witnesses are those whose rights were allegedly violated; and the interviews may help the Crown decide whether to call any witnesses from China.

The letter says that OSC investigators were present when Chinese police interviewed several witnesses, but that it is unclear whether there was an overlap between these and the ones Mr. Hannaford interviewed. The letter does not address whether the witnesses could be put at risk.

Rulings by the Supreme Court of Canada in production-order cases instruct judges to weigh the balance between the state’s interest in prosecuting crime and the media’s right to privacy in news gathering. The court’s ruling on Vice Media turned largely on the fact that the suspect was not a confidential source. That case predated the 2017 Journalistic Sources Protection Act, a federal law in which Parliament affirmed the importance of confidential sources.

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