Two years after Foreign Minister Mélanie Joly decided took the unprecedented step of confiscating millions of dollars from a sanctioned Russian oligarch with assets in Canada, the government has not actually initiated a lawsuit to forfeit the money, let alone transfer it to Ukraine's reconstruction efforts – and may never happen.
On December 19, 2022, the federal government announced that it had ordered a freeze of US$26 million held in a Canadian bank account by a foreign investment fund, saying the money ultimately belonged to Roman Abramovich, a known ally of Russian President Vladimir Putin.
This was the first use of Ottawa newly established powers not only impose sanctions on specific individuals and companies, but also confiscate their money and sell assets based solely on those sanctions – something no other major Western economy has attempted.
The government promised that Abramovich's alleged funds would be used for “the reconstruction of Ukraine and compensation for the victims of the illegal and unjustified invasion of the Putin regime.” The oligarch, who owned the Chelsea soccer team in the English Premier League and has shares in a steel company with factories on the prairies, was already hit with sanctions through Canada earlier in 2022.
However, more than two years later, the Liberal government has failed to take any necessary steps, including filing an application to the Supreme Court to actually confiscate the US$26 million it claims is in an account at Citco Bank Canada.
“We haven't seen any of this and it's definitely a mystery. “I wish I knew what was going on,” said independent senator Donna Dasko, who had a hand in the Russia sanctions file as the upper house's point person on the now-defunct bill S-278, which would have further expanded the government's powers in terms of sanctions.
“It took a long time,” Dasko said. “And we really need some transparency on this.”
Risk Canada may have to compensate the oligarch
Global Affairs Canada has not disclosed why it has not yet taken action to confiscate the funds. Last month, in a brief emailed statement, he simply said he had no obligation to do so “by a specific date.” She did not provide further information, citing privacy concerns, even though the department did so publish a press release about plans to confiscate Abramowicz's property.
The U.S. law firm representing Abramovich did not respond to emails seeking comment.
Many lawyers specializing in sanctions and international trade said the government may have bitten off more than it can chew by announcing it would confiscate the millions.
There is a risk that because Ottawa says the money is in an account belonging to an offshore investment fund called Manticore Fund (Cayman) Ltd., it cannot actually be linked directly to Abramovich.
“The issue of ownership and control is difficult,” said Clifford Sosnow of Canadian multinational Fasken. “There are a number of bushes they have to go through to take action.”
There is then a chance that Abramowicz will challenge the forfeiture of assets from, for example, 1991. Canada-Russia Investment Protection Agreementthe terms of which would require Canada to compensate any “expropriation” or “nationalization” of its investments, Sosnow noted.
John Boscariol of Canadian law firm McCarthy Tétrault said the fact that Canada is taking the unprecedented step has other countries “looking out for our success,” which could explain the delay in action.
“I think the Canadian government is probably taking very cautious steps knowing that this is a precedent-setting case,” Boscariol said.
Other countries are using Russia's foreign assets to help Ukraine, but in less direct ways. The European Union has this, for example targeted profits generated by the frozen funds of the Russian Central Bank for Ukraine for its military and reconstruction, but has not yet confiscated the funds themselves.
The G7 countries also did this announced a $50 billion (CDN$68 billion) US loan package to Ukraine, secured by interest on frozen assets of the Russian Central Bank. Canada contributed $3.7 billion ($5 billion CDN) for this purpose.
The giant cargo plane won't be leaving anytime soon
As part of the sanctions imposed on Russia, CDN assets worth approximately $140 million were frozen in Canada, RCMP said in its latest estimates.
However, the Liberal government has only committed to confiscating one Russian property: in June 2023. ordered confiscation Antonov An-124 transport aircraft parked at Pearson Airport in Toronto, belonging to the Russian Volga-Dnepr Airlines.
The cargo plane, one of the largest in the world, has been sitting on the tarmac for almost three years, which would mean more than $1 million in aircraft parking fees. The Ukrainian government has indicated willingness take over the jet, but any transfer would pose numerous hurdles, including the fact that the plane has not flown since 2022 and may no longer be airworthy.
Meanwhile, the Russian company that owns it has filed multiple disputes with the Canadian government. First – reported the Toronto Star. Last week, it filed an application in November's Federal Court asking a judge to lift Canadian sanctions on the company, and also says it has filed a $100 million arbitration claim in the U.S. under the Canada-Russia investment pact.
Orest Zakydalsky, senior policy adviser at the Ukrainian-Canadian Congress, said the lack of progress on actual confiscation of Russian-owned assets is disappointing.
“What we're talking about is that for years the government has said this is a priority and then, frankly, we haven't seen much movement on this issue – or any movement at all, to be honest,” he said. “There was a press release and then not much.”