Actual seizure of the $26 million belonging to Russian oligarch Roman Abramovich is not guaranteed, though Ottawa is confident it has a solid case on its hands. However, according to two experts, the initiative sends a “signal”.
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On December 15, Foreign Minister Mélanie Joly presented a decree aimed at freezing the funds of a company that would “directly or indirectly” belong to Roman Abramovich, then announced that a court application to seize the company would be filed within 30 days money and distribute it to Ukraine.
The funds will be placed with Citco Bank Canada, a bank headquartered in the British Virgin Islands but with offices in Toronto and Halifax.
The challenge for government lawyers is to prove to the best of their ability that the “ultimate beneficiary” – the actual owner of the funds – is in fact Mr. Abramovich. The exercise is not won in advance.
“The burden of proof really lies with the government, and that’s where it gets harder,” because “the ultimate beneficiary isn’t always who it says on the register,” explained Marc Tassé, an anti-corruption authority and professor at the University of Ottawa.
Russian oligarchs, like many criminals and ultra-wealthy individuals, resort to all sorts of subterfuges to complicate the lives of financial investigators, such as front companies, offshoring, and the figurehead.
It is therefore possible that the money placed with Citco, even if it is in Roman Abramovich’s name, really does belong to someone else.
“A lot of people have always said that Mr. Abramovitch could just be a poster child for Mr. Putin,” said Mr. Tassé.
The latter welcomes the action taken by the federal government, which he sees as the “beginning of a long process” that is likely to “take a long time”. “At least a year, that’s for sure. It will take a long time.”
Shuvaloy Majumdar, a fellow at the Macdonald-Laurier Institute who worked as political director for international affairs for the Harper government, explained that “it is always very difficult to prove which assets belong to which oligarch”.
The development of such a complex dossier and the accumulation of evidence undoubtedly explain why there was a nine-month delay between the announcement of sanctions against the Russian billionaire in March and the new application, believes Mr. Majumdar, who worked on developing Canada’s sanctions regime.
“I remember how difficult it was to impose sanctions on individuals and organizations when I was in government,” he explained. “I find it very difficult to believe that the government would have announced this operation without having a solid case to seize his assets.”
“They don’t want to use public money to end up being told they didn’t do their job well,” added Marc Tassé.
For him, the choice of Roman Abramovich as the first target of the sanctions is no coincidence: “Everyone knew that he had interests here in Canada,” he said. And then the man is the most prominent among Russian oligarchs. Attacking him sends a “signal” that Canada is ready to act.
With a list of over 1,500 people and entities sanctioned since the Russian invasion of Ukraine in February, can we expect an avalanche of such seizures?
That is what Mr Majumdar wants, but it is unlikely in the short term given the significant resources required to pursue this type of case in court, Mr Tassé said.
In an emailed statement, a Citco spokeswoman said the bank “could not comment [ses] customers – past or present – or their underlying investors”, but that it has “implemented robust screening processes for analysis [ses] Systems to identify sanctioned parties and, where appropriate, to report to the competent authorities”.