By Aleksandar Petrovic

Canada’s Justice for Victims of Corrupt Foreign Officials Act (JVCFOA, as Canada’s Magnitsky Act is formally called) provides for targeted sanctions against human rights abusers and corrupt officials, but contains no mechanism for compensating their victims. This gap threatens to undermine the legitimacy and the effectiveness of Canada’s human rights sanctions regime at a critical moment in the development of the global Magnitsky regime. Last year on Human Rights Day, the European Union joined the United States, Canada, and 5 other countries in passing Magnitsky legislation allowing for the sanction of human rights violators by freezing financial assets and imposing permanent visa bans on entry into the country. Australia is poised to follow. The expanding network of states with Magnitsky laws will result in more opportunities for coordination and consultation between countries, incentivizing proactive use of sanctions and legitimizing their imposition. Yet, even the strongest regimes for holding perpetrators accountable cannot be considered fully effective if they do not provide remedies to victims in accordance with established international human rights norms. The increasing global momentum to use Magnitsky sanctions to combat human rights abuses and corruption thus presents an opportunity for Canada to consider how its own Magnitsky legislation might be improved by offering victim compensation.

Sergei Magnitsky, victim of human rights abuse at the hands of the Russian state, whose death prompted the passage of the U.S. Congress’s original Magnitsky law.  [Image source: AP]

Victims of human rights abuses sanctionable under the JVCFOA often lose their livelihoods and their loved ones, and experience complex, lasting psychological trauma. Many of these individuals desperately need aid and treatment but lack financial means to get it. Moreover, the JVCFOA itself is victim-centered. Civil society can make submissions to Canada recommending individuals for sanction. Doing so requires civil society to identify a victim or group of victims, meaning submissions under the JVCFOA will often rely upon victim testimony. The factual information victims provide is crucial to ensuring that sanctions decisions are based on complete information and achieve their purpose of responding to human rights violations. Canada should thus be facilitating victim compensation to incentivize participation in the JVCFOA sanctioning process; instead, the JVCFOA is silent on the matter.

Sanctions on the perpetrators of these atrocities and remedies for victims are frequently justified as moral obligations. However, Canada also has specific legal obligations under the United Nations Convention Against Corruption (UNCAC) to compensate victims when Canada unilaterally confiscates the property of foreign officials. Article 57(3)(c) of UNCAC directs Canada to return confiscated property to the officials’ home state (if party to UNCAC), prior legitimate owners, or as compensation to the victims of corruption. Canada is thus under a binding obligation to return assets, including those seized under the JVCFOA, but can exercise discretion over how this will be done. The question then becomes: what is an effective way for Canada to meet its compensation obligations under article 57(3)(c)?

In 2018, Bill S-259 was introduced by Canadian Senator Ratna Omidvar. The bill proposed to create a judicially monitored mechanism for the transfer of seized assets of corrupt foreign officials to victims. While the bill died at the end of the parliamentary session, its underlying idea of creating a just and efficient mechanism of victim compensation has not. In 2019, the Foreign Affairs Minister’s mandate letter directed him to develop a “framework to transfer seized assets from those who commit grave human rights abuses to their victims”. Consequently, Global Affairs Canada committed itself to operationalizing this directive in their 2020-2021 Departmental Plan. However, little information has been provided so far on any tangible actions the department plans to take.

A judicially monitored mechanism for the transfer of seized assets to victims, as proposed under Bill S-259, would have been an important step for Canada in meeting its UNCAC obligations. However, Canada should consider going a step further and establishing a government agency dedicated to distributing funds seized under the JVCFOA. A victim compensation agency with authority to administer a victim compensation fund from seized assets would present numerous advantages over a system based on judicial discretion.

A victim compensation agency would have greater resources and expertise at its disposal than a patchwork system of individual judges. This would make an agency better suited to build relationships with relevant international institutions, foreign states, civil societies, and NGOs, allowing it to craft more appropriate remedies to address the complex harms of corruption. A specified purpose fund administered by the agency could allow victims to make claims directly and avoid direct participation in the court system, where they are required to prove a causal link between corrupt conduct and specific damage – a difficult threshold in the corruption context, where harms are often suffered collectively.

An agency would have specific expertise in the corruption context and could provide more flexible remedies than a court. For example, the closure of the KMT mine in the DRC – a result of government corruption – caused 700 workers to lose their livelihoods. Individuals responsible for the closure were subsequently targeted under the United States’ FCPA and Global Magnitsky Act, yet the workers and their families received nothing. After several years, it became apparent that local communities were being deprived of clean drinking water and plagued with ongoing pollution, sickness, and a lack of education opportunities as a result of the mine’s closure. A victim compensation agency could have directed seized funds to these former workers. A judicial proceeding might have distributed the fund to a smaller victim class of workers but could not compensate for the long-terms harms suffered by the community. This problem is common in the corruption context, where many societal harms only become apparent in the long term. A specified purpose fund could avoid this dilemma, offering significant flexibility for addressing the long term, collective harms of corruption.

Managers of the KMT mine (DRC) inform workers of the mine’s forced closure as a result of corruption.[Image source: RAID]

The UK’s General Principles to compensate overseas victims provide a useful guide for considering the mandate of such an agency. The principles are broad and direct the relevant governmental departments, most importantly the Serious Fraud Office, to consider compensation in corruption cases and, where appropriate, to use all available governmental and legal mechanisms to secure it. The Principles direct the departments to work collaboratively with other relevant government entities to identify potential victims, assess cases for compensation, obtain evidence, and ensure the process of compensation is transparent, accountable, and done in a way that avoids the risk of further corruption. A Canadian equivalent might help situate the agency’s role in Canada’s existing sanctions system by outlining collaboration with Global Affairs Canada, the RCMP, and the judiciary, among other relevant actors, for the purpose of pursuing victim compensation for corruption.

A dedicated victim compensation agency would be an ambitious step for a country with a poor record of combatting corruption. However, if implemented, a victim compensation agency would provide significant advantages over a much more limited judicial oversight mechanism. With Magnitsky legislation beginning to proliferate around the globe, now is the time for Canada to consider how its own law could improve to better support individuals whose human rights have been violated.

Aleksandar Petrovic is a 2L student at the Peter A. Allard School of Law and is working with the IJHR Clinic as part of the Magnitsky Team.