Ottawa has done nothing to actually seize millions from Russian oligarch

Two years after Foreign Affairs Minister Mélanie Joly declared she was taking the unprecedented step of moving to confiscate millions of dollars from a sanctioned Russian oligarch with assets in Canada, the government has not actually begun the court process to forfeit the money, let alone to hand it over to Ukrainian reconstruction — and it may never happen.

The federal government announced on Dec. 19, 2022, that it had ordered a freeze on $26 million US held in a Canadian bank account by an offshore investment fund, saying the money ultimately belonged to Roman Abramovich, a high-profile ally of Russian President Vladimir Putin. 

It was Ottawa's first use of newly legislated powers to not just sanction certain people and companies, but to also confiscate their money and sell off their assets based solely on those sanctions — something no other major Western economy has tried. 

The government pledged that the alleged Abramovich funds would go toward "the reconstruction of Ukraine and compensation to victims of the Putin regime's illegal and unjustifiable invasion." The oligarch, who used to own the Chelsea soccer team in England's Premier League and has a stake in a steel company with plants in the Prairies, had already been hit with sanctions by Canada earlier in 2022. 

More than two years later, however, the Liberal government has not taken any of the necessary steps, including an application to Superior Court, to actually confiscate the $26 million US, which it said sits in an account at Citco Bank Canada. 

"We've seen nothing from that, and it is a mystery for sure. I wish I knew what was going on," said independent Senator Donna Dasko, who has a hand in the Russia sanctions file as the upper chamber's point person on the now-defunct Bill S-278, which would have further augmented the government's sanctions powers. 

"It's taken a lot of time," Dasko said. "And really we do need some transparency on this." 

Global Affairs Canada wouldn't say why it hasn't acted yet to confiscate the funds. In a brief emailed statement last month, it said simply that it's under no obligation to do so "within a specific period of time." It wouldn't provide further information, citing privacy concerns, even though the department had put out a press release about its plans to confiscate the Abramovich assets.

An American law firm that represents Abramovich did not reply to emails seeking comment.   

A number of lawyers with expertise in sanctions and international trade said the government might have bit off more than it can chew when it proclaimed it would confiscate the millions. 

There's a risk that because the money, according to Ottawa, is in an account belonging to an offshore investment fund called the Manticore Fund (Cayman) Ltd., it can't actually be tied directly enough to Abramovich. 

"The issue of ownership and control is a hard one," said Clifford Sosnow at Canadian-based international firm Fasken. "There's a series of thickets for them to have to work through to act on this."  

Then there's the chance that Abramovich might challenge any forfeiture of assets on grounds such as the 1991 Canada-Russia investment-protection agreement, the terms of which would require Canada to compensate him for any "expropriation" or "nationalization" of his investments, Sosnow noted.

John Boscariol of Canadian law firm McCarthy Tétrault said the fact that Canada is taking an unprecedented step has other countries "watching to see our success on it," which might explain the delay in action.