Michelle Gallant
Michelle Gallant spoke 16 times across 1 day of testimony.
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Michelle Gallant, Prof. (Law – University of Manitoba)
Thank you. Thank you to the Commissioner, thank you to the moderator, to fellow panelists, everyone present, and those of you attending remotely for this opportunity to share some thoughts. It's a privilege to participate and maybe offer something of value. You know, funding is important to securing any aspirations. It doesn’t matter if you're opening a restaurant, if you're starting an industry, if you're going to higher education, or to realize civil society ambitions. You know, funding enables. There aren't a lot of things that are accomplished without some kind of access to finance, to property, and to resources. So in participating today, I would like to simply survey three dimensions of funding and finance; very briefly, funding and the Charter; a little bit on foreign funding and civil society groups; and a little bit about the appropriateness of these particular financial measures. So let me begin by noting that it hasn’t been fully canvassed by the courts at all, but in principle, the idea of fundraising to support a cause, right, or a social movement is protected by the Charter freedom guarantees. There was a round table this morning. They did talk about constitutional freedoms, and I'm sort of drawing on some discussions with Professor Jamie Cameron. But suffice to underscore that funding animates those freedoms, so organizations do have the right to fundraise, and you can't impose a limit on what they use those funds for. That would fall within freedom of expression. Donating to organizations, lots of people donate that donate. That donative act can constitute associational freedom; my association is by giving, right, by donating, and then again, the action is captured by the freedom of association. Broad Human Rights law also places the mobilization of resources amongst the activities that freedom of assembly protects. So there is a report. It's May 2022 from the United Nations Human Rights Council, and it specifically -- it's specifically about funding. It's actually specifically about foreign funding. But it specifically states that: "The right of associations to freely access human material and financial resources from domestic, foreign, and international sources is inherent in the right of freedom of association and essential to the existence and effective operations of any associations." So I know there are limits. Some of those were talked about this morning, but simply to underscore that that funding piece is part of those freedoms. And I would also note that the size of a particular funding campaign -- so even if someone has surprising success in mobilizing resources beyond your dreams, that is not ever without more grounds for a state interference. Simply, a successful fundraising campaign galvanizing lots of resources is not, on its own, any kind of a justification for some kind of state-based interference. So let me say a few things about foreign funding restraints and civil society organizations. As my colleague has commented, so democratic and non-democratic orders all resist foreign funding. It's not just the democratic order thing, all orders resist foreign funding. This idea that, you know, foreign influence, that the meddling of the outsider in the internal affairs of another, it's long been controversial. Usually states, particularly sovereign states, democratic states reserve unto themselves that we have the right to arrange our internal matters and will resist and sort of shut off their boundaries to the kind of foreign influence, including foreign funding. That resistance, that sort of who is -- is sort of just based on this feel that look, we're accountable as a state, I'm accountable to particularly through elections, to the domestic populous, and I'm not accountable to an audience somewhere, anywhere else on the globe. It might be said that the entire project of international law is simply devoted to deliberating upon what's the proper place of external influence on domestic affairs of state? I have to underscore this too. Any money flowing across the border is foreign funding. So if I am a Mexican expat and I'm working here and I'm sending money home to fund my family in Mexico, that, to the Mexican state, is foreign funding. If I'm in the UK and I purchase a football team and I'm a Russian billionaire, to the United Kingdom, that is foreign funding. So any funding that crosses a border constitutes some kind of a foreign funding. But what I wanted to note today is that increasingly, there has been this recognition of -- that there's a recognition that states are imposing restraints on foreign funding. This is a new thing. It sort of started maybe in the last 20 years and it's intensified in say the last 10, this idea of we're going to -- individual states are going to restrain access to foreign funding. How do they do that and what are the strategies? Well, one strategy is simply requiring that civil society groups, if you're going to go and harvest foreign resources, you must register. So you have to seek the approval of the state before you can go elsewhere. Another one is simply -- it's a little more covert -- is the adding of different administrative burdens. So you're an organization and you'd like to secure foreign funding? It's the idea that well, if you want to go after foreign funding, you have to disclose that. You have to fire a number of forms. So it impedes. It's harder to secure foreign funding than it is to secure domestic funding. I think one particularly alluded to, maybe by both of my colleagues here was the idea of a state marginalizing or decrying as illegitimate, or in particular, labelling a domestic organization as a foreign agent as a reason to say, "No monies is flowing here." So that’s another strategy. And again, the idea too would be calling a civil society group as a political organization. So what do we have? So in Canada -- so those are some of the restraints. In Canada, the -- we do have some restraints on foreign funding, and most of those, I think, as my colleague Jessica Davis has canvassed, most of those connect to elections and the formal political process, basically injunctions against foreign support. So that’s the place where we find these restraints on foreign funding. Do we actually see them anywhere else? Well, generally, the idea would be no, we don’t generally have specific injunctions prohibit prohibitions on access to foreign funding. However, what we have seen is we have seen, is we have seen some encumbering -- encumbrancing being imposed on say, registered charities. So for example, now -- this is a result of a few years ago -- now, if a registered charity, which is just a charity, it's governed under tax law, but if you are a registered charity, if you're a civil society organization that’s organized in that way, you actually now have to disclose the presence of foreign funds. So it used to be charities had to disclose broadly how successfully your fundraising efforts, right, how much money did you raise? But now, these particular ones in Canada now have to disclose the presence of foreign funding. So it's not a specific restraint, but it certainly is an exercise in opening up and disclosing the presence of those resources. So we've seen some of these, and I think what's concerning about this, to me, was when I was really looking at this, I thought, this is going to be your usual suspects where we're going to see there's maybe some states that sometimes, at least in Western society, tend to maybe think they're a little bit troublesome. But none of these foreign restraints are -- they're applying in the United States, in Europe, and in Canada. So it's in your reasonably well developed, democratic states that are imposing these restraints. An I would be remiss in not pointing out with respect to foreign funding that in July 2021, it saw the completion of an Alberta report, and the Alberta report deals specifically with foreign funding and the energy campaign and energy campaigns in Alberta. And it was an inquiry that was called in that regard. So that Inquiry, there might be all kinds of other parts of that Inquiry might be uncomfortable with. However, that Inquiry, in its forensic accounting, so it used an accountant, actually did identify an increase in the funding of our donative sector in Canada over the period of 10 years of foreign dollars. So I think the number it says is about 1.6 billion, an increase over that period flowing into Canada. It doesn’t track where it’s from. There’s some sense that a lot of it is from the States, but it does track an increase in foreign funding. And I’m noting, since that inquiry specifically about foreign funding, the first recommendation that that Commissioner made was actually that we need to increase the transparency of the financial sector, in particular, in connection with registered charities. So I would just note, just sort of mention in talking about these foreign funding restraints, any time we introduce an element of disclosure, as you know, right, elements of disclosure, they irritate privacy. So when we seek to introduce, even if the restraints are about introducing and enhancing transparency, those transparency norms irritate. And I say that because generally the act of donating, which my colleague talked about donating to any kind of campaign, normally falls within the realm of financial privacy. It’s not public. There’s no public entitlement to know where I put my donation -- my donative dollars. It’s -- privacy shelters that kind of freedom. Now, I just note that sure, if I have no obligation to disclose and yet I freely choose to disclose in some public media or, you know, tell someone what I’ve done, that’s quite different. There I’ve decided that, look, I’m waiving my financial privacy. But there is always going to be that tension between disclosure and privacy. So let me -- in the few minutes I have left, let me say a few things about the appropriateness, like, turning specifically to the appropriateness or necessity of the particular financial measures that were introduced. I think what I’d like to highlight here, and sort of along the lines of my colleague, when -- my colleague, Professor Kennedy, when you’re talking about the appropriateness or necessity of the particular financial measures. And what I’d like to simply comment on is this idea that simply because we have an emergency situation, once that’s decided, that doesn’t trump or irrigate the complete application of law. So there is space in which we have to determine ad think about were these particular things appropriate or not? Was there particular regimes necessity or not? And in saying that, it’s not sufficient to simply say they worked, the situation dissolved, we solved it. it is not sufficient, because that’s to equate effectiveness sort of with appropriateness, and it means that appropriateness has no meaning, absolutely no meaning. Anything is appropriate. So, you know, the example would be, you know, the sledgehammer killing the fly, but so would the flyswatter, and that would say that the sledgehammer is -- okay, and I’m not commenting on their appropriateness. I’m just outlining some of the things we have to think about. We have to think about whether those -- these particular measures were appropriate or not. So simply in talking about whether the appropriateness of the financial regimes or the necessity of these particular financial regimes, let me simply say that the way in which we might be able to discern that would be to at least think broadly about some kind of a proportionality test. So if you’re a lawyer, you know there’s an Oakes test, and it’s kind of -- what it is is it’s kind of a matrix of proportionality, and basically what would that mean, that would mean, in a sense, okay, let’s look at we have a response, and that response ought to be sort of minimally impacts on individuals; right? So that would be on one side of the equation, while at the same time, be designed to immediately lance a particular public order problem. So you have to think about -- so there’s proportionality between the particular measures, right, and their impact on individuals, not as concerned about institution, more concerned about individuals, and the immediate kind of dealing with the public order situation. And I’m going to end just by adding one more thing to that. So what would be -- some pieces that might be relevant to this proportionality analysis? Certainly foreign funding would be -- it would jostle for some primacy. So if there was foreign funding, not concluding that there was, it’s been outlined that maybe there wasn’t, but the idea of foreign funding would be pretty important in a proportionality analysis. Another thing that would be important, I think, is when people talk about the idea that these measures were temporary, the measures were temporary, but the impact of these financial measures on individuals may not be. And I would simply say this, the Privacy Commissioner has already warned that some information gathered under terrorist finance and suspicious transactions reporting norms, it was wrongful or not clear. Once it went into the final system, there needed to be a way to purge it, to get it out, so that that kind of thing, there was a lingering consequence. So thank you.
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Michelle Gallant, Prof. (Law – University of Manitoba)
I’m not aware of any, because generally not-for-profits, the regulation is much lighter, and simply because they don’t give tax deductible receipts; right? So I’m not aware of any. And I would also sort of, just in regards of that, I’m not aware of any restrictions. So there’s not-for- profits, there’s charities, but also sort of ad hoc civil movements. I’m not sure where they would fit in this; right?
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sure. One question I would have is sort of generally, sometimes when we talk about, you know, fixing the financial system, and then we talk sometimes about -- combine that with this idea of, you know, foreign influence, I guess I wonder myself, I have trouble sort of thinking about well, how are going to discern? So my example would be if we’re going to fix -- there’s problems with the financial system and we’re worried about foreign dollars, and I think of an example like, okay, we’re building a church, you know, in Winnipeg, and it’s funded by dollars that are coming from the Vatican. That’s foreign funding. And it could easily -- so I wonder about how do you think through how do you legitimately identify, you know, what are the gaps that need to be filled and what could be left alone?
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Michelle Gallant, Prof. (Law – University of Manitoba)
Yeah, it's not really an answer, but I think this came out of some of the comments that Professor Leuprecht made was this -- the part about identifying the foreign funding is one thing, but one reason I think that Canada has some issues on the international stage, even though it hasn't been labelled -- I'm not aware of it being labelled as a money-laundering haven or a terrorist finance haven. I stand to be corrected. But the criteria of both of those is usually financial secrecy is at least one, low tax rates can be one, but also, pronouncedly very strong secrecy rules. So I guess I wonder, like I said, I'm not that sure, I haven't sort of policed or looked into how strong kind of Canadian protection of the secrecy of transactions that cross the border actually how that stands up along, say, you know, different countries which sort of have been labelled sort of I guess as secrecy havens. Some parts in the south, some parts in the very centre of the United States, some places in the middle of Europe, like I said, I wasn't aware that we were, but if we are, simply in terms of detecting that kind of foreign funding, the suggestion would be we actually have to enhance disclosure in some way, shape or form, so to move up the transparency international, you know, index.
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sure. I would say that generally that there’s certainly been a lot of work here in Canada, and sort of it comes -- it’s this global regime, both in a sort of a criminal context and a terrorist funding intent, but also in a tax context; two separate global regimes but they’re both about increasing transparency. And it’s simply -- it’s not simply about but it’s largely about crossing borders. So the tax evasion or avoidance to which my colleague referred, a lot of that activity is because it’s enabled by a border, so even the CRA can go as far as the border, but they can’t look beyond; then they’ve got to start asking questions. But there’s been a lot of work, I think, and it has a long way to go in terms of transparency. So one example would be it’s been -- I don’t know how many years they’ve been asking us to create a corporate registry of beneficial ownership, and it’s simply a place that, you know, you find a corporation and you know who actually benefits from it, right? It's been forever, and we’re finally -- BC’s moving, so a lot of places. So that general work, I think, is happening but as I said, it’s been very slow. But related to that, and maybe -- I think somebody else can probably answer this because the transparency piece is from the top down. I usually sort of work from the bottom up. So if I were looking at -- I would start with proliferation. So I would know that, say, there was a nuclear facility and money was destined for proliferation, then I would look up from there to the regimes that governed that allowed the transparency, or why didn’t we see this. But one question I have in terms of that, is I can’t get my head around; what is it about this particular -- what was going on in Ottawa in January and February that would have triggered a financial response? So, you know, when I think of financial reporting, I think of suspicious transactions reporting, so you know, $12,000 deposit from somebody who has you know, no resources; it might trigger a suspicious transaction report. But I guess I wonder generally, so in terms of -- if we had transparency, what is it about what was happening, as I said, in January and February and sort of in Ottawa but also across the country that would have triggered some financial knowledge? Like I say, that’s ---
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Michelle Gallant, Prof. (Law – University of Manitoba)
Just, yeah, I think it’s the point ---
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sorry. I think it’s the point that Professor Cumyn -- Michelle Cumyn made about that even if you regulate the crowdfunding platforms is one thing, but as I understand it, there may -- if you have -- if I put a sign on the internet that says, “Send me money,” and it’s got my bank accounts, that that -- it’s regulated by the financial institution; it’s an exercise in crowdfunding, but it doesn’t touch any kind of crowdfunding. I think that’s the point?
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Michelle Gallant, Prof. (Law – University of Manitoba)
Yes.
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Michelle Gallant, Prof. (Law – University of Manitoba)
I can just add, just in terms of the notice piece, the idea of affecting, sort of, rights -- and I think this has been mentioned before, would be yeah, the financial measures touched the stuff of designated people, but the stuff of designated people, like most of us, a lot of that stuff is jointly owned or owned in common, so in thinking about the -- just in thinking about whether it was proportionate, sure, you jointly own a house -- or you jointly own a bank account and one of those people has nothing to do with -- or maybe they’re even estranged and they still have an account sitting there. So just -- I’m just adding that to sort of the discourse on the lack of any kind of sense of -- not only of notice but of any -- anything.
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Michelle Gallant, Prof. (Law – University of Manitoba)
I would just say as it's always difficult, given jurisdiction, to attach something. So it's the same reason again in the opening presentation, he talked about taxation. The reason you put your assets outside of Canada is a jurisdiction concern, right? It's more difficult to tax them. I'm not saying it's a crime, but it's more difficult when anything is offshore. It doesn’t matter what it is, an asset, relation to tax, or anything else. It's much more difficult for the Canadian state to do anything against that, particularly if you're not a Canadian. So if you had somebody -- yeah, so anything, sort of any resource, the only place you can catch is you can catch it at the border, but if it involves sort of a donator in Australia or in you know, Nigeria, or United States, the reach of Canadian laws obviously doesn’t cross that border. Now, I would say, there are relationships amongst banks, so Canada has never done this, but the U.S. has certainly seized -- this little thing, it's just called a correspondent accounts, but basically what they have done is, if you don’t follow what we want you to do, we will seize anything that’s remotely related to your bank here, so say the Bank of Canada has what's called a correspondent account in New York. But as far as I know, we've never done that, but that whole question about jurisdiction is a difficult one. It's an absolutely difficult one.
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sure. I'm not sure I would use the language of "unintended." But in certainly in thinking about the -- ruminating on proportionality, it would have been known -- so when I referred to the privacy -- or at least when I referred to the Privacy Commissioner has a report, it simply talks about sort of stagnant financial information, so information -- she's talking in the context of terrorist finances, suspicious transactions, so there's a little cloud on someone, and it's been investigated and dismissed. But the point she makes is you need to -- there needs to be a mechanism for clearly purging that. So in the same, we don't have mechanisms. You know, somebody else wrote about it, it's something called the right to be forgotten, right, the right to have information actually purged and destroyed. But just in response to what you said, I don't think by any stretch anyone -- it was -- I'm not sure what intention means, but it would have been known because it's always been, like, it's a piece of -- it's known that once something descends, right, as I said in her context talking about once privacy and some information, yeah, it's there; right? So it would have been known that that information was there. So this idea about was it temporary or not, at the time, that piece, that something might potentially linger would have been a piece that ought to, I think, have gone into, as you say, the analysis of whether this is proportionate or not. It's not temporary if you're, you know, for some whose relationships or financial matters would have been disrupted. Maybe not permanently, but as you say, even -- I mean, the severity would be even something like, you know, our bank account just closed and we live on the margins, and, you know, we've -- you know, the consequences there. But in this case, yeah, if you have one bank account and it goes beyond, then you're really in difficulty so.
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sorry, yeah, I don't think it's possible and I don't think it would be a good idea. So it's possible under a new technologically-driven model, which my colleague referred to earlier. You could have some sort of centralized system wherein Canadians were only allowed by law to use an electronic currency. You could have that. I think that's a very, very bad idea. It means that everything is capable of surveillance, regardless of what -- we put -- placed all the information in a central place, so I think that's bad, not a good idea. I think facilitating exchanges is fine, but that particular model, which has come up recently, is not a great idea at all. And nor would I be -- it's very, very delicate when the state starts blocking websites. So if we put this in the context of China, and you talk about sort of, well, I -- when I'm there, I can't access these websites, what's going on, which to me are quite normal, that's a very, very delicate and a dangerous area. We -- so just -- so whether it's to shut off funding or to shut off, you know, access to information, I mean, there are limits on the things maybe that we should have access to, but distaste or, you know, short of certain real extremes, you know, the state's ability to sort of shut off, to sort of shut off -- and I say that because we've seen that. We've seen that right now in the context of Russia. We've seen websites shut down, which reasonable people, I think, would completely disagree onto whether those websites should have -- they would say that was my source of information and now it's shifted. So I'm just sort of responding to that. I'm really concerned -- I would be very, very concerned about giving the state that kind of authority. Sorry.
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Michelle Gallant, Prof. (Law – University of Manitoba)
But can I ---
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sorry, Michelle Gallant, yeah. I just -- Jessica, I think in something you wrote you mentioned at some point in time you talked about these things that are called I think Hawala Networks, or Informal Value Transfer networks. So I'm simply asking you whether your idea is that actually whether you see any value in this in the fact that the state actually, so for these Informal Value Transfer networks are outside of the formal banking system, and a lot of people have issues with them, but I wonder if you see any benefits with that kind of a -- because you mentioned cryptocurrency, so the idea of a decentralised system, you know, the lack of state surveillance? The same -- and I'm just trying to parallel between the Hawala might have been an older version of a deregulator, or the Mexico peso network might have been another. So I'm just wondering if you see any value in those kind of networks that aren't subject to intense regulation?
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Michelle Gallant, Prof. (Law – University of Manitoba)
Yes.
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Michelle Gallant, Prof. (Law – University of Manitoba)
Sure. I'm not generally in favour of more law, right, more regulation. I mean prudence, yeah, maybe prudent, targeted regulation, yes. And actually, I would simply just go in terms of like watching and concerning financial activity, there is a balance between the amount of information that any state ought to know, right, and then what to be private, even if that privacy might offend someone. So we usually use the language of "crime" to discern that, and really that's what terrorism financing and those laws do, but it seems to me we're sort of -- to go beyond that to me is quite frightening. And the reason when I mentioned -- that I mentioned sort of in the future our state and many states having the capacity to regulate everything, that is -- there are templates you can see of this ability happening, right, so this ability to actually watch every single financial transaction. Now, we talk about those as though "Oh, the state won't", whatever, but I would be concerned. I would be seriously concerned about moving to a system where everything was in one place that it could be, right, because once it could be, then the next time it we'd be, "Oh, well, maybe we don't like this thing, let's check"; right? "We said we wouldn't unlock the door, but now we have good reason to so we'll break the lock and see what's in there." So seriously concerned about that. And you know, my final comment would be, you know, I have this -- you know, when we think about these things, sort of thinking about the Inquiry and the need to be consistent what keeps resonating with me, is this might not have been, you know, your particular social movement, your particular protest, but the next one might be.