Public Order highlights: Thursday, November 17

TDF’s Legal Team

Written by
November 17, 2022

The commission heard from a panel of witnesses today which included Minister Chrystia Freeland’s advisers, deputy minister Michael Sabia, and assistant deputies Rhys Mendes and Isabelle Jacques.

Mr. Sabia works in the Department of Finance. He said he is in charge of the oversight of the Canadian economy, including tax and fiscal policy, spending on economic development & social policy, and economic analysis and forecasting. Ms. Jacques was responsible for developing the financial tools under the Emergencies Act, though drafting was done by the Department of Justice.

Mr. Sabia said in January and February 2022, the economy was just emerging from the COVID-19 pandemic economic crisis. He said that they were concerned about the extent of the damage to supply chains, inflation and business investment (the latter being influenced by business confidence). He said it was easy to shut down an economy but difficult to open it up again, so it was a sensitive moment. 

The panel was shown projections for the shutdown of the Canadian economy resulting from automotive, transport or total economic disruption. Mr. Mendes said as time went on, the protests had the potential to inflict more damage to the economy. He said that short-term disruptions may not result in economic loss; however, long-term disruptions may result in permanent economic losses. It was the possibility of long-term disruptions that caused them to take steps: if the disruptions continued, US officials may reevaluate their relationship with Canada as a trade partner. They estimated loss to GDP from various disruption scenarios. 

He said they were concerned about the short-term impacts on the Canadian economy and the integrity of Canada’s financial system. They looked at the Bank Act and The Proceeds of Crime (Money Laundering), and the Terrorist Financing Act (PCMLTFA) to see if there were any applicable legal tools that could be used to shorten the disruption in the economy. They looked at the regulatory remit of FINTRAC and whether it could be used to access crowd-funding or freeze bank accounts. They realized that if they were going to take steps, it required legislative changes - but they claimed this could not be done quickly. 

They looked at options for giving the Governor in Council authority to compel banks to freeze accounts or review their existing business relationships to ensure that funds were not being used in furtherance of unlawful activities. They were in discussions with the financial services industry about ways this could be done. Mr. Sabia spoke to bank CEOs about what they thought the government should be doing about it and what could be done: he did not raise the specifics of these options at this time, however. Later, he did have collective conversations with the bank CEOs. Prior to the invocation of the Emergencies Act, his conversations were general in nature about the effects of the situation on the business and banking community: these institutions shared their economic concerns.

Once the Emergencies Act was set to be invoked, the nature of these conversations changed: he said they then had conversations about implementation. The bank CEOs were open to working with the government to bring a “peaceful end to the protests” by implementing bank account seizures. 

Ms. Jacques said that under the Emergencies Act, banks preferred to review their business relationships with customers and then use algorithms to identify suspicious transactions or obtain information from enforcement agencies. In the end, the RCMP shared information with the banks to identify customers and vet the information they received: the obligation was then on the financial institutions to determine whether they were going to freeze bank accounts. The banks did, sometimes, freeze bank accounts without request by the RCMP. She said under the Act, it was the banks’ responsibility to take action.

Ms. Jacques said that the Emergency Economic Measures Order (EEMO) policy was developed by the Department of Finance but was drafted by the Department of Justice. The Department of Finance did not send information regarding which accounts were frozen: this was done by the RCMP and the financial institutions. The RCMP worked with the OPS and OPP to identify individuals, then the RCMP sent those names to the financial institutions: the decision to freeze bank accounts was left to the financial institutions. 

Mr. Sabia said people have every right to protest, and there were no easy answers, but having made their point, they used incentives to get people to leave. He said these incentives helped law enforcement end it peacefully. He said the Department of Finance set a policy that the financial institutions should not be used in furtherance of activities declared illegal. He also suggested that the people on the ground who had information about this unlawful activity could provide the information to financial institutions. He further stated that of the 280 frozen accounts, information on roughly 256 came from the RCMP. They claimed they only set policy.

They were asked about cutting off the ability of a family to buy groceries and whether they appreciated the difference between deterrence and “getting at the family.” Ms. Jacques answered that the focus was not about “getting at the family”; it was about working quickly. She said she wanted to dissuade the protesters and act quickly. She said it was the protesters’ decision to stay. She said we did have discussions about child support, saying the goal was not to punish: the goal was to ensure the people involved would make a decision to leave - then the accounts would be unfrozen. 

On cross-examination by the lawyer for the convoy organizers, they were asked about money laundering and terrorist financing. They said they had no information one way or another that the protesters in Ottawa between February 10, 2022, to February 14, 2022, involved terrorism or money laundering. Mr. Sabia said they were not privy to information available to FINTRAC: that information goes from FINTRAC to law enforcement. He said they adjusted the regulations to apply to crowd-funding sources: before the Emergencies Act, they were not subject to FINTRAC.

He agreed that crowdfunding was done online and to support a cause. He agreed that the protests were about a political issue. He did not know that before the protesters arrived in Ottawa, the GoFundMe had raised almost $5 million. He agreed that donations to a political cause are part of political expression. But he said the issue is not about donations. He said the government made a decision to invoke the Emergencies Act and claimed it had been scrupulous in how it was used and kept it to a short duration. He said that was done in a manner consistent with the laws of Canada.

On cross-examination by the lawyer from the CCLA, he was shown a memo setting out options to deal with financial seizures. He said with respect to “illegal activities” that would have to be defined: he said the Emergencies Act did that. They agreed that financial institutions could freeze the assets of a designated person: this included joint accounts. They did not recall that the Canadian Bankers Association (CBA) raised concerns with the scope of the Orders, though they did with respect to child support. They may have asked about concerns with respect to joint accounts.

Ms. Jacques said they were not targeting small donations. However, they agreed that small donations were captured by the Order. She noted that the Order was not retroactive, so donations prior to the Emergencies Act invocation were not captured. They admitted that it was possible that people not at the protest but who donated to someone at the protest might have their accounts frozen: Minister Freeland was told this might occur. They agreed that the Order also applied to automobile insurance, though the RCMP used their discretion not to apply it. Mr. Sabia claimed that this had a helpful incentive effect: the RCMP’s approach was appropriate. Ms. Jacques said it was the responsibility of banks to be compliant with the law and share information with the RCMP or CSIS. She admitted that the indemnification for the financial institutions only applied if the banks complied with the law: she agreed that if the banks exercised their discretion for humanitarian purposes, they were taking a financial risk. She said her department received aggregate, though not specific, information about frozen accounts from the CBA. 

Mr. Sabia was aware that, by February 22, 2022, the RCMP had communicated to the banks that they should begin unfreezing accounts. FINTRAC said it did not notice an elevated level of suspicious transactions during the protests: Mr. Sabia said only 5 transactions surfaced during this time. 

On cross-examination by the lawyer from the CCF, Ms. Jacques was asked about the effects of frozen accounts. She was asked if it might have been better if a “humanitarian clause” was included in the Order. She said they could have crafted an exception and agreed that they might have been more specific because it was not the intent to affect child support payments. They were asked about the lingering effects of credit scores from frozen accounts and whether some thoughts were given to long-term effects on credit history. Mr. Sabia said the long-term effects on credit are an issue for financial institutions and not the government of Canada. He said the government of Canada made some decisions regarding freezing accounts and all individuals had to do was leave. He said people involved were given notice that they might have accounts frozen and were given a simple solution to leave. He said the credit consequences were not an incentive or part of their intent. 

Regarding the EMMO that came into effect on February 15, 2022, Mr. Sabia agreed that they had consulted bank CEOs about the measures to be implemented. He said there was no obligation on the government to consult with bank CEOs before invoking the Emergencies Act. He said that Cabinet met on February 13, 2022, to discuss, among other things, the invocation of the Emergencies Act. He said by that point, any input received from the banks could have been submitted then. Cabinet did not meet again until February 15, 2022. From a policy perspective, Ms. Jacques said they had the Order worked out by February 13, 2022. Ms. Jacque said neither she nor her group consulted with any provinces or credit unions. Mr. Sabia said he did consult with some insurance companies. 

Ms. Jacques agreed that once crowdfunds were paid to banks, those funds would come under FINTRAC authority. She agreed that the money-freezing provisions of the EMMO applied to new categories of people: people designated as participating in illegal activities. This was a category outside of those outlined in The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). 

On cross-examination by the lawyer for the government of Canada, Ms. Jaques said there was nothing in the Order preventing the banks from asking law enforcement for further information regarding illegal activities. She said it was important under the Order that banks had an obligation to review the bank account seizure of designated individuals. Ms. Jaques said people would have their accounts unfrozen once they left the protest and were no longer “designated individuals.” Implausibly, Ms. Jacques claimed that her department had no way of knowing whether funds in frozen bank accounts would be used to buy groceries.

Mr. Sabia said the record shows that the department of finance was able to minimize the damage to the national economy. He said they were able to avoid serious consequences for millions of people. Commissioner Rouleau asked if threats to economic security should be considered in the Emergencies Act. Mr. Sabia said that to the extent that there is some ambiguity, it should. 

Jody Thomas is the National Security advisor to the Prime Minister and was the next witness at the commission. She said the NSIA was created after 9/11 to coordinate between departments. She was made NSIA in January 2022. Before that, she was deputy minister of national defence. She said she was a consumer of intelligence rather than a creator. She said her sources were, among others, CSIS, RCMP, Global Affairs, Department of National Defence, open sources and Five Eyes. It is primarily domestically sourced, but some foreign sources. She reads raw sources but also processed sources. She agreed that, at this point, there was limited information coming in from CSIS. There was a briefing note mentioning that CSIS looks to the definition of “threat to the security of Canada” as defined in s.2 of the CSIS Act. She said the early reporting was that the freedom convoy would be a normal protest. She said then they saw behaviour indicating that the protesters would stay for a longer period of time.

She said her role was to give an overview of the national situation: it was not to give advice or recommendations. She would make suggestions. She gave information about arrests or IMVE information. She said she would give assessments but not advice. 

She was shown a note wherein she stated that on February 3, 2022, the protesters indicated a desire to negotiate, but no one from the federal or provincial government had reached out: she learned this from open-source media. She engaged the City of Ottawa to encourage them to dialogue with the protesters. She described the Incident Response Group as a mechanism to inform the Prime Minister of important national security events. 

She knew from the RCMP that weapons were present at Coutts, but not the extent of the weapons cache. 

On February 11, 2022, they were going into the third weekend of protests, but they had no clarity on negotiations. They did not know who the leader was or who would get the protesters to leave. She said the view was that there was a change in tone: more people were attending, and fewer people were leaving. She claimed the honking continued despite the injunction.  It became apparent that “this wasn’t breaking up.”

She said the federal government did not have the tools or the mandate to monitor social media. She did not have computer programs to monitor social media via the use of algorithms searching for keywords. She said online, it is often difficult or impossible to identify people such that credible threats can be discerned. 

She was asked if she conveyed the view to the government that all of the available tools had not been used: she said she was not asked to express that view.  She said she did not know of Commissioner Lucki’s view that the tools had not been exhausted. 

She said that, around February 13, 2022, it was her view that negotiations were breaking up and it was difficult to deal with a single protest leader. She said that there was no evidence that there was a plan in place at this time. 

She has said in an email to various political officials, that: “Clearly this isn’t just COVID and is a threat to democracy and rule of law,” and “[t]his is about a national threat to national interest and institutions…[b]y people who do not care about or understand democracy. Who is preparing to be violent. Who are motivated by anti-government sentiment.”  

She said she sought a threat assessment, but this threat assessment was never produced for her because it was overtaken by events. She said the Privy Council Office (PCO) would have written the threat assessment. 

She was asked about the specifics of a threat to national security. She was shown a memo that examined the problems.  She does not recall asking for this explanation. She was told that the government of Canada never actually defined a “threat to national security.” Ms. Thomas claimed that the question is still unclear about the legislative definition of “national security.” She was aware that CSIS did not assess the protest as a national security threat. She was not asked to opine on it. She was asked for her view about whether the Emergencies Act was necessary on February 13, 2022, but claimed Cabinet confidence. When asked again, she amended her previous statement on whether she believed that the Emergencies Act was necessary to “yes”. Regarding the engagement proposal on Feb 12, 2022, Ms. Thomas did not believe that it was a viable plan. The engagement strategy in Windsor and Coutts was unsuccessful, and the unintended consequences were greater than the actual consequences.

She said there was no public policy definition for when a protest becomes unlawful. She was shown a comment she made that said the protest metastasized into something else when people could not conduct their lives normally: she said the line between lawful and unlawful is not clear, and she does not have an answer to this question. She said the work to answer this question in the government is “ongoing.” She was asked if any thought was given about how to intervene while protecting lawful protest. 

She speculated that when the Emergencies Act was still invoked, the War Memorial was still open for lawful protest, but inside the exclusion zone, it would have been illegal. She claimed that “it is fundamental that people have the right to protest” and that it is in the Constitution. She said, however, the discussion about when it metastasized into something else is something that “we are pursuing.”

She was shown a piece about social and political upheaval after a pandemic: she said this was informative. She commissioned an intelligence assessment about how the freedom convoy could arise from and lead to social unrest. 

She said although there was a focus on Ottawa, their view was national in scope. 

On cross-examination by the lawyer for the convoy organizers, she conceded that she is not trained in intelligence. She agreed that CSIS said there was no security threat under s.2 CSIS Act but she claimed the meaning of “security threat” is not limited to the CSIS Act definition. She said the Cabinet can consider threats that are outside the definition in the CSIS Act. She said there were threats to people: when told they were only through email and Twitter, she said they still had to be taken seriously. 

She said she relies on CSIS, OPP and CBSA and the security establishment for intelligence. She was not able to say if anyone provided her with an assessment that there was a s.2 security threat. She conceded that Parliament has not given the NSIA authority to assess or analyze intelligence. 

During cross-examination by the City of Ottawa, she agreed that the removal of protesters at parliament was a step in the right direction, but the work was not complete.

In cross-examination by the lawyer for CCLA, Ms. Thomas stated that the CSIS Act should be amended. She said that she did not necessarily mean that it should be broadened but rather “modernized”. When asked if the definition of public order emergency is tied exclusively to the definition in the CSIS Act, Ms. Thomas disagreed and said that legal arguments to this effect would be forthcoming. She said the CSIS Act and the Emergencies Act “were written in the 1980s, and they both need to be modernized to reflect the reality of the nature of threats that are occurring in 2022.” 

She was aware that CSIS was concerned that the invocation of the Emergencies Act may encourage violence. When pressed, she could not point to an example of serious violence from the convoy. When taken through the definitions of a “security threat” under s.2 of the CSIS Act, she conceded that there was no sabotage, foreign influence or espionage found by CSIS. She said, however, that NSIA is not restricted to the CSIS Act definition of “security threat” when briefing Cabinet. She claimed that a public order emergency may be declared even though there is no security threat as defined by s.2 of the CSIS Act. She said economic security should be considered, as well as IMVEs, threats to public officials, and the undermining of confidence in public institutions.

She said she agreed with her US counterparts that a security threat should include threats to economic security. 

She was shown an email wherein she asks, “how do we know they’re peaceful” dated February 14, 2022, around 2:52 pm. She said that she asked for this additional information because the Clerk of the Privy Council sought it. A First Ministers’ Meeting then occurred. She agreed that the Prime Minister had a press conference around 4:30 pm where he declared a public order emergency. 

On cross-examination by counsel for the government of Canada, she said that she understood that the protesters wanted all mandates removed as well as the Prime Minister removed. She said the convoy movement was entrenched and the groups were “feeding off each other,” the violent rhetoric was increasing, and the IMVE rhetoric was going to inspire a lone wolf attack. She said it was not known if there were weapons in Ottawa. She said if the convoy had become violent, then there did not exist enough police on the ground to handle it.

She said it's her position that the CSIS Act s.2 definition is “very narrow.” She agreed that CSIS did not find there to be a security threat. She said if the tools existed to deal with the protest, they were not being used or could not be used. 

It is important to recall that, in order to justify its declaration of a public order emergency under the Emergencies Act, the government must establish, on reasonable grounds, that a public order emergency exists and necessitates the taking of special, temporary measures for dealing with the emergency. The situation must be so dire that it cannot be effectively dealt with under any other law of Canada.

The definition of a public order emergency is an emergency that arises from threats to the security of Canada and that is so serious as to be a national emergency.

Threats to the security of Canada is defined, in the Canadian Security Intelligence Services Act as: (a) espionage or sabotage that is against Canada or is detrimental to the interests of Canada or activities directed toward or in support of such espionage or sabotage, (b) foreign influenced activities within or relating to Canada that are detrimental to the interests of Canada and are clandestine or deceptive or involve a threat to any person, (c) activities within or relating to Canada directed toward or in support of the threat or use of acts of serious violence against persons or property for the purpose of achieving a political, religious or ideological objective within Canada or a foreign state, and (d) activities directed toward undermining by covert unlawful acts, or directed toward or intended ultimately to lead to the destruction or overthrow by violence of, the constitutionally established system of government in Canada.

*All quotes are subject to revision as Commission video and transcripts become available.

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