Two years after Foreign Minister Mélanie Joly declared took the unprecedented step of seizing millions of dollars from a sanctioned Russian oligarch with assets in Canada, the government hasn’t actually started a legal process to seize the money, let alone turn it over to Ukrainian reconstruction — and it may never happen.

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

Ottawa used it for the first time newly enacted powers not only to sanction certain people and companies, but to confiscate their money and sell off their assets solely on the basis of those sanctions – something no other major Western economy has attempted.

The government promised that Abramovich’s alleged funds would go towards “rebuilding Ukraine and compensating the victims of the illegal and unjustified invasion of the Putin regime.” The oligarch, who once owned the Chelsea soccer team in the English Premier League and has a stake in a steel mill with plants in the Prairie, was already hit by sanctions by Canada earlier in 2022.

More than two years later, however, the Liberal government has not taken any of the necessary steps, including applying to the High Court, to effectively seize the $26 million it said was in an account at Citco Bank of Canada.

“We haven’t seen any of that and it’s certainly a mystery. I’d like to know what’s going on,” said independent Sen. Donna Dasko, who has a stake in the Russia sanctions file as a point person in the upper chamber. the now-defunct Bill S-278, which would have further increased the government’s sanctions powers.

– It took me a lot of time – said Daško. “And we really need some transparency about this.”

Risk Canada could compensate the oligarch

Global Affairs Canada would not say why it has not yet taken action to seize the assets. In a brief emailed statement last month, it simply said it had no obligation to do so “within a certain period of time.” He would not provide additional information, citing privacy concerns, although the department did issue a press release about his plans to seize Abramovich’s assets.

The US law firm representing Abramovich did not respond to emails seeking comment.

A number of lawyers with experience in sanctions and international trade said the government may have bitten off more than it could chew when it announced it would seize millions.

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

“The issue of ownership and control is a difficult one,” said Clifford Sosnow of Canadian international firm Fasken. “There’s a bunch of bushes they have to go through to make this work.”

Then there is the chance that Abramovich could challenge any asset forfeiture on grounds such as the 1991 Canada-Russia Investment Protection Agreementthe 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 the unprecedented step is forcing other countries to “look to see our success,” which could explain the delay in action.

“I think the Canadian government is probably very cautious in the steps it takes, knowing that this is a precedent-setting case,” Boscariol said.

Other countries are using Russian assets abroad to help Ukraine, but in a less direct way. The European Union, for example, has canalized profit generated by the Russian Central Bank’s frozen funds to Ukraine for its military and reconstruction, but so far has not seized the funds itself.

The G7 countries also have announced a $US50 billion ($68 billion) package of US loans to Ukraine, secured by interest earned on frozen assets of the Russian Central Bank. Canada provided US$3.7 billion (C$5 billion) for this.

The huge cargo plane won’t be flying away anytime soon

Assets worth approximately Cdn 140 million have been frozen in Canada under that country’s sanctions against Russia, RCMP said in his last assessment.

But the Liberal government has only committed to one more confiscation of Russian assets: in June 2023. he ordered the seizure of an Antonov An-124 transport aircraft parked at Pearson Airport in Toronto belonging to the Russian Volga-Dnepr Airlines.

The cargo plane, one of the largest in the world, has now been sitting on the tarmac for almost three years, which would amount to more than $1 million in aircraft parking fees. The Ukrainian government has indicated a desire to take over the jet, but any transfer would face a number of hurdles, not the least of which is that the plane has not flown since 2022 and may no longer be airworthy.

Meanwhile, the Russian company that owns it has launched multiple disputes with the Canadian government. As the first reports the Toronto Star last week it filed a motion in November in Federal Court asking a judge to lift Canadian sanctions on the company, and also says it has filed a $100 million US arbitration claim under the Canada-Russia Investment Pact.

Orest Zakydalsky, a senior policy adviser at the Ukrainian-Canadian Congress, said the lack of progress in actually confiscating Russian-owned assets was disappointing.

“We’re talking about years where the government has said this is a priority and then frankly we don’t see much movement on it – or any, frankly,” he said. “There was a press release and not much after that.”