The questions Ottawa doesn’t want us asking about rotten yuan in Canadian real estate

National Post, Ottawa Citizen, May 6, 2015.

There are quite a few things that Foreign Affairs Minister Rob Nicholson and Public Safety Minister Steven Blaney would rather not discuss about their government’s role in the handling of tens of thousands of jet-setting Chinese multimillionaires and the dilemma of dealing with the Beijing regime’s increasingly long-armed, vindictive and ferocious police-state apparatus. There is an election coming up, after all. The opposition parties, too, have their own reasons for wishing it would all just go away.

Billions of dollars in rotten yuan got stashed away in Canadian real estate. Now, President Xi is determined to get as much of that money back as he can and to muscle Canada into handing over the culprits.

But it won’t, at least not for a growing number of wage-earning Canadians. The Canadian housing market is overvalued by 35 per cent compared to Canadian incomes, and 89 per cent compared to rents. Chinese money, of the hot and cold type as well as the clean and dirty variety, is no minor factor in the calamity. In Vancouver, as much as half the dollar value of detached housing sales went to Mainland Chinese buyers last year. Most of the $3 billion poured into the purchase of west-side Vancouver properties last year originated in China, a reflection of the spike in Chinese money that has entered Canada since China’s ruthless Xi Jinping took charge three years ago.

There is also the predicament of all those voters who have mortgaged themselves to the hilt on the bet that their houses are going to continue to rise in market value. “The Conservatives want all of this to go away and not be noticed, and not just the Conservatives, either. Nobody wants to say anything that might cause the property bubble to deflate a bit, certainly not before the election,” the veteran diplomat Martin Collacott told me the other day. A former Foreign Affairs director-general for security services and a Chinese-speaking negotiator in the lead-up to Canada’s diplomatic recognition of China in 1970, Collacott says Beijing has got us all over a barrel.

The case of Vancouver property developer Michael Ching isn’t helping to quieten things down. Ching is either some sort of embezzler and a fugitive from justice back in China, or an upstanding would-be Canadian citizen of nearly 20 unblemished years’ standing who deserves the asylum he’s seeking here. The latest developments in Ching’s story reveal him as a person of lavish generosity in his political contributions, especially to Liberal party accounts, and his daughter has turned out to be none other than Linda Ching, president of the Liberals’ youth wing in British Columbia.

Political hay is not easy to make of any of this.

A lot of it is bound up in the Immigrant Investor Program, a racket championed by the previous Liberal government but avoided by the New Democratic Party for reasons arising largely from twitchiness about insinuations of “Sinophobia” and a bias against foreign investment. Before the scheme was shut down last year, the Conservative government had issued permanent-residency certificates to more than 50,000 investor-class immigrants, mostly from China.

These people were by no means all crooks. But the IIP was a busy conduit that allowed Canada to become a robber’s roost for various kinds of swindlers and corrupt officials from China. Billions of dollars in rotten yuan got stashed away in Canadian real estate. Now, President Xi is determined to get as much of that money back as he can and to muscle Canada into handing over the culprits who have been absconding with all the loot.

Ottawa is unlikely to respond by giving Beijing any backchat. Three years ago, after Prime Minister Stephen Harper declared that CNOOC’s $15 billion Nexen purchase was going to be China’s last big oil-patch hurrah, Beijing put the screws to us. Within 12 months, Chinese investment in Canada dropped from $21.5 billion to roughly $220 million. So, this time around, Ottawa appears to be telling Beijing that Canada will play along. We’ll just want a cut of the proceeds, is all — and we’ll throw in any scoundrels that Beijing wants, too — but we just need to deal with this cultural pastime known as a federal election, first.

But how much money are we really talking about here? How much should be expected to drain out of the Canadian economy if we cut a deal with Beijing? How much of it is really stolen money?

We already know that President Xi’s own family amassed a fortune of about $400 million in tandem with his rise to power. His regime’s anti-corruption drive is intricately bound up in a purge of out-crowd party bigshots and a rapid retrenchment in Central Committee power consolidation and general repression. By what standards of evidence will Canada be sending President Xi’s enemies back to the farce of his regime’s judicial system?

Last December, Canada’s ambassador to China, Guy Saint-Jacques, told the China Daily that Beijing and Ottawa were enjoying “good collaboration,” and that Canada had returned more than 1,200 people to China during the previous three years, including more than 60 who were sought in China for criminal reasons. Really? So Canadian law-enforcement agencies are already collaborating with Beijing? We’ve already started sending these alleged looters back?

What Public Safety Minister Steve Blaney’s office has told me is that 1,838 Chinese nationals were returned to China in the four years leading up to December 2014. Almost all of them were found to be in non-compliance with Canada’s immigration laws — which can mean any number of things, including failed refugee claims, overstays and working without a proper permit. But 80 were sent back for “misrepresentation,” and 81 were sent back because they committed serious crimes or were involved in organized crime. Were these alleged crimes committed in Canada or in China? I got no answer.

What about safeguards to ensure that people wanted in China on criminal charges are guaranteed due process of law? “Pre-removal risk assessment is one of the safeguards in place to ensure people in need of protection are not removed,” I was told, but this is a cruel joke, human rights lawyer David Matas tells me.

“China tells the Canadian Border Services Agency that somebody is corrupt, and the CBSA takes it as 100 per cent gospel, as reasonable grounds to believe. The government in China concocts a theory, scoops up the target’s friends and relatives, then they torture, they fabricate evidence, and we take the allegations at face value,” says Matas, who also happens to be Ching’s counsel in his continuing refugee-status fight. Matas says he’s handled at least 20 such cases in recent years. “That’s what I see in case after case.”

Ottawa requires commitments that returned Chinese nationals won’t be executed for whatever crime they are supposed to have committed, but beyond that there is only the cockeyed and hollow 1994 Canada-China Mutual Legal Assistance in Criminal Matters treaty. China wants a formal extradition treaty with Canada, but that looks like a bridge too far, so President Xi is eager to clinch a deal with Ottawa through the Sharing of Forfeited Assets and the Return of Property deal that John Baird initialled when he was foreign minister in 2013.

“The government of Canada is committed to working as expeditiously as possible to sign this agreement,” Caitlin Workman, spokesperson for Foreign Affairs Minister Rob Nicholson, told me this week. “While Canada remains determined to sign the agreement, it is premature to set a precise date.”

Which is to say that Ottawa will want the federal election done and over with before ratifying the thing, and so long as neither the Liberals nor the NDP make a big deal of it, all the better, too.



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