PARLIAMENT of CANADA
 
 

THE STANDING SENATE COMMITTEE ON NATIONAL SECURITY AND DEFENCE

EVIDENCE


OTTAWA, Monday, October 31, 2011

The Standing Senate Committee on National Security and Defence met this day at 4 p.m. to examine and report on Canada’s national security and defence policies, practices, circumstances and capabilities (topic: Protecting Canada from Iranian attempts to acquire dual-use technology).

Senator Pamela Wallin (Chair) in the chair.

[English]

The Chair: Ladies and gentlemen, welcome to the committee proceedings for the Standing Senate Committee on National Security and Defence. Today we will continue our look at the issue of how to protect Canada from Iranian attempts to acquire dual-use technology to further its nuclear weapons development program.

To do so, we have an impressive list of witnesses from Public Safety Canada, the overall agency, and its separate agencies underneath. Thank you very much for being with us today.

Let me introduce John Davies, Director General, National Security Policy, Public Safety Canada; Geoff Leckey, Director General, Intelligence and Targeting, Canada Border Services Agency — you will hear people refer to it as the CBSA; Mike Cabana, Assistant Commissioner, Federal and International Operations, and Guy Poudrier, Superintendant, Director, Customs and Excise Branch, from the Royal Canadian Mounted Police; and Jeff Yaworski, Assistant Director of Operations for the Canadian Security Intelligence Service.

Gentlemen, welcome. We heard testimony last week from two academics on the politics surrounding this, and from some officials on the technical aspects of export control and some forms of intervention. I will caution everyone again that you folks are not ministers of the Crown and, therefore, not responsible for the decision-making, but can explain the policy and how and why some decisions are made.

I gather there are some opening comments. We will begin with Mr. Davies.

John Davies, Director General, National Security Policy, Public Safety Canada: Good afternoon. I am pleased to be here today to talk about Public Safety Canada's role regarding counter-proliferation efforts.

Our mandate is to coordinate and support the efforts of federal organizations, ensuring national security and the safety of Canadians. To achieve this, our department relies heavily on the operational expertise of the portfolio agencies that are here with me today, as well as other departments, in the development of advice and policy proposals.

Our role with regard to proliferation, as with any other threat to national security, is to leverage experts' knowledge to examine the threat and to identify the risks that Canada faces, with a view to developing the best policy advice for the minister.

Proliferation activities pose a threat to global security and continue to evolve as global transport, telecommunications and financial systems are increasingly interconnected. Proliferation networks also continue to adapt by using covert or deceptive techniques in an attempt to evade our controls. I have a brief overview of the different approaches and tools available to us as we deal with this challenge.

The first and most obvious is that Canada has a number of acts and regulations to manage the export of controlled goods and to prevent proliferators from illicitly exporting materials of proliferation concern. You heard last week from our colleagues at the Department of Foreign Affairs and International Trade Canada and I will let Mr. Leckey from CBSA go into more detail on that aspect.

Second, the government investigates and prosecutes individuals and entities engaged in proliferation activities on Canadian soil. The Canada Border Services Agency, RCMP and CSIS collect, analyze and share information on suspicious activities of individuals and entities, as well as on their methods and transactions. Canada also receives intelligence on proliferation threats from our allies, notably in the U.S. This information is critical for us in developing the necessary leads for investigations.

Third, the government controls access to sensitive facilities to prevent proliferators from obtaining and sharing Canadian high-tech goods, technologies or expertise. Securing access to sensitive facilities like chemical plants, nuclear facilities and protected laboratories is essential to prevent the sharing of information or goods for illicit purposes.

Finally, we can impose sanctions, such as restrictions on financial transactions related to proliferation activities, as they are now in place for Iran and North Korea. Again, you heard from our colleagues at Foreign Affairs last week on this matter.

In summary, Public Safety Canada continues to work with its partners, notably our portfolio agencies, to develop policy and legislative options to strengthen Canada's domestic capacity to counter proliferation threats. Overall, our efforts must meet the evolving threat environment and best practices of our allies. As we continue to examine these proposals to improve Canada's counter-proliferation regime, we are mindful of the current fiscal environment, however.

I hope this overview is helpful to you and I look forward to your questions.

The Chair: Mr. Leckey, you may go next.

[Translation]

Geoff Leckey, Director General, Intelligence and Targeting, Canada Border Services Agency: Madam Chair and honourable senators, I want to thank you for the invitation to speak to you about the role of the Canada Border Services Agency (CBSA) in preventing exports of controlled, restricted, and dual-use technology.

The committee may be more familiar with the CBSA’s role and processes when it comes to goods entering the country. However, I would like to focus my remarks today on our efforts concerning goods leaving the country, and how those efforts fit into the continuum of national security.

[English]

The CBSA's counter-proliferation efforts are based on a multi-layered approach. In the first layer, there are specific legislative requirements for exporters to report goods to the Government of Canada under the provisions of the Customs Act. The CBSA verifies that these exports comply with Canada's laws.

[Translation]

The next layer involves domestic and international cooperation, as well as intelligence-sharing with law enforcement partners. This intelligence is used to identify high-risk entities prior to export in order to issue border lookouts at ports of export.

[English]

With export and inspection personnel posted at all of Canada's major international air and marine ports, the CBSA is Canada's primary counter-proliferation enforcement arm. This enforcement layer at the front line is part of the CBSA's export program, which is designed to control strategic and dangerous goods from leaving the country, as well as those in transit through Canada.

Specifically, the CBSA interdicts exports to countries that pose a threat to us or our allies; countries involved in or under imminent threat of hostilities; countries under UN Security Council and/or Canadian sanctions; and countries whose governments have a persistent record of human rights violations.

[Translation]

If the goods do not comply with these acts, enforcement actions may be taken, ranging from the imposition of fines, to seizures of goods, to the laying of charges.

[English]

The CBSA plays an important role in national security at the physical border and, just as importantly, behind the scenes. All of these layers demonstrate the agency's commitment to stopping various goods, such as controlled, restricted and dual-use technology, from ending up in the wrong lands.

The Chair: Mr. Cabana, please go ahead.

Mike Cabana, Assistant Commissioner, Federal and International Operations, Royal Canadian Mounted Police: I would like to start by thanking you for providing us with the opportunity to speak to the proliferation issues that are affecting Canada.

If the committee so wishes, in an effort to afford the committee sufficient time to ask questions, my understanding is that you have a copy of my opening remarks that touch on our mandates, some of our prevention efforts and our outreach to the industry. If you wish, I will just leave it at that.

The Chair: That is wonderful. I appreciate your concern for time to allow us to ask questions.

Mr. Yaworski?

Jeff Yaworski, Assistant Director Operations, Canadian Security Intelligence Service: Good afternoon. I am pleased to be here today to offer CSIS's perspective on issues related to proliferation.

As set out in our founding act, CSIS is mandated to collect and analyze information and intelligence from Canada and abroad. We then report to and advise government on national security threats.

CSIS is interested in the procurement of dual-use technology when the attempts are made covertly and when they implicate Canadian companies or citizens. The proliferation of chemical, biological, radiological or nuclear weapons and their delivery vehicles poses a real threat to the security of Canada and to the international community. The pursuit of programs by certain states to acquire such weapons increases global tensions and could even precipitate armed conflicts, while their actual use in war could greatly increase levels of suffering and devastation.

Intelligence plays a key role in detecting proliferation-related activity and in disrupting procurement. It can provide early indications that terrorists are developing or deploying chemical, biological, radiological or nuclear capabilities, that related material or designs are being traded or sold, or that the security of a national program has been compromised.

Intelligence can also provide information on the status of highly secretive weapons of mass destruction programs of countries hostile to Canada, details on their procurement networks and whether or not they have a Canadian nexus. Iranian activities in this regard are well documented, but other countries are also advancing weapons of mass destruction programs. Needless to say, collecting intelligence on activities of this kind involves multi-dimensional and pan-geographic efforts.

That being said, the threat caused by the procurement of dual-use technology remains difficult to investigate, precisely because some of the technology used to develop weapons of mass destruction can also be used for peaceful and legitimate purposes.

I will end my remarks here.

The Chair: Thank you very much; I appreciate you all laying it out.

To begin with Mr. Davies, do you look at this in terms of Iran only, or are you looking at other countries that may be doing this as well? How is the net cast — geographically or the content of the problem?

Mr. Davies: Right now in terms of our department's work, it is not really cast by geographic areas; it is more thematic, with different components of Canada's domestic proliferation regime and counter-terrorism efforts more broadly — what kind of things, whether that be export controls, powers to investigators, information sharing and that type of thing. We do not have the geographic expertise in house; we rely on the operating agencies for that.

The Chair: In that sense, it is not Iran specific.

Mr. Davies: That is right.

The Chair: Is everyone else in that category as well? Are you looking for the product, the piece of equipment that might be a problem, not necessarily where it is coming from or going to?

Mr. Yaworski: From a service perspective, I would suggest that the threat is multi-dimensional. Iran is one of several countries of proliferation concern.

The Chair: Do you have a comment on that from the CBSA point of view?

Mr. Leckey: I agree with what Mr. Yaworski said. CBSA efforts are heavily focused on Iran, but not exclusively.

The Chair: There are many questions to ask you today. Senator Dallaire will begin.

Senator Dallaire: Gentlemen, you have given us an introduction to what you would give a nonsecure-cleared committee, which is pretty superficial, to say the least. Essentially, you are telling us that you are doing a lot of coordinating and, hopefully, doing your job. Thank you very much for that. That is to be expected. It does put an extraordinary limitation on this committee to get into some of the hard data that I think is essential for us to really provide advice to the government, but that is another battle for another time. You are probably happy that we do not have it because when I was sitting where you are sitting, that was the position I had, but I am no longer there.

To get to the specifics, I would like to ask a question of Mr. Davies and Mr. Yaworski. There is collation and dissemination of information. Collation happens; few intelligence organizations are good at dissemination. In fact, they do not like sharing.

I am seeking from you not the direct threat or direct targets, let us say Iran in this case, but the middlemen exercise, those who are intermediaries in that, and to what extent you can tell me what your structure is for collation and dissemination. How are you coordinating all these different efforts tangibly amongst your different agencies to go to the middlemen of this exercise, be it a country or an agent?

Mr. Davies: Every two weeks at the working level there is a meeting of counter-proliferation experts who compare notes and work through issues as needed. That is very much done at the operators-analyst level and then all the way up from DG, ADM, DM to cabinet level. There are cascading-up meetings on the same issues. From that point of view, we think the people who have the information meet regularly to discuss appropriate ways forward and appropriate actions.

Senator Dallaire: Our colleagues to the south discovered that, although that was supposed to be happening, that was not necessarily very effective between their 39, 40 or 60 different intelligence-gathering agencies.

What is your process at the DG if not at the ADM level on a regular basis to ensure that the collation and dissemination of information is brought about and that your two agencies are coordinating efforts? I am looking for an answer on the non-target countries. What means do you have for the middlemen who are acquiring this capability for subsequent sale?

Mr. Yaworski: It is very difficult. These are complicated investigations involving a multitude of individuals and groups; involving a multitude of countries potentially; and involving front companies and hubs of business traffic. They are not easy to investigate, let alone prosecute.

In terms of your question as to how we share, we do not have the same restrictions as sharing with this committee.

The Chair: Thank you for pointing that out.

Mr. Yaworski: We are all security-cleared. As Mr. Davies has pointed out, we do meet at the working level on a regular basis. We also meet at more senior levels. I am a representative of our ADM national security ops group and we meet to discuss a wide array of national security issues that are confronting us, one of which is proliferation. It is an investigation that we take very seriously. Certainly, Iran is a priority amongst those others that we are looking at.

Senator Dallaire: There are movements like the Pugwash movement in this country that are concerned about proliferation and, ultimately, looking at disarmament even. I put this to our colleagues from the RCMP.

[Translation]

As a matter of fact, I am happy to see you here wearing your uniform. I would have a question about various movements inside the country having an influence on the purchasing of this type of material and its shipping abroad rather than other counter-proliferation actions; aside from the list, have you got a methodology allowing you to identify these information sources and the entities existing in the country, particularly in the communities becoming more and more dynamic here?

Mike Cabana, Assistant Commissioner, Federal and International Operations, Royal Canadian Mounted Police: Thank you for your question. It is not easy to answer.

[English]

The role of the RCMP in all of this is the criminal prosecution, criminal investigation side of the proliferation reality.

In the course of our everyday business, we do engage different communities in Canada. We do have sources of information within different communities and we have partnerships with different law enforcement agencies, police at the front-line level, as well as with other nongovernment agencies and with the industry. Through all of those contacts, we gather intelligence. Even though we are a law enforcement agency, our mainstay really is gathering of intelligence to identify criminal offences that are being committed and trying to secure sufficient evidence to prosecute. In that process, we collect from every walk of life. We are not focused necessarily on one specific community. We receive referrals from different agencies and we collate, as you pointed out, the intelligence, which informs us in which direction we are supposed to be going.

Senator Lang: We have heard over a series of meetings that dual-use technology is of concern not only to this country but to a lot of other countries and utilizing for purposes that we obviously do not want to see happen.

The concern I have is from the Senate committee's point of view. Exactly what is being asked further of government to put more laws or policies in effect to allow your various departments to do your jobs and do them effectively?

The first question I have would be to Mr. Davies. It concerns how we prosecute a situation of terrorism now using the Criminal Code and that high bar with respect to how we proceed through the courts. In the future, will we be looking at changes to how we prosecute and pursue a case where we have a situation that is in most cases circumstantial from the point of view of evidence? Are we looking at a situation where we will, perhaps, have to change how we advance through the courts so that we can properly prosecute those individuals that are set out to do us harm in the long term as far as our society is concerned?

Mr. Davies: Are you talking particularly about potential changes to the Anti-terrorism Act or other related acts?

Senator Lang: Yes, and in any of the other legislative frameworks that you have in place for all your various organizations to do the job of security in general.

The Chair: Last session the Special Senate Committee on the Anti-terrorism Act looked at whether or not you treat terrorism and the surrounding activity as criminal behaviour; whether you have separate rules for it. I think that is part of what the senator is getting at.

Mr. Davies: A major effort we are undergoing now is related to following up of the Air India action plan that was presented to the public last December. A specific commitment in that is how to improve information-sharing related to national security, which gets into the basis from which terrorism cases can be brought forward.

We are working through that proposal now and we are willing to meet with the minister and will be presenting options in the near future.

The Chair: Mr. Cabana, do you want to comment on that as well?

Mr. Cabana: I believe it is on point with your question, senator.

Within the RCMP, as you pointed out, there is some activity that is considered purely criminal and there is some activity that has a clear national security terrorism nexus.

Internally within the RCMP we have a de-confliction mechanism to decide how to treat any referrals we receive or information that surfaces from one of our field offices. A lot hinges on the termination of the end user and the kind of evidence which surrounds that. If there is clear indication that we can identify the end user and purpose for the proliferation or transaction — the export of the goods — then our national security program will take ownership of the file. It will be done in accordance with the governance of national security investigations. If the evidence is not clear, it stays on the criminal side and is handled in accordance with framework that governs criminal investigations, which we routinely conduct.

I do not want to speak for my colleagues on the panel, but one of the key issues is intelligence to evidence. Even in the context of a criminal investigation, a lot of the information that is provided originates from the intelligence side. In the context of criminal prosecution, the ability to manage that is still difficult. The mechanisms are not necessarily there yet.

Mr. Davies: The Department of Justice is working on that issue right now. You may want to talk to officials in the department if that is particularly your interest.

Senator Lang: Could I pursue this further? I direct this to everyone on the panel and anyone can speak to it.

It is safe to say that the government will be looking at further legislative steps that should be taken — in order to meet the threats that are facing us as a free world — so that your various departments can do their job effectively. Is that what I am hearing?

Mr. Davies: Yes.

Senator Lang: I will pursue the question of immigration. I do not know how closely you are tied to Citizenship and Immigration Canada, CIC. We are centring on Iran. From a point of view of security, hopefully there is a tie-in. Take a look at the banking scandal out of Iran that has been written about in the last two months. We have one dual Canadian and Iranian citizen who has now moved to Toronto. Another one that was involved in that particular scandal has now moved to Montreal. According to what I read in various newspapers, there is some question with respect to how we tie in as a country with our immigration policy and how easily these individuals get Canadian citizenship. There are allegations that one individual was in charge of Bank Melli. It was thought they might be tied into terrorism and other aspects we would be concerned about. How do your departments work with CIC to ensure we are not giving outside Canadian citizenship to individuals who could use it for their own purpose and make it difficult down the road?

The Chair: Last week we talked about the imposition of sanctions on Iranian nationals, but not about what happens with dual citizenships.

Mr. Davies: The Immigration and Refugee Protection Act is the main piece of legislation. CIC is leading an admissibility review, particularly the sections of that acts linked to security. Our department is looking at the security certificate process and the process around that as well. From my perspective, there is an active look at this area.

Mr. Yaworski: Perhaps I could add to that from a CSIS perspective. In the case you are alluding to, Bank Melli is a state-owned Iranian bank. One of the two individuals in question is the former chair of the bank and is in Toronto, as you alluded to.

The charges against him relate predominantly to embezzlement, as I understand it. We have no extradition treaty with Iran, and Mr. Cabana can speak to that issue. It is not related to the counter-proliferation issue per se. In terms of the role of CSIS, we investigate threats to the security of Canada and individuals in Canada, regardless of their citizenship. We provide advice to CIC with respect to individuals of security concern. In the case of this particular individual, nothing came to the surface that I am aware of.

Mr. Cabana: I fully agree with my colleague. There is a process in place, as Mr. Yaworski alluded to. Our agencies are supporting CIC in their decision-making process.

Senator Lang: I will pursue this to keep the train of thought going.

What caught my attention in the early part of October was the article which stated "the international community had long been concerned about the bank's other activities . . . of funding Iran's nuclear missile programs."

In respect to this situation, I do not think I accept the premise that it is only embezzlement we should be concerned about. I am not here to try this individual. I am here to bring forward the point of view of how this ties in with our immigration policy. Perhaps people are getting Canadian citizenship because they happen to be in a certain elite side of society and it could be easier than applying it elsewhere. I am just saying there is something that must be looked at.

The Chair: I know you are in a bind about speaking about the specific case.

Mr. Leckey, would you like to make a comment?

Mr. Leckey: It might be worth mentioning that there is a security screening program within the Government of Canada. All of the partners you see sitting at this table collaborate to provide information and intelligence to CIC, and guide it in making decisions on temporary residents entering Canada or permanent residents seeking citizenship.

The security screening program has a collaborative framework that almost mirrors that of the counter-proliferation strategy of the Government of Canada. For example, if an applicant from Iran wanted to come to Canada to work in one of those highly sensitive research laboratories that Mr. Davies talked about in his introduction, that person would come in for particularly close scrutiny.

[Translation]

Senator Dawson: Mr. Cabana, you talked earlier about a case study. There seems to be a tradition of silo attitude — it was indeed mentioned in the Air India report and there is also what Mr. Lang just said about this immigration case — meaning that organizations represented here today have a tendency to work in isolation and that information-sharing has historically been difficult.

Using the elements of this case study, I would like you to tell us how the information-sharing led you to this particular case.

Mr. Cabana: I suppose you are referring to the Yadegari case which was revealed in Toronto in 2009.

The information came to us from the RCMP through CBSA, the Canada Border Services Agency. This agency received the intelligence from ICE, the US authority. After obtaining this information, an investigation was initiated in partnership with several agencies, including the FBI, some local police departments, DHS/ICE, CBSA and the RCMP. The investigation took place on an extended period of time, due to the complexity of the case, but the information was shared by these agencies in support of the process.

Senator Dawson: Was the process centralized or did the information come from documents? Was there a particular mechanism for information transactions?

Mr. Cabana: I don’t believe there was a particular mechanism or some group responsible to circulate this information among the agencies.

No actual group was created for the purpose of sharing this information. The sharing was part of the processes already in place in the agencies. Every single day, we share information with our US and Canadian colleagues.

Senator Dawson: Once again, I am referring to Mr. Yaworski’s comments.

[English]

When you talked about Air India, one of the parts of the report was that the silo effect of many organizations in Canada in particular, but also at the international level, led to a lack of useful information being given to the right people. In this case study, what are the improvements that have been done and what are you looking for so more information is shared — in a confidential way, I understand?

[Translation]

I totally respect the confidential aspect of this information. However, the process is important.

[English]

Mr. Yaworski: I agree with your comments. In days gone by, I would suggest that there have been more silos, as you described them, in terms of sharing information. I can tell you that those days are behind us. The cooperation that we have, certainly between CSIS and the partners you see before you at this table, is better than it has ever been.

On issues of national security, particularly on issues where there is an immediate threat to life, there are no silos. That sharing is extensive and timely.

In terms of international partnerships, you strike on a very important issue, which makes Mr. Cabana's job more difficult when it comes time to prosecute certain cases. A lot of information we receive comes from allied intelligence services. Canada is a net consumer of intelligence. We receive far more intelligence than we produce, and a lot of times it comes with caveats and does not easily translate into evidence that can be used in a court of law.

We are working closely with the RCMP on our own sharing and moving intelligence into evidence, as Mr. Cabana has referred to. However, from an international perspective, it makes the job more difficult when it comes to prosecutions.

Senator Dawson: I understand that; and my colleague, Senator Plett, who has sat on the Transport Committee, can tell you that silos exist in Canada at Transport Canada, so I imagine they can exist in your world. I am just hoping they have less.

Have Iran's regional ambitions been modified through the Arab Spring?

Mr. Davies: I am not sure I can comment on that. I would refer that to our colleagues at Foreign Affairs.

Senator Plett: I am not sure who would be the best person here, Mr. Leckey or Mr. Davies. There are a lot of valid things to be exported to one country but not necessarily valid to be exported to Iran. What do you do to prevent something from being exported to one country and then being sent to Iran? What controls do we have for preventing them from simply getting something second and third hand?

Mr. Leckey: The point you are raising is the issue of suspicious routings of goods being exported from Canada. CBSA, together with its partners, is very aware of certain countries used more than others as transhipment hubs — which permit themselves to be used as transhipment hubs for goods on their way to Iran or other countries of concern. We also are aware, and we learn more every day in the course of our work, about companies such as brokers and freight forwarders that have no compunction about allowing themselves to be used in terms of switching the end destination and the ending user certification of a piece of technology that will end up in Iran or another country of concern.

Senator Plett: What would set off the alarm bells? You are saying there are questionable companies, but what would set off the alarm bells on this or on the manifests of product going?

Mr. Leckey: When we say our entire system is led by intelligence, as we do, the indicators we are looking at are such things as the nature of the goods, the country of destination, the routing being used, the declared end user or end use, the exporting company and some of those intermediate companies such as brokers. Those are the kinds of things that, in the many shipping manifests we review on a daily basis, will trigger a particular concern on the part of our counter-proliferation intelligence section.

Mr. Cabana: If I may add to what Mr. Leckey just said, all of those indicators — and there are more — are a clear indication of the importance of the outreach to the industry. For some of the indicators, the industry is in some cases better positioned to identify that there is something just not right with the transaction. That is why, collectively, we have programs in place to engage the industry across the country and educate them on all those indicators and what to do if they are not comfortable with the transaction.

The Chair: Help us out here because you have the rules as you have laid them out, but how much is dependent on a CBSA border guard having a gut instinct or some kind of training? Do you know this and you are looking for it as it comes through the system, or is someone just walking through a line and you say "That does not look good"?

Mr. Leckey: The entire system is intelligence led from headquarters. We do have export control teams at the major airports and major marine ports; 99 per cent of their work is directed by headquarters based on recognized patterns of concern.

Senator Plett: I have one more question to Mr. Yaworski on the dual-use threat. How active is Iran in Canada, and is there a pattern to it? Has it grown or has it receded? Where is it at? Further to that, is it mostly just a threat of nuclear weapons, or is it broader in relation to chemical and biological weapons?

Mr. Yaworski: I have to be careful here because of the unclassified nature of the briefing, but I can tell you that we do look at all threats and they are multi-dimensional when they come from Iran.

Our act defines threats to the security of Canada in section 2 and speaks predominantly to espionage, foreign influence and activities, and the use or threatened use of violence. Counter-proliferation is held within that remit.

Iran, in and of itself, is one of countries we look at. I can tell you Iran is a significant factor in terms of the issue of counter proliferation. They are looking at acquiring anything and everything. I believe you had presentations from Foreign Affairs already in terms of the list of dual-use goods. It is extensive. It is virtually anything that will help further their program along, whether it is industrial hardware right up to the knowledge of going forward with a nuclear program.

Anything that can help them advance their program, they are interested in acquiring. They are interested in acquiring it from countries like Canada because we are technologically advanced and have free trade systems that can be exploited.

However, it is important also to get on the record that the multitude of individuals that may come in contact with an item that is ending up in an Iranian nuclear program are not necessarily witting of that involvement. Because of the free flow of business, because of the trade hubs that Mr. Leckey referred to in the Middle East and predominantly Southeast Asia, for example — the different links along that chain — individuals are not all witting that the particular product will ending up in the hands of Iranians.

They are very good at circumventing sanctions and finding ways to acquire the pieces of equipment that they do need, and they multitask. If they cannot get it here, they will try to get it somewhere else.

Senator Plett: As a follow-up, last week we spoke, and it was already alluded to, there were different opinions on that subject of sanctions. Maybe no one here can share an opinion on that, but the question I still have is this: Have the sanctions done any good? Have some of the problems receded or are they continuing to grow? There were different opinions on the merits of the sanctions.

Mr. Yaworski: I read the testimony of Ms. Charron and Mr. Jones, I believe, academics who spoke to that issue quite soundly. I concur with what they have suggested. I think they used the term "silver bullet." There is no silver bullet. Sanctions are one part and have been effective to this point, but they are only one part. Intelligence is an important component; diplomatic pressure is important. All of these things contribute to reducing their capability to acquire the goods that they are looking to.

Senator Day: First, I wonder if I could have a confirmation from the clerk whether these written comments by the witnesses were circulated to our offices beforehand.

The Chair: No, we just received them.

Senator Day: That is what I thought. I thought I would let Mr. Cabana be aware that it would have been helpful if he had gone through his remarks because we did not have the chance to review them, and as I reviewed those I missed the remarks of some of his colleagues.

The Chair: Sorry, I had asked the witnesses to help us out with the time.

Senator Day: Sometimes trying to be helpful turns out not to be as helpful as you think, especially when we have as important a panel as this. We could spend the meeting with any one of you to talk about issues. I wanted to make that point.

My colleague Senator Dawson asked you to explain the case study in more detail. My question is more mundane than that. If you had gone through your report, you would have told us what CP stands for. I assume that is criminal prosecution.

Mr. Cabana: It is "counter-proliferation."

Senator Day: That is a point of clarification that probably would not have been necessary had you gone through the document.

Mr. Davies, do you have a team of analysts that are separate from the analysts that take in information and help develop intelligence in each of what you call the portfolio agencies within the overall group?

Mr. Davies: I have two teams. I have a team of policy analysts that look at counterterrorism policy, broadly speaking — immigration policy, counter-proliferation policies. Counter-radicalization policy is a big aspect of their work. The other team works on intelligence issues; it is more operational, in terms of managing specific cases and managing committee meetings and so on. I have about one expert on counter-proliferation.

Senator Day: Is most of the counter-proliferation analysis that goes on done by the various other departments or agencies within the overall group of Public Safety Canada?

Mr. Davies: That is right.

Senator Day: Mr. Poudrier, you are with the RCMP but you are involved with the Customs and Excise Branch. Is that only the criminal prosecutions or are you involved in some other aspects of what otherwise would be done by the Canada Revenue Agency or the Canada Border Services Agency? Could you help us with your role?

Guy Poudrier, Superintendant, Director, Customs and Excise Branch, Royal Canadian Mounted Police: Customs and Excise Branch has the mandate to investigate counter-proliferation infractions, which means anything that is related to criminal activities, transhipments and all that. We have the responsibility to enforce legislation within point of entry and share this responsibility with CBSA at points of entry.

Mr. Cabana: If I may, the distinction we need to make is that this is one mandate of many mandates that the customs and excise program holds. They are also responsible for enforcement of firearms and tobacco smuggling into Canada. Counter-proliferation is only one of the priorities that they try to manage.

Senator Day: From an RCMP point of view, is it always with a view to prosecution?

Mr. Cabana: Of course, yes.

Senator Day: You apply a different standard from some of the other agencies that are concerned about acquiring information that might lead to something else not necessarily into a court situation?

Mr. Cabana: Absolutely. Our focus is criminal prosecution.

Senator Day: Thank you. I wanted to clarify that.

We have focused a lot on nuclear weapons of mass destruction, but Senator Plett mentioned that chemical and biological weapons are also weapons of mass destruction. Who focuses on those or are they all part of your focus? Do different people look out for the kind of material that might be used for that?

Mr. Yaworski: You are looking at me, senator, so I will give that one a try. Certainly, in my opening remarks I did reference CBRN — chemical, biological, radiological and nuclear — as all being weapons of mass destruction. We certainly look at all of them in terms of state-run programs of countries hostile to Canada, but we also look at it from a counterterrorist perspective, in terms of terrorist or non-state actors who are looking to acquire these goods for nefarious purposes. It is equally important and certainly one might argue even more important that we look at counterterrorist groups and their ability to acquire these materials from a security perspective for Canada.

Senator Day: Are you able to tell us generally the type of strategies that are used, the type of flow of product that might be used by a country like Iran to acquire product that we would rather they did not acquire?

What are they doing? Are they going through another country? Is the majority of this product that you are finding out is actually destined for Iran going through a friendly country first, or is it just direct and you say: "This is going to Iran; we had better look at this"?

Mr. Yaworski: Mr. Leckey can speak to that in more detail, but in kicking it off, their approach is multidimensional. They will use front companies. They will use individuals who are witting and those who are unwitting. They will use multi-countries and intentionally go from one country to another to another, because they know it is more difficult to track that.

Mr. Leckey may want to add to that.

Mr. Leckey: Some of the strategies we have observed are, as Mr. Yaworski mentioned, the use of front companies, front companies that can change their name, sometimes literally from the morning to the afternoon, and it is the same people doing the same business. They will open multiple businesses. They will close down a business as soon as the goods are detained and reopen the next day. They falsify end-use statements.

There is a technique called ports or mode shopping. If a particular port has a high enforcement rate, they will tend to avoid it, or if they find that detection rates have increased in the marine mode they will switch to the air mode.

Another technique is to procure goods just below the control threshold, which can still be of such a quality that they could be used in a program of weapons of mass destruction. As I mentioned, there is the use of third-country transshipment hubs, complicit freight forwarders who re-manifest goods. There is the exploitation of loopholes in reporting requirements — for example, reporting a piece of technology as being of less than $2,000 in value when it may be worth many times that.

Senator Day: Last day, when we had a session with Foreign Affairs, they told us about two pieces of legislation: one, the United Nations Act and the other, the Special Economic Measures Act, that allow us as Canadians and the government to list those products that we did not want shipped to certain countries.

I am assuming that all of you are fully aware of that list. However, I wonder how we get the information to Foreign Affairs that perhaps there should be other items on that list? We are seeing a lot that is just under the threshold and could be used for a dirty bomb. It would not initially be thought of as being strong enough.

The Chair: I will interrupt for one moment and have you hold that thought. Senator Wallace has to go, but I want him to put his question on the record.

Senator Wallace: The question touches on the issue raised by Senator Day. You described ways in which the nature of the risk that Iran poses has changed and the sophistication of it. Compared to three years ago, has the magnitude of risk that the national security of this country faces from Iran has increased? Has it increased dramatically? Perhaps Mr. Yaworski could tackle that?

Mr. Yaworski: Yes, it has increased. The current regime has made certain statements and had actions that clearly indicate they are advancing their desire to acquire capabilities to build a nuclear weapon. They have not indicated they will, but have indicated a desire to get that capability. As I articulated earlier, the threat is multi-dimensional. It is not just from a counter-proliferation perspective. As Senator Dawson referenced earlier, the Arab Spring has had impact as well. Instability in that part of the world is a problem to all neighbours. Uncertainty is a problem. If you look at a country like Iran — that is looking to increase influence in the Middle East and wading into affairs in Bahrain — there is multitude of things in that region that increase the overall risk to Canada and our interests here and in that part of the world. Without getting into detail, the answer to your question is yes.

Senator Wallace: As the magnitude of the risk increases we are wondering what counter measures can be taken. The appropriate measures being taken to respond to increased risk is ultimately the issue. I realize you cannot get into details in responding. However, is there anything you can say generally about how it is being approached and in what way this increased risk is being dealt with by our government agencies?

Mr. Yaworski: From the CSIS perspective, we are in the business of mitigating risk. That is what you are speaking to. We prioritize our files. I can assure you Iran is an important file to us. I have probably said too much already, but we look at that file. We devote the appropriate resources to investigating that threat.

Senator Wallace: If there are national security issues, you may not be able to say anything more. However, is there is anything you can add as to how the increased risk is being dealt with? That would be of interest to us.

The Chair: If you want to ponder it for a moment we can get back to Senator Day's question. He was asking about export controls and where the rules are going.

Mr. Davies: If it looks like certain items are off a list or thresholds are being averted, how do you close the loop? Operators get together every two weeks at the working level. It is the perfect chance to talk about emerging trends, ways to fix things and compare notes.

Beyond the agencies here that are working better together, there are other departments not normally linked to national security. When you think the information sharing regime in Canada, it is risk averse. People wonder about their lawful authority to share or they push decisions up. There is a slight culture aversion to sharing. In following up on the Air India Inquiry Action Plan, one of the things we are looking at is whether you can improve on the lawful authority to share. Other bits of information come into this loop as security agencies, more proactively as it is now.

Senator Day: When your group gets together and shares information, it is not just within Public Safety Canada. Are other government agencies there as well, including Foreign Affairs?

Mr. Davies: Yes, the issue is whether information from other departments can be brought to the attention of agencies that participate in this counter-proliferation working group. We are working on that.

Senator Day: If the counter-proliferation working group develops information that should go to Foreign Affairs so they can add this to the prohibited list, it flows that way as well?

Mr. Davies: Yes.

Mr. Cabana: Canada is also a participant in a number of international forays that look at identifying emerging trends in terms of counter-proliferation. That actually serves to populate the list. As a signatory to the UN, Canada has a responsibility to enforce the controls that are being put in place and the restrictions to the export of certain technologies. They are identified through nuclear suppliers groups and missile technology control regimes. The Australia Group was in our arrangement and there is a proliferation security initiative as well. Internationally, there is a significant body that meets to make sure there is a mechanism to identify what goods should be controlled.

Senator Mitchell: My questions concern the Special Economic Measures Act, the SEMA, under which Canada has imposed sanctions. One of them concerns making any new investment in the Iranian oil and gas sector. That begs several questions. First, what level of investment exists there now? Second, if new investment is a problem, why is existing investment not? Third, how do you police that?

Mr. Cabana: I am not sure I can answer your whole question. I can answer the component of the role of the RCMP. If investments are identified, it is our responsibility to take appropriate action to make sure they are secured, that they are frozen until a determination is made. I believe your question was much broader than that, and it falls outside the scope or mandate of the RCMP.

Mr. Davies: This is really back to Foreign Affairs.

The Chair: We talked to them last week.

Senator Mitchell: Perhaps this is in relation to DFAIT as well, but there is indication that the neighbours of Saudi Arabia — Bahrain, Jordan and others — are concerned about the U.S. taking action. What kind of action are the neighbours taking? Are we coordinating our efforts with these neighbours? They have a huge interest in this as well. You talk about silos and sharing the information. Are there links that you are finding productive or is that an issue?

Mr. Davies: Again that is a Foreign Affairs lead.

Mr. Yaworski: From an intelligence perspective, we have approximately 280 different relationships with intelligence services in different parts of the world. We work collaboratively with them on the counter-proliferation threat. We need their assistance in many cases.

We need their assistance because the material is often transiting their countries. We need to know what they are doing in relation to the threat; and, as you have suggested, it is not always a friendly neighbourhood in that part of the world. Certain countries are looking at that threat more actively than others.

Without getting into specifics, I can reiterate that we do receive intelligence from those partners on a fairly regular basis.

Senator Mitchell: Finally, we have been hearing for a long time about this threat. Perhaps it has been approached but, more specifically, how far along are they? Do they have enough parts? Are they getting parts? Are we not winning this process?

As I said, it has been going on a long time, yet you are saying they have expressed an interest in building one but you are not certain that they will.

Mr. Yaworski: There is not a conclusive answer to that question; there is not a uniform position on how far along they are. I think you are alluding to how far away are they from the creation of a bomb, basically.

Senator Mitchell: Yes.

Mr. Yaworski: The timeline varies. They will make progress and they will have significant setbacks. The issue of sanctions that we referred to earlier, diplomatic and political pressure, all weigh in on their ability to achieve their ultimate goal.

What is important for the committee to understand is that they are not giving up. They are constantly moving in that direction. Despite the setbacks they may have, they are continuing to proceed down that road.

Senator Plett: When you say they are getting closer, how cooperative are they with inspectors going in?

Mr. Yaworski: I would suggest that is probably a DFAIT question to answer. The reason we know they are moving down this road is, in part, because of their inability to allow inspectors in to do their job as appropriately as they should. I think the short answer is not very cooperative at all.

The Chair: Let me try it this way. Without saying what has slipped through from Canada to Iran, because we know you cannot say that, do you know if stuff has and, therefore, how they obtained it? After the fact, do you at least know the system and then try to plug the hole?

Mr. Yaworski: We do not know everything. I think it would be foolhardy on any of our parts up here to suggest that things have not gotten through. In terms of whether or not we are notified after the fact, on occasion that will happen; but if we get enough advance notice, it is our collective job to prevent that from going through.

The Chair: I agree.

Senator Stewart Olsen: I apologize for being late. I will not ask you any questions on much of what you have covered because I understand the constraints you are placed under.

In this brave new world that we face, I worry sometimes that our security departments do not have the wherewithal that they need. Could you give me some idea of what would make it easier for you to move forward with this business that you are doing? I am not asking you to bare your souls, but I would like to get some sense of what we, as a government, can do collectively for your agencies.

Mr. Davies: In national security?

Senator Stewart Olsen: In the broad sense, yes.

Mr. Davies: Talking from more of a policy-maker's point of view, in the next few years it will be difficult getting new resources. Everyone here would have their own wish list — if you had a marginal dollar, where would you allocate it?

I would encourage the committee to not be constrained by that, although be realistic. There are ways of profiling things and expenditures. There are ways of being innovative. There are ways that can be a big difference that are cost neutral. Those are the kinds of things we are looking at, especially in the counter-proliferation area.

New developments and infrastructure cost a lot of money. If you are smart about it and think about it a different, outside-the-box way, there may be important things we can do in the short term. The advice from the committee on layering things, piloting things, looking at best practices around the world and bringing those here would be very helpful.

Mr. Yaworski: First, thank you for that insightful question. As Mr. Davies has suggested, we each work within the resource envelopes we are allocated. We do prioritize within those monies that are allocated to our respective agencies.

I honestly think that in this time of fiscal restraint, the onus is on us to be more efficient and effective in what we do. Often in our discussions, certainly with my allied partners and particularly among our closest allies, the subject of burden sharing comes up, and the ability to work more collaboratively and to divide up the pie of the nature of the threats. The onus, I think, is actually on us.

We know there will not be any more monies coming our way; we recognize that. We are working to maximize what we can do and to ensure our prioritization is dealing with the greatest level of threats.

Mr. Cabana: Without repeating, I agree with what Mr. Davies and Mr. Yaworski said. I think that part of the focus for us must be on ensuring that our prioritization mechanisms that we have in place are appropriate to ensure that we have focused on the right priorities.

I will go back to the investigation issue. As Mr. Davies pointed out, a lot of work is already being done around that to come to terms on potential options for that kind of information to be more readily available in the context of criminal prosecution. Also, our effort must be placed toward enhanced outreach to ensure that we communicate to the industry that they play a significant role and they have ownership of this as well — as well as internationally, to ensure that we maximize and leverage the abilities and the intelligence of our partners internationally.

Mr. Leckey: First, I would like to agree with everything that my colleagues have said so far and to add the following. Clearly, we are all working within a risk management paradigm here. We have nothing like the resources to check every single export manifest. We do what we can with the resources that we have.

In general, anything that could enhance our risk management practices would be extremely helpful; for example, the ability to share information that may have been collected by another department that is not necessarily sitting here and may have been collected for a different purpose, to be shared with us for the purposes of protecting national security. Anything that would enable us to join up our IT systems to work together on a case-by-case basis — to permit that to happen more freely than it happens today — would also advance the cause.

The Chair: Unfortunately, that probably does have a price tag, but it seems so simple just to have the computers talk to each other.

Senator Dallaire: I will rattle my questions off, if you want to take note, gentlemen.

Canada was a leader in nuclear inspection. As you are saying, you are leveraging your colleagues. What niche has Canada staked out in the fight in favour of non-proliferation?

That brings me to my second question. Although we are targeting Iran, who else is coming up the priority pole of effort with regard to seeking that capability you are looking at? Does Iran also have a delivery system or will they deliver that thing in the back of a truck?

On the IT side, particularly with the RCMP, having been on the national police services advisory board and intelligence-based policing, what legislation is actually being moved from the RCMP through Justice to give you the capability of using that intelligence in a more appropriate way?

The Chair: We now have four questions. Does anyone want to take just one?

Senator Dallaire: We can take it one at a time.

The Chair: Go ahead, if someone has a response.

Mr. Davies: To answer your first question, Canada's niche area in non-proliferation is a good question for Foreign Affairs. That is my thinking here, unless any of you have thoughts.

The Chair: Are there any comments on any other points?

Mr. Cabana: On the information-sharing piece, in terms of what legislation is moving at the current time, it is probably a little premature. It is a very complex issue that is not strictly a reality in Canada.

In discussions that I have had with some of my international counterparts, it is an issue that many countries are grappling with. There is no legislation moving forward that I am aware of at the present time, but work is being done within the legal community to develop options that hopefully will lead to a legislative solution in the future.

[Translation]

Senator Dallaire: But how far advanced are you? Do we have to wait for three or five years?

[English]

The Chair: We have the questions out. I do not think it is for him to decide when that is coming forward.

[Translation]

Mr. Cabana: Discussions are still going on; the timeframe is still being discussed.

[English]

The Chair: Are there any other questions?

Mr. Yaworski: To answer Senator Dallaire's question about delivery systems, absolutely, that is very much a concern that CSIS has. They are advancing what they are calling their ability to launch a satellite. That is the approach that they are taking to develop technology that you are well aware could be transformed into something much more nefarious in terms of a delivery system for a payload other than a satellite. Yes, indeed, we are very concerned about that.

Senator Lang: I want to refer back to the case of 2009 that was referred to the RCMP by CBSA, namely, the Mahmoud Yadegari case. It was successfully prosecuted. From the short discussion we are having today, I feel that we are facing a very serious threat in the world. I do not think it can be understated. At the same time, you gentlemen have told us clearly that you are doing your job. You are aware of how this dual-use technology can or could be exported from this country and is being exported from this country; yet, to my knowledge, we have one successful case that has been prosecuted.

I would like to ask this question, following up on those of Senator Stewart Olsen. What further tools have to be put in your toolbox from a legislative policy point of view so that we can apprehend these individuals whether they have come into this country with us knowing they have come into this country or if they have been homegrown, these individuals that are aiding and abetting terrorism in another part of the world that could come back to affect us dramatically?

The Chair: We do know dollars are scarce. We have that as the preface, yes, but if there are other things in response, that would be great.

Mr. Davies, do you want to answer that?

Mr. Davies: It is difficult to answer because we have a number of discussions with the minister on this. Obviously, you want to look at the export regime and powers given to CBSA, penalties and so on. That would be certainly one place to start. I am not sure if Mr. Leckey has anything to add.

Mr. Leckey: In terms of successes, of course prosecution and successful conviction is a good deterrent, but it is not the only possible success. There is a continuum of successes here. Canada has had a number of successes. I would like to put on the record a couple of statistics, if I may.

Since the beginning of the current fiscal year, CBSA has made 24 seizures of goods valued at $2.1 million. Six of those have been assessed as prohibited under SEMA. Four others were controlled nuclear dual-use goods and they are still being assessed.

Since the implementation of SEMA in July 2010, CBSA has seized 14 shipments valued at approximately $4 million total. Most of those were going to listed entities or involved prohibited goods or a prohibited use.

CBSA has also prevented the export of 16 other shipments that have been assessed as prohibited under SEMA. Those were allowed to be withdrawn so there was no administrative consequence to them.

We have also in the same time frame referred two seizures to the RCMP for possible criminal prosecution.

When I talk about the continuum of successes, you might put a successful conviction at the top end. Other measures of success can be simply stopping goods, making sure that the exporter lost that particular contract so he may not be contacted again. Simply disrupting and delaying the shipment of goods is also a success. Outreach efforts to private companies, to the manufacturers have resulted in a number of successes that we are aware of where, after an outreach session, a company has come and spoken to us about an order that is being placed that just does not seem right to them anymore.

Senator Lang: I really appreciate that information.

Are any steps being taken by your various departments or by you collectively to inform the public that this is being done and your successes on the continuum way of doing it? Also, people who would be interested in doing this, once they know that we have this type of system in place, it is a fair warning, then they do not come forward to Canada because they know we are doing the job we said we would do. If we do not tell people and people are not aware of it, it will be cloak-and-dagger every day of the week. Do you have any kind of PR program?

Mr. Davies: There is no direct PR program right now, but I think it is a good idea and one worth looking at.

Senator Lang: Thank you.

The Chair: We started here today. We are done.

Senator Day: Yes, we are done.

On a point of privilege, Senator Lang posed a question I thought was an important one and you put a restriction on that by saying, "We all know that dollars are scarce."

The Chair: We had that discussion earlier, yes.

Senator Day: Surely, it would be helpful for this committee to know if these gentlemen or any of them are not able to do the job they should be doing because they do not have enough money.

The Chair: Would anyone like to answer that question?

Senator Day: We know dollars are scarce. It is a matter of prioritizing the amount of scarce money that is available.

The Chair: It is just that they had all spoken to it, Senator Day. That was why I made my comment. They all addressed the remarks, all five of them had said that, and they agreed with each other on that. I felt that that was firmly on the record.

Are there further comments, gentlemen, on that topic? No.

Thank you all very much, gentlemen, for your testimony here today. We appreciate it.

Ladies and gentlemen, we will terminate our meeting, but I would ask senators to stay for two minutes for some information on upcoming meetings.

(The committee adjourned.)