News (Media Awareness Project) - Canada: Mounties Didn't Have Government's OK For Covert Drug Sting |
| Title: | Canada: Mounties Didn't Have Government's OK For Covert Drug Sting |
| Published On: | 1998-06-14 |
| Source: | Ottawa Citizen (Canada) |
| Fetched On: | 2008-09-07 08:11:50 |
MOUNTIES DIDN'T HAVE GOVERNMENT'S OK FOR COVERT DRUG STING
RCMP LAUNDERED cash for five months before getting cabinet approval
The RCMP operated an undercover currency exchange in Montreal for five
months in 1990 before getting the required legal approvals from the
Solicitor General of Canada, secret federal documents show.
Even when the Solicitor General's approval was later obtained, it appears
the RCMP never told the minister -- at the time, Conservative cabinet
minister Pierre Cadieux -- about the full extent of its covert operation:
that police officers were changing Canadian currency into U.S. funds for
suspected drug traffickers, and that such transactions would facilitate
imports of drugs.
In an interview, Mr. Cadieux declined to comment on the series of events or
discuss what he knew about the RCMP covert operation while he was Solicitor
General of Canada from Feb. 23, 1990 to April 21, 1991.
``I can't recall,'' said Mr. Cadieux, who later became Minister of State
for Fitness and Amateur Sport in the former Progressive Conservative
government.
Mr. Cadieux is now vice-chairman of the Quebec Rental Board in Montreal.
Former RCMP commissioner Norman Inkster said he recalled the Montreal
operation and that it had been approved by the Solicitor General, but he
declined to comment on the timing or anything else about it.
The federal Financial Administration Act requires that the RCMP obtain
written approval from the Solicitor General before setting up a covert
Crown corporation for investigative purposes.
Such approval also exempts the covert company from having to prepare
detailed financial reports about its activities, something all normal Crown
corporations must produce annually and table in Parliament.
The undercover RCMP company, called the Montreal International Currency
Centre Inc., was located in downtown Montreal on de Maisonneuve Blvd. West.
It was incorporated on Aug. 17, 1990 by a Montreal corporate lawyer working
for the RCMP. Fictitious names were used on the incorporation papers.
The company began exchanging money in September 1990.
But Mr. Cadieux did not authorize the RCMP's covert company until Jan. 11,
1991, the secret federal documents show.
By this time, the federal police force had already exchanged hundreds of
thousands of dollars in suspected and known drug money, which had
facilitated efforts by criminals to import cocaine into central Canada.
By this time, the police force also had already signed a secret agreement
with the National Bank of Canada on Aug. 28, 1990, under which the bank
agreed to train undercover officers who were to staff the currency exchange.
That secret agreement also stipulated that the RCMP would guarantee all
losses the Montreal-based bank might incur as a result of the covert police
company's activities.
The RCMP was months away from getting the Solicitor General's approval when
that deal was signed. When Mr. Cadieux approved the creation of the covert
company, the agreement with the National Bank was never mentioned to him by
then-RCMP commissioner Mr. Inkster.
Documents obtained by the Citizen show that the RCMP knew just days after
the currency exchange opened its doors in Montreal that officers had not
received the proper written authorization from the Solicitor General.
That message was delivered to Insp. Bruce Bowie, then the officer-in-charge
of the Drug Enforcement Directorate at RCMP Headquarters in Ottawa, on Oct.
4, 1990, by Nancy Irving, a lawyer in the federal Justice department.
Ms. Irving described the failure to get the Solicitor General approval as a
serious problem, outlining possible repercussions in a five-page memorandum.
She said the Financial Administration Act could allow the government to
suspend the RCMP officers with or without pay for failing to get the
Solicitor General's approval to incorporate the covert company.
Ms. Irving then said that a ``far more serious'' concern was that the
covert corporation might have to be dissolved because of the failure to get
the proper ministerial authorization.
``The only real solution to the foregoing is for the Force to proceed
without delay to attempt to obtain the Solicitor General's approval under
paragraph 85 (2) a. It remains to be seen whether the Minister will
authorize the company's incorporation ex post facto,'' she added.
Despite her recommendation for the RCMP to ``proceed without delay'' and
try to get the Solicitor General's approval, Mr. Inkster took two months to
send a letter to Mr. Cadieux to advise him of the problem.
Mr. Inkster's description of the situation was different than that of Ms.
Irving's, and he didn't tell Mr. Cadieux of the issues outlined by Ms. Irving.
His letter to Mr. Cadieux, dated Dec. 3, 1990 -- stamped ``SECRET'' --stated:
``As you are aware, the RCMP has a number of legally incorporated companies
to enable us to effectively pursue covert investigations and surveillance.
``With the passage of Bill C-61 (the law to counter money laundering), we
have taken the lead role in the enforcement initiative against money
laundering.
``The RCMP Economic Crime Directorate has had an international money
laundering initiative working with our American counterparts which
necessitated the incorporation of companies for support cover and potential
business transaction reasons,'' the letter stated.
``The RCMP Drug Enforcement Directorate is also carrying out enforcement
initiatives versus money laundering and the proceeds of crime through the
incorporation of a store front operation,'' he added.
Mr. Inkster reported that a ``recent review'' discovered an ``unintentional
oversight:'' that the RCMP failed to get proper written Ministerial
approval to create eight separate covert Crown corporations for its
investigations.
One of them was the Montreal International Currency Centre Inc.
A separate appendix was included for Mr. Cadieux to sign to retroactively
approve the creation of the covert company in Montreal.
Mr. Cadieux only signed that authorization on Jan. 11, 1991.
Mr. Cadieux declined to say whether he was subsequently briefed on the full
details of the Montreal covert operation, given that he had not been told
about them in the letter from Mr. Inkster.
The Montreal Mounties running the currency exchange were never told about
RCMP headquarters' failure to get the Solicitor General's approval to
create the covert company until three years later, internal RCMP documents
show.
On Dec. 7, 1993, RCMP Headquarters in Ottawa sent a confidential facsimile
message to officers in Montreal in which they were told their operation had
ministerial approval and that it was a Crown corporation.
A handwritten note on the facsimile from RCMP Sgt. Yvon Gagnon, the officer
overseeing the Montreal operation, stated: ``It seems that the Montreal
International Currency Centre is a Crown corporation and has been since
Dec. 3 1990. Headquarters forgot to inform us about it.''
The RCMP was criticized in the final report of the Macdonald Royal
Commission into RCMP wrongdoing in the 1980s for not fully informing its
political masters of its ongoing operational activities.
This way, the commission found, the minister could deny knowing of
potentially sensitive police operations should they be exposed and publicly
criticized.
A series of articles in the Citizen last week about the Montreal covert
operation revealed that the cash-strapped, short-staffed undercover RCMP
unit was overwhelmed by the drug world figures using the currency exchange.
RCMP officers only had the manpower and financial and technical resources
to investigate a fraction of the cocaine traffickers using their exchange.
While the RCMP eventually arrested some criminals and recovered $16.5
million in laundered cash, $125 million in known and suspected drug money
which was exchanged at the Montreal counter vanished, fuelling drug sales
between Canada and Colombia which were worth about $2 billion on the street.
The covert police operation was also hurt by leaks of sensitive information
by corrupt fellow police officers, including one Mountie who remains on the
force and who has yet to be identified following an internal security probe.
Checked-by: Mike Gogulski
RCMP LAUNDERED cash for five months before getting cabinet approval
The RCMP operated an undercover currency exchange in Montreal for five
months in 1990 before getting the required legal approvals from the
Solicitor General of Canada, secret federal documents show.
Even when the Solicitor General's approval was later obtained, it appears
the RCMP never told the minister -- at the time, Conservative cabinet
minister Pierre Cadieux -- about the full extent of its covert operation:
that police officers were changing Canadian currency into U.S. funds for
suspected drug traffickers, and that such transactions would facilitate
imports of drugs.
In an interview, Mr. Cadieux declined to comment on the series of events or
discuss what he knew about the RCMP covert operation while he was Solicitor
General of Canada from Feb. 23, 1990 to April 21, 1991.
``I can't recall,'' said Mr. Cadieux, who later became Minister of State
for Fitness and Amateur Sport in the former Progressive Conservative
government.
Mr. Cadieux is now vice-chairman of the Quebec Rental Board in Montreal.
Former RCMP commissioner Norman Inkster said he recalled the Montreal
operation and that it had been approved by the Solicitor General, but he
declined to comment on the timing or anything else about it.
The federal Financial Administration Act requires that the RCMP obtain
written approval from the Solicitor General before setting up a covert
Crown corporation for investigative purposes.
Such approval also exempts the covert company from having to prepare
detailed financial reports about its activities, something all normal Crown
corporations must produce annually and table in Parliament.
The undercover RCMP company, called the Montreal International Currency
Centre Inc., was located in downtown Montreal on de Maisonneuve Blvd. West.
It was incorporated on Aug. 17, 1990 by a Montreal corporate lawyer working
for the RCMP. Fictitious names were used on the incorporation papers.
The company began exchanging money in September 1990.
But Mr. Cadieux did not authorize the RCMP's covert company until Jan. 11,
1991, the secret federal documents show.
By this time, the federal police force had already exchanged hundreds of
thousands of dollars in suspected and known drug money, which had
facilitated efforts by criminals to import cocaine into central Canada.
By this time, the police force also had already signed a secret agreement
with the National Bank of Canada on Aug. 28, 1990, under which the bank
agreed to train undercover officers who were to staff the currency exchange.
That secret agreement also stipulated that the RCMP would guarantee all
losses the Montreal-based bank might incur as a result of the covert police
company's activities.
The RCMP was months away from getting the Solicitor General's approval when
that deal was signed. When Mr. Cadieux approved the creation of the covert
company, the agreement with the National Bank was never mentioned to him by
then-RCMP commissioner Mr. Inkster.
Documents obtained by the Citizen show that the RCMP knew just days after
the currency exchange opened its doors in Montreal that officers had not
received the proper written authorization from the Solicitor General.
That message was delivered to Insp. Bruce Bowie, then the officer-in-charge
of the Drug Enforcement Directorate at RCMP Headquarters in Ottawa, on Oct.
4, 1990, by Nancy Irving, a lawyer in the federal Justice department.
Ms. Irving described the failure to get the Solicitor General approval as a
serious problem, outlining possible repercussions in a five-page memorandum.
She said the Financial Administration Act could allow the government to
suspend the RCMP officers with or without pay for failing to get the
Solicitor General's approval to incorporate the covert company.
Ms. Irving then said that a ``far more serious'' concern was that the
covert corporation might have to be dissolved because of the failure to get
the proper ministerial authorization.
``The only real solution to the foregoing is for the Force to proceed
without delay to attempt to obtain the Solicitor General's approval under
paragraph 85 (2) a. It remains to be seen whether the Minister will
authorize the company's incorporation ex post facto,'' she added.
Despite her recommendation for the RCMP to ``proceed without delay'' and
try to get the Solicitor General's approval, Mr. Inkster took two months to
send a letter to Mr. Cadieux to advise him of the problem.
Mr. Inkster's description of the situation was different than that of Ms.
Irving's, and he didn't tell Mr. Cadieux of the issues outlined by Ms. Irving.
His letter to Mr. Cadieux, dated Dec. 3, 1990 -- stamped ``SECRET'' --stated:
``As you are aware, the RCMP has a number of legally incorporated companies
to enable us to effectively pursue covert investigations and surveillance.
``With the passage of Bill C-61 (the law to counter money laundering), we
have taken the lead role in the enforcement initiative against money
laundering.
``The RCMP Economic Crime Directorate has had an international money
laundering initiative working with our American counterparts which
necessitated the incorporation of companies for support cover and potential
business transaction reasons,'' the letter stated.
``The RCMP Drug Enforcement Directorate is also carrying out enforcement
initiatives versus money laundering and the proceeds of crime through the
incorporation of a store front operation,'' he added.
Mr. Inkster reported that a ``recent review'' discovered an ``unintentional
oversight:'' that the RCMP failed to get proper written Ministerial
approval to create eight separate covert Crown corporations for its
investigations.
One of them was the Montreal International Currency Centre Inc.
A separate appendix was included for Mr. Cadieux to sign to retroactively
approve the creation of the covert company in Montreal.
Mr. Cadieux only signed that authorization on Jan. 11, 1991.
Mr. Cadieux declined to say whether he was subsequently briefed on the full
details of the Montreal covert operation, given that he had not been told
about them in the letter from Mr. Inkster.
The Montreal Mounties running the currency exchange were never told about
RCMP headquarters' failure to get the Solicitor General's approval to
create the covert company until three years later, internal RCMP documents
show.
On Dec. 7, 1993, RCMP Headquarters in Ottawa sent a confidential facsimile
message to officers in Montreal in which they were told their operation had
ministerial approval and that it was a Crown corporation.
A handwritten note on the facsimile from RCMP Sgt. Yvon Gagnon, the officer
overseeing the Montreal operation, stated: ``It seems that the Montreal
International Currency Centre is a Crown corporation and has been since
Dec. 3 1990. Headquarters forgot to inform us about it.''
The RCMP was criticized in the final report of the Macdonald Royal
Commission into RCMP wrongdoing in the 1980s for not fully informing its
political masters of its ongoing operational activities.
This way, the commission found, the minister could deny knowing of
potentially sensitive police operations should they be exposed and publicly
criticized.
A series of articles in the Citizen last week about the Montreal covert
operation revealed that the cash-strapped, short-staffed undercover RCMP
unit was overwhelmed by the drug world figures using the currency exchange.
RCMP officers only had the manpower and financial and technical resources
to investigate a fraction of the cocaine traffickers using their exchange.
While the RCMP eventually arrested some criminals and recovered $16.5
million in laundered cash, $125 million in known and suspected drug money
which was exchanged at the Montreal counter vanished, fuelling drug sales
between Canada and Colombia which were worth about $2 billion on the street.
The covert police operation was also hurt by leaks of sensitive information
by corrupt fellow police officers, including one Mountie who remains on the
force and who has yet to be identified following an internal security probe.
Checked-by: Mike Gogulski
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