Ontario bill could reward police forces for seizing property in illicit tobacco busts

A new bill in the Ontario legislature seeks to crack down on the multimillion-dollar contraband tobacco trade by giving police departments financial incentive — through civil forfeiture — to investigate the crime.

Bill 139, which passed second reading in November and is being examined by a standing committee, puts harsher penalties on contraband tobacco trafficking and would create a public anti-tobacco education program for schools.

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But one key provision of the bill — which gives the finance minister the option to give proceeds from property seized during a contraband tobacco investigation to the police force that did the investigation — alarms anti-civil forfeiture advocates.

Civil forfeiture law has amassed opponents who say the measures can be abused, with people having their property wrongly taken.

Concerns have been raised about the threshold to seize property, with forfeitures being processed through civil court and requiring no criminal charges or convictions.

Todd Smith, the Conservative MPP from Prince Edward-Hastings behind the bill, says the provision to provide police forces with a financial incentive to go after contraband tobacco was made to provide cash-strapped municipal police forces with the funding they need to fight the crime.

"The bill just really empowers local police services and incentivizes local police services to make these kind of busts so we can crack down on this," said Smith.

He added many municipal police forces do not bother dealing with the trade, leaving it to the RCMP to handle because contraband tobacco is principally in their jurisdiction.

In 2014, the RCMP seized contraband tobacco worth more than $4 million across Canada.The RCMP also used civil forfeiture against the contraband tobacco trade, seizing more than 50 vehicles with a total value of $400,000.

Concerns about incentives

Seizing property relating to crimes, selling it and distributing the proceeds to law enforcement have taken place under civil forfeiture laws in Canada for several years.

Ontario instituted civil forfeiture in the Civil Remedies Act of 2001, becoming the first province in Canada to do so.

The laws allow police forces to seize assets such as houses, cars and cash if they are shown to be a proceed or instrument of crime in civil court. Funds received from selling the properties are held by the government, distributed with law enforcement grants or given to victims' agencies.

In Ontario since November 2003, approximately $48.6 million worth of property was seized by the province, with another $10.5 million worth of property being held and frozen. According to the provincial Ministry of the Attorney General, $24.5 million of that has been distributed to victims' funds and $10.9 million was distributed to law enforcement agencies through grants.

The remainder has been held by the government to help recover the Crown's cost to handle cases of civil forfeiture.

But Marni Soupcoff, executive director of the Canadian Constitution Foundation — a charity supporting civil liberties that opposes civil forfeiture — says Bill 139's provision to potentially give police forces direct reward from civil forfeiture is a step backward.

'Strong motivations'

"One of the things we had been a bit ahead on [was] at least [we] weren't giving it directly to the exact same law enforcement organization that was conducting the law enforcement itself," said Soupcoff.

"They have strong motivations then to seize property because it is going to directly benefit them or their peers and their organization that they're working for," she added. "That is really encouraging them to seize property and when you're dealing with law enforcement, you don't want police to be encouraged by anything beyond the law."

Gary Grant, a spokesperson for the National Coalition Against Contraband Tobacco — a group of organizations advocating for more measures to stop the contraband trade — said financial incentive is needed for some police services to fight contraband tobacco.

"I have spoken to police chiefs across the country and across the province and they indicate they would join in the fight against contraband tobacco if possible," said Grant, who previously served in the Toronto Police Service.

"But I also know that they're facing very, very serious challenges with resources — both human resources and financial."

Grant added the bill will allow officers to fund additional resources to fight the contraband tobacco trade.

"It will — maybe not just incentivize —  but it will allow the police services to be able to free up more officers to deal with the problem."

Similar measures

The Ontario bill emulates Quebec's Bill 59, introduced in 2009 to combat the contraband tobacco problem. Bill 59 imposed harsher fines for the trade of contraband tobacco, gave local police forces more authority over the crime and allowed municipalities to prosecute contraband tobacco crimes and keep any proceeds.

Ontario's Bill 139 would also introduce harsher fines and penalties for those involved in the contraband tobacco trade, as well as incentives to get local police forces more involved in fighting the trade as Quebec did.

Quebec's contraband tobacco trade has taken a hit since the measures were implemented. According to the province's 2014-15 budget, the amount of smuggled tobacco products dropped from an estimated at 30 per cent of the tobacco market in 2009 to 13 per cent in 2014.

More tax was also collected from tobacco, with revenues rising from $650 million in 2009 to more than $1 billion in 2014, despite tax rates and smoking rates remaining steady. For the 2013-14 fiscal year, $19.1 million in cash and tobacco products were seized in Quebec by police forces.

Clément Robitaille, a director in Quebec's Public Security Ministry, said the measures Quebec has taken to fight contraband tobacco have led to positive results and that providing financial support to municipalities to get involved in the fight has been key to that.

"We got them involved to to make sure the supply chain was fully covered," said Robitaille. "Municipalities are the beginning of the supply chain."

But he added Quebec does not really use civil forfeiture to dissuade the contraband tobacco trade in the province, instead relying on fines, which he said bring in $30 million per year to the province.

Grant said Quebec's bill should be imitated by other provinces.

"Quebec is really the benchmark," he said. "To me, it's best practice and I suggest, at the end of the day, that's what Ontario should be doing."

Civil forfeiture has seen controversy in other provinces. Several charter challenges have been launched against British Columbia's civil forfeiture laws, including one challenge by several members of the Hells Angels over a seized clubhouse.

Millions in lost revenue

The Canadian contraband tobacco trade, which is centred in Ontario and Quebec, is lucrative. A study by Macdonald-Laurier Institute estimated there are 19 to 23 million cartons of contraband cigarettes consumed in Canada each year, with a market value of $1.5 to $2 billion.

Another study by the Canadian Taxpayers Federation in 2012 estimated Ontario loses at least $689 million in tax revenue from the contraband tobacco trade each year.

Smith said he is optimistic his bill will pass through the provincial legislature because of the amount of support it has received.

All three parties in the provincial legislature backed the bill during its first two readings, as have many health and business organizations, including the Canadian Cancer Society and the Heart and Stroke Foundation of Canada.

The bill also received a small reference in the Ontario 2016 budget, but it is only noted the province is examining the potential expansion of forfeiture provisions.