Canadian Lawyer InHouse

19 canadianlawyermag.com/inhouse April 2015 by magic. But if you do take the time to map the responsibilities and what to communicate internally, then you've come a long way to make sure that you can sleep better." For others, the challenge has become one of keeping up with the level of sanctions. "We live in interesting times with Russian business — we have to understand each coun- try's sanctions," says Hartland Paterson, gen- eral counsel, chief compliance officer & sec- retary with CAE Inc. in Montreal. CAE is a manufacturer of simulation technologies and training services to airlines, aircraft manu- facturers, defence, and mining companies. CAE's business with Russian companies has predominantly involved pilots of Russian companies using CAE's civil aircraft training centres in Europe. "It's not really a big sanc- tions issue, you just need to look at whether the airline company is sanctioned or not by Canada, the host country or the training cen- tre. If they're not sanctioned it's not illegal and I don't know that it's immoral — I think the world has a vested interest that civil aircraft flown by Russian pilots are flown safely." There's also the issue of payments — are they going to be able to get the hard currency to pay? Paterson says some Russian customers are looking at clauses to protect them from their inability to perform due to sanctions. "They are transferring, in a way, the risk of the sanc- tion through that proposed clause back to CAE in the sense that we would be the ones who lost out if there was some change." Many companies seeking to do business in Russia find it hard to create and update in-house compliance programs and to train managers and sales staff about the changing rules. Some have abandoned the hope of new business in a country that, more than two de- cades after the collapse of the Soviet Union, remains a challenging place to work. "Self-sanctioning is something that a number of Canadian and other western com- panies have done," says Lou Naumovski, di- rector general of the Kinross Moscow office and chairman of the board of directors of the Canada Eurasia Russia Business Associa- tion, a trade organization that has spoken out frequently against the economic sanctions. "Basically, companies not willing to contend with the analysis and preparatory work . . . have taken the decision not to seek out new business, or in a number of cases not to con- tinue to try to do business with Russia." Naumovski notes that the sanctions are both focused and specific, and most business between Canada and Russia is likely not af- fected. But companies must still monitor things carefully, and perhaps see if it's pos- sible to get supplies from non-sanctioning jurisdictions. Support from internal and ex- ternal counsel is "critical to ensure that there is a clear understanding of all of the potential risks," he adds by e-mail. Kinross has not been affected. "On an op- erational level our business remains unaffect- ed by the sanctions," he says. "The relation- ships required to do good business in mining, such as with suppliers, federal regulators and other public officials, local administrators, and stakeholders, remain strong. We have not experienced any fallout at an operational level, despite Canada's sanctions." Canada introduced its first batch of sanc- tions against Russia last March, in response to what Foreign Affairs describes as "Russia's violation of the sovereignty and territorial integrity of the Ukraine." The first docu- ment listed companies and individuals that Canadians may not sell to or have business dealings with, but the prohibitions have been amended many times, rolling in first some lending and capital investment and, last De- cember, a ban on specified exports to parts of the Russian energy sector: offshore, Arctic, and shale oil production. It's a development that hits Calgary's energy companies hard. "From the perspective of seeing our Calgary- based clients reel from the impact, it's clear that in respect of oil exploration and produc- tion and in connection with our service com- pany clients, it is impacting their business and the way they pursue additional business in Russia," says Kristine Robidoux, a partner at Gowlings in Calgary and a member of the firm's white collar defence and investigations group. "If you are a Canadian company look- ing to provide services in Russia, then one of the key considerations that you would look to, and I would suggest that it should be done early, is the application of U.S. sanctions and Canadian sanctions against Russia." There are both similarities and differences between Canada's sanctions and those im- posed by the United States and the European Union, and the rules change frequently, with a dozen amendments to the Canadian lists alone. Nobody expects the curbs will stay the same for long, given pressure from some quarters to ease the restrictions and from others to tighten them in response to the still tense political situation in eastern Ukraine. Canada has been relatively hard line, perhaps reflecting a large Ukrainian diaspora that's very sensitive to the issue. "Part of the very aggressive rhetoric that we see from [Prime Minister Stephen] Harp- er . . . is in large part motivated by that bloc of Ukrainian voters we have here, but I'm not saying that it's the only reason," says Boscari- ol. "There are legitimate reasons under inter- national law for imposing sanctions measures of some kind to address what's happened in Ukraine." The intense focus on compliance and due diligence from Canadian companies looking at trade with Russia has spawned an industry ready to help. Service provid- ers like Dow Jones and Thomson Reuters offer software for compliance checks, and Canadian companies may ask their trade partners to certify that they are not work- ing with any of the entities — banks, com- panies, and individuals — included in the sanctions lists. Law firms offer training sessions to teach companies' managers and sales staff about the sanctions, and about the questions that they need to ask of would be trading partners. If the risk is high — a Russian partner company with ties to the sprawling military industrial complex perhaps — the due dili- gence will likely be more extensive, perhaps including background checks and work by private investigators. But for a smaller trade partner with no obvious ties to the Kremlin or the military, it may be enough to check names against sanctions lists and ask for some sort of assurance that proscribed partners are not involved. '' '' We live in interesting times with russian business — we have to understand each country's sanctions. HArTlAND pATErSON, CAE inc.

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