Halifax man with business dealings in Syria now under EU sanctions

A Halifax man who was the first person charged with violating Canada’s economic sanctions against Syria is now accused of violating the European Union’s sanctions as well. 

Nader Kalai — a Syrian national with permanent residency in Canada — is known to be a close associate of Syrian President Bashar al-Assad and his loyalists.

On Monday the European Union added Kalai to a list of individuals who are subject to travel bans and an asset freeze for their involvement with the Assad regime. EU citizens and businesses are also banned from making funds available to Kalai and others on the list.

The EU council describes Kalai as a “leading businessperson operating in Syria, with significant investments in the construction industry.” 

The EU said he has a 50 per cent stake in Zubaidi and Qalei LLC, which it said is building a luxury tourist city known as Grand Town. It said the company secured a 45-year agreement with the Syrian regime after agreeing to pay 19 to 21 per cent of its revenue.

Kalai “benefits from and/or supports the regime through his business activities, in particular through this stake in the Grand Town development,” the EU decision states.

It also described him as one of the majority shareholders of Castle Investment Holding and the chairman of Kalai Industries Management. 

Nader Kalai’s family home is located on the historic Young Avenue in Halifax’s south end. (Robert Short/CBC)

The 54-year-old was born in Damascus and runs a telecommunications consulting company, Telefocus Consultants Inc., out of his home in Halifax. He purchased the house on Young Avenue — which has an assessed value of $1.3 million — in 2009, and he is still listed as the owner.  

Kalai’s wife and six children are all Canadian citizens. A 2018 CBC investigation found he was back in Damascus doing business there.

In Canada, he was charged with one count under the Special Economic Measures Act (SEMA) tied to a payment of 15 million Syrian pounds — or about $140,000 — to a company called Syrialink on Nov. 27, 2013, according to court documents filed in June 2018. 

Kalai is still listed as the owner of a south-end Halifax home that has an assessed value of $1.3 million. (Robert Short/CBC)

He was not present during an August court appearance. His lawyer said Kalai was out of the country at the time, and CBC News has learned Kalai is currently in Damascus. 

Kalai’s case is still before the courts. A preliminary hearing is scheduled to continue Feb. 8 in Halifax provincial court. 

Court documents, which were sworn by a Canada Border Services Agency investigator, outlined a nearly two-year investigation that led to the Canadian charge. They included a claim that Kalai was making false statements to Citizenship and Immigration Canada about his work history.

They also say that Canada Revenue Agency was investigating Kalai for tax evasion and failure to report hundreds of thousands of dollars in income.

EU adds 11 men to sanction list

Kalai was among 11 businessmen added to the list of inviduals and companies subject to EU sanctions, which include restrictions on some investments. It total the list includes 270 people and 72 entities.

The EU first imposed sanctions on the Syrian regime in 2011. 

Canada has had formal sanctions in place against Syria, a number of high-ranking Syrian officials and a handful of Syrian businesses since 2011 as well — a response to the regime’s use of violence against its own people, including apparent chemical weapon attacks.

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IMF cuts forecast for 2019 growth in Canada, world

The International Monetary Fund has cut its forecast for world economic growth this year, citing heightened trade tensions and rising U.S. interest rates.

The IMF said Monday that it expects global growth this year of 3.5 per cent, down from 3.7 per cent in 2018 and from the 3.7 per cent it had forecast for 2019 back in October.

Unveiling its forecasts at the World Economic Forum in Davos, Switzerland, the fund left its prediction for U.S. growth this year unchanged at 2.5 per cent.

For Canada, the IMF’s estimate for growth in 2019 was 1.9 per cent, down from a forecast in October for growth of 2.0 per cent.

The IMF’s view is more positive than an assessment by the Bank of Canada issued Jan. 9. The central bank forecast growth of 1.7 per cent this year, down from its October prediction of 2.1 per cent.

The IMF expects the Chinese economy — the world’s second biggest — to grow 6.2 per cent this year, down from 6.6 per cent in 2018 and the slowest since 1990.

Chinese growth slowing

China announced Monday its GDP had expanded by 6.6 per cent in 2018, down from 2017’s 6.9 per cent. Growth in the three months ending in December dipped to 6.4 per cent — the lowest quarterly level since the 2008 global crisis — from the previous quarter’s 6.5 per cent.

Chinese growth helped kickstart the world’s economy after the 2008 financial crisis and economists fear the slowdown will put a drag on global growth.

The Chinese economy is transitioning from one based on trade to one driven by domestic consumption, says Fotios Raptis, senior economist at TD Bank. He said the dramatic slowdown confirmed today was expected, in part because of weaker infrastructure spending and the tariff war with the U.S.

“Efforts by policymakers to stimulate economic activity, such as cutting the required reserve ratio in the banking sector and broad tax cuts, have likely acted to prevent a more dramatic decline,” he said in a note to clients.

International Monetary Fund (IMF) managing director Christine Lagarde, shown Oct. 1, 2018, has warned that higher interest rates will leave many countries with higher debt loads. (Andrew Caballero/AFP/Getty Images)

The IMF’s growth outlook for the 19 countries that use the euro currency has been reduced to 1.6 per cent from 1.8 per cent.

The World Bank and the Organization for Economic Cooperation and Development have also downgraded their world growth forecasts.

Trade tensions create uncertainty

Rising trade tensions pose a major risk to the world economy. Under President Donald Trump the United States has imposed import taxes on steel, aluminum and hundreds of Chinese products, drawing retaliation from China and other U.S. trading partners.

“Higher trade uncertainty will further dampen investment and disrupt global supply chains,” said IMF chief economist Gita Gopinath.

Rising interest rates in the U.S. and elsewhere are also pinching emerging-market governments and companies that borrowed heavily when rates were ultra-low in the aftermath of the 2007-2009 Great Recession.

As the debts roll over, those borrowers have to refinance at higher rates. A rising dollar is also making things harder for emerging-market borrowers who took out loans denominated in the U.S. currency.

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Doug Ford says Trudeau’s carbon tax will cause recession

Premier Doug Ford ratcheted up his rhetoric on Ottawa’s climate change plan Monday, warning that the federal government’s carbon tax will plunge the country into recession.

During a speech at the Economic Club of Canada, the Ontario premier said there are already warning signs of difficult economic times ahead and a carbon tax will kill jobs and hurt productivity.

“I’m here today to ring the warning bell that the risk of a carbon tax recession is very, very real,” he said.

The Progressive Conservative government scrapped Ontario’s cap-and-trade system after it was elected last spring saying it was a “cash grab” that didn’t help the environment and have since launched a legal challenge of the federal government’s carbon pricing plan.

Ford said Ontario does not need a carbon tax to help it reach its emission targets, pointing to his government’s new climate change plan introduced late last year.

Ford renewed his calls for the Trudeau government to abandon its plan to put a price on carbon.

“A carbon tax will be a total economic disaster, not only for our province but for our entire country,” he said. “There are already economic warning signs on the horizon.”

Federal Environment Minister Catherine McKenna’s office did not immediately respond to request for comment.    

Greenpeace Canada slammed Ford’s remarks, saying the effects of climate change can’t be ignored.

“We need a government committed to supporting much-needed jobs building electric vehicles, installing solar panels and other climate solutions rather than trying to boost sales of gasoline,” said Keith Stewart, a senior energy strategist for Greenpeace Canada.

Watch Ontario environment minister Rod Phillips on Power & Politics

‘Layering on another tax…that isn’t going to be effective from an environmental perspective isn’t necessary and is a risk,’ says Ontario’s environment minister Rod Phillips. 9:15

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46% of Canadians $200 or less away from financial insolvency: poll

The number of Canadians who are $200 or less away from financial insolvency at month-end has jumped to 46 per cent, up from 40 per cent in the previous quarter, as interest rates rise according to a new poll.

A survey conducted for insolvency firm MNP Ltd. in December also found that 31 per cent of Canadians say they don’t make enough to cover their bills and debt payments, up seven per cent from the September poll.

The results released Monday also indicated that 51 per cent of respondents say they are feeling the pinch of interest rate increases, up from 45 per cent a quarter ago.

“Many have so little wiggle room that any increase in living costs or interest payments can tip them over the edge,” said MNP’s president Grant Bazian in a statement. “That’s what we are seeing happen right now.”

As well, 45 per cent of those surveyed say they will need to go further into debt to pay their living and family expenses.

Canadians’ finances have come under increased pressure after the Bank of Canada introduced five rate hikes since mid-2017, in response to the stronger economy.

Central bank governor Stephen Poloz kept his benchmark interest rate unchanged earlier this month at 1.75 per cent, but has signalled that more rate increases will still be necessary “over time.”

Interest rate worries

MNP’s latest survey also showed that half of Canadians surveyed said they believe they could be in financial trouble if rates continue to rise, up five per cent from the previous poll.

“Higher interest rates combined with household expenses that outweigh income mean that some are unable to make any kind of meaningful reduction in their debt and, in fact, continue to take on more especially if they encounter unexpected expenses,” Bazian said.

Insolvency concerns rose across the country, with the exception of Atlantic Canadians, said MNP.

Saskatchewan and Manitoba residents were the most likely to be near insolvency, at 56 per cent, up eight percentage points from the previous poll, MNP said.

Alberta residents were second at 48 per cent, up eight points. Ontario and Quebec followed at 46 per cent each, up six points and five points, respectively.

Among residents surveyed in Atlantic Canada, 45 per cent said they were $200 or less away from the financial brink, but that marked a decrease of four percentage points from the September survey.

Ipsos, which conducts the quarterly poll for MNP, surveyed 2,154 Canadians online from Dec. 7 to Dec. 12.

The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

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Deciem founder Brandon Truaxe dead at 40

Brandon Truaxe, the controversial and enigmatic founder of Deciem, the upstart Canadian company behind the hugely popular The Ordinary skin care line, has died.

Two sources told CBC News Monday that Truaxe died over the weekend. A company memo informed employees of the news Monday morning.

A sign in the window of an Abnormal Beauty Co. store says it is closed unexpectedly on Monday. (Oliver Walters/CBC)

Truaxe founded Deciem in 2013, dubbing it The Abnormal Beauty company. 

It quickly became one of the most disruptive in the cosmetic industry, mainly because of its low prices, skyrocketing sales, and customer loyalty.

Truaxe was also known for outlandish social media posts that prompted some to question if they were all a marketing stunt.

In October, Truaxe was ousted as chief executive of Deciem after the company’s largest shareholder, Estée Lauder, sought an injunction in an Ontario court.

That move came after an Instagram post by Truaxe saying all stores would be closed due to what he said was widespread criminal activity within the company.

In its court filing, Estée Lauder cited “outrageous, disturbing, and/or defamatory posts on Deciem’s social media accounts.”

Police were parked outside Brandon Truaxe’s condo in Toronto on Monday. (Aaron Saltzman/CBC)

Truaxe did not contest the injunction and was removed as CEO.

Since then, his Instagram account has featured a series of erratic video posts, including some that appear to have been taken at some point over this past weekend in which he gave the address of his Toronto condo.

Stores and the head office were closed Monday in what the company said was a tribute to a great founder. (Oliver Walters/CBC)

Deciem paid tribute to its founder on the company’s corporate Instagram account on Monday

It said: “Brandon, our founder and friend. You touched our hearts, inspired our minds and made us believe that anything is possible.

“Thank you for every laugh, every learning and every moment of your genius. Whilst we can’t imagine a world without you, we promise to take care of each other and will work hard to continue your vision. May you finally be at peace. Love, (forever) your DECIEM.”

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Barrick explores sale of Zambian copper mine as government mulls more taxes

Barrick Gold Corp. says it’s exploring all options including the possible sale of its Lumwana mine in Zambia as the government considers increased taxes.

While acknowledging that the government is under pressure to increase revenue, company chief operating officer Willem Jacobs said the changes would hit the mine’s profitability.

“The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders,” he said in a statement Monday.

Barrick said it continues to engage with Zambia about ways forward for the operation, including a potential partnership approach with an increased stake for the government in the mine’s economic performance.

Lumwana produced 256 million pounds of copper in 2017 and had a carrying value of US$849 million that year.

Toronto-headquartered Barrick said reports that it has already sold the mine were untrue, but that all options need to be considered given the conditions the mine faces.

First Quantum Minerals Ltd., which operates the Kansanshi and Sentinel copper mines in Zambia, said last September that it faces increased tax rates and reduced deductions that would add about 1.8 per cent to its all-in sustaining costs in the country.

Barrick, which completed its takeover of Africa-focused Randgold Resources at the start of the year, said it plans to divest some assets as part of the deal.

The company is also embroiled in a tax dispute with the government of Tanzania, which handed the company’s Acacia Mining subsidiary with a $190-billion US tax bill in 2017.

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EU regulator who fined Google, ordered Amazon to pay taxes, plans tighter scrutiny for tech sector

Silicon Valley’s notorious nemesis, Margrethe Vestager, plans to end her term as the European Union’s antitrust enforcer this year with a bang, laying out a long-term plan to intensify scrutiny of the world’s big tech companies.

As the EU’s competition commissioner, Vestager is arguably the world’s most important tech regulator. Since 2014, she has slapped Google with eye-popping multibillion-dollar antitrust penalties, ordered Apple and Amazon to pay back taxes and fined Facebook over its WhatsApp acquisition — flagship enforcement cases that have struck fear into Silicon Valley while drawing attention in Washington.

Now, in her final year in office, the 50-year-old Danish politician is laying the groundwork for a new phase of regulation beyond the end of her term in October.

She’s planning a report meant to guide EU competition policies in the era of digitization. Feedback from companies, business groups and experts shows many see the need for more regulation and when it’s published in March, the report by three expert advisers will reflect the need for new or tougher rules, she told The Associated Press in a recent interview.

Digital technology watchdog

“The most important thing is that the majority of input is pro-enforcement,” Vestager said during one of her frequent visits to Copenhagen from her Brussels base. The digital technology industry can no longer be allowed to shape itself, she added. “We are way beyond that.”

It’s unclear yet what shape the new enforcement will take but it may not bode well for the big U.S. technology companies that have landed in Vestager’s crosshairs.

Vestager has cultivated a down-to-earth image — she likes to knit elephants during meetings — that belies her formidable powers of enforcement.

The EU pursued an antitrust case against Google for forcing cellphone companies to use its software on Android phones. (Marcio Jose Sanchez/Associated Press)

She opened three antitrust cases against Google, including one that resulted in a record 4.3 billion euro ($6.5 billion Cdn) fine for forcing cellphone makers to use the internet giant’s software on Android phones. Another 2.4 billion euro ($3.6 billion) penalty was punishment for manipulating shopping search results. She aims to wrap up a probe before her term ends of whether Google blocked rivals from its Adsense ad service.

Vestager ordered Apple to pay back up to 13 billion euros ($19.6 billion Cdn) in back taxes from Ireland. Apple CEO Tim Cook called it “total political crap” and President Donald Trump referred to her as the “tax lady” who “really hates the U.S.”

The EU competition commissioner, with a 900-strong staff, is unusually powerful in the Brussels bureaucracy because it can enforce bloc-wide rules, giving it the power to take on countries and companies. Other departments typically share regulatory duties with national governments. Vestager’s job includes approving or rejecting mergers and investigating cartels and antitrust behaviour. She also makes sure EU states don’t give tax breaks to individual companies that are not available to other corporations — legitimate business strategy in the U.S., but illegal in Europe.

Scrutiny of how data is handled

A lot of attention is now falling on data, the commodity that drives the digital economy.

Information collected by web browsers, apps, smartphones and other devices can be enormously valuable to companies because they can provide insight about, for example, an individual’s buying habits and movements. Data can power artificial intelligence or be used to show targeted advertisements. Vestager is concerned that a small group of companies could corner the market and abuse their power.

She started confronting the problem with an informal probe launched last year into whether online shopping giant Amazon is using data to gain an edge on third party merchants, who are both its customers and rivals. She hopes to decide within six months whether to open a formal investigation.

Many people still aren’t sure how to take control of their personal information. New European privacy rules introduced last year were a start, obliging companies to be more transparent with customers about what they do with people’s data. But consumers are often still overwhelmed by detailed consent forms for third-party tracking on each new site they visit or the fine print of an app’s service terms.

Vestager, a member of a small left -ing political party who believes in free markets, said the private sector can play a role in finding solutions.

Urges private sector to help enforce privacy

“I think you need products that will help you exercise your rights. Independent digital assistants that will make sure that your privacy settings are maintained no matter where you go. That kind of stuff,” she said.

Vestager, whose party was founded by her great-grandfather, was Denmark’s deputy prime minister and economy minister before taking up her post in Brussels in late 2014. She reportedly keeps a sculpture of a hand with an extended middle finger in her office, a gift from a Danish trade union angered by her welfare cuts. She’s said to be one of the inspirations for the lead character in the Danish TV show “Borgen,” about an ambitious minor politician trying to become the country’s first female prime minister.

Although Vestager’s term runs out in October, she’s hoping for a second stint, an unlikely prospect because her party is out of power in Denmark and its prospects look uncertain in upcoming elections. The EU’s executive commissioners are nominated by their country’s governments.

“Sometimes things are unlikely but not impossible,” Vestager said. “I’m in the middle of something and we’re not done yet,” she added, referring to the new era of digital regulation.

Took on Starbucks, McDonald’s, Nike

Vestager brushes off criticism that she’s stifling innovation by targeting U.S. companies to help prop up European firms. She has also taken on Starbucks, McDonald’s and this month opened an investigation into Nike’s tax arrangements. But other targets have included Italian automaker Fiat and Russian gas giant Gazprom.

“When you look at our cases you’d see that what they have in common is not nationality. It’s the fact that they’re multinationals,” she said.

Her aim, she says, is to keep competition fair.

“That was the idea before the world became digital,” Vestager said. “And it becomes an even more important idea when the world becomes digital because things are so fast moving.”

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Nuclear fusion, a disruptive power source for crowded cities: Don Pittis

The battle to replace fossil fuels with low-carbon power is bumping up against a new practical reality.

As people crowd into cities, the world’s need for concentrated power sources is growing just as low-carbon green power is heading in the opposite direction. While the world needs high-density energy — the amount of power used or produced in a given space — low-carbon power sources such as solar, wind and hydro sprawl out over the distant hinterland.

Energy economist Christina Hoicka says the world needs “a new geography of energy” to satisfy soaring power requirements in densely populated urban clusters.

Sun power

Just as that problem looms, there are growing hints that a long-promised energy solution, nuclear fusion — the low-carbon, high-density, power of the sun — may arrive in time to solve the geographic challenge.

In some ways, the tantalizing prospect of safe and unlimited fusion energy adds to the confusion as the world struggles to move away from high-carbon fossil fuels. Long-term planning would be much easier if we knew how soon the technology would arrive.

Canadian experts say a burst of new technology and new private sector investment mean the commercialization of fusion could be ten or 15 years away. Other estimates have been even more optimistic.

At the Canadian company General Fusion, a precision titanium component made using 3D printing is an example of how new technology is accelerating the fusion energy timeline. (General Fusion)

Nuclear fusion — making energy by forcing hydrogen atoms to merge —  is quite different from the nuclear power we use now at generating stations in Canada and beyond. Current nuclear plants are powered by fission, releasing energy by smashing heavy atoms apart, with a resulting shower of dangerous radiation that must be contained.

In places like Ontario, and countries like France, Hungary and Belgium, nuclear power plants are the backbone of electricity production, delivering vast quantities of reliable, low-carbon energy.

While fission power plants offer a high-density low-carbon alternative to coal and natural gas, their costs are rising to the point where they are no longer practical.

The cost of Fukushima

Following devastating and costly accidents such those at Chernobyl and Fukushima, now estimated in the hundreds of billions of dollars, the expense of constructing safe new nuclear fission plants has become prohibitive.

Just last week, the Japanese company Hitachi walked away from a plant under construction in Britain, writing off their investment of nearly $3 billion US.

“I was not prepared to ask the taxpayer to take on a larger share of the equity, as that would have meant taxpayers taking on the majority of construction risk,” said British Energy Secretary Greg Clark.

Giant batteries in the centre of Toronto now plugged into the grid are an example of how low-density power could be accumulated in high density areas of demand. (Don Pittis/CBC) 

One difficulty for governments and utilities is that the complete cost of building, upgrading and waste storage for conventional nuclear plants continues to soar. Meanwhile, the cost of green power, especially wind, has plunged well below the price of even conventional fossil fuel power plants.

The problem, says Hoicka, who is currently writing a contribution on energy infrastructure for the forthcoming Oxford Handbook of Energy Politics, is one of energy density.

“Cities are becoming much more dense so the demand centres are becoming much more dense,” says Hoicka, pointing to such things as high rise buildings and high power server farms to run our ubiquitous phones and computers.

“If we do a shift toward renewables and away from thermal technologies … the density of supply would reduce.”

Industrialized rural landscapes

As well as industrializing rural landscapes that many people object to, Hoicka says converting to an all-renewable energy supply will require a rebuilding of our energy network. Such plans could include giant batteries to store power close to where it is needed or pricing systems to encourage urban roof-top solar.

But Hoicka says such a rebuilding is path-dependent, a technical term that means future plans depend on what we have built in the past.

That is why the sudden and unexpected arrival of nuclear fusion would be disruptive, not only for fossil fuels, but also for the systems we are building to replace them.

Wind power has become a cheap source of electricity, but it’s mostly produced far from where power is needed. (Jorge Luis/Reuters)

Mike Delage, chief technology officer at General Fusion, a privately held company based in Burnaby, B.C., and a global star in private sector fusion, thinks commercial fusion could be as little as a decade away.

And one of the reasons is the number of private sector start-ups getting into a sector once reserved — like space exploration —  for governments with deep pockets.

“Fifteen years ago, General Fusion and one or two others existed,” says Delage. “Now, we’re tracking more than two dozen companies.”

Accelerated development

Such young start-ups include Commonwealth Fusion Systems at MIT, founded last spring with $50 million US in startup money from the Italian energy giant ENI. 

Delage says start-ups are using innovative ideas based on science accumulated by government research projects and brand new technologies such as 3D printing and massive computing power, to accelerate development of an affordable power source he is convinced is inevitable.

“If you have the knowledge to build a power plant, you can build it anywhere,” says Delage. “You can put it closer to the centres of demand.”

Once it arrives, fusion power sounds like a perfect plan to solve the problem Christina Hoicka has identified.

General Fusion’s giant plasma injector is used to shoot super-heated gas into a compression chamber for ignition. The Canadian company has an even newer version of the injector that’s ten times more powerful. (General Fusion)

That said, other experts, while agreeing that commercial fusion is coming, have pushed the year out to 2050 — a date 30 years away or the perpetually-offered timeline for a technology that never seems to arrive. 

Whether fusion arrives in five, 10 or 30 years, inevitably it will disrupt the fossil fuels industry, conventional nuclear and even renewable power, says Allan Offenberger, an Alberta-based physicist who has advised governments around the world.

In any case, he says, that’s too long to wait. The switch to renewables must go ahead. Fossil fuels, while much reduced, will still be needed, and nuclear fission power is still essential as an interim energy source.

“We can’t get fusion plants up fast enough to phase out greenhouse gases overnight,” says Offenberger.

“We’ve got to go through that phase-in to where fusion will become the main energy source, and it will in the long run, in this century.”

Follow Don on Twitter @don_pittis

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TD Bank should have seen ‘red flags’ as senior lost $732K in romance scam, son says

The son of an Ontario senior who drained his entire life savings and then went deep into debt says TD Bank didn’t do enough to prevent his father from being victimized — over and over — in a romance scam.

Dayle Hogg says his late father Robert, a widower, went into his local TD branch in Whitby, Ont., 19 times over a period of eight months and wired a total of more than $732,000 to Malaysia.

The money was for a woman Robert knew as “Sophia Goldstein,” whom he’d met online but never in person — and who doesn’t really exist.

“There should have been red flags going up all over the place at the bank,” said Dayle Hogg.

“He had no history of sending money anywhere outside of the country until this point. Something should have happened to stop this.”

Most fraud goes unreported, but the Canadian Anti-Fraud Centre says victims of romance scams lost almost $25 million in 2018, up from $17 million reported in 2016 — making it the most costly scam the centre tracks.

“The banks are well aware of the romance scams that are going on,” said Garry Clement, a financial crime expert and former RCMP investigator. “If the banks don’t start taking responsibility for these type of things, more and more are going to continue.”

However, Clement acknowledges that such scams put banks in a tricky spot. They are expected to try to protect the customer from financial fraud, which could require asking potentially intrusive questions, while also respecting the customer’s right to privacy and to use their money as they see fit.

In Robert Hogg’s case, TD says its staff asked Hogg all the necessary questions. The bank says it fulfilled his requests because he told a consistent story about building a house in Malaysia.

The scam begins

Robert Hogg had been married for 44 years when his wife, Kathy, died of cancer in 2015. The following year, he was diagnosed with pancreatic cancer.

In 2017, at the age of 67, he joined the online dating site Match.com and soon met “Sophia Goldstein,” who claimed she was on a business trip in Australia but would soon be returning to Toronto.

“Sophia Goldstein” was actually a phoney name used by a scammer or group of scammers. According to web chat correspondence with Robert, within weeks “Sophia” began calling Robert her “lover” and “husband.” She also told him her previous relationship ended because her partner hadn’t been there for her.

After Robert Hogg lost his wife of 44 years, Kathy, to cancer, he went on a dating site and was quickly sucked into a romance scam. (Submitted by the Hogg family)

The two began making plans for a life together, but within a month “Sophia” asked Robert to wire $2,000 to her, claiming she was having banking issues and couldn’t access her own money.

Soon, her requests increased to $10,000 and then $50,000 at a time. She provided various reasons for why she needed the loans, and instructed him to wire the money to “friends” in Malaysia, claiming that would be the easiest way to get the money to her in Australia.

She coached Robert to tell bank employees that he was wiring the money to a family member, and to keep their relationship secret, saying she wanted to surprise his friends with him when she returned to Canada.

Robert Hogg had been a customer at this TD branch in Whitby, Ont., for three decades. This is where he wired money to various people in Malaysia on 19 occasions during an eight-month period. (Jon Castell/CBC)

Between September 2017 and April 2018, Robert Hogg went to his TD branch in Whitby, located east of Toronto, and dutifully wired his entire life savings to Malaysia, believing he was helping the new love of his life.

When his investment accounts ran dry, TD helped him open a home equity line of credit for $300,000 — much of which he also wired offshore in regular instalments.

None of this was discovered by his family until he passed away from pancreatic cancer last September and his grown children began going through his paperwork.

“Initially, it was just like a punch in the gut,” said his son, Dayle. “I felt bad for him that this situation had happened.”

Robert Hogg’s son says online scammers sent his father a photo of this woman, claiming her name was Sophia Goldstein and that she was a successful businesswoman from Toronto. (Submitted by the Hogg family)

His shock quickly turned to anger when he added up wire transfer after wire transfer, and realized the money had been drained from accounts at his father’s trusted bank.

“Given the amounts that were leaving the country, there should’ve been somebody asking some serious questions,” Dayle said.

TD: ‘Detailed questions’ asked

TD Bank declined an interview request from Go Public.

In an emailed statement, senior manager of corporate and public affairs Carly Libman wrote: “Our review of this case found that our employees followed rigorous processes to fulfil the customer’s request, asking detailed questions at each transaction, including the purpose of the transfers.”

Dayle Hogg filed a complaint with TD’s ombudsman, who investigated the case. The ombudsman’s report also found the bank acted appropriately.

It says Robert Hogg “told a number of branch representatives that he had purchased land in Malaysia and was building a house,” which was why he needed to wire money.

As this story was “consistently told,” the ombudsman wrote, it “is not necessary to ask a customer to provide proof to support a story like the one he told.”

The report also says there was “no reason to question” the reason Hogg cashed in his investment accounts — despite the fact it would lead to a significant tax bill — or why he needed to open a line of credit after his investments were gone.

What we need is to have our financial institutions ensure anything that’s an anomaly involving a senior, there’s questions and red flags raised.– Garry Clement, financial crime expert and former RCMP investigator

None of this sits well with Dayle Hogg, who claims the ombudsman’s investigation contains “inconsistencies,” “serious omissions” and “incorrect statements.” For example, the report says his father made 14 wire transfers for a total of $603,000, when it was actually 19 wire transfers totalling more than $732,000.

The ombudsman’s report also doesn’t address Dayle Hogg’s chief request — that TD improve its procedures to ensure vulnerable people are protected from similar scams in the future.

“The fact that you ignored this request completely and failed to even address it speaks volumes to TD Bank’s ethical and moral values,” Hogg said in a written reply to the bank’s ombudsman.

Banks must strike ‘appropriate balance’

Trying to protect customers from scams while also respecting their privacy can be tricky business, the Canadian Bankers Association says.

“Ultimately, banks must strike an appropriate balance between helping to prevent and detect fraud, while also protecting the rights of their customers to access their money,” spokesperson Mathieu Labrèche said in a statement  to Go Public.

“As the owners of the account, the customer is responsible for any funds that she or he withdraws from their bank account.”

Banks have no national standards or policies when it comes to protecting people from romance scams, but Labrèche says bank staff “are aware of fraud scams and are trained to ask probing questions if a customer makes an unusual transaction.”

The bank is starting to ask questions about all the money I’m sending.–  Robert Hogg, writing his online love interest “Sophia”

Although now deceased, Robert Hogg left a written record of his conversations with “Sophia.” In an exchange on Jan. 2, 2018, he says staff at his local TD branch are starting to wonder about all the wire transfers.

“The bank is starting to ask questions about all the money I’m sending,” he wrote.

Go Public can’t confirm what was discussed at TD that day, but records show that a bank employee helped Hogg wire another $50,000 during that visit. Over the next four months, he wired a further $168,000.

Police contacted

When Dayle Hogg discovered what happened to his father’s money, he contacted Durham Regional Police.

“They were fairly disinterested, saying it would be almost impossible to catch criminals in Malaysia,” he said.

A police spokesperson said there is an ongoing investigation. TD said it has not been contacted by police.

Financial institutions must automatically report any overseas transaction greater than $10,000 to the Financial Transactions and Reports Analysis Centre of Canada, but the federal watchdog only investigates suspected money laundering or terrorist-financing activities.

Former RCMP superintendent Garry Clement says banks have a moral and ethical obligation when dealing with seniors to take appropriate steps to detect scams and take action. (CBC)

Financial crime expert Garry Clement says banks have to respect customer privacy, but they have an equally important responsibility to try to protect them from financial fraud. It’s even more important in the case of seniors, he says, because they are more likely to be taken advantage of.

“What we need is to have our financial institutions ensure anything that’s an anomaly involving a senior, there’s questions and red flags raised.”

Meanwhile, the scammers seem unaware that Robert Hogg passed away last fall. Dayle Hogg occasionally corresponds with them, posing as his father, hoping that somehow, some day, police investigators will be able to catch them.

In Dayle’s most recent exchange, “Sophia” claimed she needed money to pay some bills. She asked him to wire money, writing: “Try $5000 if you can.”

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