Canada, China to sign deal on return of fugitives' seized assets

By Megha Rajagopalan and David Ljunggren

By Megha Rajagopalan and David Ljunggren

BEIJING/OTTAWA (Reuters) - Canada is set to finalize a deal with China to return ill-gotten assets seized from those suspected of economic crimes, the official China Daily reported on Monday, as Beijing works to track down corrupt officials who have fled overseas.

China has vowed to pursue a search, dubbed Operation "Fox Hunt," beyond its borders for corrupt officials and business executives, and their assets.

But Western countries have balked at signing extradition deals with China, partly out of concern about the integrity of its judicial system and treatment of prisoners. Rights groups say Chinese authorities use torture and that the death penalty is common in corruption cases.

With the deal, Canada, one of the top two destinations for suspected economic fugitives from China, would become the third country to agree to help Beijing deal with such offenses, following offers this year from France and Australia.

The agreement will cover "the return of property related to people who would have fled to Canada and would have been involved in corrupt activities," the China Daily reported Guy Saint-Jacques, Canada's ambassador to the country, as saying in an interview.

China and Canada announced the deal in July 2013, but both countries are still in the course of ratifying it.

Canada's Public Safety Ministry, which oversees the agency that handles deportation cases, said authorities had expelled 1,766 Chinese nationals from Jan. 1, 2011 to Nov. 7, 2014.

Although the vast majority were sent back for minor offenses such as overstaying a visa, 70 had committed serious crimes and a further seven had engaged in organized crime. The ministry did not give more details.

Canada has a policy of not sending people to countries where they might face execution.

Chinese President Xi Jinping has vowed to go after high-ranking "tigers" as well as lowly "flies" in his campaign against corruption.

China this month asked the United States to help it track down more than 100 people suspected of corruption. At least 428 Chinese suspects had been captured abroad by the end of October under the "Fox Hunt" campaign, state media reported.

Some observers suggest the campaign could be linked to infighting in the Chinese Communist Party.

Former Canadian diplomat Charles Burton, who served two tours in China, said the deal on assets was problematic.

"These requests to Canada to strip the assets of Chinese people in Canada and repatriate them to China may be more informed by political factors related to factional struggle(s) within the Chinese Communist Party than purely legal claims," said Burton, who is now a Brock University professor.

China has extradition agreements with 39 countries but not the United States or Canada, the two places suspected economic fugitives are most likely to go, China's Foreign Ministry said.

"No country should become a haven for the corrupt to seek refuge from the law," Chinese Foreign Ministry spokesman Qin Gang told a daily news briefing but gave no details of the pact with Canada.

The Foreign Ministry has said it may sue people suspected of financial crimes who have fled abroad.

The Washington-based Global Financial Integrity Group estimates that $1.08 trillion flowed out of China illegally from 2002 to 2011.

(Additional reporting by Ben Blanchard in Beijing; Editing by Clarence Fernandez, Amran Abocar and Lisa Von Ahn)