A Law Suit Against the Government of Canada

Rocco GalatiSource: Toronto Star, March 23

The Toronto lawyer Rocco Galati is pursuing a court case intended to do nothing less than force the Bank of Canada to reorient its activities on behalf of Canadians.

Galati, who led a successful challenge against an appointment to the Supreme Court of Canada, is representing a small Toronto group whose legal bid is attracting increasing attention from people in Canada and elsewhere who distrust global financial institutions.

The unusual case originated with William Krehm, a much-travelled 101-year-old Toronto native and former Trotskyite who was in Spain during the Spanish Civil War and once stood guard over Leon Trotsky’s corpse after the Russian revolutionary was assassinated in Mexico City.

Krehm, later an economic writer, asked Galati to launch the case on behalf of his Committee on Monetary and Economic Reform (COMER). Galati first filed the case in 2011 and after several legal rounds – including a court skirmish with federal government lawyers – is expected to return to Federal Court within days to move the challenge forward.

COMER contends the Bank of Canada, a publicly owned national financial institution created in the Great Depression, is mandated to provide debt-free support for public projects undertaken by federal, provincial and city governments. Not doing so has deprived Canadians of the benefits of larger infrastructure investments, COMER alleges.

Among other arguments in its court submission, the group alleges Canada ceded its sovereign ability to conduct independent monetary policy to the “secret” deliberations and control of private foreign bankers. This unconstitutional move, COMER argues, was a result of Ottawa’s decision to join several multinational financial organizations, particularly the Bank for International Settlements (BIS).

Headquartered in Switzerland, the BIS is an organization that brings together the central banks from 60 countries to co-operate in the promotion of international monetary and financial stability. Canada joined in 1970.

“It’s by far the most serious and important case I’ve ever done,” said Galati, who gained national prominence in a classic David versus Goliath case last year in which he moved to block Prime Minister Stephen Harper’s appointment of Justice Marc Nadon to Canada’s top bench.


9 responses to “A Law Suit Against the Government of Canada

  1. Sharon Sommerville

    Good luck, Mr. Galati. It is estimated that only 7–8 % of Canada’s national debt is attributed to goods & services provided for Canadians by our government, the remainder of our debt is interest. Imagine what our country would look without the national debt hanging over our heads. No excuse for austerity budgets.

  2. Fred Langan

    Loopy. Social Credit?

  3. Absolutely love it. Australia has a Commonwealth Bank. It was founded to provide loans to Australian house buyers and Australian infrastructure projects. Today it’s one of the country’s `Big 4′ and vies with three other giant commercial banks to make profits for shareholders. Please Mr Krehm, when you’ve finished in Canada, can you come here?

  4. henrylotin@rogers.com

    Setting aside the colourful story of Krehm, we need to establish if there is any basis to the claim that the Bank of Canada “is mandated to provide debt-free support for public projects undertaken by federal, provincial and city governments”, and what the accepted definition of “support” is. How our membership in BIS constrains Government or Banks from making infrastructure investments (it would otherwise wish to make) is beyond me. Finally, since when does providing an institution the mandate to take an action (if this is in fact the case), oblige it to do take specific actions. The exercise of its mandate rests with its appointed leadership.

  5. The Bank of Canada Act says that the Bank may make loans to governments (s. 18(i) and (j) http://laws-lois.justice.gc.ca/eng/acts/B-2/page-7.html#docCont). In an interview with the CBC (http://www.cbc.ca/news/business/rocco-galati-challenges-bank-of-canada-to-offer-interest-free-loans-1.3065650), it was explained that this was done, for example, to finance the seaway and the Trans Canada Highway. No more for such significant projects after BIS. Perhaps if the practice was restored, we wouldn’t be paying tolls to travel on the 407, or supporting the commercial banks in quite the way we do now. At least, that’s the argument.

  6. Michael Gundy

    Renting money has a cost, in this case interest. If the Bank of Canada did not charge rent reflecting risk and return, the “debt free” (or is it interest free?) would be subsidy. Who pays and why a subsidy opens a rather large can of worms. I wait for clarity from Mr. Rocco Galati.

  7. Michael G is correct, but the risk and return principal means that projects of benefit to the community come a poor second to projects that make money. Think about your own community and its amenities. Would those amenities exist if the loan to create them had been determined by a hard-headed financier who demanded that they make lots of money? What price do we place on the social benefits of such things as schools, hospitals, flood proofing projects and (horror of horror) parkland?

  8. elizabethecker

    We should discuss the whole problem of how the money supply is increased for an expanding economy. Right now it is created with loans. What would happen if the government would repay all its debts?

  9. Money is debt. If we repaid our loans, we would concurrently have no money supply.