1. Scope of Memorandum

The Minister of Justice is presenting to the Cabinet, at this week's Cabinet meeting, a draft submission to the Governor in Council, recommending that two questions be referred to the Supreme Court of Canada for hearing and consideration in regard to the Scott Judgment in the Link and Green extradition case. The Minister of Justice's draft submission to the Governor in Council will explain the legal position. The purpose of this memorandum is to set out the political reasons that make this action necessary.

2. Extradition Convention

Extradition arrangements between Canada and foreign countries are carried into effect in this country by the operation of the Extradition Act. In 1951 Canada and the United States signed a Supplementary Extradition Convention which was expressly designed to extend the existing extradition arrangements between the two countries to cover offences involving fraudulent dealings with securities.¹³⁴

3. Link and Green Case

In December, 1954 Associate Chief Justice W.B. Scott of the Superior Court of Quebec, Montreal District, refused the application of the United States Government for the extradition of W.H. Link and H.M. Green on charges involving fraudulent dealings with securities under the Extradition Act, pursuant to the 1951 Supplementary Extradition Convention. The United States Government applied to the Supreme Court of Canada for leave to appeal the decision. The Supreme Court refused the application. The Court did not pass on the substance of the judgment, as it considered that it did not have jurisdiction to hear appeals in extradition cases.

Subsequently the United States Government has expressed in two official Notes to the Canadian Government its concern over the problem caused in the United States by fraudulent securities offerings emanating from Canada; at the same time indicating that its fears are heightened by its concern lest the decision of Scott, J. have the effect of nullifying the 1951 Supplementary Extradition Convention. Furthermore, it has asked indirectly whether the Canadian Government might refer the judgment to the Supreme Court of Canada.

4. Action taken by the United States Congress

Subsequent to the Scott Judgment, strenuous press campaigns developed in the United States against the so-called "Canadian stocketeers". Also, Senator Wiley in a statement in the Senate on June 17, 1955, proposed the adoption of certain methods for the control of trans-border operations of fraudulent securities. Moreover, on July 29, Senator Fulbright introduced in the United States Senate a bill designed to prohibit the use of United States mail, telephone and telegraph facilities by foreign security dealers who refused to enter the United States to face charges of violating United States securities regulations. The Senate Banking and Currency Committee is scheduled to conduct a hearing on Senator Fulbright's bill. As yet, however, the Canadian Government has no information as to when this hearing will be held. At this hearing the State Department expects to be asked to comment upon the international aspects of the securities frauds problem.

5. Views of the Minister of Justice

The Minister of Justice is of the opinion that it is important to the administration of the Extradition Treaty between Canada and the United States that this reference should be made to the Supreme Court of Canada.

6. Conclusions

By making this reference to the Supreme Court of Canada, the Canadian Government will be taking the measures open to it to meet the problem of fraudulent securities offerings across the border. Should the Canadian Government, on the other hand, decide not to make this reference to the Supreme Court of Canada, an awkward situation would be likely to develop. The United States Government would be frustrated in its efforts to solve the fraudulent securities problem and it would be in a position to place the blame on the Canadian Government. Such a situation clearly must be avoided if at all possible.

For these reasons the Department of External Affairs supports the recommendation of the Minister of Justice that the Scott Judgment be referred to the Supreme Court of Canada.

J. L[ÉGER]