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Bill aims to change way white-collar crime punished

|Written By Dale Smith
Bill aims to change way white-collar crime punished
Danielle Royal says a bill currently before Parliament could help in situations where current shareholders of a company are being punished for corporate misfeasance that occurred years before their time.

Bill C-74, the omnibus budget implementation bill, contains provisions that propose to amend the Criminal Code to add a new system of remediation that can be triggered prior to a trial for corporations accused of offences such as bribery of public officials, frauds on government, municipal corruption, prohibited insider trading or false prospectus.

The bill includes provisions that deal with how white-collar crime that takes place in the jurisdiction of Canadian courts is prosecuted and proposes a system of remediation that can ensure that corporate offenders avoid conviction if they co-operate with the Crown and the courts. 

Opposition MPs in the House of Commons have likened the proposed changes to being “soft” on white-collar crime as it allows corporations to “avoid jail time,” but lawyers in the field dispute that assertion.

Lawyers say the proposed changes could promote good corporate citizenship and bring Canada into line with other jurisdictions. However, they say they have concerns about how these proposals will dovetail with other anti-corruption legislation.

Patrick McCann, counsel with Fasken Martineau DuMoulin LLP in Ottawa, says the proposed legislation will bring Canada in line with many other countries that have deferred prosecution agreements, including the U.S., the U.K. and most other European countries.

“It addresses the unfairness of the situation when you have a large company that has a rogue senior officer — and the definition of senior officer in the Criminal Code is extremely broad — who has bribed somebody to get something done and the whole company takes a hit,” says McCann.

“It impacts investors, all of whom are completely innocent,” says McCann. “That’s perceived as being a very unfair repercussion for charging a company with criminal offences that are actually committed by one individual without the knowledge of the rest of management.”

Danielle Royal, partner with Stikeman Elliott LLP in Toronto, says that, when companies are facing potential criminal exposure, “having this as an option provides greater flexibility when you’re advising clients about potential outcomes.” 

The proposals in the bill, which is still before the House of Commons, would apply to any organization or corporation — with the exception of public bodies, trade unions and municipalities — that is being prosecuted in Canada under the Criminal Code or the Corruption of Foreign Public Officials Act. 

The underlying offences would have to be committed in a Canadian jurisdiction. Existing penalties for the crimes targeted by the bill can include significant fines and restitution orders and probation for the organization.

Royal says the bill could help in situations where the corporate misfeasance was years ago and current shareholders are being punished for something that happened before their time.

Brian Weingarten, a sole practitioner in Toronto, says this process accelerates restitution to victims in cases where it’s applicable.

“I would caution that it’s not truly revolutionary in that the Criminal Code, under the probation section, provides for a mechanism to provide restitution to victims, and it allows for some degree of monitoring over organizations that are convicted for any offence under the Criminal Code,” says Weingarten.

He says the major difference is that this ensures that trial and conviction can be avoided, which may be advantageous to companies, not only saving the resources of a trial but avoiding triggering other anti-corruption legislation.

“If an organization is convicted, they may be restricted in their ability to bid for contracts or continue to work for the government or be eligible to contract with other entities, so that’s certainly a problem,” says Weingarten.

Royal says the possibility of this kind of debarment currently means that a company may opt to fight charges at trial instead of co-operate, which is why this legislation helps.

McCann notes that the proposed process only begins after charges are laid against a company, and while successful remediation includes a presumption that charges were never laid, this may create awkward situations where a company post-remediation is bidding on a major contract and gets asked whether it has ever been charged with a criminal offence.

Weingarten adds that for the government, the remediation process ensures that restitution is funnelled back to victims very quickly. The bill specifies a strict timeline of one year, so that if the deal falls apart within the year and a trial resumes, the timelines won’t fall under the Supreme Court of Canada’s Jordan principles.

“It looks as though everything is going to have to be done to the court and prosecution’s satisfaction before the expiry of the one-year stay,” says Weingarten. “It really does accelerate payments [and] forces the organization to work quickly to try to correct the problems to the satisfaction of the Crown and the court.”

Justice Minister Jody Wilson-Raybould did not respond to a request for comment.

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