COMMENTS BY THE CPQ ON BILL C-74 - May 2018 -
Canadian remediation agreements: punishing corporate wrongdoers without threatening jobs and prosperity in Canada Comments by the CPQ submitted to the Senate Committee on Legal and Constitutional Affairs for the prestudy of Bill C-74 (Budget Implementation Act, 2018), Part 6, Division 20: Remediation Agreement Regime The CPQ (Conseil du patronat du Québec) represents the interests of 70,000 employers of all sizes in the private and quasi-public sector, either directly or through the industry associations among its membership. Its mission is to ensure that employers in Quebec enjoy the best possible conditions to prosper sustainably in a context of global competition. Introduction The CPQ believes that Canada needs to find a way of balancing the need to hold corporations and businesspeople accountable for wrongdoing and the importance of not unduly penalizing innocent third parties: primarily the employees of these companies, but also pensioners, shareholders and suppliers. In addition, even though a corporation is accountable for misconduct, the corporation as a legal entity is also the victim of the actions of individuals who committed that misconduct. The various stakeholders in the legal entity (other employees, investors, suppliers, the community and even clients) are therefore doubly victimized if the corporation s sustainability is threatened as a result. Consequently, there needs to be a way for a corporation to make restitution for wrongdoing without causing irreparable harm to the other stakeholders. The individuals who engaged in wrongdoing should be subject to regular prosecution under the law. In our opinion, the remediation agreement regime proposed in Bill C-74 is the way to appropriately punish serious economic crimes committed by corporations. Canada is poorly equipped to address corporate economic crime Canada s proposed regime is modelled on the concept of deferred prosecution agreements (DPAs) adopted by other major economies, such as the United States, the United Kingdom, Singapore, France and soon Australia, reportedly. Implementing such a regime in Canada would enable us to compete internationally on a level playing field with our main economic partners, such as the United States and the United Kingdom. This regime would allow the Crown prosecutor to stay charges pending confirmation of the terms of an agreement with a corporation accused of economic crimes. 2
Currently, under Canada s Criminal Code, there are two possible verdicts when a corporation is prosecuted for economic crimes: guilty or not guilty. A formal conviction can damage a corporation s reputation and future, long after the perpetrators of an economic crime have been found guilty. A conviction in court can have serious repercussions for a corporation, including preventing it from competing for contracts in Canada and abroad. Many parties that have done nothing wrong are also seriously affected: employees, suppliers and shareholders. Consequently, the legislation and policies in place should focus on the optimal way of punishing corporate wrongdoing and preventing repeat offences, while protecting the viability of corporate activities and the jobs that are at stake, when warranted. The Criminal Code offers no other choice to address corporate crime. The desire to avoid conviction may pervert corporations behaviour, causing them to conceal evidence rather than disclose it to investigators. Public consultation and Budget 2018 Under the circumstances, the Government of Canada held a public consultation from September to December 2017 on the need to improve the Integrity Regime and the possibility of introducing a deferred prosecution agreement regime. The final report on the consultation, Expanding Canada s Toolkit to Address Corporate Wrongdoing: What we heard, was released in February 2018. The consultation was very broad and open to all Canadians. More than 300 participants responded, and 75 written submissions were received. The CPQ took part in this consultation. Most of the participants in the consultation supported a DPA regime in Canada, often preferring the United Kingdom model, a statutory regime that provides for judicial oversight. Public Services and Procurement Canada issued a press release with the report stating that the government was committed to introducing legislation for deferred prosecution agreements to be implemented through judicial remediation orders, as an additional tool for holding corporate offenders to account. We were pleased that the government followed up on its recent consultation and its budget commitment by quickly incorporating a Canadian remediation agreement regime into Bill C-74. This initiative would mean an amendment to the Criminal Code, but we believe that it fits with the budget implementation act because it improves Canada s economic competitiveness, in addition to levelling the playing field, promoting self-reporting and transparency and having the potential to generate significant revenue for the Government of Canada. Terms and conditions of Canada s proposed remediation agreement regime Under the remediation agreement regime proposed in Bill C-74, a remediation agreement (RA) could be negotiated between a prosecutor and a corporation accused of misconduct following an investigation. Oversight We believe that the proposed oversight is appropriate to ensure that a remediation agreement serves only the public interest. The decision to negotiate a remediation agreement would be made at the prosecutor s discretion. The negotiation would require the Attorney General s consent. Any formal remediation agreement would have to comply with the legislation and receive court approval to confirm that it protects the public interest and that its terms are fair, reasonable and proportionate. In addition, any amendment to the remediation agreement would also require court approval. Limitation to economic crimes 3
The proposed remediation agreement regime applies only to corporations accused of economic crimes and excludes offences that have caused death or serious bodily harm, that have injured national defence or national security or that were committed on the direction of, or on behalf of, a criminal organization or terrorist group. Encouraging corporations to act in the public interest The bill clearly provides an incentive to corporations to voluntarily disclose misconduct to the authorities and appropriately sanction all the employees responsible. The proposed regime is more effective and faster than criminal prosecution in improving compliance and corporate culture, because the agreement will generally require that appropriate compliance measures be put in place and may require a monitoring system independent of the corporation. Before deciding to negotiate a remediation agreement, the prosecutor must consider the factors set out in the legislation, including the circumstances in which the crimes were brought to the attention of the authorities, the gravity of the crimes, whether the corporation has sanctioned those responsible and whether it has taken measures to remedy the harm caused. Rigour of terms We believe that the legislation rigorously sets out the terms of any remediation agreement. As the bill provides, any remediation agreement would require that the corporation cooperate fully with the prosecutor, agree to a statement of facts, accept responsibility for the crimes and relinquish any benefit gained from them, pay a financial penalty and make reparation to victims. Any criminal prosecution would be stayed for the duration of the remediation agreement, but the charges against the corporation would be revived if the terms of the agreement were breached. In addition, under the legislation, the remediation agreement could include other compliance measures, the appointment of an independent monitor and the reimbursement of any costs incurred by the prosecutor and related to the administration of the agreement. Conclusion We believe that the remediation agreement regime proposed in Bill C-74 will encourage self-reporting, expedite prosecutions and reduce their cost, and improve transparency, compliance and corporate culture. It will help achieve all the goals of justice levying stiff fines and punishing those responsible without hurting employees, shareholders, pensioners or other innocent third parties. Lastly, if adopted, this measure will put Canadian corporations on an equal footing with their competitors in the United States, the United Kingdom and elsewhere and will prevent Canada from losing investments and jobs to other regions that have passed similar provisions. We believe that it is in the public interest to pass this law as soon as possible. 4
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