Does Canada need a formalized deferred prosecution agreement system to tackle white-collar crime?
A report by the Institute for Research on Public Policy suggests it is one way the federal government could deal more effectively with corporations caught up in wrongdoing.
The report is based on a round table held in Toronto last November that included legal and academic experts and stakeholders for a discussion on ensuring “integrity in government procurement processes while allowing Canadian firms to conduct their business on a level playing field with international competitors.”
“Finding the Right Balance: Policies to Combat White-Collar Crime in Canada and Maintain the Integrity of Public Procurement” calls on the federal government to:
• adopt a regime of deferred prosecution agreements;
• disintangle punishment of crime and public procurement;
• strengthen enforcement;
• raise public awareness of white-collar crime; and
• fill the knowledge gaps in data and research.
The separation of punishment of crime and public procurement is key, says Milos Barutciski of Bennett Jones LLP who was a member of the round table.
“Procurement policy should be about securing the integrity of public procurement and value for the dollar for the Canadian taxpayer,” says Barutciski. “The criminal justice system is about punishment, retribution, rehabilitation — that’s a separate world and the old regime confused the two. It became a piling on of punishment.”
In 2012, the government introduced stricter eligibility rules and automatic 10-year disqualification period for doing business with governments for companies charged with fraud and other offences, either domestically or abroad.
But as certain cases came to light, critics started suggesting the punishment was excessive with unintended consequences. A lack of appeal mechanism was also cited as a potential violation of due process.
Then in July 2015, the rules were adjusted and the 10-year debarment rule was reduced to a potential five years through an administrative agreement that included monitoring to make sure remedial actions and compliance were being followed.
Barutciski says it doesn’t make sense to add criminal punishment when companies have already paid in the form of a fine and conviction.
“A debarment will only hurt innocent employees and communities where the companies do business,” he says.
Barutciski says in Canada, the system overall doesn’t enforce effectively or efficiently. He points to prolonged trials such as the one involving former Nortel executives and delays in the preliminary inquiries for cases such as SNC Lavalin.
“When it comes to white-collar crime we make a meal of it in Canada; cases take forever,” he says.
“The trial in that case won’t be for years — it’s ridiculous,” he says. “Part of that is about inadequate resources and inadequate court time and the pre-trial procedure.”
Deferred prosecution agreements are favored by lawyers such as Norm Keith, a white-collar crime lawyer and partner with Fasken Martineau DuMoulin LLP.
“I think deferred prosecution agreements are very important,” he says. “In the U.S. and the U.K., the only way for a publicly traded company to survive and not get its stock price beat up is to negotiate a deferred prosecution agreement.”
In the U.S. companies only get a DPA with the Department of Justice if they also turn in the individual or individuals involved.
“It takes away some of the criticism of DPAs that they can be become an easy shield for a company to admit responsibility,” he says.
Some, including Barutciski and those involved with Transparency International, are against DPAs but Keith says that is a “big mistake.”
“You’re not going to get companies coming forward and admitting they’ve had problems until they know there is a solution available,” he says.
While there are “isolated diversion programs” in Canada, Keith says the big problem here is that there is no comprehensive approach to defer prosecution and no rules in place that individuals know about in advance.
Barutciski says he would rather see what can be done with existing laws before drafting new ones. His concern is a DPA would see a judge “bless” a settlement but questions if that is really the role of a judge — rather, he says, shouldn’t it be the role of the Crown?
“We think our legal system currently allows for DPAs, and the problem with going for a statutory regime is once you start drafting something what comes out is rarely what you wanted,” he says.
“It starts becoming a political football. Right now we have immunity agreements — essentially the Crown promises that someone who could be charged won’t be charged if they satisfy certain conditions including giving evidence. How different is that from a DPA?”
Keith says there is also public interest in collecting fines through DPAs.
“I think DPAs are absolutely necessary and helpful. They will help in cleaning things up and bringing light to the whole subject of corruption as opposed to what happens now,” he says.
For now, he says a good lawyer has to tell a client not to self-disclose unless they know they are going to get caught.
“That might sound bad, but that is the correct advice to give, otherwise you’re getting nothing for it,” he says.