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White collar crime/corruption
In Canada, regulators and enforcement agencies are taking a progressively more proactive and serious stance against improper and unethical business practices. This is particularly evident in Canada's adoption of remediation agreements, Ontario's creation of a Serious Fraud Office, and increased whistleblower incentives and protections.
To ensure compliance with the complex framework of laws, regulations and governance requirements, and to detect and prevent potential violations, businesses should consult a team of legal professionals with national and international capabilities and experience.
- Foreign corruption
- Antitrust/competition law
- Securities prosecutions
- Corporate criminal liability
- Regulatory prosecutions
- Private prosecutions
- Anti-money laundering and terrorist financing
- Whistleblower protections
1. Foreign corruption
Canada's answer to the United States' Foreign Corrupt Practices Act (FCPA) was the enactment of the Corruption of Foreign Public Officials Act (CFPOA) in 1998. Like the FCPA, the CFPOA criminalizes the act of offering or giving a reward, advantage or benefit of any kind to a foreign public official in exchange for an act or an omission to act in connection with the performance of that official's duties, or to induce the official to use his or her position to influence acts or decisions of the foreign state.
Canada's jurisdiction over foreign bribery is broad. The CFPOA captures acts committed anywhere in the world by:
- A Canadian citizen;
- A permanent resident of Canada; or
- A corporation, company, society, firm or partnership that is incorporated, formed or otherwise organized under the laws of Canada or a province
Unlike the FCPA, Canada's CFPOA is purely a criminal statute - there is no civil component. The potential penalties for corporations include unlimited fines, corporate probation, debarment from government contracting and forfeiture of criminal proceeds.
For individuals, the potential penalties include up to 14 years of imprisonment, unlimited fines, probation and debarment from government contracting.
While Canada was slow to enforce the CFPOA, since 2011 there has been an increase in enforcement. In 2011, Niko Resources Ltd. pleaded guilty under the Act and was sentenced to a $9.5-million fine and three years of corporate probation. In 2013, Griffiths Energy - a Canadian oil company operating in Chad, Africa - was sentenced to a $10.25-million fine under the Act. Also, in 2013, Nazir Karigar was convicted after trial for bribes paid to the Indian minister of civil aviation and employees of Air India to influence the sale of facial recognition software. Karigar was the first individual to be convicted under CFPOA - he was sentenced to three years in jail. In July 2017, Karigar's conviction was upheld by the Ontario Court of Appeal. In late 2018, two individuals, Robert Barra and Shailesh Govindia, were convicted of agreeing to bribe a foreign public official, contrary to the CFPOA. In March 2019, the two were sentenced, each receiving a 30-month custodial sentence. In 2020, Sami Bebawi, former vice-president of an international corporation was found guilty on 5 counts relating to fraud, corruption of foreign officials and laundering proceeds of crime and sentenced to 8.6 years. These prosecutions appear to be showing a trend towards the prosecution of individuals involved in corporate corruption abroad.
Companies operating in the extractive sector in Canada are required to comply with the Extractive Sector Transparency Measures Act (ESTMA) which came into force in June 2015. ESTMA requires that certain payments made to governments (in Canada and abroad) be tracked and reported. Failure to comply with ESTMA can result in fines of up to $250,000. This process could also be used as a conduit to investigate payments made to foreign officials and potentially lead to an investigation under the CFPOA, the FCPA, or both.
2. Antitrust/competition law
Antitrust in Canada is governed by the Competition Act, which is a central and established feature of Canadian economic policy. The purpose of the Act is to eliminate activities that reduce competition in the marketplace. As a whole, the Act embodies a complex scheme of economic regulation, and identifies and defines anti-competitive conduct. It provides an extensive range of criminal and administrative redress against companies engaging in behaviour that tends to reduce competition.
The key pillars of the Act's criminal provisions are sections 45 and 47, which prohibit anti-competitive conduct in the form of price fixing and bid-rigging, respectively. Following amendments to the Act in 2009, penalties for those criminal offences can now be up to 14 years of imprisonment and/or up to $25 million in fines. Recent case law suggests that courts may use the amendments to harshly penalize certain anti-competitive conduct to "communicate the Court's recognition of the very serious nature of such illegal conduct, its substantial adverse impact on the economy, and society's abhorrence of the crime."
3. Securities prosecutions
In Canada, unlike most other jurisdictions, securities regulation is not done at the federal level, but is instead regulated by the provinces and territories. Each of the provincial securities statutes include quasi-criminal provisions - such as prohibitions on insider trading and tipping - in addition to securities and accounting fraud provisions. Penalties for quasi-criminal securities prosecutions include jail sentences and fines. There are also overlapping Criminal Code provisions related to securities offences, such as insider trading, but they are rarely utilized.
By virtue of its broad interpretation in case law, criminal fraud is one of the more commonly prosecuted offences in the Canadian corporate context. The offence can be committed by or against a corporation.
Criminal fraud occurs when, through deceit, falsehood or other fraudulent means, a person intentionally defrauds the public or another person of any property, money, valuable security or any service. Where the subject-matter of the fraud exceeds $5,000, the offence is punishable by a maximum of 14 years of imprisonment. Where the value of the subject-matter of the fraud exceeds $1 million, there is a minimum sentence of two years imprisonment.
The Ontario Provincial Police established a Serious Fraud Office (SFO) in 2018 to coordinate police and prosecutorial services for investigations of white collar crime. Recently in 2020, the SFO investigated a "Ponzi scheme" orchestrated by Charles Debono. He was eventually charged with fraud, money laundering and other crimes. Debono was ordered to pay restitution for a total of about $26.9 million and was sentenced to seven years in prison.
5. Corporate criminal liability
Canada's Supreme Court has long held that the corporate vehicle occupies such a large portion of the industrial, commercial and sociological sectors, that amenability to our criminal law is as essential for the corporation as it is for the natural person.
The Criminal Code allows for corporate criminal liability where a senior officer - a representative who plays an important role in the establishment of the organization's policies, or who is responsible for managing an important aspect of the organization's activities - is implicated in the crime. To establish criminal liability, the senior officer must have intent, at least in part, to provide some benefit to the organization.
The senior officer can attract corporate criminal liability on the following grounds:
- Acting within the scope of their authority, the senior officer becomes a party to the offence
- Directing others to commit the offence
- Failing to take all reasonable measures to stop a representative of the organization from committing the offence
In 2018, the federal government amended the Criminal Code to institute a remediation agreement regime (better known as "deferred prosecution agreements") to address corporate criminal wrongdoing. This regime allows prosecutors to negotiate remediation agreements for certain economic criminal offences, such as bribery, frauds on the government, municipal corruption, fraudulent manipulation of stock exchange transactions, secret commissions, and money laundering, where it is in the public interest to do so. It is also intended to promote voluntary disclosure of criminal wrongdoing and ensure corrective measures are implemented to develop a compliance culture within the organization.
A provincial Crown Prosecutor's Office entered into the first remediation agreement under the new regime in May 2022 in relation to charges laid of fraud and bribery. The agreement required payment of monies with respect to forfeiture, penalty, victim surcharges and reparations to victims, as well as the appointment of an independent monitor to review and evaluate an integrity program.
6. Regulatory prosecutions
There are numerous regulatory regimes in Canada that have criminal or quasi-criminal powers. These regulatory regimes include occupational health and safety legislation, environmental legislation and a wide variety of economic legislation.
For example, alleged violations of federal and provincial environmental protection legislation can lead to investigations and enforcement action. Environmental offences are typically strict liability offences, meaning that there is no mens rea element. The accused must demonstrate on a balance of probabilities that they took all reasonable care. Responses to alleged violations include but are not limited to warnings, tickets, compliance orders, injunctions, prosecutions, and penalties such as fine or imprisonment.
7. Private prosecutions
Private individuals have the ability to commence a prosecution for a criminal offence by laying an information and providing notice to the Attorney General. The private individual must establish at a "pre-enquete" that the accused ought to be compelled to answer the criminal charge in court. The Director of Public Prosecution may intervene to stay a private prosecution or take over conduct of the prosecution.
8. Anti-money laundering and terrorist financing
Taking steps to eliminate the financing available to criminal and terrorist groups is becoming an increasingly important part of the global fight against such threats. For its part, Canada enacted the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in June 2000. The Act is intended to detect, and ultimately deter, the processing of funds that have been tainted by crime, or the transfer of funds for the purpose of carrying out terrorist activities. It accomplishes this goal by imposing a number of (sometimes onerous) obligations on certain categories of businesses. It also bestows investigative powers on the authorities for the purpose of implementing the Act. Failure to comply with the provisions of this Act can result in significant financial penalties and/or imprisonment.
9. Whistleblower protections
The Criminal Code, securities legislation, financial services legislation and occupational health and safety legislation provide protections to whistleblower employees who report or plan to report violations of legislation. Whistleblowers are protected from reprisal, including but not limited to discipline, demotion, suspension, intimidation and termination.
Employers who enact reprisals against whistleblowing employees may be liable to imprisonment for a term not exceeding five years under the Criminal Code. The Ontario Securities Act provides a civil remedy for employees who have been the subject of a reprisal, namely reinstatement and/or payment of twice the remuneration the employee would have received had the reprisal not taken place.
The Ontario Securities Program also provides financial awards to whistleblowers who provide information leading to an administrative proceeding in which over $1 million in monetary sanction is ordered and/or voluntary payments are made to the Ontario Securities Commission.
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