Category Archives: Analysis

Radiohead stage collapse victims let down by the justice system

On September 5, 2017, Justice Nelson of the Ontario Court of Justice stayed all quasi-criminal charges against the three corporate and one individual accused in the deadly stage collapse at the Radiohead concert in Downsview Park on June 16, 2012.  These charges under the Occupational Health & Safety Act (“OHSA”) are some of the latest in a series of serious regulatory and criminal charges, that have been stayed for unreasonable delay as a result of the Jordan decision of the Supreme Court of Canada.

Radiohead, a British rock band, was scheduled to perform at a concert in Toronto at Downsview Park.  Just hours before the start of the concert, the stage superstructure collapsed.  Scott Johnson, a drum technician, and resident of the United Kingdom,  was fatally injured.  Others were also seriously injured.

On June 6, 2013, the Government of Ontario’s Ministry of Labour laid charges against a number of parties under the OHSA, including but not limited to, Live Nation Canada Inc., Optex Staging & Services Inc., and the professional engineer who provided advice and engineering drawings and certification, Domenic Cugliari.

The case was factually and legally serious and complex.  It proceeded to trial in November 2015, before Justice Nakatsuru, of the Ontario Court of Justice.  Although during that trial, there had been an Application for Delay, after the Jordan decision was released by the Supreme Court of Canada on July 8, 2016, it was rejected by the trial judge.  The trial proceeded, the prosecution and defense evidence was completed, and the lawyers were in the process of making final, written submissions on the merits of the prosecution.

However, on April 12, 2017, before all the final arguments were made, Justice Nakatsuru was appointed to the Ontario Superior Court of Justice, by the Federal Attorney General, Jody Wilson-Raybould.  As a result, and under instructions from the Department of Justice not to do any further work on any matter, including the completion of the Live Nation case, Justice Nakatsuru ruled that he had no jurisdiction to continue the trial, and declared a mis-trial.

The  policy and practice of the Department of Justice did not permit Justice Nakatsuru to complete the trial, after his appointment to the Superior Court of Justice in Ontario.  Justice Nelson, was appointed to be the second trial judge. On a pre-trial Charter delay motion, to stay the OHSA charges for a breach of s. 11(b) of the Charter, said the following at paragraph 70:

[70] Both Cugliari and Live Nation submit that Justice Nakatsuru’s appointment should not be treated as a discrete event because although unforeseen by the Crown in this case, it was not unforeseen by the state.  Further, the state failed to take reasonable steps to mitigate any delay that did ensue.  Specifically, counsel point to the following:

  • The Provincial government failed to pass legislation which would have permitted Justice Nakatsuru to complete the trial;
  • Justice Nakatsuru would have known that he was presiding over this trial when he applied to the Superior Court bench thus risking the mistrial;
  • Justice Nakatsuru could have deferred his appointment until after he completed this case;
  • The Federal government should have ensured that Justice Nakatsuru was not appointed until this trial was completed.[1]

Although the Crown prosecutor persuaded Justice Nelson that the judicial appointment was a discrete exceptional event, it still did not permit this type of overall delay that occurred in this case.  The trial justice held that even if one was to give thirty (30) months to complete this type of trial, rather than the presumptive eighteen (18) months, that the delay still far exceeded that period of time;  the case having been in the judicial system for almost five (5) years.

The charges were stayed for breach of the constitutional right, under the Charter, to a trial within a reasonable period of time under section 11(b).

[1]       Ibid., para. 70.

ISO 37001: The New Anti-Corruption International Standard

The International Organization for Standardization (ISO) has recently entered the fray by establishing an ISO certification standard 37001 specifically addressing anti-bribery in corporations by providing a structure for organizations to assist them in the implementation or management of anti-bribery managements systems.  So what is ISO 37001?  Simply put, it is an international standard for anti-bribery management systems.  The beauty of ISO 37001 is the global acceptance of the standard for anti-corruption compliance.

Obviously an anti-bribery system is to prevent bribes from being given or offered by corporate individuals representing business interests of the organization.  As with all ISO certification standards there are specific elements that must be met by the organization in order to be certified.  The system is set up that there is a consistent review of the system in order to ensure compliance and continual improvement.

While national laws may differ regarding anti-corruption compliance, the idea, as with any standard, is to provide a common ground where all global branches of an organization, no matter the location, have the same basis for compliance.  Keep in mind that ISO 37001 only addresses bribery.  Other white collar compliance issues such as fraud, ant-trust offences and other types of corrupt practices activities are not within the scope of this standard.

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Government of Canada Launches Federal Contracting Fraud “Tip Line”

On April 20, 2017, the Government of Canada introduced a new tool in the fight against federal fraud.[1] The federal contracting fraud tip line is a joint initiative between the Competition Bureau, Public Services and Procurement Canada (PSPC) and the Royal Canadian Mounted Police (RCMP).  It allows anyone who suspects unethical business practices in federal contracting, such as bid-rigging, price-fixing, bribery, undisclosed conflict of interest and fraudulent contract schemes, to report it anonymously. Individuals may report either by calling in to a toll-free number or by completing an online form.[2] The information provided through the tip line will be shared with three federal organizations and will be used to help conduct investigations and to introduce due diligence measures, where warranted. Any suspected criminal activity that is uncovered as a result will be turned over to the Competition Bureau and/or the RCMP.

The tip line complements measures already in place at the Competition Bureau to detect fraud in the realm of federal contracting. The immunity and leniency programs are currently the most relied upon by the Competition Bureau to detect and investigate criminal offences under the Competition Act. Under these programs, individuals with evidence of criminal offenses under the Competition Act are given immunity or lenient treatment if they cooperate with the Competition Bureau and Crown in investigating and prosecuting others implicated in the illegal activity.  However, the Competition Bureau has still encountered challenges over the years in securing convictions with the evidence obtained through these programs. The primary reason being insufficient resources and the lack of experience and training of Competition Bureau investigators.

This was evident in the 2014-2015 trial of several information technology companies and individuals charged with conspiracy and working together to obtain contracts with the federal government. The trial arose from charges laid following an investigation at the Competition Bureau and ultimately led to a defeat for the Competition Bureau, due to the weaknesses in the Crown’s case. At trial, it was shown that the Competition Bureau had relied almost exclusively on the testimony of self-interested people who were competing against the accused when making its referral of the case to the Director of Public Prosecutions. The Competition Bureau investigators had essentially taken the immunity and leniency reports of these individuals without independent investigation. The evidence at trial disclosed that the Bureau investigators in charge of the case, while seizing hundreds of thousands of documents from the suspect companies, failed to seek any significant material from the government agencies involved. The resulting, 8-month jury trial resulted in 60 not-guilty verdicts.

It will be interesting to see if the Competition Bureau, with its new Tip Line has learned from such cases and how it investigates future potential criminal offences under the Competition Act. By collaborating with RCMP officials, this hopefully marks the beginning of additional measures being implemented by the Competition Bureau to ensure that allegations of illegal conduct are investigated thoroughly and that only appropriate action is taken. It is not clear whether the Competition Bureau, PSPC or the RCMP will take the lead in investigations arising from tip line complaints. The addition of a combined task force, signals that the Competition Bureau is getting serious in its efforts to  detect and investigate Anti-corruption crimes.

[1]       “Government of Canada launches tip line to help Canadians report federal contracting fraud

[2]       “Report wrongdoing in government contracts and real property agreements

Inside Baseball: Former Baseball Star Convicted of Insider Trading

The phrase “inside baseball” took on new meaning for a former baseball star, Doug DeCines, who was recently convicted on insider trading and securities fraud charges.  Inside baseball is a term that usually refers to a detail-oriented approach to any subject, which requires a specific knowledge about what is being discussed, with nuances that are not easily understood by outsiders.  This term became reality for DeCinces when he was convicted on Friday, May 12, 2017 of illegal insider trading for a stock buy that earned him more than $1 million.

DeCines was no stranger to white collar crime allegations. On August 4, 2011, DeCinces, along with three others, was charged with securities fraud by the Securities and Exchange Commission (SEC).  The SEC alleged that DeCinces and his associates made more than $1.7 million in illegal profits when Abbott Park, Illinois-based Abbott Laboratories Inc. announced its plan to purchase Advanced Medical Optics Inc. through a tender offer. Without admitting or denying the allegations, DeCinces agreed to pay $2.5 million to settle the SEC’s charges.

Then in November 2012, DeCinces received a criminal indictment on insider trading in a related matter and was charged with securities fraud and money laundering.  Evidence at trial was that DeCinces was tipped off in 2009 that a Santa Ana-based medical device firm, Advanced Medical Optics, was going to be sold. The information came from the company CEO, James Mazzo, who was DeCinces’ neighbor in Laguna Beach, California, prosecutors argued. DeCinces bought more than 90,000 shares in the company days before Abbott Laboratories bought the firm, and he sold the shares for a profit of about $1.3 million, prosecutors said.[1]  On May 12, 2017, after a nearly two-month trial, a federal court jury in Santa Ana, California found him guilty on 13 charges.[2]

DeCinces, who is now 66 years old, will remain free on bail until sentenced. A hearing date was not immediately set for sentencing.  At the time of the merger, Advanced Medical Optics had seen its stock price plunge from more than $30 to under $10 in the wake of the 2008 Wall Street crash. It more than doubled after the merger was announced.

Canadian insider trading laws have not been as aggressively enforced as those in the U.S. The epic failure of the Ontario Securities Commission to secure a conviction in the prosecution of John Felderhof arising from the Bre-X Minerals scandals has now gained notoriety in the Hollywood movie Gold.[3]  There has only been one prosecution for insider trading under the Criminal Code, resulting in a guilty plea and a 39 month jail term for Stanko Grmovsek.[4]  Canada’s team, the Toronto Blue Jays major league baseball franchise, have been largely scandal free and is celebrating their 40th season in Toronto.


[2] Hannah Fry, Former Angels player Doug DeCinces found guilty of insider trading, Los Angeles Times (May 12, 2017). Retrieved on May 13, 2017.


[4] See, Insider Trading in Canada, 2nd Edition, 2017, Lexis Nexis, N. Keith, pp. 88-94

Corruption Prosecution Collapses After Wiretap Evidence Excluded

The high-profile corruption prosecution of two executives and the alleged intermediary to a foreign government has ended dramatically after a judge excluded the wiretap evidence collected by the RCMP. The defendants – Kevin Wallace & Ramesh Shah, both former Vice-Presidents at SNC-Lavalin, and Zulfiquar Bhuiyan, a dual Bangladeshi-Canadian citizen – were charged under the Corruption of Foreign Public Officials Act for bribes allegedly paid by SNC-Lavalin to secure a contract to supervise construction in Bangladesh.

The construction project was to build a multipurpose bridge connecting the southwestern region to the rest of Bangladesh. [1]  It was intended to stimulate economic growth by allowing transport of passengers, freight, natural gas, telecommunications and electricity.[2]  The project was forecast to cost approximately $2.9 billion and was funded, in part, by a $1.2 billion credit from the World Bank.

The Canadian investigation started after a World Bank investigator provided information obtained from four tipsters to the RCMP.  The tipsters alleged SNC-Lavalin was in the process of bribing Bangladeshi officials to secure the contract to supervise construction.  The RCMP never met any of the tipsters, but spoke with one by telephone.  The information provided by three of the four tipsters was obtained from other sources, but the RCMP never spoke with the tipsters’ other sources where identified.  The RCMP used information from the tipsters to obtain authorization to wiretap the private communications of the three defendants.  The information gathered on the wiretap led to the charges being laid.

Intending to challenge the wiretaps, the defence applied for a third party production order to compel senior investigators of the World Bank to appear before a Canadian court and produce documents.  The trial judge granted the applications.  The decision was appealed all the way to the Supreme Court of Canada.[3]   The Court overturned the trial judge’s decision.  The Court held that the World Bank did not waive its immunity by voluntarily providing information to Canadian law enforcement officials accordingly, its documents were immune from production.  Further, the Court found the documents requested were not relevant to the challenge of the wiretaps.

The defence subsequently brought a successful application to exclude the wiretap evidence.  Justice Nordheimer found that the two preconditions for a wiretap – (i) reasonable and probable grounds to believe an offence is or has been committed and (ii) investigative necessity – were not met and the wiretap should never have been granted.  On the first criterion, Justice Nordheimer noted that the RCMP relied almost entirely on information provided by the tipsters.  In his view, that information was not sufficient to provide reasonable and probable grounds because it was not compelling, credible or corroborated.  He was particularly critical of the reliability of the information.  He wrote:

The fact that a particular investigation may be difficult, does not lower the standard that must be met in order to obtain a [wiretap] authorization. Reduced to its essentials, the information provided in the ITO was nothing more than speculation, gossip, and rumour. Nothing that could fairly be referred to as direct factual evidence, to support the rumour and speculation, was provided or investigated. The information provided by the tipsters was hearsay (or worse) added to other hearsay.[4]

On the second criterion for a wiretap, Justice Nordheimer found that the RCMP failed to establish there were no other reasonable ways to investigate the allegations.

Justice Nordheimer concluded that the wiretap should not have been issued, and the evidence gathered by wiretap violated the defendants’ Charter rights to be free of unreasonable search.  Accordingly, he excluded all of the private communications intercepted from the evidence at trial. The Crown admitted that it had no reasonable prospect of conviction without the wiretap evidence.  The prosecutor decided not to call any evidence, and all three defendants were acquitted.

This was certainly not the end that Canadian prosecutors envisioned to a case the World Bank described as “a high-level corruption conspiracy among Bangladeshi government officials, SNC-Lavalin executives, and private individuals” that was proven by “credible evidence corroborated by a variety of sources.”[5]  The collapse of the Canadian case was caused, in large part, by deficiencies in the RCMP’s preliminary investigation.  Investigators appear to have taken insufficient steps to vet tipster information before seeking authorization for wiretaps.  This failure rendered the wiretap evidence inadmissible.  This case underscores the importance of the preliminary stages of the investigation and highlights opportunities for defence counsel seeking to exclude evidence obtained by wiretaps authorized primarily on the basis of tipster information.

[1] World Bank “Bangladesh Padma Multipurpose Bridge Project”, online:

[2] Ibid.

[3] World Bank Group v. Wallace, 2016 SCC 15

[4] R. v. Wallace. 2017 ONSC 132 at para 71

[5] World Bank, “World Bank Statement on Padman Bridge” (29 June 2012) online: