The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the federal agency responsible for the detection, prevention and deterrence of money laundering and terrorist financing, has, for the first time, imposed an administrative monetary penalty on a Canadian bank. The penalty of more than $1.1-million comes at a time of increased scrutiny of Canadian financial institutions and financial transactional crime as a result of the publication of the Panama Papers.
The enforcement efforts of the Ontario Securities Commission (OSC), the regulator that administers and enforces compliance with the provisions of the Securities Act (Ontario) and the Commodity Futures Act (Ontario), have had mixed success— at best. With a mandate to protect investors and ensure fair and efficient capital markets through monitoring compliance and enforcement measures in the securities industry in Ontario, the regulatory body has been struggling to be taken seriously. Having taken a chapter from the playbook of the American national Securities Exchange Commission (SEC), prosecuting individuals for Insider trading, tipping, and securities fraud, the initial results, which are highlighted below, were underwhelming. Now, in a renewed effort to assert its presence in the capital markets as a regulator with teeth, the OSC is taking new approaches, with more promising results.
Despite internal safe guards and the best efforts of mining companies and their executives, criminal investigations can arise in relation to operations at home or abroad. How a company responds to a criminal investigation or to possible internal criminal misconduct, can have a serious legal and reputational impact, particularly since changes to Canadian law have made it easier for prosecutors to convict corporations and their officers of criminal wrongdoing. Today at Fasken Martineau’s PDAC 2016 seminar, Peter Mantas and Norm Keith of Fasken Martineau and Sandy Boucher of Grant Thornton discussed how proactive a mining company should be during the critical period after suspected criminal wrongdoing is discovered.
In what can only be described as a harsh sentence, with scathing reasons, Justice MacDonnell sentenced Vadim Kazenelson to 3 ½ years in prison, for each of five convictions of criminal negligence, relating to the Metron Construction Swing Stage collapse, to be served consecutively. With the January 11, 2016 sentencing, the tragic saga of a quadruple fatality on a construction site on Christmas Eve 2009 has finally come to legal conclusion. On June 26, 2015, following a trial, Kazenelson had been found guilty of all five counts of criminal negligence for which he had been charged in relation to the cause of the incident.
The trial judge said in the Reasons for Sentence: “ … a significant term of imprisonment is necessary to reflect the terrible consequences of the offences and to make it unequivocally clear that persons in positions of authority in potentially dangerous workplaces have a serious obligation to take all reasonable steps to ensure that those who arrive for work in the morning will make it safely back to their homes and families … “
In August 2009, Metron was retained to repair concrete balconies on two high-rise apartments. As was its normal practice, Metron hired a project manager and a site supervisor to oversee the project. Mr. Kazenelson was retained by Metron as its project manager. Mr. Kazenelson owned and operated his own construction company and according to reports, came highly recommended as an experienced and qualified project manager.
On December 10, 2015, SNC-Lavalin announced that it had signed the first-ever administrative agreement with the Government of Canada under the Integrity Regime.
The Integrity Regime, in effect since July 2015, bars companies and their related legal entities from bidding on government contracts if they are charged with or convicted of certain criminal or administrative charges. SNC-Lavalin is currently battling fraud and corruption charges filed in February, 2015 regarding three of its legal entities. This administrative agreement allows it to bid and win government contracts as it signifies the government’s satisfaction with SNC-Lavalin’s ethics and compliance programs.
SNC-Lavalin had to undertake and institute a comprehensive ethics and compliance program. Some of the measures it took include an antitrust and competition policy, a whistleblowing policy, a political contribution policy, appointing compliance officers in every business sector, and obligatory compliance training and certification for all employees.
This is a significant step towards addressing what many companies and legal advisors believe to be a harsh policy. Until now, the Integrity Regime allowed very little discretion to the government to create an alternative to debarment of the accused, pending a judicial decision on criminal charges. While on its face, the Integrity Regime remains rigid, in practice, it now appears that companies facing criminal charges or under investigation may have other options.
On November 27, 2015, the Supreme Court of Canada decided two appeals, B010 v. Canada (Citizenship and Immigration) and R. v. Appulonappa. The appeals concerned the meaning and application of the human smuggling provisions in the Immigration and Refugee Protection Act (IRPA).
The Supreme Court of Canada unanimously concluded that the offence of “human smuggling” in s. 117 of IRPA, despite its broad wording, applies only to those engaged in organized crime. It does not apply to those who provide humanitarian, mutual and family assistance to asylum-seekers coming to Canada.
These cases arose out of large scale entries to Canada in 2009 and 2010 by Tamil refugees arriving by boat in British Columbia. The Supreme Court’s decision comes in the midst of the most serious worldwide refugee crisis since the Second World War and as Canada prepares to welcome 25,000 Syrian refugees.
The tragic saga of a quadruple fatality on a construction site on Christmas Eve 2009 has finally come to legal conclusion with the criminal conviction and sentencing of the project manager overseeing the project. On June 26, 2015, following a trial, Vadim Kazenelson (Mr. Kazenelson), the project manager overseeing the project for Metron Construction Company (Metron), was found guilty of five counts of criminal negligence in relation to the accident. Mr. Kazenelson has had sentencing submissions completed before the trial judge.
The Crown argued that a penitentiary sentence of 4 to 5 years was appropriate, and that the sentence should be at the upper range. The Defence argued that the appropriate sentence in this case was 12 months to 2 years of incarceration. The Defence argued that 4 years imprisonment overshoots the mark for deterrence purposes, and that there is a real risk of sentencing imbalance, given that imprisonment is a blunt instrument. At the conclusion of submissions, Justice MacDonnell commented that there is no sentencing precedent that could easily be applied to this case, and as a result, sentencing would require much more thought. Justice MacDonnell did note that it is common ground that incarceration should be imposed; the only question remaining is the length of incarceration. Justice MacDonnell adjourned the sentencing decision until January 11, 2016.
On July 3, 2015, the Government of Canada introduced a new and controversial procurement policy with serious repercussions should a company be charged with certain criminal offences.
The Department of Public Works and Government Services Canada’s (PWGSC) Ineligibility and Suspension Policy  states that if a person or company is charged criminally, they may be barred (also known as “debarment”) from doing business with the federal government for up to ten years.
For individuals and corporations who do, or want to do, business with the Canadian government, this policy is a game changer. Such companies must now consider if and how they can avoid being charged.
Many companies already take steps to avoid criminal prosecution. But in an increasingly complex business world, where companies have operations globally, the risk of running afoul of the law, both at home and abroad, cannot be eliminated. Recent changes to Canada’s Criminal Code, which have expanded who within a company can create criminal liability for a corporation, have increased this risk.
Recent trends have seen legislative penalties increase, prosecutors cracking down, and more individuals going to jail. We have entered a new era of white collar crime enforcement in Canada.
In mid-2013, the Corruption Foreign Public Officials Act (CFPOA) was amended by the Federal Government. It introduced a “new books and records” offence, increased the maximum jail time to 14 years for individuals, and promised to phase out the legality of facilitation payments. The Royal Canadian Mounted Police (RCMP) was assigned the exclusive jurisdiction over investigation and laying charges under the CFPOA and given an enhanced increase in their mandate to investigate and prosecute more corporations and individuals, which it is doing.
Following this, the RCMP prosecuted Nazir Karigar, a Canadian-Indian business man, under the CFPOA. At his lengthy trial it was never proven that he gave a bribe to an Air India (foreign) official, as alleged; the Crown did prove, to the court’s satisfaction, that he intended to pay a bribe to secure business with Air India for an American company. That was enough to convict and send him inside for 3 years.