Author: Norm Keith

What happens in Vegas…SEC investigates Sands Hotel and Casino

In 2006 through to at least 2011, the Las Vegas Sands hotel and casino corporation transferred funds totaling more than $62 million to a “consultant” in China to promote their interests.

Lacking supporting documentation for appropriate authorization and identity, the money trail raised a red flag for the Department of Justice (DOJ) in the United States. This led to an investigation under the authority of Foreign Corrupt Practices Act (FCPA), as well as an investigation carried out by the U.S. Securities and Exchange Commission (SEC), since the Sands is traded on the New York Stock Exchange.

Since the Sands management could not account for the funds transferred to the consultant, bribery was inferred. This lack of controls extended to other transactions, including gifts and entertainment to foreign officials, employee and vendor expense reimbursement, and customer complimentary services.

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Can the OSC sharpen its teeth and take a bite out of enforcement, or lack thereof?

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.

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Managing Local and International Criminal Law Risk for Mining Companies

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.

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Project Manager Sentenced to Five 3.5-Year Jail Terms in Metron Swing Stage Conviction

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.[1]

The trial judge said in the Reasons for Sentence: “ … [2]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.

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Criminal Negligence Causing Death: Crown Asking for 5 Years in Jail for Project Manager Charged in Metron Christmas Eve Swing Stage Collapse

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.

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