Canadian DPA? Cross-country consultations begin

Government of Canada Launches Consultations

More than two years ago, in the context of its procurement modernization initiative designed to ensure that it was doing business with ethical suppliers, the Government of Canada introduced a government-wide “Integrity Regime”. The Government is now seeking to review whether its objectives have been achieved. On September 25, 2017, it launched a consultation to seek stakeholders’ views on its “Integrity Regime” and took the opportunity to seek the public’s opinion on a potential deferred prosecution agreement (DPA) regime as well. The Government has published a Discussion paper entitled “Expanding Canada’s Toolkit to Address Corporate Wrongdoing: the Deferred Prosecution Agreement Stream Discussion Guide in relation to the consultation process. Stakeholders may provide their responses and comments until November 17, 2017.

DPA Regime

A DPA regime is like a diversion program that provides an alternative to criminal proceedings. Instead of going to trial, the prosecutor can make an offer to the accused to hold off on criminal charges, while the person enters into a program designed to rehabilitate them. If the accused does not comply with the terms of the agreement, the prosecution is resumed. In Canada, diversion programs are currently made available to individuals only. A DPA regime is a diversion program made available to corporations. It is often – but not always – available only for specific offences related to economic crimes.

Other Jurisdictions

Other jurisdictions have adopted DPA regimes. An enforcement tool for corporate crime exists in the United States since the early 1990s. The United Kingdom adopted a DPA regime that came into effect in 2014. In 2016, France adopted a DPA-like mechanism in connection to anti-corruption investigations. Finally, Australia is in the process of drafting a DPA regime.

Increasing Pressure to Adopt a DPA Regime

The number of criminal prosecutions against companies yielding a guilty verdict in Canada has been relatively low. Increasingly complex corporate structures as well as sophisticated ways of channeling funds and hiding illegal conduct make corporate crime ever more challenging and resource-intensive to prosecute. A number of companies and commentators have been calling for the implementation of mechanisms that are deemed more effective than criminal prosecution for deterring and punishing corporate misconduct.

The implementation of Canadian anti-corruption and bribery legislation has added to the call for a DPA type mechanism. Canadian companies continue to expand and operate globally and despite their best efforts, sometimes find themselves facing criminal charges due to the misconduct of certain people within their company. The impact of just criminal charges, particularly for companies that are engaged in or seek public procurement projects, can be devastating. Many national and subnational governments, and international organizations, have strict guidelines that block companies from bidding on or participating in projects where they have been charged with a criminal offence.

A DPA is seen as a fair alternative in circumstances where a company has been or wishes to be a good corporate citizen, and has taken or wants to take steps to prevent criminal wrongdoing within its ranks. Rather than punish the whole company, which can lead to negative collateral effects such as lost jobs, a DPA can focus on punishing specific wrongdoers, and implementing measures to minimize the chance of a recurrence.

In addition, it is argued by these companies and commentators that the prospect of negotiating a DPA will likely motivate companies to self-disclose wrongdoings and even be more vigilant. In other words, a DPA could change the paradigm in appropriate cases from adversarial, to cooperative and remedial.

It is important to note that there is opposition to DPAs. Opponents contend that DPAs will not deter misconduct and will only become another “cost of doing business” that corporations will pass on to the consumers. It is also argued by some that a DPA regime may undermine public confidence in the justice system because the regime would be seen as a privilege afforded to companies to break the law without real consequences. Some argue that corporations should be held to the same standards as individuals. There are also concerns with the possibility of companies scapegoating a handful of employees, through the DPA process.

Potential Features of a Canadian DPA Regime

In its Discussion paper, the Government acknowledges that a DPA regime’s essential characteristics include conditions such as an admission of facts on the part of the corporation, the imposition of a financial penalty, a requirement that the accused cooperate with law enforcement as well as an obligation to implement compliance measures.

There are however an array of other issues to considerer, and the Government is seeking the stakeholders’ opinion on, among other things, the following questions:

  • Which offenses should be covered by the DPA regime?
  • What role should the courts play with respect to the DPAs?
  • What factors should be taken into account when offering a DPA?
  • What terms should a DPA include?
  • When would a DPA not be appropriate?
  • How should non-compliance be addressed?

Next Steps & Scope

The scope of a potential Canadian DPA regime is for now unknown. In the United States, DPAs are available for all federal crimes except where not appropriate for policy reasons. The United Kingdom limits DPAs to specific economic crimes. In Canada, the Criminal Code could be amended in order to render the regime available for offences such as fraud, bribery and money laundering. Other offences under federal statutes such as the Corruption of Foreign Public Officials Act or the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, could also be amended in order to establish the DPA regime.

These possibilities all require an amendment to existing legislation and as such, a potential DPA regime would likely not come into force in the short term.