Op/Ed: What’s next on corporate crime and remediation agreements?

The Conversation
By The Conversation
January 7th, 2020

By Jennifer Quaid; originally published in The Conversation

About a year ago, the SNC-Lavalin controversy introduced Canadians to a new way of settling criminal charges — remediation agreements.

Added to Canadian law via a budget bill in June 2018, the system was put to the test almost immediately when SNC-Lavalin sought a deal to settle fraud and corruption charges pending against it since early 2015. Prosecutors decided, however, that it wasn’t in the public interest to offer the Québec company a deal.

Government officials, convinced a deal was essential to avoiding big job losses, urged Jody Wilson-Raybould, then the attorney general, to use her power to direct prosecutors to negotiate with SNC. Her replacement, David Lametti, said recently that the attorney general can make that call in rare circumstances.

But once those efforts became public, the settlement tool at the centre of the political storm became inextricably linked to the SNC-Lavalin affair.

It’s 10 months later and a jury is about to decide the fate of Sami Bebawi, a senior SNC-Lavalin executive accused of corruption and fraud. SNC-Lavalin is also scheduled to be back in court on Dec. 18, and the start of its criminal trial is imminent.

As for the remediation agreement regime, the bright promise of what many saw as a welcome addition to the corporate accountability tool kit has dimmed considerably. The taint of SNC seems to have made prosecutors and organizations wary of settling cases via remediation agreements.

That’s a terrible shame. As the Department of Justice states in its backgrounder, remediation agreements are a much-needed alternative to full prosecution in appropriate cases, for holding organizations accountable and encouraging corporations to disclose wrongdoing with investigators.

While remediation agreements may have been unfairly tarred by the SNC-Lavalin case, the controversy has also shown that the new system was put together too quickly and without enough consideration of how it would work in practice.

It’s time to set the remediation agreement system back on course. Here are three things that can be done relatively quickly:

1. Enact the regulations

At the moment, the remediation agreement system is comprised only of the legislative provisions in a new section of the Criminal Code. Unlike other settlement mechanisms in Canada, including the Immunity and Leniency Program for competition offences, or the United Kingdom’s deferred prosecution agreement regime that inspired Canada’s, no accompanying guidelines or policies were adopted to help prosecutors and accused companies navigate the basic process outlined in the law.

The legislation specifically calls for regulations to be adopted on two items: the actual form of the remediation agreement and the qualifications needed to be an independent monitor who oversees the implementation of the agreement.

These regulations have yet to be drafted and enacted.

The lack of specifics in these two areas erodes confidence that the system can keep its two key promises: transparency and effective implementation of corrective measures.

A remediation agreement is not just a deal between the Crown and an organization, it is also a public record that sets out the facts underlying the criminal charges. It also includes an admission of responsibility, past and future co-operation with authorities, the amount to be paid in penalties, disgorgement of profits and restitution to victims and any corrective measures that the organization has promised to implement.

Read more: SNC-Lavalin: Canada’s anti-foreign bribery laws did their job

Developing a standard template will ensure that agreements are drafted in a consistent style that makes it easy to understand why and how they advance the public interest.

Similarly, until there are standards for who qualifies as an independent monitor, it will be up to the courts approving remediation agreements to decide on a case-by-case basis who can be trusted to ensure organizations are implementing corrective measures properly.

That’s not only inefficient, it invites a mish-mash of standards.

2. Provide detailed guidance

There are also several aspects of the remediation agreement process that aren’t outlined in the legislation and require more precise guidance.

That includes the evaluation of the public interest criteria that must be weighed before inviting an organization to negotiate a remediation agreement. Since deciding what is in the public interest falls to prosecutors as they decide how to proceed, this kind of information should be included in what’s known as the Federal Prosecution Deskbook and its provincial equivalents.

While there is a part of the deskbook devoted to prosecutions for foreign corruption offences, it’s focused on making sure these sometimes diplomatically sensitive matters are co-ordinated at a national level as well as ensuring that prosecutors know about unique aspects of the OECD Anti-Bribery Convention integrated into Canadian law.

This part makes no reference to remediation agreements. At the moment, the only reference is a short briefing note in the Public Prosecution Service of Canada’s Transition Book. That note was prepared when Lametti was appointed in January 2019, and some of it’s redacted.

There’s also a pressing need to describe how organizations should proceed when disclosing a possible offence, and especially what kind of information they are expected to provide prior to prosecutors approaching them about a possible remediation agreement.

 This void created problems in the SNC-Lavalin case. Since prosecutors don’t need to provide reasons for their decisions, it was impossible to know on what basis they decided a remediation agreement with SNC-Lavalin was not in the public interest.

Without any indication of what kind of information prosecutors would normally expect to receive from companies seeking to negotiate deals, SNC-Lavalin was able to cast doubt on their decision by saying it didn’t understand why prosecutors refused to negotiate when the company had provided so much relevant information.

The clear implication was that the decision against negotiating a deal could only be due to an erroneous assessment of the evidence or a failure to consider it at all. Though this argument was clearly rejected by Justice Katherine Kane in her decision striking down SNC’s application for a judicial review, it continues to hang over the SNC-Lavalin decision. It’s not likely to be fully refuted as long as the details remain confidential.

To ensure fairness and transparency, the remediation agreement process for companies should be set out clearly in writing and made widely accessible to the public, ideally through a website.

3. Create an anti-corruption enforcement body

The need for such transparency also suggests that it’s a good idea for Canada to create a specialized enforcement body, akin to the Serious Fraud Office in the U.K. or Canada’s own Competition Bureau. The enforcement body would oversee and co-ordinate anti-corruption policy and enforcement in Canada.

There are several aspects of the remediation agreement system that would benefit from specialized expertise and personnel in one place. In Canada, most significant criminal cases against organizations for elusive economic crimes have been immunity or leniency settlements for competition offences. There’s a need for tools that are tailored specifically to the remediation agreement regime and its mandate to settle corruption and fraud offences.

These include developing robust methods of calculating fines and restitution amounts, outlining methods for locating and compensating victims and building an inventory of promising corrective and compliance measures to be included in remediation agreements whenever appropriate.

The government should also consult with experts and stakeholders to evaluate the existing remediation agreement regime and identify areas for improvement.

Enacting the legislation so quickly has deprived Canadians of a detailed discussion about how it was developed. That’s undermined the overall legitimacy of remediation agreements. It’s time to correct those mistakes.

Author Jennifer Quaid is an Associate Professor, Civil Law Section, Faculty of Law, L’Université d’Ottawa/University of Ottawa. 

Disclosure statement: Jennifer Quaid holds research grants from the Social Sciences and Humanities Research Council of Canada and the Foundation for Legal Research. She is a member of the legal committee of Transparency International Canada.

This post was syndicated from https://rosslandtelegraph.com