Prosecuting a corporation for criminal offences has long been criticized as potentially giving rise to a number of unfair and unwarranted results. Usually the wrong-doing is attributed to one or two individuals who have acted on their own and often well into the past and are no longer associated with the company.
By prosecuting the entire company, a multitude of completely innocent individuals can be harmed. Investors can lose their investments, employees can lose their jobs, retired employees might lose their pensions. A criminal conviction of a corporation can have far-reaching repercussions, including being debarred from bidding on government contracts domestically and internationally. Many non-government requests for proposals now also have an integrity requirement for companies submitting bids.
To address these unfair effects resulting from convicting corporations of criminal offences, most G7 countries have adopted some form of deferred prosecution agreement provisions in their criminal law.
Last year, Canada finally joined the U.S., the U.K., France and other European countries when Parliament passed Part XXII.1 of the Criminal Code, which provides for a Remediation Agreement regime – Canada’s version of deferred prosecution agreements.
Opposition MPs in the House of Commons have likened these changes to being “soft” on white-collar crime as they allow corporations to “avoid jail time.” Of course, corporations can’t do “jail time.” Usually, the most onerous penalty faced by a corporation is the loss of business resulting from a criminal conviction.
The purpose of Canada’s regime
S.715.31 of the Criminal Code sets out the purpose of the regime and lists a number of objectives:
715.31 The purpose of this Part is to establish a remediation agreement regime that is applicable to organizations alleged to have committed an offence and that has the following objectives:
(a) to denounce an organization’s wrongdoing and the harm that the wrongdoing has caused to victims or to the community;
(b) to hold the organization accountable for its wrongdoing through effective, proportionate and dissuasive penalties;
(c) to contribute to respect for the law by imposing an obligation on the organization to put in place corrective measures and promote a compliance culture;
(d) to encourage voluntary disclosure of the wrongdoing;
(e) to provide reparations for harm done to victims or to the community; and
(f) to reduce the negative consequences of the wrongdoing for persons – employees, customers, pensioners and others – who did not engage in the wrongdoing, while holding responsible those individuals who did engage in that wrongdoing.
S. 715.32(1) sets out a number of conditions which must be met before a prosecutor may enter into the agreement. They are:
(a) the prosecutor is of the opinion that there is a reasonable prospect of conviction with respect to the offence;
(b) the prosecutor is of the opinion that the act or omission that forms the basis of the offence did not cause and was not likely to have caused serious bodily harm or death, or injury to national defence or national security, and was not committed for the benefit of, at the direction of, or in association with, a criminal organization or terrorist group;
(c) the prosecutor is of the opinion that negotiating the agreement is in the public interest and appropriate in the circumstances; and
(d) the Attorney General has consented to the negotiation of the agreement.
Considerations for the prosecutor
Even if the conditions are met, a remediation agreement is not automatic. Among the several factors the Code requires the prosecutor to consider before offering to negotiate an agreement are:
Whether the organization has taken disciplinary action, including termination of employment, against any person who was involved in the act or omission
Whether the organization has made reparations or taken other measures to remedy the harm caused by the act or omission and to prevent the commission of similar acts or omissions
Whether the organization has identified or expressed a willingness to identify any person involved in wrongdoing related to the act or omission
The Code also directs that any agreement negotiated must include:
An admission of responsibility
A provision for reparation of any harm done, if not already made
An undertaking to cooperate with the prosecution in any related investigations or prosecutions
Once the agreement has been negotiated, it is submitted to a judge of the Superior Court for approval. The judge must be satisfied that the agreement is in the public interest before it is approved.
Upon approval of an agreement
Once the court has made an approval order, the charges against the company are stayed pending the completion of the terms of the agreement. If the company fails to comply with the terms of the agreement, the prosecutor can apply to the court to terminate the approval order and the criminal prosecution will resume. When the company has successfully completed all the terms of the agreement, the prosecutor applies to the court for a declaration that the terms of the agreement have been met. If the Court is satisfied that is the case, the court will issue an order staying the proceedings against the company for any offence to which the agreement applies and the proceedings are deemed never to have been commenced and no other proceedings may be initiated against the company for the same offence.
Not an ‘easy ride’
Remediation agreements have received some bad press recently as a result of the SNC Lavalin affair. However, no agreement would be negotiated unless the individual culprits are no longer associated with the company and procedures have been put in place to substantially reduce the chance of any further offences being committed by other employees.
Rather than giving corporate crime an easy ride as many commentators have suggested, remediation agreements are a rational process to ensure corporate compliance and accountability, which is in the public interest, and, at the same time, to limit the harm to innocent individuals.
Patrick McCann is White Collar Defence and Investigations Counsel with the Fasken Ottawa office, representing clients in all trial and appellate courts in Ontario, and the Supreme Court of Canada. Previously, Patrick practised at the forefront of Canadian criminal law for over 40 years. He can be reached at email@example.com.