Bill C-45 (Historical)
An Act to amend the Criminal Code (criminal liability of organizations)
This bill was last introduced in the 37th Parliament, 2nd Session, which ended in November 2003.
Martin Cauchon Liberal
This bill has received Royal Assent and is now law.
Offshore Health and Safety Act
March 27th, 2014 / 12:35 p.m.
Robert Chisholm Dartmouth—Cole Harbour, NS
Mr. Speaker, I am pleased to have the opportunity to weigh in on this important issue again. I had the opportunity to speak on this at second reading, at which time I indicated my support for this legislation and for the measures. I was pleased that the two levels of government, the two provincial governments and the federal government, were finally able to reach agreement. The Province of Newfoundland and Labrador and the Province of Nova Scotia passed mirror legislation, and the federal government is now following suit.
I want to focus my presentation today on where we go next. It is extremely important that we get the best piece of legislation that we can to serve the purposes laid out in the legislation. However, if we do not have the enforcement and the political will to make it happen then, frankly, we will go back to the decades when the offshore on the east cost was covered by draft regulations. We will go back to something we see far too often as it relates to private industry, in particular in the fields that are so dangerous. I speak of the whole practice of voluntary compliance. In that, governments expect the companies and individuals involved in any particular industry to be safe and careful and to not put workers at risk.
We know that public sector and private sector entities conduct risk analysis at every opportunity, before they put in any constraints on their practices whatsoever. Before a private sector company introduces any, in this case, safety measures or the use of safety equipment, it will do a very careful analysis on what the chances are that anything is going to happen, that there are going to be problems, that there is a risk there will be a loss of limb and life and, even at that point, what the exposure of that company is to liability.
That is why it is so important for governments to take their responsibility seriously in protecting people who are not protected, whether they are citizens, customers, clients, or workers. In the case of the Ocean Ranger, the 84 people who lost their lives, and in the case of the Cougar helicopter, the 17 people who lost their lives, nobody represented them. Nobody went to the effort to ensure there were constraints on the private sector companies that controlled what was going to happen to them when those workers at their jobs were carrying out their responsibilities. That is why it is incumbent upon us, not only to pass legislation to prevent these kinds of things, but also to ensure that the legislation is enforced, to ensure there is the political will in place, and that there are provisions in the legislation to ensure that people or companies that contravene provisions of the legislation are held accountable.
We had a terrible tragedy in Nova Scotia, in 1992, where 26 miners lost their lives. There was a royal commission held that made a number of recommendations. It led to Bill C-45, which was passed in this House, I believe in 2004.
It was called the Westray bill, and it was done to assign corporate responsibility. That legislation makes all decision-makers in a company responsible for the results of bad decisions or decisions that lead to the loss of life. Yet, since 2004, 22 years after that disaster happened, there have been a couple of charges but absolutely no convictions.
That underlines my point. We need to make sure that the responsibilities are laid out in the legislation. We need enforcement. We also need to make sure that people are held accountable. Ultimately, it all comes down to political will.
This legislation would only take us part of the way. We are only beginning to move in the right direction toward ensuring that the industry has a proper health and safety regime, as well as regulations.
However, our responsibility does not end here. We need to ensure that as development continues we work harder to make sure the people working in this environment are protected, and that the environment itself is protected.
I want to refer to Lana Payne, the Atlantic director of Unifor, who testified at the natural resources committee. She said that “Canada is still far behind other industrialized oil economies such as Norway, the United Kingdom, Australia...[and] the United States” in having “powerful stand-alone authority in charge of safety and the environment...”.
The member who spoke before me seemed to suggest that we do not have a stand-alone regulator here. We do not need it. It is a small jurisdiction. It is smaller than the Arctic or the west coast or some of these other countries. The member should say that to the 82 families who lost loved ones when the Ocean Ranger went down. He should say that to the 17 families of the workers who lost their lives when the Cougar helicopter went down.
If development is going to be conducted off the coast of our country, then we need to ensure that proper protections are in place, as in other countries. We have not done enough. We need to do better. We in the New Democratic Party will do everything in our power to ensure that this country does a better job in this area.
It is important for the federal government to continue working with the provinces and offshore boards in this area. There is no doubt about that.
I wish the government had considered the amendment that was introduced by our members on the natural resources committee. That amendment would have seen a review by the minister after five years. We would have known whether the legislation was actually accomplishing, not only what it set out to accomplish, but whether the government was showing the political will to enforce it and to hold people accountable. That happens with other legislation. It is not new. Things change, and try as we might, we might miss provisions that we should have perhaps picked up on. A five-year review would indicate whether we had run into any difficulties. A five-year review would ensure that 10 years or 13 years out we have done our due diligence with respect to making this happen.
I will refer to the intervention by my friend Dr. Susan Dodd, who wrote the book The Ocean Ranger: Remaking the Promise of Oil . Susan lost her brother when the Ocean Ranger went down. I spoke at some length about Susan's work in this area at second reading, but let me say again how much I value her opinion and the exhaustive research that she engaged in to prepare her book.
Before committee, Susan rightly identified that the “failure to regulate leads not only to the loss of life and the destruction of the environment, but also to the public's losing confidence in the legitimacy of government”. Disasters, such as the Ocean Ranger, Westray—and I referred to the explosion of the coal mine in Pictou County, in 1992—and the Deepwater Horizon, are also political disasters. People appropriately asked why it was that regulations did not exist or were not strong enough. Why were there weaknesses in the system and why were they not addressed years before?
Too often, changes to health and safety come about as a reaction to an event rather than as a preventative measure. I would suggest that this needs to be changed.
When I was preparing for these remarks, I looked at the Westray example. I was a member of the legislature in 1992 when that disaster happened. Within the next day or so, I sat with families in Stellarton who were trying to understand the magnitude of the disaster and whether their loved ones might still be alive. In the initial days of that disaster, it was a rescue effort.
We had a commission of inquiry, which did not table its reports until 1998. There were 74 recommendations, and section 73 led to Bill C-45.
I talked abut the need to hold decision-makers accountable. In the Westray situation, they found that there were decisions made or not made that directly led to the explosion and the loss of life. Everyone recognized that the people who had the responsibility for making decisions did not make those decisions, or they made decisions understanding that a result there could be a disaster, an explosion, which happened. Those people need to be held accountable, and that is what led to Bill C-45.
Here we are 22 years later, and we still have not been able to hold people accountable for these kinds of workplace disasters. That is why I worry very much about our sense of satisfaction when we pass a piece of legislation like this.
We have been at this for 13 years. We worked with the other jurisdictions and we got it through. When it passes through this House and finally receives royal assent, we have done our job. However, that is just the beginning. That is the point I am trying to make; it is simply just the beginning. We need to do so much more to make sure that we fulfill our responsibilities in representing the people of this country.
Let me make it clear. I certainly do not have all the answers on how we protect workers in the offshore industry or how we protect our environment. That is why I feel compelled, as an individual MP and a member of this House, to say we need to be ever vigilant and be always listening and always paying attention, so we can ensure that the right thing is done, that we correct our mistakes, and that we move quickly, because we are responsible to represent not only people who work in that industry but also the environment, in the event of oil spills. As my colleague from St. John's East said, there will be a third rig in operation in 2017, even farther off the coast of Newfoundland. They are exploring, again, off the coast of Nova Scotia and in the gulf. It may be inevitable that there will be further development of these resources, but we cannot proceed without ensuring that we are protecting the people who work in the industry and protecting the environment, because once those disasters happen, those lives are lost and that environment is damaged, in many cases, forever.
Let me make a couple of suggestions.
First, I call upon the current government, and any government, to support the recommendation that has gone before Transport Canada to ensure that all airplanes and helicopters that are used for search and rescue and to transport workers to and from the oil rigs must have the capability to operate for an hour after they have no oil or have run dry. That has been a recommendation--in fact, it was 30 minutes, I believe—and that recommendation has still not been put in place. Even after it was determined to be one of the problems that led to the disaster with the Cougar helicopter, that still has not been implemented. I think it is extremely important that we ensure regulation is put into place. We know this is a fairly standard requirement for helicopters that operate off the coast, to give them time to land safely.
Second, the government needs to reverse its cuts to search and rescue and ensure that our SAR teams have the equipment necessary, and in working order, to carry out their missions as quickly as possible. These are life and death situations that these people are responding to in Atlantic Canada and around our coasts. It is too often the case that search and rescue missions are hampered because our dated equipment is not functioning or the teams are unable to arrive in a timely manner.
I think it is important that I also make a plug for the environment, in this respect. As I have already said, Canada is lagging behind once again. While the government has recently introduced legislation to increase oil and gas spill liability to $1 billion, this amount pales in comparison with the actual costs of the spill cleanup and the impact on our environment and local economies.
To wrap up, there is still a lot of work to be done to strengthen the safety of the offshore industry for our workers and for our environment. While Bill C-5 is a step in the right direction, I think it is incumbent upon the government to continue to work with the provinces, the stakeholders, and industry to prevent future disasters.
November 7th, 2003 / 1:15 p.m.
I have the honour to inform the House that when the House went up to the Senate chamber, Her Excellency the Governor General was pleased to give, in Her Majesty's name, the royal assent to the following bills:
Bill C-45, an act to amend the Criminal Code (criminal liability of organizations)--Chapter No. 21.
Bill C-25, an act to modernize employment and labour relations in the public service and to amend the Financial Administration Act and the Canadian Centre for Management Development Act and to make consequential amendments to other acts--Chapter 22.
Bill C-6, an act to establish the Canadian Centre for the Independent Resolution of First Nations Specific Claims to provide for the filing, negotiation and resolution of specific claims and to make related amendments to other acts--Chapter 23.
Bill C-459, an act to establish Holocaust Memorial Day--Chapter 24.
Bill C-55, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 2004--Chapter 25.
Bill C-37, an act to amend the Canadian Forces Superannuation Act and to make consequential amendments to other acts--Chapter 26.
Bill C-50, an act to amend the statute law in respect of benefits for veterans and the children of deceased veterans--Chapter 27.
Bill C-48, an act to amend the Income Tax Act (natural resources)--Chapter 28
Bill S-21, an act to amalgamate the Canadian Association of Insurance and Financial Advisors and The Canadian Association of Financial Planners under the name The Financial Advisors Association of Canada.
Statements By Members
November 7th, 2003 / 11:10 a.m.
Alexa McDonough Halifax, NS
Mr. Speaker, today Bill C-45 will gain royal assent.
The Westray bill is a victory for working people across Canada and culminates 11 years of work by New Democrats in solidarity with families of mine disaster victims, Westray survivors, steelworkers and other trade union partners.
This brings us one step closer to ensuring that corporations are held liable for irresponsible working conditions that end up costing workers their lives.
Justice Peter Richard, who presided over the Westray public inquiry, described Westray, as, “a story of incompetence, mismanagement, bureaucratic bungling, deceit, ruthlessness, cover-up, apathy, expedience and cynical indifference”.
Bill C-45 will ensure in future that corporate managers and employers are held criminally responsible for endangering the lives of workers. Let there not be another Westray.
November 3rd, 2003 / 4:55 p.m.
Bev Desjarlais Churchill, MB
Mr. Speaker, I am pleased to have the opportunity to speak on the bill for a couple of reasons. First it will give me the opportunity to speak for a bit on the companion legislation that was tabled on the same day as this legislation, and that is Bill C-45, the corporate manslaughter bill, and also on this piece of legislation, which certainly is timely.
To indicate some of the reasons we have the bill before us, I will read out of few of them just in case somewhere along the way someone has forgotten what prompted governments in the U.S. and Canada to finally put in place legislation to address some of the problems we are having in the corporate world and which are having an extremely detrimental effect on the markets. I say extremely because although things have been happening for a number of years it was not too severe and not quite as much money was being lost. Not quite as many people were affected, nor were so many of the pension funds of people we knew. Nothing was being done for a lot of years.
Over the course of the years from the early 1990s and on, we were hit with a number of problems. I will read through them just to remind Canadians of why we are here with the legislation and why it is personally important that the legislation gets support. I would agree with my colleagues on why we should strengthen it. We should be strengthening it in a number of areas.
There was the Enron Corporation. At one time the seventh largest company in the U.S., Enron announced in November 2001 that it had overstated its earnings back to 1997 by about $600 million U.S. Is that not great? It was by about $600 million U.S., give or take $1 million or maybe $100 million. The company camouflaged the huge debt in a web of off the balance sheet partnerships. The company collapsed in the biggest bankruptcy filing in U.S. corporate history. The shares now trade for pennies in the over the counter markets. The bottom line is that people's pension funds, employees' benefit plans and numerous areas are affected as a result of companies doing this type of underhanded businesses.
Tyco, the conglomerate company, abandoned plans to split into four parts when concerns arose over its accounting practices in the wake of the Enron fiasco. In early June, the company announced the resignation of its CEO, Dennis Kozlowski, who was later charged for allegedly avoiding payment of over $1 million U.S. in sales tax on $13.2 million U.S. in artwork. Tyco shares are down 80% since the start of the year.
There was Adelphia Communications. In March, the Pennsylvania based cable company said it had loaned billions of dollars to the founding Riga family. The family relinquished control of Adelphia, which defaulted on a $7 billion U.S. debt and filed for chapter 11 bankruptcy protection on June 25.
Livent, the Toronto entertainment company, collapsed in 1998 amid allegations of financial impropriety that led to its financial results being restated. Soon after the collapse, the new management of Livent filed a $225 million lawsuit against Garth Drabinsky and Myron Gottlieb, the two Canadians who founded the theatre company. Livent then fired Drabinsky and Gottlieb, saying they fraudulently manipulated financial records to hide losses of $100 million. They have countersued for $200 million. Livent also filed for bankruptcy protection, citing debts of $334 million.
When we see companies like this filing for bankruptcy protection, we have to wonder about those involved and whether or not there should be some very strong criminal legislation in place to ensure that they cannot do those types of things that have such a great effect, not just on their employees but on the markets overall and, again, on pension funds and pensioners.
Going on to ImClone and the Martha Stewart affair, the drug company's co-founder and former CEO, Sam Waksal, and his daughter were charged on June 12 with insider trading relating to sales of ImClone stock. In the days leading up to the release of the federal ruling that rejected the company's new cancer drug, Martha Stewart came under investigation after she sold nearly 4,000 shares of ImClone on December 27, a day before the regulator's announcement. She is a friend of Waksal's and shared the same stockbroker. ImClone shares are off more than 90% from the high. As for Martha Stewart, of course her shares are down a little bit these days too.
Then, of course, there is Canada's own Michael Cowpland. The founder and former CEO of the software company Corel Corporation is still involved in the OSC's case over insider trading allegations after a company he controlled sold $20 million worth of Corel shares five years ago, just before it posted poor earnings. The OSC has rejected a proposed settlement that would have seen Cowpland pay a $575,000 fine and his company pay $1 million.
I mentioned those examples for a couple of reasons. The next time someone in the House talks about corporations being good citizens and that we should always trust them and allow them voluntary recognition of certain practices, I want everybody to remember each and every one of those corporations and why we need legislation in place to hold them as well as individuals accountable for their crimes. Just because a corporation has millions of dollars does not mean it is a good corporate citizen unless there is legislation in place that ensures it remains a good corporate citizen.
I indicated the reasons for including capital markets fraud in the bill, but Bill C-46 is an act to amend the Criminal Code as it relates to capital markets fraud and evidence gathering. Evidence gathering relates to whistleblower protection to which a number of colleagues have already spoken today. There have been criticisms that the sanctions in place are not strong enough and will not provide protection for whistleblowers. I have to agree that stronger legislation needs to be in place.
If employees or others know that these kinds of actions are taking place and they do not feel secure and feel that their livelihood will be jeopardized as a result of their evidence, it will be tougher to get these types of actions halted in the early stages. People must be assured that if they disclose this information they will not have to worry about getting another job in their field.
This is not just about being with one employer. We all know what blacklisting can do within business sectors in the world. There is a tendency to blacklist anyone who is seen as a squealer or a whistleblower. It has become a negative thing to squeal or whistleblow even if someone who has been committing a criminal act is caught, especially if that individual is in the corporate world. We have to ensure that we provide strong sanctions so people can feel safe if they whistleblow.
A number of my colleagues in the House have tried to bring in whistleblower protection for our own public service employees. Some individuals in the Office of the Privacy Commissioner wanted to mention things that had been going on but because they could not be assured of protection, actions went on for a period of time that ended up costing taxpayers huge amounts of dollars. As a result, huge amounts of taxpayer dollars were spent in that office without proper scrutiny. Had there been whistleblower protection within the public service, I submit that would not have happened.
In spite of the government bringing forward this piece of legislation, we still do not have whistleblower legislation in place that will protect public servants. The minister has stated that she does not think it is necessary because public servants would not do that kind of thing.
I need to remind people again of various situations that have happened in a number of government departments where deputy ministers or assistant deputy ministers have absconded with funds. There have been criticisms about the Indian health branch and a number of other departments. It is crucially important that there be whistleblower protection for the public service as well.
There is one area in Bill C-46 which has not been discussed a lot today and I want to make a point of emphasizing it. In spite of always being concerned about taxpayers' dollars being spent, I know what a tough job it is to ensure that legislation is enforced. Legislation can become just words on paper unless some enforcement mechanisms are in place.
I was pleased to see that the federal government would create a number of integrated market enforcement teams composed of RCMP officers, federal lawyers and other investigators such as forensic accountants to deal with capital market fraud cases. They will be located in cities throughout Canada and are scheduled to become operational over the next two years. They will work with securities regulators as well as provincial and local police forces.
It is crucially important to ensure that these types of mechanisms are in place, otherwise the legislation is not worth the paper it is written on. If there is going to be meaningful action against corporate fraud, there have to be people who are trained in those areas to get to the crux of the problem and do the job that is needed.
I want to take the time to comment on the Office of the Superintendent of Financial Institutions, OSFI, which deals with pensions and keeps track of pension funds in Canada. There has been criticism that there are not enough dollars in pension funds and OSFI is supposed to be keeping tabs on them. The bottom line is that in a good number of instances, OSFI does not have the resources to keep tabs on those pension funds.
As a result, we have ended up with situations like the Air Canada pension fund fiasco where the company did not put enough dollars into the pension fund. By the time OSFI got around to telling the company it had to put in enough money, Air Canada was going bankrupt. We now have a situation where a number of employees are not getting their pension funds. Certainly their families, their communities and Canadians throughout the country are being affected by the failure to properly support a program that is in place to keep tabs on pension funds.
My colleague from Regina—Qu'Appelle had introduced amendments at committee stage to strengthen Bill C-46. One of those was in regard to whistleblower protection. I emphasize again that there was a need to do that. Ideally it would have increased the penalties for employers who intimidated employees who were taking part in whistleblowing. In the other area, it was to have stronger penalties for insider trading.
Quite frankly I want to commend the government for bringing forward this legislation a whole lot quicker than it brought forward the legislation on corporate manslaughter, the corporate liability bill, commonly referred to as the Westray bill, which was introduced at the same time as this legislation. Bill C-45 also addressed corporate responsibility, but it did not address something that seems to hit home so much more with people, which is really too bad.
Bill C-46 deals with the money aspect and it certainly hits home with people, but Bill C-45 dealt with the lives of workers who were injured or killed on the job as a result of gross negligence and disregard by corporations. It took the government almost 11 years to finally come through with the legislation. I am extremely pleased that the House and the other place have seen fit to finally pass that legislation.
I will commend the government on Bill C-46 and indicate that it should be strengthened, but I will also make the point of emphasizing that it took far too long for Bill C-45 to come into place. I personally believe that a number of accidents have happened since that time that may have resulted in corporations being held criminally responsible for the deaths of workers. I am not going to mention specific instances, but I think those corporations out there that have had accidents like that know who they are.
Corporations will know that from the day the Westray bill, the corporate liability legislation, Bill C-45 takes effect, they will not have that freedom any more. At least there is going to be a challenge out there. If that is enough to smarten up corporations to put in place better work processes by not ignoring safety mechanisms, then it has done the job. It is far better to have that legislation in place to ensure that there is a bit of fear.
To this point there has been nothing. Somehow being fined a couple of thousand dollars, whether it be $10,000 or $50,000, because they did not want to fix an unsafe action in the workplace that might cost them $100,000 was no big deal. Somehow the workers' lives were an okay kind of bargain for certain employers to say, “To heck with it. It is more cost effective this way, so if we lose a couple of lives, no big deal”.
That is not going to happen any more, or at least I hope it will not happen any more. I hope corporations recognize that if they take a life, they will be giving up something at least close to a life on their part. Certainly if the legislation does not do the trick, we will be back here ensuring that the legislation is strengthened.
In January 2002 the Canadian Democracy and Corporate Accountability Commission issued a call for the Canadian government and corporations to follow the wishes of the majority of Canadians and to adopt measures to expand corporate accountability.
The commission did not just talk about corporate accountability with respect to the dollars that corporations were making or with regard to lives. It expected that corporations would look at things differently and would take a lot of factors into consideration when they dealt with whether or not they were good corporate citizens. It would consider whether or not they were following good human rights practices, whether they dealt with companies that followed good human rights practices, good labour standards, good environmental standards.
In the same way that people say there is honour among thieves, there was a time when there was honour among business people, that things were done in a certain way because it was beneficial for society. Somewhere in the course of our history not only in Canada but in the U.S. and throughout the world that has been lost. Somehow the bottom line is about making the most money with total disregard for the environment, for lives and for everyone else. Times have changed. People have said they will not accept that any more and if corporations are not good corporate citizens, they will make their lives miserable. That is the way it should be.
Things are changing in the world. There have been too many Enrons, too many Tycos, too many issues with ships spilling oil into the oceans. The fines have been so limited that they did not worry about cleaning it up because it really did not affect their bottom line. In some cases corporations can deduct the cost of their fines from their income tax. That is unacceptable. Those are the kinds of things we cannot allow to continue.
I mentioned the Canadian Democracy and Corporate Accountability Commission. A good friend and a former leader of the NDP, Ed Broadbent, was very much a part of that commission. He has been involved with others as well.
Members of the commission travelled throughout Canada. They not only talked to a few people here in Ottawa and a few in one province and here and there, they talked to people throughout the country. The message the commission heard was that Canadians want to see good corporate citizens in every aspect, in dealing with the environment, workers' lives, human rights. That is the route we have to take.
The NDP will certainly be supporting the legislation. We want to make it perfectly clear that we would like to see it strengthened in a number of areas, certainly the whistleblower protection and as well the amounts of the fines and penalties that corporations should have to pay in a number of areas.
I cannot think of the countries offhand, but there are countries in the world that actually put in place fines that are commensurate with a person's income or wealth. For a person who is a millionaire and is operating a business that is making millions of dollars, there is a $2,000 fine for some environmental damage or corporate fraud, the fine is a percentage of the person's income or wealth. For someone who makes $200, a fine of $20 has an impact, but a fine of $20 for someone who makes $2 million has no impact.
Maybe it is time we put in place those penalties that are a percentage of the amount of yearly income or profit that someone makes. We would truly see some strong action taken for corporations to improve their actions in this world and penalties that really did fit the crime.
October 27th, 2003 / 5:55 p.m.
Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC
Mr. Speaker, I rise once again regarding this bill, of which I have already spoken at other stages. It is as industry critic for the Bloc Quebecois that I am taking part in this debate. I used to be human resources development critic and, as such, I may have had more opportunity to deal with issues that have to do with workers, employment insurance and things like that.
In this case, I think that this is a bill that deserves our support. Indeed, it is the result of several years of work as well as the result of the tenacity of certain members of this House. The involvement of members of the Standing Committee on Justice and Human Rights was mentioned. The work that led to this bill was initiated by NDP members. They were the ones who were closest to those who went through this terrible experience.
As was mentioned earlier, this bill follows several bills that were brought forward by individual members. Basically we realized, following the explosion at the Westray mine in Nova Scotia, that we did not have the necessary tools to conduct a thorough inquiry.
This could also have a preventive effect so that, in future, people would not engage in more or less acceptable behaviours for which they could not punished previously. Now, with this legislation, before engaging in such behaviours, people will know that there are consequences, and chances are that they will choose not to go in that direction. Indeed, they will have been warned in advance that it is very dangerous to engage in these types of behaviours.
First, let us go back to Bill C-468, which was introduced in February 1999. The purpose of this bill was to establish in certain circumstances the criminal liability of corporations for criminal acts or omissions carried out by their officers or staff and to create a new offence in the Criminal Code for corporations that do not provide a safe workplace.
This bill was also aimed at making it easier to establish the criminal liability of directors and officers, something that was missing from the legislation and the Criminal Code. It was impossible to clearly put the blame on those who were actually responsible for these situations.
After Bill C-468 died on the Order Paper in June 1999, a motion was presented to amend the Criminal Code and other federal legislation to hold corporate managers and administrators responsible for workplace security. At that time, the Bloc was in favour of such an amendment. The members of the Bloc Quebecois took part in the work needed to ensure that the end result would be as good a bill as possible and one that would solve the problem at hand.
The bill was introduced again in October 1999, as Bill C-259. Once again, it died on the Order Paper. In February 2001, the bill was introduced again. At that time, the hon. member for Laurentides spoke in favour of the bill while explaining that Quebec already had such an agency—the Commission de la santé et de la sécurité du travail—that oversees the safety of employees. Thus, in Quebec, we already had a framework for dealing with such situations. Nevertheless, that did not correct the weaknesses of the Canadian Criminal Code. Thus, the Bloc Quebecois thought it relevant to push for the adoption of a satisfactory bill.
For example, in the House on November 11, 2001, the member for Hochelaga—Maisonneuve expressed his support for such a bill. For him, it was important to pass this bill as a kind of legislative corrective measure, and especially important to strengthen the Criminal Code in order to prevent loss of life among workers.
Finally, it was the Standing Committee on Justice and Human Rights that began to deal with the issue. It held hearings on the issue in the spring of 2002 and tabled its report in June 2002. It recommended that the government introduce legislation in the House on criminal responsibility of corporations, managers and administrators.
That has been the legislative process so far. Beginning with a private member's bill, facing many challenges, we have finally, through sheer tenacity, ended up with a government bill. In the end, the government had almost no choice but to introduce something. We started with a vague private member's bill, and ended up with a recommendation from the Standing Committee on Justice and Human Rights, telling the government that it must act. And that is how Bill C-45 came to be introduced in the House.
The main changes pertain, first, to the use of the term “organization”, rather than “corporation”. This will take in more institutions, including institutions that otherwise would not have been covered and could have continued to engage in inappropriate behaviour.
The bill also says that a company can be held criminally liable for the acts of employees who are not necessarily senior officers in the company. We know that with the multitude of hierarchical levels, under the current Criminal Code there would be no way to ensure that someone who committed a reprehensible act could be prosecuted accordingly and forced to assume the consequences of what he had done. Part of this is corrected in the current bill.
The material aspect—the act of committing a crime—and the moral aspect—the intent to commit a crime—of criminal offences attributed to companies and other organizations no longer need be the work of the same person. It is possible that in an organization where a criminal act has been committed, that someone utters the intent to commit the crime and directs someone else to do it. Now this distinction can be made in charges and in the how the behaviour of people involved in this type of situation is judged.
When it comes to criminal negligence, the moral aspect of the offence could be attributed to the organization insofar as it can be attributed to one of the organization's senior officers. For these aspects, it is essential that fault be attributable to one of the senior officers of the organization.
With regard to mens rea, the organization could be held responsible for the actions of its senior officers if a senior officer is party to the offence or directs other employees to commit an offence or if a senior officer, knowing that an employee is about to be party to an offence, does nothing to stop them.
I would say that this is the crux of the bill. It was truly this side of it that had major flaws and blame could go back and forth without anyone ever having to take responsibility.
The bill also explicitly imposes an obligation on those with the authority to direct the work of other employees to take the necessary steps to prevent bodily harm to those individuals.
The bill also establishes sentencing principles and conditions of probation for organizations. It was important to have clear and specific penalties, so that people would know exactly what the consequences of their actions would be. This did not exist previously in the Criminal Code, which led to the Westray mine situation, where it was impossible to establish liability and to ensure that it was assumed correctly. This gave a very bad example for the future and created legal precedents. This is why it was necessary to legislate.
We know that, in Canada, the conditions under which a corporation can be held criminally liable are essentially based on jurisprudence. Therefore, it was important to have adequate legislation as a basis for jurisprudence.
The bill also amends current legislation so that organizations other than corporations can be held criminally liable. Indeed, under this bill, the term organization includes a public body, body corporate, society,company, firm, partnership, tradeunion or municipality. Let us hope that we did not forget other types of organizations that could be placed in such situations. The definition appears to be broad enough to cover all those who should be covered.
The bill also says that the term organization includes any association of persons thatis created for a common purpose,has an operational structure, andholds itself out to the public as anassociation of persons. We see that the legislator really wanted the definition to be as broad as possible. It is not only the employer that is included but any other type of organization, so as to prevent the same kind of situation from happening again. The government is ensuring that the legislation was not corrected only to cover a certain type of organization or employer, but all the different types of associations.
The bill also deals with the issue of safety in the workplace when it says, with respect to section 217.1, that every one who undertakes, or has theauthority, to direct how another person doeswork or performs a task is under a legal dutyto take reasonable steps to prevent bodilyharm to that person, or any other person,arising from that work or task. This new provision will make it possible to charge people in positions of responsibily who have failed to meet this obligation with criminal negligence.
Again, this measure comes from the impact analysis of the tragedy at the Westray mine. Of course, it will not bring back those who died in that terrible accident and are still mourned by their families.
However, this bill at least gives those families the assurance that legislators have learned their lessons and are trying to ensure that such a tragedy never occurs again.
Sentencing these organizations is another issue on which we put a lot of emphasis. The bill would add new sections and expand existing sections to take into account, during sentencing, factors that are characteristic of organizations. A specific section is also added to regulate the probation conditions applicable to organizations.
Overall, this bill seems to solve one of the problems linked to the tragedy at the Westray mine. For all these reasons, the Bloc Quebecois supports the principle of Bill C-45.
Given the current state of the law, we believe it is important to establish a regime of criminal responsibility for businesses that is effective and takes into account the differences between an individual and an organization.
However, I would like to voice a concern regarding offences. Indeed, mens rea is required, in other words, to prove that intent is above and beyond that required for criminal negligence. A first look at clause 22(3) leaves questions as to how effective this clause will be when it is applied to a specific situation.
We have reached a level of proof that, in practice, might be difficult to achieve. We made these comments in committee and at other stages. This has not been corrected, but let us hope that with respect to jurisprudence, we will not end up in a situation where we have to amend the legislation because it was not accurate enough in the first place.
I want to reiterate that Bill C-284, which had been presented by the NDP, proposed a solution to this difficulty by including the possibility of reversing the burden of proof for corporations. Reversing the burden of proof would work as follows: once it has been established that the employees of an organization have committed an act or made an omission leading to the commission of a crime, that organization would have to prove that it neither authorized nor tolerated such behaviour.
Thus, it would be a kind of preventive measure to avoid that kind of situation. We also should note that the bill does not in any way make it possible to impute criminal responsibility to administrators of corporations, unless the corporation itself has committed a criminal act.
Perhaps this amendment was not included in Bill C-45 for constitutional reasons. Still, it remains open to interpretation, which I hope will not leave an opportunity for people with bad intentions to commit a criminal act without being subject to the appropriate sanctions.
Certainly, the entire bill must be examined very carefully to ensure that it is effective; still, its objective remains valid and necessary in order to make organizations answer for their acts.
I believe that this is the kind of law on which we will look back in 10, 15 or 20 years and say that it brought in real improvements to prevent unacceptable behaviour. It will have corrected something that had caused a great deal of pain in the past, particularly to the families of the victims of this accident.
Nevertheless, it will be clear that the measures that legislators in this field have taken will have helped correct the situation. We can hope that this kind of situation will never happen again and that there will be no need to intervene before the courts to obtain convictions. The way the bill has been written and the information that will be provided to various organizations are intended to make people in all kinds of organizations aware of the fact that they will be held responsible for the consequences of their actions. Thus, we hope to avoid a repetition of the terrible accident at the Westray mine.
In conclusion, I want to express my wishes, and those of many members of this House, that we will be able to pass this bill and that it will come into effect as soon as possible.
October 27th, 2003 / 5:45 p.m.
Alexa McDonough Halifax, NS
Mr. Speaker, I am happy on this occasion to have the opportunity to speak briefly in the final reading stage of the so-called Westray bill, Bill C-45, that is now before the House.
I want to take the opportunity to pay tribute, where I think tribute is owing, to those Canadians who have worked long and hard to bring the bill to the point where we in fact will have a vehicle to hold criminally accountable corporations, their officers and executive members who knowingly put at risk the lives of their employees.
I think credit must first and foremost go to the families, the survivors of the Westray miners, 26 of whom lost their lives in my province of Nova Scotia over a decade ago, and to the surviving miners who had been employed at Westray but, fortunately, were not working in the mine on the occasion when this tragic disaster occurred.
Second, credit is owing to the trade union movement and, in particular, to the United Steel Workers of America which made a commitment that was not required in law and not a commitment it had entered into in any contractual way but in fact a commitment to help the Westray miners organize. A vote had been cast by the Westray miners but because the ballots were counted after the 26 deaths occurred, it turned out that the Westray miners had sought to be represented by the United Steel Workers of America.
The mine closed but the steel workers never faltered, never hesitated. They poured their heart and soul, blood and guts into pressing for the kind of changes in law, the changes in health and safety practices in Nova Scotia and across the country, that would ensure never again would there be an occurrence permitted in this country such as what happened at Westray.
Credit must also be shared with those who have lost their lives and others who have advocated on behalf of workers who lost their lives or lost their health or lost limbs in workplace accidents, who have also understood the need for changes in the Criminal Code to make it possible to establish corporate responsibility and accountability and, where appropriate, corporate criminality when employers act in grotesquely irresponsible ways that endanger the lives of their workers.
I want to underscore the tragedy of the government having taken so long to reach this point of bringing the legislation forward by mentioning 21 year old Lewis Wheelan. He was employed by Ontario hydro to clear brush. In Nova Scotia we call it Power Corporation. Through what was a horrendously irresponsible set of circumstances, for which the employer was responsible, this young man initially suffered a serious workplace injury and became a triple amputee. He struggled valiantly to rehabilitate himself but in a double tragedy and a double irony he lost his life during the recent Ontario hydro power outage.
His father wrote to me a few days ago expressing concern about the possibility that the bill would die on the Order Paper as a result of premature prorogation or the recessing of this session of Parliament. I do not think we should leave it to chance. We should ensure that the legislation is effective.
Had the legislation now before the House been in place in May 2001, when Mr. Wheelan's son suffered his severe workplace accident, the employer, Great Lakes Power Corporation, a subsidiary of Brascan Corporation, would have found itself in the criminal courts facing the kind of sanctions and ultimate justice that are in the bill.
It is too late for Lewis Wheelan and the other Lewis Wheelans of the world who have lost their lives over the last 10 years in what might have been preventable workplace accidents or injuries and ultimately workplace fatalities but let us not delay further the full implementation of the legislation.
I have been concerned, and I know others have been concerned from the beginning, about whether the legislation is as far-reaching as it needs to be. We do not know whether the bill captures all of those intended by the recommendations of the judge who presided over the Westray inquiry. Departmental officials have insisted that those concerns are unfounded and they have been adamant that executives, officers or CEOs of corporations who might engage in criminally irresponsible activity as it relates to the lives of their employees will be fully covered under the legislation. I hope those assurances are based on solid ground.
There also has been a concern about whether the definition of organizations is one that is entirely appropriate and whether there is any possibility that inadvertently those who would be least expected to be held responsible for workplace injuries or fatalities might find themselves being blamed and others in fact finding themselves getting off scot-free. We have been given assurances that these concerns are, if not ill-founded, that there is a remote possibility that those concerns are on solid ground.
For that reason, I and the New Democratic Party caucus are prepared to indicate our support for the legislation. It may not give us the most stringent possible measures but in this instance it is certainly an improvement over the disgraceful situation as it relates to holding employers fully responsible for criminally irresponsible actions in the workplace.
I again pay tribute to those who have worked to bring this about. I think some credit also needs to go to the justice committee. Sometimes it is not evident to the general public that parliamentary committees working under the umbrella of Parliament, in this case the parliamentary committee on justice, get the job done. It is true that sometimes committees are hopelessly bogged down, paralyzed or engaged in dismaying partisan manoeuvring in the eyes of the public but in this case some credit has to go to the chairman of the justice committee, the member from the Fredericton area and two other members of the committee for ensuring that this necessary legislation has now reached this stage in the completion of the parliamentary process.
The bill was first introduced by me in a private member's bill and died on the Order Paper. It was then introduced by my colleague, the member for Churchill, and died on the Order Paper.
It is much appreciated that enough members of the House saw the necessity of moving forward. The justice committee had a genuine and sincere debate on whether it was necessary, once the government sponsored its own legislation, to have a full array of witnesses come before the committee yet again. Given the urgency of getting on with the legislation, we appreciate the cooperation at the justice committee to recognize the possibility that bringing forward a whole series of witnesses all over again was perhaps unnecessary and, in any case, could jeopardize the importance of the legislation being enacted before the House faces the possibility of prorogation.
To all those who have contributed, I send a heartfelt expression of appreciation. In the final analysis, to those who have paid with their lives in preventable workplace deaths, accidents and injuries, it is hoped that this, in the future, will allow family members to say that lives and limbs were not lost, that people did not sacrifice their health without there finally being an appropriate response from the federal government to do what it could to prevent such fatalities and tragedies in the future.
October 27th, 2003 / 5:35 p.m.
Inky Mark Dauphin—Swan River, MB
Mr. Speaker, it is a pleasure on behalf of the Progressive Conservative Party to take part in the debate on this very important bill, known as the Westray bill. Certainly, the Progressive Conservative Party wishes to see its quick passage.
The purpose of the bill is to amend the Criminal Code to establish rules for attributing organizations with criminal liability for the acts of their representatives. It would establish the legal duty of persons directing work to ensure the safety of workers. It sets out factors for courts to consider when sentencing organizations and provides conditions for court imposed probations.
Bill C-45 is billed as the government's long awaited response to the findings of a public inquiry into the Westray mining disaster.
On May 9, 1992, an explosion at the Westray site in Plymouth, Nova Scotia, killed 26 coal miners. As a result, the mine's parent company, Curragh Inc., and two on-site managers were charged with manslaughter and criminal negligence causing death. Despite evidence of lax safety standards and hazardous conditions in the mine, the case failed at trial sparking allegations of abuse of the court process and appeals to the Supreme Court.
The founder of Curragh Inc. refused to testify at the subsequent public inquiry calling it a farce, which prompted a public outcry over the lack of corporate accountability.
In 1997, inquiry commissioner Justice Peter Richard, issued the final report that accused mine managers and government inspectors of dereliction of their duties. A key recommendation from the report called upon the federal government to ensure that corporate executives and directors were held properly accountable for workplace safety.
Let me go over some of the highlights of the bill.
The criminal liability of corporations and other organizations will no longer depend on a senior member of the organization with policy making authority; that is, a directing mind of the organization having committed the offence.
Another highlight is the physical and mental elements of criminal offences attributable to corporations and other organizations will no longer need to be derived from the same individual. The class of personnel whose act or omissions can supply the physical elements of a crime attributable to a corporation or other organizations will be expanded to include all employees, agents and contractors.
Another highlight is that for negligence based crimes, the middle element of the offence, mens rea , will be attributable to corporations and other organizations through the aggregate fault of the organization's senior officials, which will include those members of management with operational as well as policy making authority.
For crimes of intent or recklessness, criminal intent will be attributable to a corporation or other organizations where a senior officer is a party to the offence or where a senior officer has knowledge of the commission of the offence by other members of the organization and fails to take all reasonable steps to prevent or stop the commission of the offence. Sentencing principles specifically designed for corporate organizational offenders will be adopted.
Another highlight is that special rules of criminal liability for corporate executives will be rejected.
The last highlight that I will provide is that an explicit legal duty will be established on the part of those with responsibility for directing the work of others, requiring such individuals to take reasonable steps to prevent bodily harm arising from such work.
It should be noted that none of the provisions in the bill are retroactive. The government claims that the bill should make it easier to convict companies and other officials of crime that injure workers or the public.
Although specifying that an organization may be held responsible for occupational safety matters is a step forward, the bill does not address what happens if a negligent organization ceases to exist.
For example, Curragh Inc. was bankrupt by the time the Westray prosecutions could have started, meaning that imposing a fine and preventative safety measures in that case would have been meaningless punishment.
The Canadian Federation of Independent Business said that the bill has the potential to end up as mere feel good legislation, meaning that it would have little practical impact. It says that it would rather see the federal government assist businesses to meet their existing health and safety obligations.
However, many groups have come out in favour of this legislation. Physicians for a Smoke-Free Canada, for example, have stated that it believes Bill C-45 will effectively ban smoking in all workplaces, as second-hand smoke is considered a health hazard, and the bill requires employers to take reasonable measures to protect employee safety.
Also nothing in the bill suggests that it will be easier for workers or members of the public to receive direct compensation from corporations for their wrongdoings. One possible way to address this would be to distribute fines collected from organizations found guilty of workplace safety violations to the individuals directly harmed by the offence.
The bill also does not deal completely with the responsibility and accountability of corporate directors for unsafe work environments. The definition of a “senior officer” specifically includes the director, chief executive officer and chief financial officer, but does not mention lower level corporate executives and officers.
In closing, despite the failings of the bill, the PC Party believes that it is better than no bill at all and we certainly encourage its quick passage through this House as well as the Senate.
October 27th, 2003 / 5:30 p.m.
Richard Marceau Charlesbourg—Jacques-Cartier, QC
Mr. Speaker, it is with great pleasure that I rise today to speak to Bill C-45. As you know, the purpose of the bill is to carry out an indepth review of the principles of law governing the liability of corporations and other associations of persons for all criminal offences.
I want to commend committee members for their cooperation. All parties put their shoulders to the wheel so that the bill could be passed quickly, and in as non-partisan a fashion as possible.
It is also interesting and crucial to remind the House that this bill is the outcome of the efforts of ordinary members of this House and not an initiative of the government. Members worked hard to ensure that tragedies such as the one we saw at the Westray mine would never occur again or, if they did, that very harsh penalties could be incurred.
To understand the issues, it is important and even essential to put them into context. We remember that at the Westray mine, in Nova Scotia, 26 men, 26 mine workers died, leaving wives and children behind, creating sadness for women and children who did not deserve to lose their loved ones. We also remember that the public inquiry revealed that the tragedy was caused in large part by the negligence of the bosses, who had turned a blind eye to some serious safety problems.
For more than five years, the government did not do a thing in response to this inquiry. MPs had to bring pressure to bear to get substantial legislative changes passed to ensure that such a situation will happen again. These members worked hard, with the fierce and constant support of the families of the victims of Westray.
In June 1999, a motion was put forward to amend the Criminal Code and other federal legislation so that the directors and officers of a company would be held responsible for workplace safety. At the time, the Bloc Quebecois supported the motion, but when Parliament was dissolved, the motion died on the order paper. Since then, similar motions were brought in on several occasions. But we must recognize that the government dragged its feet until it introduced Bill C-45.
Bill C-45 is based on eight key points I will review here:
First, to the use of the term organization, rather than corporation. This will broaden the definition, thereby affecting more institutions.
Second, companies can now be held criminally liable for the acts of their employees who are not necessarily in positions of authority or, as they are commonly referred to, the higher ups.
Third, the material aspect—the act of committing a crime—and the moral aspect—the intent to commit a crime, the mens rea —of criminal offences attributed to companies and other organizations no longer need be the work of the same person.
Fourth, the category of persons whose acts or omissions can constitute the material aspect—meaning the criminal act that can be attributed to a corporation or any other organization—is broadened to include all employees, representatives or contractors.
Fifth, with regard to crimes resulting from negligence, generally referred to as criminal negligence, the fault can now be attributed to the organization to the extent that one of the senior officers of the organization can be charged with the offence.
Sixth, in the case of deliberate crimes, an organization can now be held responsible for the actions of its senior officers to the extent that a senior officer is party to the offence, directs other employees to commit an offence or, knowing that an offence will be committed by other employees, does nothing to prevent it. It is important to clarify, nonetheless, that the acts or actions of senior officers must be committed with the specific purpose of procuring an advantage for the organization.
Seventh, the bill is designed to place the onus explicitly on anyone who undertakes to direct the work of other employees to take all reasonable steps to prevent bodily harm to these employees
Finally, the bill also contains provisions for establishing general sentencing principles and probation conditions in respect of the organizations.
We are therefore extremely pleased with this bill. We support it, although we would have liked to have seen it sooner.
Although enactment of Bill C-45 cannot of course compensate the families, the women and children who have lost husbands, fathers, brothers, we do hope that Bill C-45 will at least lessen their suffering somewhat and will give those who have lost loved ones in such tragic circumstances some feeling that justice has been done.
October 27th, 2003 / 5:25 p.m.
Darrel Stinson Okanagan—Shuswap, BC
Mr. Speaker, it is a pleasure to comment on Bill C-45. I would really like to think of it as the Westray bill.
When I was first elected in 1993, representatives of the small communities of Plymouth and Stellarton, Nova Scotia were among the first to come to see me as I was serving as the mining critic for the official opposition. They still come to see me today .
Back in 1993 they sought justice regarding 26 working miners, their neighbours, friends and customers, sons and fathers, husbands and brothers, who died underground in the Westray mine disaster on May 9, 1992. Since then, at least one folk song has been written about it, the title of which is “Everybody Knew”. I have travelled to the area several times and have found that is a fact; everybody knew there were problems with that coal mine. Everybody knew conditions were not safe, yet management sent those men into unsafe conditions day after day until what seemed to be almost inevitable happened.
According to the Westray mine public inquiry, sparks struck by cutting bits from the continuous miner, a machine working the southwest 2 section of the mine, ignited coal dust and she blew, taking not only those families' dear ones, and hopes and dreams, but also the traditional Cape Breton coal mining economy with it. That inquiry also found:
Had there been adequate ventilation, had there been adequate treatment of coal dust, and had there been adequate training and an appreciation by management for a safety ethic, those sparks would have faded harmlessly.
Today, over 11 years later, to the best of my knowledge not one representative of the resource company, not one mining inspector, not one provincial or federal bureaucrat from the Department of Natural Resources, Environment Canada or the Department of Labour has served one day in jail for what seems to me, admittedly not a lawyer, their criminal negligence in those 26 preventable deaths.
The federal government helped finance this mine so it cannot simply wash its hands and point the finger of blame solely at the province. As the report states:
Westray took over development from Canadian Mining Development in early April 1991, at a much earlier stage of development than originally planned, and began using continuous mining machines to drive the mains.
Still quoting from the report:
In the rush to reach saleable coal, workers without adequate coal mining experience were promoted to newly created supervisory positions. Workers were not trained by Westray in safe work methods or in recognizing dangerous roof conditions--despite a major roof collapse in August. Basic safety measures were ignored or performed inadequately. Stone dusting, for example, a critical and standard practice that renders coal dust non-explosive, was carried out sporadically by volunteers on overtime following their 12-hour shifts.
Here are some further quotes:
Management trivialized the concerns of workers, some of whom quit their jobs at the mine. Although the mine inspectors asked the company for roof support plans, as well as stone dusting plans, it repeatedly deferred supplying them. Westray is a stark example of an operation where production demands resulted in the violation of the basic and fundamental tenets of safe mining practice.
As Mr. Don Mitchell, mining consultant for the Nova Scotia department of labour concluded from his post-explosion investigation of mining safety training, Westray mine “had no program that was appropriate to the needs of that mine”.
I have to ask, why was there no such investigation in time to prevent those 26 deaths? Such blatant disregard for the safety of employees must not be allowed to be repeated. Nevertheless, every day in Canada, workers are still being killed or injured on the job while some corporations simply continue what they do best, make a profit.
Of course most corporations do have a heart and also recognize that good, safe working conditions also are good business practice. It is also true that provincial workers' compensation rates will go up after accidents, and sometimes they go up a lot. However, that financial aspect has not proven to be enough to motivate all corporations into creating safe workplaces.
Therefore, Canada needs both big carrots and big sticks, including federal legislation for criminal liability, to protect vulnerable workers, like the new kid in his job, those young workers most likely suffer workplace injuries.
In conclusion, as mining critic for the official opposition and as one who has personally visited the communities and the United Mine Workers local most affected by the Westray disaster, regardless of whatever other concerns may affect our scheduled business this fall in Parliament, this bill is shamefully overdue. I believe we should pass this legislation post-haste.
October 27th, 2003 / 5:20 p.m.
Paul MacKlin Parliamentary Secretary to the Minister of Justice and Attorney General of Canada
Mr. Speaker, the passage of Bill C-45 represents the final step in the House in making significant reforms to the criminal law as it applies to all organizations. The bill has its origins in the terrible tragedy of the Westray mine explosion. All parties in the House cooperated in ensuring that the bill received high priority.
As members know, the bill when passed will significantly modernize Canadian law by expanding the circumstances in which an organization can be held criminally responsible for the actions taken in its name by its representatives.
To accomplish this it will introduce definitions of “organization”, “senior officer” and “representative” that in combination expand the current directing mind test of liability to include persons who manage important aspects of the organization's business. It will codify rules for attributing criminal liability to organizations that reflect the modern, complex decision making structures of organizations. It will set out factors for a court to consider when sentencing an organization. It will provide optional conditions of probation that a court can impose on an organization.
Well run organizations that take seriously their responsibilities as corporate citizens have little to fear from these changes. They would of course be well advised to review their practices and procedures and how much discretion they give to managers. However, the organization will only be held liable when there has been fault on the part of a senior officer. In offences based on negligence, the senior officer will have to have shown a marked departure from the standard of care that could reasonably be expected.
Where the offence is based on fault other than negligence, for example, knowledge or intent, the organization will only be liable if a senior officer who intends to benefit the organization either is a party to the offence personally, or directs the commission of the offence or turns a blind eye to the criminal activity of others.
These new rules are balanced and fair.
With respect to safety, the bill proposes not to separate out corporations and other organizations, but rather to emphasize the importance of ensuring the safety of workers and the public by introducing into the Criminal Code new section 217.1 making it a legal duty for everyone who directs the work or other persons, or who has the authority to do so, to take reasonable steps to prevent bodily harm to that person or any other person.
Officials of the Department of Justice told the standing committee that in an organization with a complex structure, this new duty would apply not only to the organization itself, but also to individuals who may be personally liable in their own capacity, such as senior officers, low level managers, shop foremen, indeed anyone in the corporation who has the authority to direct how work is to be done.
Ultimately, the chief executive officer and the board of directors are responsible for how work is carried out. Clearly, they are not involved in the day to day decisions on the shop floor, but if they act with total disregard of their obligations with respect to work or worker safety and put pressure on the lower level managers to sacrifice safety to production, they could be personally liable.
I believe that Bill C-45 is already having an effect. Worksite News in August ran an editorial under the title “Bill C-45: What You Need To Know To Protect Your Assets Against The New Criminal Liability For Workplace Safety”. In that editorial the author wrote:
Corporate Canada would be well advised to assess their current OHS programs, training budgets and real commitment to workplace health and safety. An effective program with demonstrated clear communication throughout the organization is not only the way to ensure compliance with your legal obligations, but more importantly it helps to ensure the health and safety of your employees.
I understand that officials of the Department of Justice have met with the Canadian Chamber of Commerce and with the occupational health and safety committee of the Canadian Manufacturers and Exporters to explain the potential impact of Bill C-45. They have also participated in a panel on Bill C-45 and the implications of proposed amendments to the Criminal Code as part of the Health and Safety Law Conference 2003 held in Toronto. All members should be encouraged by these signs that corporations and other organizations are considering their policies in the light of this new duty.
I believe that all parties in the House have approached this bill, the previous debate on Bill C-284 and the hearings of the standing committee last year in a non-partisan way, seeking to improve the operation of the law in this important area. I believe that all parties can take pride in their contribution to developing this bill and that the House can unanimously pass this bill and send it to the other place where we hope it will receive the same expeditious, non-partisan consideration.
Business of the House
Oral Question Period
October 23rd, 2003 / 3 p.m.
Don Boudria Minister of State and Leader of the Government in the House of Commons
Mr. Speaker, insofar as the last part of the question, in fact such a motion would not change a law in any case. Let me first of all start by saying that this afternoon we will continue with debate on the opposition day non-confidence motion.
Tomorrow we shall consider Bill C-50, respecting veterans benefits, followed by the Senate amendments to Bill C-6, concerning first nations. Then, if we have time, we will consider Bill S-13, an act to amend the Statistics Act.
On Monday, we will consider bills left over from this week, as well as Bill C-32, the Criminal Code amendments, Bill C-13, the Assisted Human Reproduction Act, and Bill C-45, the corporate governance bill.
Tuesday shall be the last allotted day in this budget cycle.
On Wednesday and on subsequent days, we shall return to any unfinished business, adding to the list any bills that may be reported from committee. We will also start debate on Bill C-19, the First Nations Fiscal and Statistical Management Act, and Bill C-43, an act to amend the Fisheries Act.
This is the part of the session when it would be normal for bills that have been in committee for some time to be reported back to the House. I am hopeful that committees, such as the Standing Committee on Justice and Human Rights, the Standing Committee on Citizenship and Immigration and the Standing Committee on Transport, will soon complete their legislative work, so that the House may dispose of them in an orderly fashion.
Committees of the House
October 23rd, 2003 / 10:50 a.m.
Paul MacKlin Parliamentary Secretary to the Minister of Justice and Attorney General of Canada
Mr. Speaker, I have the honour to present, in both official languages, the fifth report of the Standing Committee on Justice and Human Rights.
Pursuant to its order of reference of Friday, September 19, 2003, your committee has considered Bill C-45, an act to amend the Criminal Code (criminal liability of organizations), and has agreed to report it with amendments.
October 8th, 2003 / 4:50 p.m.
Peter Stoffer Sackville—Musquodoboit Valley—Eastern Shore, NS
Madam Speaker, it gives me great pleasure to speak on behalf of my party and the hon. member for Regina—Qu'Appelle to Bill C-46.
Bill C-46 is the sister bill to Bill C-45, the Westray bill. I want to say at the outset that my party supports the bill in principle, although we would have liked a few amendments and further discussion in committee.
I consider the bill to be important legislation and something that is long overdue. Our research department has indicated to me that David Lewis, Ed Broadbent, Tommy Douglas and others of our party asked for corporate accountability for a long time. Now we are starting to slowly see a bit of that. We have to give credit where it is due, which is to the media for the way it covered the Enron story and the Bre-X story.
Canadians are saying that enough is enough. Canadians are concerned about where their investment dollars go. Workers and their families are concerned about where their pension dollar goes. Nothing can make people more sick to their stomach in terms of our own money than when we see the head of Enron living in a lavish mansion in Florida, with I do not know how many rooms, while the workers at Enron have lost all their pensionable savings. How that can happen in a free and open democratic society like the United States is beyond me.
The question is, can it happen here? Without legislation it probably could.
We are hoping this particular bill has teeth. In order to have teeth, as my hon. colleague said earlier, we must ensure that the authorities who oversee and regulate this type of legislation, whether it be a commission, the RCMP, domestic police services or whoever, have the final authority to investigate, bring charges and make them stick. They will also need the resources because we know these corporations have deep pockets. They could tie up cases of this type in the courts for a long time. It is just the way the legal system is sometimes.
We must ensure that the people who will be prosecuting these companies or corporations in the future have the resources and the technical ability to carry it through. Otherwise, this will fall like a deck of cards.
Another concern is the protection of employees. Although the bill does discuss whistleblower protection, we do not think it goes far enough. Clause 6 of Bill C-46 makes threats and retaliation against employees an offence punishable either as an indictable offence, which carries the maximum sentence of five years, or as a summary offence.
It is quite curious that the government is introducing a law that exposes an employer who makes threats to a punishment that is less than that of extortion. This is especially worrisome when the purpose of clause 6 is to deter employers from committing economic extortion. What we mean by that is that the threat will always be there for employees. What will happen to an employee who decides that someone in the legal or political world needs to know that what is happening in the company is simply not right? Many people will hold back because they do not want to lose their jobs.
As well, if people are in a particular trade or in the financial services world and they become blacklisted, who will hire them? No one should be punished for telling the truth but a lot of people in the corporate world have that fear hanging over them. We also have it in the public service world.
I will just go off track for a moment. It is interesting that the commissioner of the Coast Guard, Mr. Adams, would write a letter to all his employees and say that if any of them have contact with a member of Parliament the Coast Guard wants to know the details of any conversations.
Why would the commissioner of the Coast Guard want to know about my conversation with an employee of the Coast Guard? It is none of the commissioner's business. In a free and open, democratic society, people, in my opinion, have the right to speak to their member of Parliament on any subject.
To turn back to the corporate world, we want to ensure that when people within the corporate world see, hear or feel that something is drastically wrong they will be allowed to speak openly. If they are wrong, the court of public opinion will weigh heavily upon them, but if they are right, they will be doing our country a great service.
As I said before, many of these corporations hire lot of people in this country, and thankfully they do, which is part of the good thing about businesses in this country working hand in hand with government to create a mixed economy, something I have always supported. However the reality is that we must protect people's pensions. We must ensure they have proper working environments and reliable salaries and wages to base their living on.
I come from the airline world. When Canadian Airlines merged with Air Canada I could not help but notice that Air Canada wanted to delay or hold back some of its employees' pension liability funds. We simply will never accept that. The 11th commandment in the world is “Thou shalt not fool around with thy pension”. A pension is what a lot of people work for, be they in the auto industry, the forestry industry, the airline industry or even members of Parliament for that matter.
The fact is that when we leave our places of employment after many years of service we rely on that pension plan to ease ourselves into retirement. For anybody, be it government or business, to attempt to fool around with that pension plan is despicable and criminal.
I am hoping the bill will deal with issues of that nature down the road. I think the essence of the bill is accountability, transparency, openness and fairness. It would ensure that when corporations show us their books and tell us that they were audited fairly by an independent agency that they will not be buffaloing, masking the figures or whatever, that those are the facts.
Who will ever forget Bre-X? I remember people telling me many years ago that I had to get into this Bre-X because it was so hot. They told me that I would be able to retire early if I invested in Bre-X. It was around $95 a share at that time. I possibly should have invested and left when it reached about $130 or $140 but I do not think I would have. I probably would have been like most investors, been a little greedy, held on and then lost everything. Why? Because Bre-X and the people behind it lied to the investors and to the Canadian people. It was out and out fraud.
How many people lost their shirts on that? How many investors were shaken in the stock market because the stock market commissions were not able to or could not, for whatever reason, find out until it was too late? This bill should send a clear warning to companies telling them that if they are thinking about attempting to defraud investors, to screw their employees and everything else, we will keep a very close eye on them. Again, we can only keep that close eye on them if we have the resources and the manpower to get that job done.
It may be my perception but, like anywhere else in a capitalist society, people can make large amounts of money if they are smart, know the right people and have a lot of luck at the same time. The thing is that a lot of those companies in the United States, and the list goes on and on, are corrupt. They use smoke and mirrors. They have influence and conduct insider trading. It goes on and on, and a lot of them get away with it.
However it appears that the United States is not afraid to go after the big guys. We saw the impeachment of Richard Nixon. We saw them go after Bill Clinton. We saw them go after the seventh largest corporation in the United States, Enron. The Americans do not appear to be afraid of these individuals, the amount of money they have or their influence. If they have done something wrong or it is perceived that they have done something wrong in the United States the government will go after them.
The problem in the United States, as it is here, is that far too many companies get away with those kinds of things and that is completely unacceptable.
I will give a quick analysis that was done by our research department. The integrity of our public markets and strong investor confidence has been an important issue for security regulators for a long time because these principles are the necessary foundation for any successful market.
We in the NDP always question the market system of our economy. Many of us in the NDP like a mixed market economy, one with the private sector along with government. We think government could be an appropriate tool and an appropriate avenue to work with private business to develop the economy so that we can equally share our resources across the country. As our famous leader of the CCF, J. S. Woodsworth, once said “What we desire for ourselves, we wish for all”.
If the market is perceived to be corrupt or influenced in any way, shape or form by some shady characters or some outside sources that makes investors very nervous and they will put their money somewhere else.
The main contribution that Bill C-46 makes to this effort is to act as a greater deterrent to would-be insider traders and provide courts with the authority to compel the production of documents to determine the nature and extent of insider trading.
Insider trading is a tempting way to take care of one's friends. If we had a lot of stock, let us say in Air Canada, which I believe is trading now at anywhere between $1.10 and $1.30, and we knew tomorrow that a big deal would be coming up for Air Canada that could raise the price of shares, would we not love to know that information beforehand so we could either buy more or sell out, depending on the circumstances? There are not too many Canadians who would not love to have that type of information but that information, called insider trading, is extremely dangerous to the confidence of all other investors.
What happens is that only a select few, those in the inner circle of whatever that kind of information will assist, will get it, while the vast majority of investors will be left out in the cold. That is simply wrong. I am glad to see that the bill actually tries to do something about that.
The codification of aggravating sentencing factors and the elimination of mitigating factors, such as status and reputation, if those attributes were relevant to the commission of the offence, will develop a more consistent and certain punishment regime. That is something we support. If corporate criminals want to commit those kinds of act and break the trust of investors and ordinary Canadians, we believe they should be punished to the fullest extent of the law. We like the idea of punishment for fraud going from 10 years to 14 years, fraud affecting capital markets going from 10 years to 14 years and market manipulation going from 5 years to 10 years.
I want to make sure that it just does not say “Here is your 14 year sentence but, by the way, if you serve one-third of it, with good behaviour off you go”. No. We have to make a strong deterrent and make sure that 14 years means 14 years.
I know of other concerns. Let us look at someone who commits a criminal act and gets eight years. I had an individual in my riding who had eight previous impaired charges and on the ninth one he actually killed someone, an 18 year old girl. He was sentenced to eight years but only served two of them. Many citizens in my riding, including myself, were extremely upset when that sentence was reduced.
It is just like Bill C-46 on corporate crime. When the head of a major company, which employees thousands of people, defrauds their pension plans, he or she only gets a few years while the employees lose all their savings and lose everything, which means that if they had no private savings of their own and have no other means of supporting themselves they will then turn to the government for assistance. The government should try to prevent that by making sure that if the bill says 14 years, then that is what the person gets, not 3 years and not if they are really good in jail they can go early. That is nonsense.
The NDP will ensure that further amendments come to this bill. We have always said that corporate accountability, business accountability, is extremely important. To the best of our ability we will make the government aware that any agencies or regulatory authorities must have the manpower and the resources to carry out identification and charging, to ensure that they have the wherewithal to carry through with those cases.
As I said earlier, companies can be charged but when the companies have all kinds of money to fight these cases, they can tie them up in the courts for a long, long time with appeal after appeal. Our judicial system must have the authority, the manpower and the staying power to ensure that cases result in convictions. In the end we must protect the investors, protect our workers and protect fellow businesses not only in this country but around the world. If we prove to investors around the world who are looking to invest in Canada that we have a fair, transparent and open system, that would go a long way in building our economy in the future.
There is still an unanswered question to which I have not received a satisfactory answer. It has to do with trade deals such as the WTO, NAFTA, or whatever they may be. Now that many of these companies are becoming very international in their nature, will this domestic law stand up to those trade deals in terms of people who own companies but do not actually reside in Canada? Will we be able to bring them to court satisfactorily with these trade deals hanging over us? Will those trade deals impede us from bringing this type of domestic legislation to the forefront? I do not know, but I would like those questions answered.
I am proud to say that our party will be supporting this bill in principle.
September 29th, 2003 / 6:10 p.m.
Brian Masse Windsor West, ON
Mr. Speaker, it is a pleasure to speak in the House today to Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence-gathering).
It is tempting to go down the road, as several speakers have, about the government and its practices versus what it is trying to accomplish in the bill, but I will not do that. I want to talk about this specific bill and feature some of the things that I think are positive but also some of the major weaknesses that need to be discussed.
I know that with the coming election boundary changes we are fast-tracking that bill for the member for LaSalle—Émard to make sure the provincial requirements for new seats will happen. That is something that has been going over the summer and it is happening right now.
I would expect the same thing to happen to Bill C-46. Because it is important for Canadian families and for businesses we need to ensure the business of the House is not ground out. I do not want to see that hypocrisy. The bill is certainly owed to the general public.
The mere fact that we are talking about this shows us that the entire free market system has been shattered by unprecedented corporate fraud. Formerly reputable accounting firms, business leaders and banks have been shaken to their foundations, and it is not just in Canada. WorldCom, Xerox and Enron are good examples in the United States of what has driven us to recognize that there are problems.
These problems highlight a systemic or financial system. It is systemic because it is not just isolated to one or two groups or organizations. They have far-reaching effects and they involve multiple companies and organizations that we do not even know about.
We have focused exclusively on the top, not just the medium and the small, which we still do not know about. Plenty of excellent corporations, which are working very well within the system, are being punished as well because others are abusing it. We need to make sure that stops. There is no doubt about that.
The current spin by the financial market backers and government backers is that this is individual ethics rather than a systemic problem. However the reality is that right now we require the toughest policing between lawyers, police officers and investigators and l to ensure that people can come forth with information and we can gather information. That is a significant change over the last several years. That is an identification that we have systemic problems with our system that is hurting, not only people who invest money but the development of our free market economy, and that has to change.
One of the issues that is not addressed in the bill is another question that needs to be raised. I believe it is fraud. We have a system right now where a CEO can come into a company, cut thousands of workers, sell equipment and assets, raise the price of the stock for the short term, get a big cash handout, a series of bonuses and then leave the company in ruin. That also has to be addressed. The bill does not address that but we should start talking about that as a change to the system.
We have literally thousands of workers who have lost their jobs and people who have lost their investments for a short term, and that has to stop.
This has been driven by a number of issues that have happened in the United States and worldwide, as we said, where millions of dollars have been lost.
The U.S. congress responded by passing the Sarbanes-Oxley act and enhancing enforcement and funding to support investigations and prosecutions. It was very swift and clear on this and here we are still fumbling with it through our system. That is not acceptable.
After listening to thee discussions today from the government side and the opposition parties, it sounds like there is support. My hope is that we will continue to press that and ensure that we at least have some improvements. Where those improvements should go in terms of the length and distance, everything from the actual types of tools that the prosecutors have to the actual fines and jail time, might be different but we have to make sure that something gets through.
I hope we go for some very strong laws and improvements that the bill requires.
On June 12, 2003, Bill C-46, a companion to Bill C-45, the Westray bill, was tabled and presented as a Canadian response to the Enron fiasco and the Sarbanes-Oxley act. It is important to note that we are talking as well about some environmental and human safety issues at the workplace. It would make people responsible for their actions and they no longer would be able to hide behind a corporate identity or symbol. It would actually bring to the forefront people who make decisions and who are derelict in their duties.
This is something that is actually important and exciting, because it gives those people providing good, stable jobs with the best practices the ability to compete with those who cheat the system.
This package intended to maintain investors' confidence in Canada's publicly traded companies includes spending of $120 million over the next five years, together with proposed amendments to the Criminal Code. The money would go towards the creation of six integrated market teams, IMETs, made up of RCMP investigators, federal lawyers and other experts.
That in itself is acknowledgment once again of systemic problems. We have a government that has a record of dismantling public service and privatizing. That is the record over the last 10 years. The government is now admitting it needs to create another body to deal with this problem. If it is $120 million, I do not believe that is going to be sufficient, because the document itself outlines the fact that government is going to go after the major perpetrators, that they will not be able to get to the other ones. The government is scratching the surface with this.
Despite that, the $120 million may not even be enough money for policing the greatest of crimes. Hopefully when we get to the committee stage we will hear from delegations and from witnesses and experts who will bring numbers forward. I would expect that suggestions will be made to raise that amount of $120 million to provide for appropriate legal repercussions and prosecution so that people do not get away.
Bill C-46 makes insider trading a criminal offence with a 10 year sentence. The bill targets employees of corporations and others who use privileged information not available to other investors to benefit themselves. That is a significant achievement in itself. It shows that there actually will be some repercussions. I do not believe that is enough. I will get into that later with a comparison of what is happening in the United States. I believe we need to go farther than that.
It also creates a new offence punishable by up to five years in jail to prohibit intimidating or retaliating against employees who report fraud and other unlawful practices or conduct in the financial markets. This will protect employees from employment related harassment and punishment; that is whistle-blowing. Members of the New Democratic Party have been calling and advocating for whistle-blowing protection for many years. It is a good feature to have, but five years is not enough to protect an employee.
We know that some of these people may not necessarily even get prison time. They could be out and they could also hold other jobs with competitors. They could have inroads with groups, organizations or other investors and that could have a repercussion on employees. I want to see greater detail on how we can protect those employees to make sure that when they step forward they have the confidence that not only will their business will support them, but also that outside of that the Government of Canada and the institutions of justice will protect them and their family.
Without that, we are going to lose many files. We will see many cases requiring more investigation and cost. We have to simply say that we will not let people hang out to dry by themselves, that we are going to protect them and their families when they have the courage to step forward. That has not happened enough in the past.
Right now the bill also codifies non-mitigating factors. For example, if a corporation has been a good corporate citizen and used that leverage, then it will be used against a corporation not to lessen a fine. That is an improvement. That is a first step and there is no doubt about that.
I think we should be looking at other things over a company's history to see what taxable deductions it has been using. Has it been lunches? How much booze has been written off? What about the environment? Has it actually caused environmental problems and written them back as a tax deduction? That can currently be done in the government's program. A company can spill or create a toxic waste and actually get a fine and then at the same time claim it back on income tax. Has the company done these things?
There are political donations, golf games, and all the different things that a company has used through their system. They should be examined. The corporation should be made to pay it back if it has actually had someone on the take or was basically using information or those experiences to better their position or to share that arrangement amongst people. The reality is that taxpayers end up paying for that as they write off those deductions. Taxpayers are subsidizing those deductions. All of that should be added to the actual bill.
Right now Bill C-46 creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances. One of the good things about the bill is that these production orders may be issued without another party's knowledge, which will allow investigators to gather evidence from third parties such as banks and auditors without tipping off the subject of their investigation.
That goes back to my position on whistle-blowers. We would be able to save millions of dollars, strengthen cases and ensure that justice would be done if we can get that information and cooperation, but that takes the confidence of those people stepping forward. As it is right now, I do not believe the bill provides that confidence. It does not provide that ironclad commitment required. We know that this type of system will actually create better opportunities for us to prosecute and to be successful, but once again, that has to be enshrined in such a way that people feel protected.
As things stand right now, there is a deterrent effect. Punishment for fraud would increase from 10 to 14 years, for fraud affecting capital markets from 10 to 14 years, and for market manipulation from 5 to 10 years. I believe that is not enough. That has to change. We should be looking for stiffer penalties. As well, if damages are over $1 million fines could be increased. Perhaps we have to look at lowering that $1 million. I am not sure whether I am comfortable with that and I am looking forward to hearing witnesses come forward to discuss that.
The bill also allows the Crown to prosecute for insider trading. That is very important. We think that should move forward right away.
One of the concerns we do have with the bill it is that there are still some vague definitions involved. There is an issue of vague information in regard to insider trading, that is, how significant is significant? The definition is not there. We know that there can be increased penalties because significant information comes forward or there is significant alteration on the market, but who is going to define that? I do not think that leaving this entirely to the courts is good. Whether it is a 15% drop in the stock or a financial issue affecting later performance, those are things we have concerns about. We would like to see these further defined.
There is another aspect of Bill C-46. Once again I will go back to whistle-blowing; I can do this quite a bit because we have been talking about whistle-blowing for years. Instead of amending the Criminal Code we should keep the broader definition of extortion so that it still exposes offenders to an indictable offence punishable by life in prison. What we can do is make sure that it is one of the harshest penalties out there.
There is no mention in the bill of accessories to fraud or wilful blindness. I am going to go through a brief scenario on Enron to give an example of some of the weaknesses of the bill that we need to discuss. Obviously the offence of fraud requires an element of intent to deceive, but what happens when there is no intent to defraud yet the failure to act allowed the deception to take place in itself?
For instance, let us take the example of the Enron fiasco, which in part prompted this legislation. There, the accounting firm of Arthur Andersen admitted to making “errors in judgment”. It shredded thousands of documents relating to its audit of Enron and suspected or knew that Enron was breaking security regulations.
Most cases prosecuted under this legislation will not involve outside firms such as accounting firms so closely involved in the actual offence, but the example illustrates how an outside firm's omissions can contribute to commission of the offence itself. That is why under Bill C-46 we need to explore the possibility of imposing a legal duty on outside firms dealing with financial statements or companies to take reasonable steps to verify or scrutinize the accounting practices of their clients to expose them to criminal liability.
It is not good enough to just pass the buck. We would have those groups and organizations that are actually paid as businesses having to show their confidence in what the corporation has put forth to the market to prove and back up what they have done; they could not hide. That is one of the weaknesses of the bill. It does not go after them the way it should and it would allow situations like that of Enron to continue to happen.
It has become obvious that it is not practical to rely only on the deterrent effects of criminal legislation to prevent such disasters. What is needed are better watchdogs to oversee the affairs of corporations and to ensure that businesses' accounting practices comply with the law that all material information is being disclosed.
Once again it goes back to the whole concept of whistle-blowing to gather that information and ensure that it can be used, and it cannot be just the corporation. We must have those accounting firms responsible. They as well would be responsible. If we look at some of the accounting cases, and I am going to read out a couple of them, we know that they are very important to the actual criminal liability issue. One is Enron, as I mentioned. I will not go through that again except to say that basically in 1997 it overstated its earnings by about $600 million U.S. It should have been responsible and so should all the partners who signed off on that.
Tyco allegedly avoided payment of $1 million U.S. in sales tax on $13.2 million in artwork. They did not show that. They should have been responsible. Adelphia Communications lent billions of dollars to the founders, the Rigas family. The family relinquished control of Adelphia which had defaulted on $7 billion U.S. in debt and filed for chapter 11 bankruptcy protection on June 25. Once again its loan documents and information were not accounted for. Livent is another one where financial records were manipulated to hide losses of $100 million.
Once again, those who sign off on this business need to be responsible and should be considered as part of the offence in itself.
I am going to compare some of the differences between the United States and Canada as we discuss Bill C-46.
Right now for insider trading, Canada gives 10 years in prison. In the United States, the maximum sentence for insider trading is going to increase from 10 years to 20 years, with a fine of up to $5 million U.S. That is the minimum.
For threatening whistle-blowers in Canada, there is up to five years in prison. In the United States it is going to be up to 10 years in prison.
On increased enforcement, they are actually going to be hiring 200 new investigators, lawyers, and auditors and establishing an accounting oversight committee to monitor and regulate accounting industries. That once again goes back to my argument on the accounting, that they are actually identifying that and providing a resource for that.
The sentence for fraud in Canada is raised from 10 years to 14 years. In the U.S. it is actually going up to 20 years in jail.
I agree with the debate about whether or not there should be minimum sentences provided. My concern quite frankly is that a judge could give a minimum sentence which would not act as a deterrent. A person would get a couple of years perhaps and there would be no real repercussions on his or her life beyond that. Maybe there would be some professional repercussions but it would not be the same compared to the businesses and the families that had lost their savings and their ability to plan financially for their futures. I have some real concerns that we may not get the type of deterrents we are seeking.
The government needs to look at this. We need to focus if we are really going to attack this problem. It is systemic. It is not something that happens to one or two companies. We know that fraud occurs and market practices are very vulnerable to a number of people who are taking advantage of the system. We need to be in front making sure that justice is going to happen.
We have a different perspective on corporate crime here in Canada. We see street crime and we act on those things a little differently, but regarding white collar crime we have done very little or nothing at all. That has to change. This bill should move quickly through Parliament to ensure that Canadians are protected and that their investments are there for the future.
A motion to adjourn the House under Standing Order 38 deemed to have been moved.
September 29th, 2003 / 5:25 p.m.
Richard Marceau Charlesbourg—Jacques-Cartier, QC
Mr. Speaker, on behalf of my colleagues in the Bloc Quebecois, I am pleased to take part in this debate at the second reading stage of Bill C-46, sponsored by the Minister of Justice, which deals with capital markets fraud and evidence-gathering.
Members will remember that this bill was introduced just before summer recess last spring, after months of waiting and pressure from all sides. The gigantic financial scandals that we have seen over the last 24 months, such as Enron, Arthur Anderson and WorldCom just to name a few, have shown how urgent it is for the government to legislate in that area in order to protect not only investors but also the whole economic system.
But the government was dismally slow to react, being too busy, no doubt, managing the leadership crisis within the Liberal Party of Canada. The bill was finally introduced, very late unfortunately, but we can nevertheless be pleased that we do have it before us now. I will take this opportunity to say that the Bloc Quebecois will support speedy passage of this bill so that we finally have legislation that will effectively regulate financial transactions and ensure the accountability of business auditors. To this end, the Bloc Quebecois will propose certain amendments to specify both the scope and the spirit of the bill. I will be more specific about these amendments later in my speech.
I would remind members that, in the fall of 2002, the Bloc Quebecois urged the federal government to tighten the provisions of the Criminal Code so that the authorities would have better tools at their disposal to fight corporate fraud. In fact, several elements of the bill stem from our party's contribution to the debate, but we find it unfortunate that some of our suggestions were not accepted.
We still have major concerns about one particular aspect of the bill. We find it difficult to understand that this bill could provide that a federal attorney also has jurisdiction to prosecute Criminal Code offences concerning capital market fraud. This is especially worrisome to us since the federal government publicly announced, or at least suggested, its intention of establishing a Canadian securities regulator.
As you know, and this is an aspect that is particularly important to the Bloc Quebecois, securities regulation clearly falls under the jurisdiction of the governments of Quebec and the provinces. We must therefore ensure that the various jurisdictions are respected, thereby countering the federal government's designs in this respect.
This will be discussed further at committee stage, and I believe we ought to focus on the principle of the bill for the time being. So, the bill amends the Criminal Code and creates two new offences, namely insider trading and threats and retaliation against employees who may have revealed corporate misdeeds. At the same time, the maximum sentence for some offences, including fraud, is increased, and certain rules relating to aggravating and mitigating factors will be codified to facilitate interpretation at the time of sentencing. In addition, the bill gives the Attorney General of Canada jurisdiction to prosecute these offences.
The enactment also provides for new mechanisms whereby certain persons will be compelled to produce documents, data or information that will often be specific. As I said in my introduction, there is a very specific context requiring legislation in the financial sector today.
Corporate scandals in the United States have made us aware of how fragile our financial system is and how much were collectively rely it. Some might think that only major investors can be affected by a financial debacle and that the small savers who make up the most part of the population are therefore relatively safe. The fact is that this is totally untrue.
In fact, the biggest and most powerful financial players are represented by the whole familiar panoply of pension funds, and this inevitably means that part of these funds consists of our fellow citizens' savings. Thus, if a pension fund were to suffer substantial losses, it would be the small investors who would pay the heaviest price, even to the point of losing their life savings and seeing their retirement plans go up in smoke.
In this regard, and without getting too entangled in numbers, in order to understand the factors at stake here, it is important to note that in Canada in 1998, Canadian trusteed pension funds held assets of more than $500 billion. Statistics Canada, in a 1998 report entitled “Trusteed pension funds, financial statistics,” estimated that of the $500 billion held in pension fund assets, about $115 billion was invested in Canadian stocks and some $57 billion in foreign stocks.
These sums, which appear astronomical to ordinary mortals but are commonplace in the financial world, represent the contributions of four million Quebec and Canadian workers to these funds. As an illustration, only the financial assets of the chartered banks exceed the capital held by the pension funds.
There is another important fact that illustrates the need to regulate the integrity of administrators. It has to do with the propensity of trusteed pension funds to favour investment in stocks rather than in fixed interest securities. As such, and in light of the previously mentioned figures, it is clear that a financial crisis as serious as the one suffered by our neighbours to south, would be devastating to Canada. The consequences to the retirement incomes of millions of households would be immeasurable and it is precisely those households that we have to protect.
Fortunately, to date, Canadian markets have been relatively spared from large-scale professional misconduct, except for the scandals involving the former directors of Cinar and Nortel. However, we feel that despite the fact that our securities regulation systems are, in the opinion of many experts, much more comprehensive than that which existed in the United States before the financial crisis, it is nonetheless important to send a clear message to corporate directors that financial misconduct constitutes a serious crime and that the punishment will fit the crime.
This is what prompted the Bloc Quebecois, in the fall of 2002, to call for significant changes to the Criminal Code in order to provide the appropriate authorities with better tools to fight crimes of a financial nature.
A year ago, my colleague from Joliette and I proposed adding a section to the Criminal Code that would make insider trading a criminal offence in order to send a clear message to company directors that the use of confidential information obtained within the scope of their duties for the purpose of making profits or avoiding losses would not be tolerated. This is essentially a question of fair play since making profits or avoiding losses in this manner impacts negatively on other investors who do not have access to the same privileged information.
We had suggested amending the Criminal Code by adding, after section 382, a specific reference to insider trading as a criminal offence punishable by a maximum prison sentence of ten years. We are quite pleased at the interest the government has shown in our proposal by including it in its bill.
Additionally, the Bloc Quebecois proposed that a new offence could be created for securities fraud. This offence, which would be patterned on the measures adopted in the United States, could carry a ten-year jail term. It would prohibit fraud when selling or buying securities. The Bloc had also proposed two amendments to section 397 of the Criminal Code. This section clearly stipulates that fraud is committed by someone who:
—destroys, mutilates, alters, falsifies, makes a false entry in or omits a material particular from, or alters a material particular in a book, paper, writing, valuable security or document.
In our opinion, this provision could have applied to falsified financial statements. Furthermore, subsection 2 of this section makes it a specific offence if documents are falsified with the intent to defraud the creditors.
Currently, both offences carry a five-year prison term. We believe that this sentence is so light that it might not deter unscrupulous individuals from committing fraud for millions of dollars. Consequently, we had proposed increasing the maximum term of imprisonment to ten years.
Finally, we proposed adding a third subsection to section 397 of the Criminal Code to specifically target the falsification of financial documents with the intent to defraud shareholders. We believe that shareholders are a more vulnerable category since, unlike the majority of creditors, their investments are not guaranteed. Furthermore, although the information they are provided with is accessible, it is not easy to understand.
I would remind hon. members that these small investors are included in the major pension funds, and few such investors know exactly what is in their portfolio. We therefore have trouble seeing the reason why there would be a specific offence relating to fraud of which creditors are victims, and yet where shareholders are concerned a similar provision would not be included in the Criminal Code. This is precisely the flaw the Bloc Quebecois wants to correct, and we are hopeful that the government will realize the singular nature of this situation.
As I have said, the government plans to add to the Criminal Code a provision defining insider trading and its criminal nature, subject to up to ten years in prison. Although insider trading is banned at this time under provincial legislation on the sale of securities, and the Canada Business Corporations Act, this new Criminal Code offence is intended for the most egregious offences that merit stiff criminal penalties.
This new proposal for an offence being directly modelled on the Bloc's proposal, we cannot be anything but pleased that it is included in the bill. It seems, for once, that the government has heeded the opposition and bowed to our arguments.
The same thing goes for threats of reprisal against employees. It is necessary, indeed vital, for there to be special protection for employees who blow the whistle on fraud, or contribute information that leads to its discovery by assisting law enforcement officers in the investigation of such situations. The purpose of this is both to reveal such financial frauds and to protect employees from the intimidation which might occur in such circumstances.
Often these people play key roles in the disclosure of corporate scandals, but as a result are at risk of intimidation or threats, including action affecting their employment or means of livelihood. Creation of a new offence of threat or reprisal relating to employment would encourage people with inside information to cooperate with law enforcement officials and would punish those threatening or making use of reprisals. Let us note in passing that this offence would be punishable with up to five years' imprisonment if Bill C-45 is passed with this provision.
Overall, prison sentences would be increased to reflect the gravity of the crime and its repercussions. The proposed reforms would establish aggravating circumstances, which the courts should take into consideration in setting sentences. Thus the bill calls for maximum sentences to rise from 10 to 14 years for the present fraud offences under the Criminal Code, and for those affecting the public market. Maximum prison sentence for market manipulation offences increase from 5 to 10 years.
Factors such as the extent of the economic impact or any negative impact on investor confidence or market stability, defined as aggravating circumstances, could lead to stiffer sentences.
It is also of particular interest that, under these provisions, the accused or convicted person cannot invoke a reputation in the community or work as an attenuating factor for sentencing, This is precisely because these qualities are, more often than not, used to defraud and commit crime. We do acknowledge that these proposals are highly interesting, but regret that the government has not chosen to make use of our suggestions on stiffer sentencing for offences under section 397 of the Criminal Code.
I wish to call the attention of the House to the fact that Bill C-46 will force professionals to breach their duty of confidentiality.
Under certain circumstances, the government's legislative proposal would force a professional to produce information or documents, which could result in the disclosure of confidential information infringing on an individual's privacy.
While the clauses in question provide that the production order may contain terms and conditions to protect a privilegedcommunication, particularly between a lawyer and theirclient, the fact remains that confidential information might be disclosed in certain circumstances. We must therefore ask ourselves if forcing a professional to provide confidential information could undermine the professional-client relationship of trust.
However, a person named in an ordermade under these provisions may apply to a judge for an exemption from therequirement to produce any document, data orinformation referred to in the order. It remains to be seen what bases judges will use to prohibit the disclosure of confidential information.
Before I conclude, I would like to come back to an issue I raised at the beginning of my speech about the involvement of federal prosecutors. In fact, this includes some irritants that would need to be alleviated for the bill to be passed quickly.
As you know, financial market regulation comes under the jurisdiction of Quebec and the other provinces, as does the administration of justice.
Under this bill, the attorney general of Canada would have concurrent jurisdiction with the provinces and the territories to prosecute certain criminal fraud cases, including the proposed new offence of illegal insider trading. Federal involvement in this area would supposedly be limited to cases that threaten the national interest in the integrity of capital markets.
According to information released by the federal government, the Government of Canada will work with the provinces to ensure proper and efficient concurrent jurisdiction by establishing prosecution protocols.
We cannot support such a deliberate encroachment by the federal government in provincial areas of constitutional jurisdiction. What is even worse is that all of this goes to prove the federal government's intent to infringe upon yet another area of Quebec and provincial jurisdiction, the securities market.
Lastly, we are now debating the principle of the bill and we look forward to having the opportunity in committee to examine some of these issues in greater detail. Therefore, at this time, the Bloc Quebecois will support Bill C-46 in principle.