Bill C-45 (Historical)

An Act to amend the Criminal Code (criminal liability of organizations)

Criminal Code

[Richard Marceau, Bloc, 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.

[Alexa McDonough, NDP, Halifax, NS]

Madam Speaker, I am happy to again have an opportunity to address Bill C-45, which deals with corporate criminal liability.

When debate on second reading began on Monday, I had an opportunity to raise various concerns that had been identified about the legislation in terms of the shortfall, the inadequacy of the provisions in the bill to actually get the job done, to actually act upon the horrifying tragic lessons of the Westray disaster that occurred in my province in 1992 resulting in the deaths of 26 miners.

What the Westray inquiry clearly established was that those deaths were preventable. I will quote directly from the report of Justice Peter Richard when he said that it documented “a complex mosaic of actions, omissions, mistakes, incompetence, apathy, cynicism, stupidity and neglect”.

The details of that horrendously irresponsible behaviour that could be described as nothing less than criminal have been fully spelled out. I will quote briefly from a couple of the specifics that documented the glaring safety abuses, among them: inadequate ventilation design and maintenance that failed to keep methane and coal dust at safe levels; unauthorized mine layout, forcing miners to work risky tunnels to get the coal out faster; methane detectors were disconnected because frequent alarms, signalling dangerous concentrations of methane, interrupted coal production; procedures to stonedust coal to render it non-explosive were done only sporadically, usually before inspections; and an appalling lack of safety training for miners.

There may be some people following the debate on this so-called Westray bill, Bill C-45, who are wondering if this only has to do with coal mining. That is an important question to be addressing. Many people know that coal mining, by its very nature and its very essence, is a very hazardous industry, and that is true, but what has clearly been established is that the most basic, the most elementary, the most fundamental safety precautions that could have prevented this tragedy were not observed, were not enforced by the company that employed those workers and operated that mine.

However it is about more than coal mining and this particular tragedy. It is about the 1,000 men and women in this country who lose their lives in workplace accidents. It is about the close to one million--and it is hard to get one's head around that figure--workplace accidents that occur on an annual basis in this country.

At the end of the day it is not a statistic or an array of statistics that we are talking about. What we are talking about are human lives shattered or terminated, in all too many cases, as a result of practices that could have been improved and accidents prevented.

In the few minutes that remain to me I do not want to talk about more details respecting the Westray disaster because that has been well-documented again and again. It was documented in the private member's bill that I had the privilege of bringing forward in 1999, which died on the Order Paper, and in the private member's bill brought forward by my colleague from Churchill which also was sidelined. However, we are finally at the point where we are dealing with a piece of legislation. It is inadequate to the task but at least it is now before us and we need to get it right.

In the few minutes remaining to me I will talk about a courageous young man by the name of Lewis Wheelan. One month ago today, on August 19, 2003, I received the following message from the parents of Lewis Wheelan, Melanie and Bob Wheelan, from Echo Bay, Ontario. The message reads, “Sadly I share with you the loss of our beloved Lewis. He left us strong and optimistic with nothing but love in his heart even for those who failed him so terribly”.

I want to tell the House the tragic horror story that unfolded on May 30, 2001 for 19 year old Lewis Wheelan, a young man who was energetic, optimistic and who faced a brilliant career.

He reported for his summer job on May 30, 2001 after his first year at university. The second day on the job he was electrocuted by 7,200 volts from a live hydro wire dropped on him as he worked gathering and piling brush for his employer.

As a result of that electrocution he lost his right arm, his right shoulder front and back, both legs, the middle finger of his left hand, partial use of his left hand due to nerve damage in the forearm and was burned over half of his body.

I visited Lewis Wheelan in his home as he was struggling to pull his body and soul together to get out across the country to tell his story and fight for workplace health and safety and, yes, fight for the kind of legislation that we are here considering today, which is legislation to change the Criminal Code to hold corporations accountable for criminal behaviour in putting the lives of employees knowingly at risk in the workplace.

It is a double tragedy that Lewis Wheelan passed away in August, because he was clearing brush under contract to a company that was engaged by Great Lakes Power. In the hearings held to gain convictions for the completely unsafe practices of that company under contract, what was absolutely documented was that this was a private company owned by Brascan that was constantly guilty of cutting corners, of not maintaining the power lines to any kind of safety standard, not clearing the trees and brush in a timely manner and not willing to invest the money to keep the lines safe so that the line that broke, which resulted in Lewis' electrocution and ultimately his death, had 15 splices in it. The company was too cheap to protect the lives of its workers.

However, even though, under the provincial health and safety requirements for training, this company was found to be woefully inadequate, the occupational health and safety division of the Ontario government was not able to hold the four directors charged in this case in any way accountable for their actions.

This is a company that made $240 million last year. It received a fine of $250,000 and, I might say, a tax deductible fine, which my colleague for Winnipeg North has repeatedly talked about as being obscene and something we have to do something about.

It is a double tragedy that this young man's life was ended as a result, again, of inadequate public policy. His life ended as a result of the power blackout; surely a double irony if we consider the workplace accident that occurred in the first place.

As a result of the power blackout, Lewis Wheelan was abandoned for his most basic survival needs. I think two things are underscored by the story of Lewis Wheelan's life. First, the need for us to not just consider the legislation that is before us and uncritically pass it, but for us to send it on to committee where it is absolutely essential that it be tightened up and made more effective in order to achieve the recommendation made by Justice Peter Richard, which was to establish criminal liability for the directors and the senior managers who escape responsibility in such a horrendously irresponsible and reckless situations.

Second, it seems appropriate on this occasion to acknowledge that we need to keep the provision of power, as my provincial colleague, Howard Hampton, has argued again and again, in the public domain where there will be public accountability and where we do not end up with situations of private corporations further contracting out work, such as the maintaining of power lines, completely thumbing their noses at health and safety and not concerning themselves with the impact a power failure has on people' s lives.

I want to say again, as many have, that we welcome the fact that the bill has reached this stage. One steelworker e-mailed me this morning, as many others have, and said “Thank goodness the Westray bill is finally making its way into law”. However let us take the opportunity to do the job right in the name of the 26 Westray miners who lost their lives and in the name of the families of those Westray miners who pleaded to me and my NDP provincial colleagues 11 years ago to see that their loved ones did not lose their lives in vain, to at least leave that legacy for their children. Let us do it in the name of the Lewis Wheelans of this country who have lost their lives by the thousands, 1,000 every year on average, because of workplace health and safety accidents, the overwhelming majority of which could have been prevented.

As the NDP caucus has already indicated, we will be supporting the bill going to committee. Sometimes when we say that we will support a bill to go to committee and we hope there will be improvements when it gets there, we have a kind of sinking feeling that it is a faint hope. The government knew the legislation, as it brought it forward, was inadequate. It did not make the restrictions as tight as they needed to be, the provisions to capture those senior managers and directors. The government knew that.

However I have to say in this case that I am optimistic that the justice committee will do the work that is necessary to make sure this legislation comes back to the House appropriately amended. Why am I optimistic? I am optimistic because it was the justice committee that was willing to act on the private members' bills brought forward by myself and by my colleague from Churchill in the first place and put the government on the spot. Unanimously, members of all parties in the House recommended to the government that it take the essence of Justice Peter Richard's recommendations on the Westray inquiry, the essence of the private members' bills that we brought forward on behalf of the Westray workers and families, and the thousands and thousands of others whose lives have been unnecessary lost, and bring forth legislation to once and for all address this issue.

I appeal to the justice committee to act in that spirit and, having done the homework, having understood the need for this legislation, that it not bring forward nominal amendments that are just tokens, but amendments that will be effective, enforceable and will ensure the job is done.

I look forward to that spirit being carried out by all my colleagues in the House who represent the people of Canada who look for leadership on this issue.

[Bernard Bigras, Bloc, Rosemont—Petite-Patrie, QC]

Madam Speaker, it is with great pleasure that I take part in this debate today on Bill C-45, which deals, among other things and most importantly, with the criminal liability of organizations.

It is with great pleasure that I do so, because I had the opportunity, over a year ago, to attend the convention of the Canadian Labour Congress, the CLC, in Montreal. The CLC had made a number of parliamentarians aware of the problem. I remember this convention in Montreal quite well. Some parliamentarians were present. I was there, but there were also representatives from the NDP. Unfortunately, the Liberal Party had refused to attend, as had the Conservative Party and the Canadian Alliance.

The delegates made us aware of the importance of making legislative changes to better protect workers. They gave as an example, of course, the explosion at the Westray mine, in Nova Scotia. The explosion inside the mine had caused the death of more than 26 men. After a rather extensive public inquiry, it was concluded that, most likely, if some prevention or safety measures had been taken to protect workers, the tragedy would not have occurred. The public inquiry into the Westray mine showed that there had been negligence on the part of company directors, with respect to safety.

The delegates had made us aware of the importance of enacting legislation. Essentially, Bill C-45 is merely the expression of a willingness to react to this problem and to make the necessary legislative changes.

I must remind the House that we had studied this issue many times before, through private members' bills such as Bill C-468, Bill C-259 and, more recently, Bill C-284, containing similar provisions. Of course, some aspects have been omitted from Bill C-45. We know that some provisions of Bill C-284, particularly with regard to penalties, have not been included in Bill C-45. Consequently, we would like to amend it.

First of all, the bill uses the word “organization” instead of “corporation”. As a result, it applies to a larger number of institutions. We must raise the awareness of firms regarding the need for prevention and protection of workers in the workplace. However, we must realize that some workplaces are more dangerous than others.

As the Westray mine disaster taught us, it is essential to make the organization, in other words the institution or the firm, responsible for the protection of workers.

Another aspect of the bill is that from now on a firm will be criminally liable for the actions of employees who are not necessarily very high in the hierarchy. What does this mean? It means that in the case of bosses who are not necessarily executives but foremen or third or second level bosses, the firm would have organizational liability insofar as these bosses are responsible for the enforcement of stringent security standards.

Negligence is no longer acceptable, it is now a criminal offence. This is not a trivial issue when we know that some workplaces are more dangerous than others, especially for human health. Moreover, in some workplaces, negligence relating to safety can result in the loss of human life. The Westray mine is a case in point.

Offences of negligence are another important aspect. Let us take criminal negligence as an example. The moral element of the offence will be attributable to the organization insofar as the moral element of the offence can be attributed to one of the senior officers of the organization.

So, as I mentioned earlier, there is now criminal liability for offences of negligence. In reality, the whole issue of prevention in the workplace is at the heart of these provisions.

Another aspect of the bill is that it explicitly makes it a duty for those who have the authority to direct how employees do work, to take the necessary steps to prevent bodily harm to the employees. In other words, this is about the responsibility of foremen and managers and the need to have stringent prevention standards in dangerous workplaces. That is another important aspect.

Clause 3 of Bill C-45 is even more interesting and it is the key element of the bill. It reads as follows, and I quote:

Every one who undertakes...to direct how another person does work or performs a task is under a legal duty to take reasonable steps to prevent bodily harm to that person or any other person, arising from that work or task.

This will make it possible to charge those who fail to comply with this requirement with criminal negligence.

With clause 3 of the bill, occupational safety is improved. This is fundamental.

We agree with certain aspects relating to the principle of the bill. But we can only condemn the fact that between the time when we studied Bill C-284, during the first session of this Parliament, and Bill C-45 now before us, some substance was lost, with respect to the criminal liability of directors and officers, for example.

With respect to the penalties that could be imposed on organizations, I should point out that they would have no effect in cases of bankruptcy. Given the very principle that underlies it, Bill C-45 should therefore not be allowed to provide loopholes to businesses which are in a difficult fiscal situation or have declared bankruptcy.

In our opinion, there should be full liability, not only for businesses which are operating but also for those that have declared bankruptcy. It seems clear to us that this bill bears some resemblance to Bill C-284, but there are significant omissions as well. The danger is that this could lead to loopholes with respect to criminal liability.

Another significant omission is that, contrary to Bill C-284, Bill C-45 contains no provisions for making directors and officers of corporations criminally liable if they are not the ones who, materially, committed a criminal act.

Once again, there are significant omissions in this bill and, in some respects, Bill C-284 was more comprehensive than the one before us today.

I will point out in closing that, with a vote in favour of this bill today, we are telling those working in conditions hazardous to their health and safety that the message from the Westray mine workers has come through loud and clear: negligence must be punished.

We have also understood that prevention is the most fundamental action, the cornerstone of worker protection. We believe nothing like this must ever be allowed to happen again. We believe that imposing penalties and taking stringent measures, up to and including punishment of negligence under the Criminal Code, cannot help but improve workers' lives, as well as their working conditions.

The message we are sending out today is that we have understood the Westray mine workers, and intend to make the necessary legislative changes to protect them better. Workers have the right to protection, particularly when they work in a dangerous environment.

[Alexa McDonough, NDP, Halifax, NS]

Madam Speaker, I was very happy to hear the spokesperson for the Conservative Party indicating support for the direction of the Westray bill, Bill C-45. However, I am deeply disturbed that he has made no indication that his party shares the concerns that have been widely raised about the shortfall and inadequacies in the legislation that is now before the House.

Let us be clear, we are talking about a piece of legislation that has been 11 years in incubation and is only finally now finding its way into the light of day. It leaves me wondering whether the Conservative Party has already dropped the term “progressive”.

I want to ask the member if he would clarify something. I have heard from many people that if this legislation had actually been in place at the time the Westray disaster occurred in Nova Scotia 11 years ago in 1992 costing 26 lives, that it would not have made any difference whatsoever in establishing the criminal liability, the criminal culpability, of the directors and senior managers of that company. They clearly were responsible for horrendous deeds that were documented in the Westray inquiry. Is the member prepared to fight alongside the New Democratic Party and all others concerned? We must ensure that the bill actually is what it needs to be to get the job done in the future both by way of prevention, and punitive measures where they are deserved.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Madam Speaker, it is a pleasure today to speak to Bill C-45. As a Nova Scotian it is particularly poignant. The legislation emanates from a disaster in my province, in fact the Westray disaster in the riding of the hon. member for Pictou—Antigonish—Guysborough, the leader of my party.

Almost 12 years ago, on May 9, 1992, the Westray mine disaster in Plymouth, Nova Scotia occurred, killing 26 men. At the time I was actually living in New York. I was listening to national public radio on that morning. It was the first time I had ever heard Nova Scotia mentioned on national public radio in New York during the period of time that I lived there. I remember how it impacted me, the thought of 26 Nova Scotians dying, and we were to learn unnecessarily, in a disaster that could have been prevented. It is unfortunate that 12 years later we are still debating the merits of a piece of legislation that could have been in place a lot earlier to protect Canadians against that sort of corporate malfeasance.

It is interesting to consider the legislation today in an environment where increasingly issues of corporate governance and accountability are being debated and discussed. Most of the time when we are talking about corporate governance and accountability, we are talking about financial issues, dollars and cents issues and accounting issues. We are talking in this case not about dollars and cents but about human lives.

If we consider the principles of corporate governance and the principles of financial accountability and financial corporate governance, the similarities are striking of what we want to achieve. We simply want to see that management and ownership is held accountable and responsible to protect the safety, of workers in this case, from avoidable disasters.

Our party has spoken supportively. My leader, in his capacity as justice critic for our party, has been supportive. Clearly there are some legitimate criticisms of the legislation that it does not necessarily go far enough. I suppose an unfortunate irony of this is that the legislation quite possibly would not have helped address the accountability of the management and ownership of the Westray mine.

In the case of Westray, prosecution of the corporation would have been pointless. The parent company, Curragh Resources, was bankrupt by the time a prosecution could have been started and there was nothing left for a court to fine. No company survived to implement new safety policies.

The power to charge a corporation would have been an empty power in that sense in the Westray disaster. There is a fine line clearly between ensuring reasonable accountability and governance on health and safety issues but also recognizing that there is always the risk of somebody down the management chain acting irresponsibly. There is a fear in Canada today at the board of directors level of various companies that there is going to be an almost unlimited accountability. These issues have to be considered.

There is a fine line effectively in creating an environment within which no Canadian would take the risk of being on the board of a company for fear of being implicated in a proceeding like this, even though they would not have a direct responsibility. Despite those fears, there is no doubt we need greater levels of accountability of management and ownership in health and safety issues.

I would hope that this legislation will help prevent the kind of disaster, such as the Westray disaster which destroyed lives. It took away lives and tore apart families in Nova Scotia in 1992. We would like to see Canadians protected immediately by the passage of this legislation. Hopefully this legislation can play a role in preventing another Westray type disaster in the future.

We should not have had to wait 12 years after the original Westray disaster for this legislation. It is imperative that we as legislators move quickly now, when we have the opportunity, to pass this legislation and do the right thing.

Sometimes in this place when we are talking about legislation it seems a little esoteric, it seems less connected to the lives of ordinary Canadians, but this is not one of those times. This is a time when I am proud to speak to an important piece of legislation. As a Nova Scotian, I feel particularly honoured to have the opportunity to stand in the House and support this legislation.

I want to commend my leader for having played such an important role at justice committee as justice critic for our party over the last number of years in terms of working toward the passage of this legislation. I want to commend him and offer my full support and that of our party for the direction that this legislation is trying to achieve.

Business of the House

[Don Boudria, Liberal, Minister of State and Leader of the Government in the House of Commons]

Mr. Speaker, I will be pleased over the following weeks to continue to elaborate on the program from now until December 12 for the benefit of the hon. member and for anyone else. More specifically, about the following week, I wish to express the following by way of the business statement.

This afternoon, we will continue with the debate on the opposition motion.

Tomorrow, the House will return to the motion to refer Bill C-49, the electoral boundaries bill, to committee before second reading. This will be followed by Bill C-45, the corporate liability bill, or Westray bill if you like, and Bill C-34, the ethics commissioner bill.

On Monday, we will begin with bills not completed this week, Friday in particular. We will then proceed to Bill C-46, respecting market fraud, Bill C-50 respecting veterans, Bill C-17, the public safety bill, and finally Bill C-36, the Library and Archives of Canada bill.

Tuesday will be an allotted day.

On Wednesday and Thursday, the House will begin consideration of Bill C-48, respecting resource taxation, and will then return to any of the business just listed that has not been completed.

Criminal Code

[The Acting Speaker (Mr. Bélair)]

I am sorry to inform you that there was only one minute left on the clock during your speech. I inform you that you still have nine minutes to go when debate resumes on Bill C-45.

It being 6:30 p.m., the House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6.30 p.m.)

[Joe Peschisolido, Liberal, Parliamentary Secretary to the President of the Queen's Privy Council for Canada and Minister of Intergovernmental Affairs]

Mr. Speaker, let me begin by saying that Bill C-45 should be supported as it will make a great contribution to promoting safety in the workplace. As was stated earlier on, the hearings of the standing committee had their origins ultimately in the Westray tragedy, and I believe all members wish to do what they can as legislators at the federal level to eliminate as much as we possibly can, deaths and injuries on the job.

The Criminal Code is not the primary way of promoting safety. Strong laws governing the workplace, like those which this government introduced into the Canada Labour Code, vigorous inspection of farm factories, mines and other high risk work sites and training workers and supervisors in the best safety practices are the first line of defence. However the Criminal Code does represent the judgment of Parliament as to what conduct is so harmful that it must be treated with the utmost severity.

Within the code there are distinctions in the severity of the sentence possible, ranging from the most minor offences punishable only on summary conviction to the most serious punishable by life imprisonment. Causing death by criminal negligence is among those offences that are punishable by life and causing bodily harm is punishable by 10 years of imprisonment. Despite the fact that these provisions have been in the code for many years, prosecutions of corporations for death and injury in the workplace have been rare. These changes in Bill C-45 should lead to more accountability for the most serious cases of endangering workers.

Members of the House may be interested to know that outside experts in the field have come to the same conclusion. Cheryl A. Edwards, a lawyer in private practice in Toronto, wrote an article in the August 22 edition of the Lawyers Weekly . The opening paragraph of the article states:

On June 12, 2003, the prospect of both regulatory and Criminal Code prosecutions emanating from a serious workplace accident became much more real. The federal government introduced anticipated amendments to the Criminal Code in Bill C-45, which, if passed, will create positive occupational health and safety-related duties for corporations, individuals, and other parties defined as “organizations”. Bill C-45 will make it easier to convict those parties of criminal negligence for workplace safety violations.

Let us then deal with Bill C-45 as others have, but I would like to also elaborate on this point. What are the elements of Bill C-45 that will enhance the effectiveness of the Criminal Code in holding corporations accountable for safety?

First, there will be the positive duty imposed on those who undertake or have the authority to direct how another person does work to take reasonable steps to prevent bodily harm to any person arising from that work. Application of existing criminal negligence provisions would mean that those parties that fail in this duty and show wanton and reckless disregard for safety in doing so could be found criminally negligent.

Similar duties already exist in statutes and regulations governing the conduct of various businesses and even in the common law. Placing the duty, however, in the Criminal Code is an important signal that Parliament intends that everyone take their responsibility for worker safety very seriously.

The criminal negligence sections of the code already impose a legal duty on parents and spouses to provide the necessities of life and on anyone who undertakes to administer surgical or medical treatment to another to use reasonable knowledge, skill and care. It is right that the duty to protect workers and the public from foreseeable harm be placed in the Criminal Code and so treated in the same way as these other duties.

The mere fact that the legal duty is in the code may also serve to simplify some prosecutions. It can also serve as a wake-up call to those who direct work. Reckless disregard of the duty of care can lead to imprisonment for a very long time.

With respect to corporations that are charged with criminal negligence, the rules for attribution of liability set out in the proposed new section 22.2 of the Criminal Code will make it somewhat easier to establish liability of the corporation than is the case under existing common law rules.

Those rules establish a two step procedure. First, the crown would have to show that the actions of a single corporate representative or group of representatives demonstrated a lack of care that constituted a breach of the new legal duty to take reasonable steps to prevent bodily harm. Then the crown would have to show that a senior officer either acted or failed to act in a way which was in a marked departure from that which could be expected of a senior officer in the circumstances.

Both representative and senior officer are defined. Corporations will be liable for the physical acts and the omissions of the director, partner, employee, member, agent or contractor of the corporation. An important innovation of the proposed reform is that the courts will not have to seek a single person who both committed the negligent act or omission and was a directing mind of the corporation. Bill C-45 provides that conduct by two or more representatives can be added together to constitute the negligent conduct.

For instance, if we consider a death or injury in a mine, there may have been a series of errors by employees and supervisors that all contributed to the accident. If a single employee turned off three separate safety systems and miners were killed as a result of an accident that the safety systems would have prevented, the employee would probably be prosecuted for causing death by criminal negligence but the mine operator might not depending on the particular facts. Did the employee act in defiance of direct orders or did the employee act in accordance with company policy and practices?

On the other hand, if three employees each turned off one of the safety systems, none of the employees would likely be subject to criminal prosecution because each one thought there would still be two systems in place to protect the workers. Under existing rules for attributing liability, the mine operator could very well also escape prosecution because no single person was negligent. However under the proposed rules, the fact that the individual employees might escape prosecution would not be a bar to the prosecution of the corporation. After all, the corporation through its three employees turned off the three systems.

Not only is proving the act of negligence going to be easier under the reforms but finding the wanton and reckless disregard for safety that is necessary for a conviction of the corporation is also going to be easier. The fault of the corporation is found through the actions and omissions of a senior officer, which is defined to include persons who play an important role in establishing the organization's policies, and persons responsible for important aspects of an organization's activities, and in the case of a corporation includes directors, the CEO and CFO.

The existing test developed by the courts is, as people have alluded to, quite restrictive. In the leading case, the Supreme Court referred to the person having so much authority in the corporation that the person could be considered the directing mind, alter ego or soul of the corporation. While the Supreme Court recognized that a corporation could delegate enough authority to managers that the corporation would have more than one directing mind, it is clear that the court is looking for persons on the very highest rungs of the corporate ladder.

Again, in the words of Ms. Edwards in the Lawyers Weekly :

The proposals do not eliminate the “directing mind” doctrine, as it would still be necessary to prove culpability of a senior official. However, the doctrine would be altered to eliminate the requirement to show [their] direct involvement, and it would be altered to allow the actions of lesser corporate representatives to make the organization party to the offence of criminal negligence.

This clearly signals an expectation that senior management take a proactive role in health and safety matters. The conduct of senior management could very well come under unprecedented scrutiny from investigators.

It is not only Ms. Edwards who expects Bill C-45 to have a major impact. In an article in Worksite News, Norman Keith, another lawyer from Toronto specializing in occupational health and safety issues wrote:

Bill C-45 extends legal duties to a new level that will likely include foremen, lead hands, and even co-workers. The requirement “to prevent bodily harm to that person, or any other person, arising from that work or task” goes farther than any current OHS legislation in Canada. Nova Scotia requires employers to be responsible for members of the public at or near the workplace, however, Bill C-45 casts the net farther to include all persons that may be affected by the work or task.

It is certainly my hope and expectation that Ms. Edwards' prediction of “unprecedented scrutiny” and Mr. Keith's prediction of “a higher level of accountability” will come true.

In passing Bill C-35, Parliament will be responding positively to the Westray tragedy. The new rules and the positive duty combined should ensure that the Criminal Code serves to attribute liability in a way that is fair to workers and their employers when there has been death or injury at work.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I rise today to speak on Bill C-45 concerning the criminal liability of corporations. Before getting into the pith and substance of the legislation, I would like to say that I examined this bill as my party's industry critic to see what impact it would have on the industry sector, while recognizing the fundamental merit of plugging a loophole in the Criminal Code that absolutely had to be plugged.

Unfortunately, a terrible situation existed where it was later realized that liability could not be correctly assigned and that measures had to be taken accordingly.

I am also speaking as a former director of personnel. In a previous life, before I was elected to this place, I was the director of personnel and secretary general of the CEGEP in La Pocatière. I have lived though various labour relations situations. Organizations obviously have a major moral responsibility to take. The absence of any clear indication of how to deal with these things in the future created a loophole that absolutely had to be plugged.

The last aspect I wanted to raise was the process for improving the legislation. People often wonder whether the efforts made by lawmakers, that is the hon. members, ever pay off. In this case, the result has been a government bill, which was introduced on June 12 by the Minister of Justice and Attorney General of Canada.

The purpose of the bill is to review the principles of law concerning the criminal liability of corporations and other organizations. But to get there required sustained efforts. I want to acknowledge in particular the efforts of the members of the NDP.

If we look briefly at the history of this bill, it was based on Bill C-468 and Bill C-259, put forward by the NDP in the thirty-sixth Parliament, and on Bill C-284, put forward by the same party in the first session of the thirty-seventh Parliament.

This goes to show that the NDP kept up the pressure following the public inquiry into the causes of the explosion at the Westray mine in Nova Scotia. We all remember this tragic accident. Without going into the evidence of the case, it was realized that, basically, this accident was caused by neglect. Efforts were made to clearly identify who was responsible. Under the current code, it was impossible to really hold responsible those who ought to have been held responsible.

From that point, steps were taken to establish, under certain circumstances, the criminal liability of companies for omissions or criminal acts by their directors or employees and to add a new offence to the Criminal Code for companies that fail to ensure a safe workplace.

In the mining industry, this was more evident than ever. It is an industry where all problems absolutely have to be eliminated from the outset. Negligence has very significant direct consequences. This aspect needed to be corrected and broadened to incorporate all employers and organizations that, until then, could slip through the cracks. This aspect of liability needed to be defined.

This has to do with the criminal liability of companies for omissions or criminal acts perpetrated by their managers or employees. We are trying to have a new offence added to the Criminal Code for companies that fail to ensure a safe workplace.

In addition, there is everything that is not criminal in nature, but results in accidents. However, in this case, we are truly talking about situations where an act can be recognized as being criminal.

Initially, the bill that was introduced by the NDP was designed to facilitate establishing the criminal liability of company administrators and directors. The bill died on the Order Paper at the end of the first session of the 36th Parliament, in September 1999.

The NDP raised the issue once again. In June 1999, a motion was moved to review the Criminal Code and other federal legislation so that company executives and administrators could be held responsible for workplace safety.

At that time, the Bloc Quebecois, which was in favour of such a review, supported the motion. This motion was moved in 2000 and the Bloc Quebecois voted in favour of it. There were also motions brought forward in 2001 and 2002 on the same subject.

In October 1999, the NDP reintroduced its bill, which also died on the Order Paper.

There has therefore been continuity in the desire to regularize this situation, not only because of the difficulties identified in the Criminal Code in connection with past situations, but also and particularly for future situations, in order to ensure that a dissuasive effect is created and that employers and organizations are well aware of the potential consequences if they do not fulfill their responsibilities properly.

In the same vein, the fact that these past actions are today culminating in Bill C-45 is very good news indeed.

Obviously, the bill needs to be examined carefully. Perhaps some corrections will have to be made in committee, as my colleague suggested earlier. Basically, however, this is a positive bill.

On November 11, 2001, the member for Hochelaga—Maisonneuve indicated his support for a similar bill. He felt that it was important to pass such a bill in order to improve the legislation and particularly in order to tighten up the Criminal Code to prevent any workers from losing their lives. As I was saying, through prevention and increasing employers' awareness of their responsibilities, there is more likelihood that the approaches adopted will be what they need to be.

Most employers, like most members of the public, are honest. Unfortunately, the Criminal Code is there for those who are not. That is the purpose pf this bill.

The member for Laurentides also spoke out in favour of this bill. In expressing her support, she indicated that Quebec already has in place a body, the CSST, or Commission de la santé et de la sécurité au travail, to ensure worker safety.

We wanted to ensure that the bill did not interfere with the responsibilities of the CSST. In this case, this being an amendment to the Criminal Code, it can be considered that this is really a federal responsibility. As a result, we feel it is appropriate to move ahead with this bill.

What is also significant is that Bill C-284, the previous version tabled, was withdrawn before Bill C-45 was arrived at. There had been an agreement to examine the matter in the Standing Committee on Justice and Human RIghts in February 2002.

The committee held hearings and presented a report. It asked, and I quote:

that the Government table in the House legislation to deal with the criminal liability of corporations, directors, and officers.

Bill C-45 is the result of all these actions. I think there is still room to make improvements as we study the bill, so that we end up with legislation that is exactly what is requested to eliminate the shortcomings in the Criminal Code.

Quickly looking at the main issues addressed by Bill C-45, we first notice the use of the term “organization” instead of “corporate body.” This is a way to truly include all possibilities. For example, the definition of “organization” is:

(a) a public body, body corporate, society, company, firm, partnership, trade union or municipality, or (b) an association of persons that (i) is created for a common purpose, (ii) has an operational structure, and (iii) holds itself out to the public as an association of persons;

This very broad definition, will cover all situations that might arise. Of course, when the bill is passed, all associations and organizations must be informed about the implications of the law, in order to ensure they are aware of it.

A company can also, according to the bill, be criminally liable for acts carried out by employees who are not necessarily highly placed in the company. Previously, it was absolutely necessary to have a manager who was in an untenable situation. That concept is now being extended to ensure that no one can slip through the safety net. The organization could consider that these people were not really under its control. The safety net will be tightened up, so that organizations will feel more responsible for all of their employees and so that employees will act with propriety.

The bill also mentions the categories of persons whose actions may actually constitute a criminal act for which a corporate body or any other organization is liable. This has been broadened to include all employees, representatives or contractors.

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.

Therefore, this section ensures that, in the case of criminal negligence, someone is responsible and that liability is tied to one of the organization's senior officers.

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.

Obviously, it must be noted that the actions of this senior officer must seek to benefit the organization.

The bill explicitly imposes a duty on those with the authority to direct the work of other employees to take steps to prevent bodily harm to those individuals.

The bill also adopts sentencing principles and probation conditions for organizations, because, in fact, persons cannot be sentenced, when an organization is sentenced, in the same way as if it were a person.

Currently in Canada, it is essentially jurisprudence that determines the conditions under which a company can be held responsible for a criminal offence.

In the case of criminal offences that require mens rea or the intent to commit a crime, companies are only responsible for acts or omissions by persons who may be said to constitute the directing mind of the company. In fact, according to the identification theory, persons who constitute the directing mind of a company personify its intentions.

The bill also amends, in different sections, the types of institutions, and establishes an organization's criminal liability. It integrates the notion of who can be a “representative”. Earlier, it was mentioned that liability was being extended not only to senior officers, but in many cases to other employees. For example, a “representative” essentially includes any person working for or affiliated with the company. This could be a director, an employee or a member, agent or contractor. A “senior officer” is any representative who plays an important role in the establishmentof the organization’s policies or is responsiblefor managing an important aspect of theorganization’s activities.

This bill, specifically clauses 22.1 to 22.3, contributes to changing the current state of the law by introducing new elements to the identification theory. In terms of what are essentially acts of criminal negligence, we could, under clause 22.2, hold an organization criminally liable in cases where the physical offence—the act of committing a crime—is perpetrated by a representative in the scope of tht person's authority, and fault lies in the hands of a senior executive.

To prove that a senior executive acted at least partially to benefit an organization, it would have to be confirmed that they participated in an offence in the scope of their authority by having someone else knowingly commit an offence or by knowing that someone else was committing or was about to participate in an offence and the executive failed to take the necessary actions to prevent it.

There is nonetheless a framework that would prevent peculiar situations from being subject to the prosecution under the Criminal Code based on new sections resulting from Bill C-45.

In terms of sentencing an organization, the bill suggests adding new sections and completing existing sections to take into account, during sentencing, factors that are characteristic of organizations. Therefore, a specific section was added for organizations to regulate the probation conditions applicable to organizations, which are not of the same nature as those for individuals.

The bill increases the maximum fine for an organization when a guilty plea is entered by summary conviction or for a less serious offence, increasing it from $25,000 to $100,000. This provides a very clear incentive not to repeat a situation whereby the organization's liability could be determined and the organization could be convicted.

Currently there are no limits for fines for criminal acts or more serious offences, and this is not being changed by the proposed legislation. If there is a very serious situation, the sum could be determined based on the seriousness. This will continue to be the practice.

This bill is the result of a series of steps taken by several parliamentarians in this House. The Bloc Quebecois is in favour of the principle of this bill.

Given the current state of the law, it is important that a criminal liability regime be established for businesses that is effective and takes into account the differences between an individual and an organization.

We will see in committee if the bill could not be improved where it deals with offences, and it is said that an intent must exist which goes beyond criminal negligence. The suggestion was made to reverse the burden of proof, that is to say that when it has been established that an act or omission was committed by the personnel of an organization, resulting in a criminal act taking place, the onus will be on the organization to prove that it did not authorize or condone such behaviour. When we hear witnesses in committee, we will be able to see if this would not be a better approach than the one put forward in the bill as it now stands.

Note also that this bill does not allow directors, executives or a corporation to be held liable if they did not physically and personally commit a criminal act. This may tie in with the constitutional issue, but it deserves nonetheless to be examined further to ensure there are no loopholes which, we will find out in a few months or years, ought to have been plugged when Bill C-45 was passed.

I should point out also that the penalties that may be imposed would have no effect on a business that has declared bankruptcy. This touches on the whole issue of a big organization taking some action which results in its going bankrupt because it has lost its business name and can no longer sell its product. In this case, when penalties are paid, it will be too late, and the fact of the matter will be such that the business will not be able to assume the costs.

While particular attention must be paid to a number of things in Bill C-45, as this was explained, for the system to be effective, the fact remains that the purpose of this bill is valid and necessary to ensure that organizations are held accountable for what they do.

I believe we are making an addition here that does not fix what happened at the Westray mine, but at least for the families of those who died in the mine, for the entire community that was affected and for the future also, I think that we are taking an appropriate, responsible step, as parliamentarians, in proposing that this bill introduced by the government be passed.

[Sarmite Bulte, Liberal, Parkdale—High Park, ON]

Mr. Speaker, today is the first day of the fall session and Bill C-45 is on the Order Paper. That speaks to the very fact of how important this legislation is and how important it is to move forward on this matter.

Today is our first day back. We have had debate all afternoon. We will continue to have debate and as soon as we finish that debate we will send it to committee. Again, I urge the hon. member to speak to his House leader, and other opposition members to speak to their House leaders so we can indeed have this legislation brought forward as quickly, effectively and efficiently as possible. Perhaps it could be done before our recess week in October.

[Sarmite Bulte, Liberal, Parkdale—High Park, ON]

Mr. Speaker, Bill C-45 is the culmination of many years of attempts to reform the general law of attributing criminal liability to corporations. In fact, Bill C-45 would give Canada rules that are appropriate for the complex, modern corporate world where often a company has many places of business, various subsidiaries, parts of the business contracted out to specialists, decentralized control over some parts of the business and a great deal of discretion vested in its managers.

Now, in these circumstances, it is difficult to decide whether a corporation has committed a crime both by doing something the law prohibits and by intending to break a law or having mens rea, as the criminal lawyers say.

It is not surprising that rules that were originally developed beginning in the horse-and-buggy age are often in need of updating as conditions change. It is part of the genius of the common law system that adjustments can be made by the courts as new cases come before them. The common law may not always have the logical consistency that academics want but it does get the job done.

Historically, at first the courts held that a corporation could not break the law but gradually the courts made exceptions.

The first criminal offence for which a British company was found liable was for nuisance. Something simply had to be done about locomotives setting fire to crops by their sparks. The real problem was not with a strict liability offence but with those offences where the crown had to show some form of intent.

It was not until 1915 that the House of Lords developed a so-called directing mind test for offences of intent but the test was quite narrow, concentrating on a corporation's board of directors.

Of course Canada also followed British judgments until 1949 when appeals to the judicial committee of the Privy Council were finally abolished and our Supreme Court of Canada was created.

The Alberta Court of Appeal struggled with this issue as late as 1941 in a case called Rex v. Fane Robinson Ltd. The two directing officers of a garage company, pursuant to an agreement with an insurance adjuster, added a certain sum to a repair bill on an insured automobile. On the receipt of the moneys from the insurer, part of the additional sum was given to the adjuster and the balance was retained by the garage company. There was no problem finding the individuals involved guilty but the garage company was also charged with conspiracy to defraud and obtaining money by false pretences.

The trial judge, following the narrow test developed by the Privy Council, acquitted the company. In the judgment he wrote as follows:

The accused is a corporate body incorporated under the laws of the Province of Alberta. A corporation acts through its directors. There is no evidence whatever disclosed in the minutes of the meetings of the directors or the shareholders which are in evidence, that any authority by resolution was ever given to the directors acting in their official capacity to enter into the conspiracy alleged in the first count, or to procure by false pretences the money alleged in the second count...

The Court of Appeal in a two to one decision convicted the company. Justice Ford wrote:

--I have, not without considerable hesitation, formed the opinion that the gradual process of placing those artificial entities known as corporations in the same position as a natural person as regards amenability to the criminal law has...reached that stage where it can be said that, if the act complained of can be treated as that of the company, the corporation is criminally responsible for all such acts as it is capable of committing and for which the prescribed punishment is one which it can be made to endure.

Interestingly enough the dissenting judge wrote “I am of the opinion that mens rea must be established in a case of this nature. A number of changes in regard to liability of corporations have been made from time to time by Parliament and, as has been suggested, the changes and extension of liability of corporations will probably be extended, but in my opinion the extension, if there is such to be, must come from Parliament”.

It is important to note that what was said in the dissenting opinion was that it must come from Parliament.

It has been more than 60 years since that was written and I would respectfully submit it is high time that Parliament did set the rules. The legal background, the many attempts to reform the law and the situation in other countries were thoroughly canvassed in the discussion paper the Department of Justice provided the standing committee and in the government's response to the standing committee's one page report. Clearly we are not starting from scratch and no one should be taken by surprise by the provisions of Bill C-45.

The fundamental question that we as parliamentarians must answer is whether the proposals in Bill C-45 with respect to offences requiring proof of knowledge or intent by the corporations are appropriate in today's conditions.

As members know, in the absence of action by Parliament, the Supreme Court expanded the so-called directing minds test in the Canadian Dredge and Dock case in 1985. The government in its response found the Canadian Dredge and Dock case rules too restrictive. Also the committee rejected the American vicarious liability model as contrary to fundamental principles that underlie Canadian criminal law. It also rejected the Australian corporate cultural model as being vague and also untested.

Instead, Bill C-45 proposes to broaden the persons who can be considered directing minds through the definition of “senior officer”. It sets out three ways that a senior officer can make the corporation criminally liable, but in all cases the senior officer must have the intent at least in part to benefit the corporation.

The first question we must ask ourselves is whether the definition of “senior officer” is broad enough to catch the right officers without being so broad that it unfairly stigmatizes the corporations. Members should not underestimate the consequences of the criminal conviction on the reputation of the corporation but also on the individuals employed by that corporation.

The proposed definition of “senior officer” includes everyone who has an important role in setting policy or managing an important aspect of the corporation's activities. It is significant that that person does not have to have the final say in setting policy but must have an important role. Moreover, a person who has no role in making policy can be a senior officer if he or she is entrusted with important management duties.

In the Rhône case referred to in the government's response, the Supreme Court stated the following: “The key factor which distinguishes directing minds from normal employees is a capacity to exercise decision making authority on matters of corporate policy, rather than merely to give effect to such policy on an operational basis”. Clearly, the proposal in the bill is broader.

The new definition makes it clear that the directors, the chief executive officer and the chief financial officer of a corporation are, by the virtue of the position that they hold, automatically senior officers. A corporation charged with an offence cannot argue that the individuals occupying these positions actually had no real role in setting policy or managing the corporation and so were not senior officers.

However, there is an endless list of titles: senior vice-president finance; general manager western division; corporate counsel. The same title can mean quite different things in different corporate structures. For example, the executive assistant to the president could have a great deal of authority and effectively speak for the president in one corporation and so be a senior officer, but in another corporation would have only minor administrative functions, perhaps such as scheduling the president's meetings.

Necessarily, the Criminal Code has to use general language so that the courts will have to decide in each case whether a person who is not the CEO, CFO or a director is indeed a senior officer. By requiring that person play an important role in developing policy or managing an important aspect of the business, we are indeed providing the courts with indications of the position the person must actually play in that organization.

The first two ways that a senior officer could make the organization liable set out in section 22.3 are fairly straightforward. The most obvious way for the organization to be liable is the first way set out in 22.3, which is that the senior officer actually committed the crime for the direct benefit of the corporation. For example, if the CEO cooks the books and thereby induces others to provide funds to the corporation, both the corporation and the CEO may be guilty of fraud. However, senior officers usually direct others to do such work.

The second way set out in section 22.3 makes it clear that the corporation is guilty if the senior officer has the necessary guilty intent and indeed wants to benefit the corporation, but subordinates carry out the actual physical act. An example would be where a senior officer could be benefiting the corporation by having it deal in stolen goods. The senior officer could instruct employees to buy from the supplier offering the lowest price, knowing that the person who offers to sell the goods at the lowest price can only make such an offer because the goods are stolen. Here the employees themselves have no criminal intent, but the senior officer and the corporation could be found guilty.

The bill proposes a third way of holding the corporation liable and this is something new. A corporation could be guilty of a crime if a senior officer knows employees are going to commit an offence but that senior officer does not stop them. Using the stolen goods example, a senior officer might become aware that an employee will get a kickback from the thieves for getting the corporation to buy the stolen goods. The senior officer may have done nothing to set up the transaction, but if he or she does nothing to stop it with the intent that the corporation again will obtain a benefit from the lower price, the corporation would be responsible.

Members should note that indeed in this third case, unlike the first two, the senior officer does not have to be active within the scope of her authority. In other words, if a manager of security knows that there is criminal activity going on in the sales division, for example bribing municipal officials to get a contract, she cannot decide to let it slide so that the company will benefit, even if that area of the corporation's business is not her responsibility. She must take all reasonable steps to stop the commission of the crime.

The supreme court has held in the Sansregret case, which involved a sexual assault that “Where the accused is deliberately ignorant as a result of blinding himself to reality, the law presumes knowledge”.No doubt the court will apply the same test to an organization, which will be liable if a senior officer is wilfully blind to information in order to avoid confirming what he or she suspects.

The government in its response to the standing committee report concluded that Canadian criminal law as it applies to corporations is in need of modernization. The directing mind model does not reflect the reality of corporate decision making in the delegation of operational responsibility in complex organizations.

Cumulatively, the changes to the law which are set out in Bill C-45, particularly as they affect those crimes that require knowledge or intent, represent a significant broadening of the rules for holding a corporation liable. The proposed changes should be supported by the House and I urge members to vote in favour of the bill.

[Jim Abbott, Canadian Alliance, Kootenay—Columbia, BC]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-45, but I am sad that we have to have this kind of legislation under consideration by the House. I take a great deal of comfort for the Canadian Alliance and for that matter for the bill and for the House as a whole from the fact that our justice critic, the member for Provencher, as a former attorney general of Manitoba, will be able to bring a lot of light to the process.

The process is a complex one simply because one cannot hold a corporation accountable at the end of the day. The people who have to be held accountable are people as opposed to just a numbered corporation. Getting the balance between those two things and ensuring that the bill is operative and is workable is going to be exceptionally important.

One of the things that I have been particularly encouraged by has been the tone of the debate in the House on this issue. There has been a very low level of partisanship and there has been a strong desire expressed on the part of everyone that the bill be a proper working document, an agreement on the part of parliamentarians here that we bring forward legislation that can be useful.

We have to remember that the most probable cause, the foundation of Bill C-45 is the Westray disaster. There was tremendous political interference in the process around Westray, both at the federal and provincial levels. In the spirit of non-partisanship I will not offer party designations to that political interference. The reality was that there were very high levels of interference in both the Nova Scotia government and in the federal government of the day. The interference was such that I believe that some of the very irresponsible people who were involved at the corporate level and who were responsible for many of the decisions, or lack of decisions, and many of the people who were involved in the process of looking at the regulations surrounding the conditions within the mine, the bureaucrats of the day, had the assumption that there was a free track. There had been so much political interference, whether it was from people involved at the corporate level or people involved at the bureaucratic level who felt they had all sorts of latitude and elbow room, that many corners were cut.

The workplace practices that were in effect at that time were the most dangerous that could ever possibly be imagined. Unfortunately, following the disaster the hearings themselves bordered on being a farce simply because there were witnesses who should have testified but were not available because they were concerned about possible criminal sanctions being brought against them. As a result, those witnesses who were absolutely key and germane to the Westray inquiry, who should have been at the hearings and who should have been able to speak up under oath were not there.

After the inquiry closed, the decision was made that there would be no criminal charges. Of course by then, because the inquiry was concluded and we had the report, there was no way in realistic terms that those people could then testify. The decisions had already been made.

There also was a situation regarding the destruction of evidence in the mine itself. Decisions were made by people, and to this point I am really not clear, to flood the particular portions of the mine thereby removing the actual evidence of what had contributed directly to this disaster.

I had the opportunity, on behalf of my political party, to travel to Nova Scotia to take a look at this when I was formerly the solicitor general critic. I met with some very wonderful people, members of the families who were bereaved by these terrible events and by this avoidable accident.

I am sure the frustration of these families to this day is larger than we could ever possibly imagine, their frustration at the process they have been through and the very obvious fact that, most charitably, mismanagement cost the lives of their loved ones and, less charitably, to say that there was actual criminal negligence on the part of corporate officers that led to that.

Their frustration boiled over into bitterness and cynicism. I can recall one meeting in particular with the families. It was a quiet meeting. I think about 15 people were at the meeting. It was not a big town hall meeting. I was not there for any grandiose political reason. These people just wanted someone in Ottawa to listen, so I went and listened. The bitterness and the cynicism on the part of these families against the whole process was absolutely immense.

Having tried to stay non-partisan, I want to offer a criticism in the most non-partisan way that I can of the Liberal government that has been in Ottawa for 10 years. The families deserve better. This accident, as was noted by my friend from Halifax, took place 11 years ago. The events that followed were very transparent to anybody who turned on the nightly news.

We all know there was a deficiency and yet in the 10 year period that has transpired for the Liberals to be on the governing side of the House this is the very first time that we have been able to debate any action proposed by the government to overcome this problem.

That is grossly inadequate. It leads to the bitterness and the cynicism that is so easily understood on the part of these families. It leads to a cynicism of Canadians toward the entire political process.

How many times have we seen bills come before the House, be presented to the House and then die on the Order Paper when the Prime Minister calls an election and then be re-introduced and re-introduced. People want action. They do not just want words.

I give my friends in Nova Scotia this caution. What I suspect could very well happen as a result of the political opportunism that will be exhibited by the next Prime Minister of Canada, there will undoubtedly be an election called by April 4. If an election is called Parliament will be dissolved which is, by the way, totally unnecessary since there is another year and a half more that the House could be sitting without the political gyrations of the other side. As a result of the calling of that election, which I predict will be April 4, there is a high possibility that this legislation will die. I just want to give the people who are bitter and cynical about the political process a little forewarning that the legislation could very well die.

This is not good enough. Having given that criticism, and it is a very direct criticism, let me reiterate what my colleague, our justice critic, has said. We are prepared to work with the committee, to help the committee and to be part of the process so that at the end of the day we have good, logical, concise, practical, workable legislation so that the workers in the workforce of Canada will have the protection that they deserve.

[Jim Gouk, Canadian Alliance, Kootenay—Boundary—Okanagan, BC]

Mr. Speaker, I would like to advise that I will be splitting my time today with my colleague from the neighbouring riding of Kootenay--Columbia.

I am pleased to rise today to speak to Bill C-45 dealing with criminal liability for companies and organizations.

Over the years I have had several occasions to attend the annual day of mourning for workers who are injured or killed on the job. One of the sentiments that rings out at those meetings on those special days is that although numbers tend to be coming down for many companies, and many companies are very conscious of safety, even one death or injury is one too many. That is the premise which I believe the bill is approaching in terms of liability.

Many years ago, probably in the 19th century, companies were pretty horrendous places for anyone to have to work. The conditions were deplorable. The tactics they used were absolutely disgusting, and that was a large part of what caused workers' organizations and unions to form, because there was an incredible need for someone to stand up for workers against the very oppressive type of corporations that sometimes pervaded throughout our society.

Since that time, we have now what we refer to as the pendulum effect. Sometimes when the economy is going really strong, the unions have tremendous power to force things, maybe even beyond reason at times, on companies because there is such a need for the company to keep working, and so much profitability. At other times the pendulum swings the other way. Even now we can see the same thing returning back, where some corporations take advantage of that and use it as an opportunity to try to squeeze unions into conceding benefits for which they have fought.

One of the problems with the pendulum is we get no stability out of that. In my position as labour critic I saw a case where we have had strikes at the port of Vancouver. The government may have decided that it was appropriate to legislate people back to work because it could not take the disruption and because of what it would do to our economy. However a year ago one of the companies dealing with the grain workers had very little grain flowing into it so it was in labour negotiations with the union. The company actually locked the union out because it saved money by not bringing them in and having to cover benefits. It had alternatives. It was able to divert it to the different facilities that it had. The company did not have enough volume to keep its operation as well. Ironically, those same workers who would have complained with a different swing of the pendulum on being ordered back to work asked why the government was not doing it now. These are the kinds of shifts that we need to try to avoid.

We have the same thing in Bill C-45 in terms of liability on the part of companies. We need to address the problem of criminal liability on the part of persons within the corporation. By the same token, the bill needs to be written in such a way to ensure that we do not go to a point where there is no proper consideration for the criminal liability of people within a company, like the Westray example that has been quoted so much here today in this debate. We also need to ensure that the bill does not swing the pendulum too far and go from a point where people were not being held properly to account to a point where it is done in an oppressive manner.

There has to be an example of balance to put it in a common sort of term for the average person who is watching these proceedings today. The previous Liberal speaker quoted sections and subsections of the bill and some of the more arcane provisions in it, which is necessary. I am sure lawyers, judges and others who are watching need to know those types of details, although they have undoubtedly read the bill. However it is the general public whom we are largely here to represent, including the workers on whom this bill will have such a profound effect. We need to show them exactly what this means and why we feel we need to make these changes.

For example, I lend a car to someone. After the person borrows it, he or she goes out, gets impaired, gets into an accident that perhaps kills someone and very serious charges are pending against that person. It would be inappropriate if I were charged with the criminal responsibility for that accident as well if I had no knowledge whatsoever of what this person was going to do.

On the other hand, if the person were impaired when he borrowed my car and I knew that, then I should be held accountable for allowing him to take my car when he was in that condition.

That is the basic premise of how the bill needs to work. By all means we need to put in some kind of legislation that allows the courts to take criminal action against people who knowingly allow workers to work in conditions that are unsafe and that result in injuries or in the case of the Westray Mine many deaths. These are the types of things that need to be put in the legislation.

We believe the bill has conceptually a lot of merit. We agreed certainly in principle with the private member's bill that actually caused this bill to be written by the government. However the bill needs changes and improvements to make it truly a bill that works for all people. A bill that is imbalanced is not a good bill at all.

When it went from a private member's bill to government legislation, I think it might have lost something in the translation. That is not uncommon. That is why we have debate in the House to disclose what the issues are and to bring them forward. More important, that is why we send a bill to committee. A committee is supposedly master of its own destiny. It can examine the bill based on the debates held in the House by the various parties and from witness, many of whom have brought their opinions forward already. The committee can then decide to make changes that will make the bill, which has a lot of merit, into a bill that has more than just conceptual merit but indeed answers the concerns of workers throughout the country while at the same time ensures that it does not become oppressive against the other side.

We have to keep that pendulum in the middle. In fact we have to eliminate the pendulum and do something that is balanced and right, taking into consideration the needs and rights of both side, instead of something that takes a liability that was never addressed and takes it to a greater degree.

I am sure that members who spoke before me outlined the intricacies of the proposed legislation. I am sure my hon. colleague, who will be speaking next and who has put a great deal of time and background work into the bill, will bring forward the specifics on the kinds of things we need to fix to ensure this is a balanced bill.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I think perhaps the vacation was a bit too long.

I would like to thank the hon. member for his comments, particularly at the end of his remarks when he called upon the House to vote quickly in favour of Bill C-45, which meets a need he himself described very well.

I would like to ask him the following question: Since this bill is the result of repeated initiatives by opposition members, and since for many months, not to say years, the government appeared to be totally oblivious to the needs addressed by Bill C-45, what can explain his slow response to a need felt not only by the workers in many industries, but also by the opposition parties?

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, welcome back. I am delighted to be standing here to give a speech on a second piece of legislation today. It shows that we have a lot of legislation to cover this fall and a lot of work to do and that a lot of important things are being done to help Canadians.

I would also like to add a special welcome to the member for Dauphin—Swan River, who is a tremendous contributor to the House and who has been away for some time. We are all very happy to see him back.

Of course I also want to, as other speakers have, pay tribute to the families and friends not only of Westray but of other organizations where accidents have deprived families of their loved ones, and to the people who have worked toward improving the legislation, such as the friends of Westray and the steelworkers and all those who have contributed to getting to this stage with Bill C-45, the Westray bill, to address corporate responsibility for workers' safety.

I also want to thank many ministers and members of Parliament who came to my riding this summer to see the various problems and issues there first-hand. I think it is very important to Yukoners that so many saw these issues. They look forward to progress on such issues as placer mining. There was a problem, but now we are making progress on it.

Talking about mining, it has been the mainstay of the Yukon for the last hundred years, and while the bill of course does not deal only with mining, mining is a very important and special type of corporate entity. Often it is based around one mineral find and one property, and then the corporation dissolves thereafter. A way is needed to ensure that the corporation maintains safety in the perhaps short time it is in existence through the life of an ore body and that individuals responsible for unsafe actions are held to account.

In response to the standing committee's report, the government stated that the principles of sentencing in the Criminal Code should provide more guidance to the courts when imposing sentences on corporations. However, the government did not indicate its support for any particular changes. Indeed, it expressed concern as to the relationship between the criminal law and regulation and whether a form of community service order could result in managers who were culpable requiring their subordinates to do the actual community service work.

I am pleased to see that in Bill C-45 the government has gone beyond these concerns and has developed very substantive provisions that should result in much more effective and indeed creative sentencing of corporations.

The bill proposes three major changes. First, section 718.21 would provide the courts with what amounts to a checklist of 10 things that should be considered in setting the level of a fine. Second, proposed section 732.1 would open the way for the courts to take a supervisory role in rehabilitating a corporation. Finally, that section also points to the possibility of shaming the corporation.

Canadian law does not provide a mechanical process whereby the punishment is predetermined. Judges have a great deal of latitude to craft the appropriate sentence. I suspect that often judges find sentencing the most difficult part of their job. The guilt of the accused is often pretty clear. Indeed, often the accused pleads guilty and the only real question is what sentence to impose.

Courts are often criticized by the media and the public for the sentences they impose, but I believe that is the inevitable result of giving them the latitude we have. Neither the reporter nor the members of the public who read or hear the media report have to fashion a sentence that reflects the six, and sometimes competing, purposes of sentencing set out in section 718.

When a court has before it an individual who has pleaded guilty to a serious offence, who has expressed remorse, who claims to be dealing with his or her alcohol problems, and who has a family to support, the decision whether to emphasize denunciation and deterrence, perhaps at the expense of assisting the offender to rehabilitate himself, must be very difficult.

The task is no less difficult when a corporation is convicted. Of course, a corporation cannot be imprisoned and so fines are virtually the exclusive way of punishing a corporation. Even that is not without difficulty, since the individuals who actually committed the unlawful act and had the necessary criminal intent will not bear the cost of the fine. It will be borne by the investors and shareholders who are quite likely totally innocent.

Moreover, the corporation may have been transformed between the time of the commission of the crime and the imposition of the sentence. All the managers and employees involved may, for example, have been fired.

There is no way to ensure a perfect result. This does not mean that we should do nothing. Parliament should at least indicate to the courts the factors that they should consider when an organization has to be sentenced. The factors found in proposed section 718.21 are intended to reflect for corporations the factors that govern sentencing of individuals. Judges probably already apply many of these factors, but providing a list should result in judges having a more complete picture of the corporation. I believe that members will agree that the factors are comprehensive and appropriate. They are as follows:

First, the economic advantage gained by committing the crime. Clearly, the more money the corporation made the higher the fine should be.

Second, the degree of planning involved. Careful planning shows a deliberate breaking of the law and should be punished more than a case where the senior officers took advantage of an unexpected opportunity to make a quick, illegal profit.

Third, the need to keep the corporation running and preserve employment. Just as individuals should not be fined so heavily that they will not be able to provide for their families, so a corporation should not normally be bankrupted by a fine so its employees are thrown out of work.

Fourth, the cost related to an investigation and prosecution. Many corporate fraud offences require lengthy investigations and the cost to the public of detecting the crime and building a case should be considered by the judge.

Fifth, any regulatory penalties imposed on the corporation for the offence. Courts consider whether individuals have been punished in other ways, for example, by losing their jobs. Similarly, a court should consider whether the public interest is served by adding a large fine to the penalties that may have been imposed on the corporation by a body such as a securities commission or any other regulatory body.

Sixth, penalties imposed on managers and employees for their role in the crime. A court should consider whether a corporation has disciplined or even fired employees who participated in the offence. Doing so sends a powerful message to other potential wrongdoers in the corporation. Individuals who plays a role in breaking the law risk ending their career even if criminal prosecution is avoided.

Seventh, noting whether there have been previous convictions or regulatory offences. Just as the criminal record of an individual is very important to determining the appropriate penalty, so it is important for a judge to consider whether the corporation and its workers had been sanctioned for similar activities in the past, not just in the criminal courts but by regulators like occupational health and safety departments.

Eighth, restitution, which has been mentioned by other speakers today. Compensating victims shows that the corporation is trying to make up for the harm that it caused.

Ninth, attempts to hide assets to avoid paying a fine. A corporation that tries to pretend it is poor, rather than being open with the court about its financial situation, is showing that it has not changed its ways.

Tenth, measures taken to reduce the likelihood of further criminal activity. New policies and practices, like spot audits or changes in personnel, could indicate that the corporation has learned its lesson.

After considering all these factors, a court should have as complete a picture of the corporation's situation as it has of an individual's circumstances when it receives a pre-sentence report. Indeed, the factors may encourage the Crown and defence counsel to give serious thought to what is an appropriate fine leading to a joint recommendation. There is nothing wrong with negotiations on the level of the fine to be paid, provided everyone has considered the appropriate factors.

Although the factors are important, a potentially more effective tool for rehabilitating the offender and protecting the public from further crimes is the possibility of putting a corporation on probation. Courts often place individual offenders on probation. The court imposes conditions that allow the offender to deal with the underlying problems like substance abuse.

Probation is virtually unheard of for corporate offenders, but there may be circumstances in which probation would be appropriate to ensure that the corporation would take steps to reduce the chances it would commit further crimes .

The bill proposes to put into the code a specific section dealing with probation orders for corporations. The list of conditions the judge can impose begins with providing restitution to the victims of the offence, to emphasize that their losses should be uppermost in the sentencing judge's mind. But it then sets out conditions that may be imposed by the court to supervise the efforts of the corporation to ensure that it does not commit crimes in the future.

A court order can order a corporation to implement policies and procedures to reduce the likelihood of further criminal activity, to communicate those policies and procedures to employees, to name a senior officer to oversee their implementation, and to report on progress.

In its response, the government expressed a concern about the potential overlap of probation under criminal law and regulation, and that is an appropriate concern. It is noteworthy that Bill C-45 would require the court to consider whether another body would be more suitable to supervise the corporation. There is no need for the court to get involved in overseeing changes in a corporation's safety practices, for example, if a territorial or provincial occupational health and safety department is already doing so. Such an agency has trained inspectors and expertise that the courts lack.

Finally, the bill would give the court the power to require the corporate offender to inform the public of the offence, the sentence imposed, and the remedial measures being undertaken by the corporation.

Cheryl Edwards in her article on Bill C-45 in the August 22 edition of Lawyers Weekly called this possibility the most interesting of the proposed creative sentencing options. She wrote:

Imagine a court directing the posting of a criminal conviction and sentence prominently on a corporate website, in a corporate annual report, or in the news media. For many organizations the resulting profound impact on public relations and public image would far outweigh any monetary penalty.

I ask members to consider how a CEO would explain to the board of directors or to the annual general meeting of the shareholders having to run full page ads in the major dailies across Canada telling everyone that the corporation was guilty of serious fraud or killing its workers through criminal negligence? Surely the very possibility would be an incentive for the corporation to review its policies and procedures now to avoid the possibility of such embarrassment in the future.

These innovative proposals should be supported by all members. Therefore, I hope for the families and friends of future workers and for the safety of Canadians that we adopt Bill C-45 as quickly as possible before the House prorogues.