Bill C-46 (Historical)

An Act to amend the Criminal Code (capital markets fraud and evidence-gathering)

Criminal Code

[The Acting Speaker (Mr. Bélair)]

It being 5:29 p.m., the House will now proceed to the taking of the deferred division at third reading stage of Bill C-46.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Madam Speaker, it gives me great pleasure to rise on behalf of the federal New Democratic Party to discuss Bill C-46, capital markets fraud and evidence gathering.

I admit this file is not my area of expertise, but I have been following it quite closely because of media events around the world and what is going on in our own country.

The reality is that we are a market based economy. We do have government assistance in that regard, but the markets will be tainted if there is any perception of insider trading through white collar crime.

These corporations and businesses hire many thousands of employees throughout the entire country. That is good because it assists our economy; however, we must ensure that these companies are on the up and up and are not siphoning off, for example, profits and investments, and employee pension funds from within. A classic example of that is what happened at WorldCom, ImClone and Enron in the United States.

They were apparently going well, life was good and the next thing we know they crashed. Thousands of employees lost their savings and pension funds. What do these people do now? There are thousands of people who invested in the companies, had pension funds and their life savings with these companies. What do they get to do now? They are out on the lam. They will have to turn to government assistance. All the other taxpayers in the country will have to assist them.

We saw what happened in our own country with Bre-X. It was the darling of the stock market. A lot of people made a lot of money on Bre-X and what happened? It is that old adage, if it is too good to be true, it probably is, and thousands of people lost an awful lot of money being scammed on that particular issue.

That is something that the bill should address. I sure hope my hon. colleague for Lethbridge did not lose too much money on that particular issue.

By the way, Madam Speaker, just for the record, Saskatchewan will defeat Edmonton in the final game on the weekend and go on to win the Grey Cup because even though I am from Nova Scotia, I do have Rider pride. So, go Saskatchewan go.

My colleague from Regina—Qu'Appelle moved a couple of amendments forward which were not adopted because the bill was fast tracked through the committee. In fact, it was presented so quickly that no witnesses from outside the House were heard on the bill.

This is extremely important. Regardless of our viewpoints on particular legislation, we must include the viewpoint of Canadians. We must, in fairness, even afford those corporate directors and businesses the opportunity to speak before a parliamentary committee to address their concerns, whether they support or disagree with the bill. They do have a right in a democracy to present their concerns in person to a standing committee of the House of Commons.

It should not be fast tracked. The legislation is too important to rush through. Eventually, what will happen is that somebody will take it before the courts and it will be tied up for years and years. In the end, nothing will get done.

If we are going to present legislation of this nature, let us take our time with it and see that it is the best legislation that we can bring forth with input from all stakeholders, not only those in the business community but employee groups, and people within the bureaucratic world as well.

Among the biggest things that the New Democratic Party has pushed for over the years is the protection of pensions and whistleblower legislation. We honestly believe, and we stand by it as a party, that if employees of a particular company or agency feel that something is drastically wrong within a corporation, business or government department, and they feel they have no other choice, they should be able to express their concerns.

It may be on a serious health issue. I forget the name right now, but there was an individual in the United States who blew the whistle on the tobacco companies. He was ostracized, threatened and everything else. However, that man showed a lot of bravery and in the end, he probably saved many lives down the road by exposing the tobacco companies in the United States for what they really were.

In Canada, when four scientists, I believe, in our Department of Health expressed serious concerns about the goings-on within the Department of Health, they too were ostracized and shunted to the side. These people are professionals. They have every right to do this. If they feel that in their professional judgment something is seriously wrong and they cannot mitigate the concerns through the proper channels within their own department, they should have the right to be able to express those opinions freely, either to the media or to other members of Parliament for that matter. They should be able to express the serious concerns they have.

They may be saving lives in the end. They should not be threatened with losing their jobs or the loss of the future enhancement of their careers or anything of that nature. If they are wrong, they will be proven wrong, but if they are right, then they will have done justice not only to their employment but also to their bureaucratic concerns as well.

We in the NDP support the proposed legislation, although with reservations. We do wish that the government had accepted the amendments we proposed on insider trading and of course on whistleblower protection.

There is also one concern I have on a personal level. If we set out maximum sentences of 10 years or 14 years, that really means maximum. A judge can offer the minimum, which could be anywhere from no time in jail to a fine or house arrest. The judge has that leniency.

I believe that if we want to send a strong signal to these people we should tell them what minimum sentence they are going to get, similar to the outrage we expressed in the House a couple of weeks ago when we discussed concerns about child pornography or pedophilia. There is no sense in stating a maximum sentence if we are never going to do it. We should make it a minimum sentence of 10, 15, 20 or 25 years and make sure the offenders serve every single day of that sentence. There should be none of this good behaviour nonsense.

A classic example of that is a person in my riding--and I refuse to use the word gentleman--who had eight previous impaired convictions. On the ninth impaired charge, he got it right: he killed a young girl of 18 years of age. He was sentenced to eight years in jail. He served only two years and was released.

What signal are we sending people when a person who has nine impaired convictions kills a young 18 year old girl on the ninth conviction, only gets an eight year sentence and serves just two years of that sentence? What are we telling the victim and the victim's family? It is an outrage.

There is no difference in terms of corporate crime. If we are going to send people to jail, we must send them to jail for the length of their time and ensure that they serve every single day so they know that if they commit this white collar crime they indeed will face serious consequences if they are caught.

I have another concern. We have to ensure that our government, our police forces and all the agencies have the manpower and the financial resources to follow up on the investigations and tips they receive. Many times our police forces and the RCMP are underfunded and undermanned. They simply do not have the resources to do the job effectively.

The proposed legislation sounds good. We can put it into law and on paper, but if we do not provide the tools and the teeth to back it up, it means absolutely nothing.

With that, we give cautious support for the bill. We wish that members on both sides would have the opportunity to speak to it. We would like to see further dialogue happening when it gets to the Senate. We are definitely in support of the proposed legislation, although it is not as strong as we would like it to be.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, it is a pleasure for me to speak today on Bill C-46, which, as you know, establishes new offences under the Criminal Code with regard to capital markets fraud, particularly when it concerns employee pension funds.

People tend to think that only large investors will be affected by the kind of legislation before the House today.

However, when it comes to investment interest rates, those investing the most in the stock markets and even banks are often big companies investing their employee pension funds.

On a daily basis, public sector funds even undergo a certain number of operations to leverage the savings of both private and public sector employees. As a result, when they retire, these people will get a decent pension. So it is extremely important for us to ensure that we protect these small investors.

Recently, there have been major scandals that Quebec and Canada have so far managed to escape. However, it is feared that what has happened in the United States might happen here.

Everyone remembers the infamous Enron scandal. Several U.S. companies had misappropriated funds, but Enron, in particular, truly created a crisis in the retirement fund of its own employees, who had been convinced to invest their retirement money in Enron shares or the like.

Consequently, when Enron started to take on water and sink, the entire employee retirement fund sank with it. People who had worked there for several years are now without a pension.

I have here some data on Canadian trusteed pension funds. For instance, Canadian trusteed pension funds have over $500 billion in assets. It is easy to understand the importance of the bill before the House today.

It must be said that $500 billion is a lot of money. Some day, these funds will be used for retirement; they are already being used for that purpose today. Indeed, when people retire and stop working today, they are often at retirement age and want the company they have worked for to pay their pension beneifts.

It is the same thing in the public sector in Quebec and in Ottawa. There are procedures. People are entitled to a retirement pension. They apply and receive their pension; in the public sector it is no different. However, the public sector is somewhat protected by the government.

In the private sector, the Criminal Code must be very clear on punishing people, especially people who commit fraud, which can have extremely harmful consequences for private sector pension funds. It is important to tighten up the Criminal Code to try to prevent such a thing from happening.

There is also the example of Singer, in my riding. Not only did the company not pay into the fund, but it took off with the rest of the fund. Instead of improving this fund over the years, it stopped paying premiums, often without the workers' knowledge. Some former employees in Saint-Jean receive a pension of roughly $20 a month.

This goes to show that it would be very useful to tighten up criteria and warn fraudsters and inside traders—I will explain what insider traders are in a moment—that they will have to answer for their actions, probably face severe fines and even a prison sentence.

Out of the $500 billion I mentioned earlier, $115 billion is invested in Canadian stocks. Once again, if a group of companies tampers with or benefits from specific information to make money or sell stocks before their price declines, we can see how this can affect the little guy.

The little guy goes to work every day. He relies on his employer, his union and his pension fund to see to it that his money is invested properly. We must be confident that the companies in which the funds invest are protected against such fraud.

Also, $57 billion is invested in foreign stocks. More than 4 million workers contribute to these funds. Clearly, when 4 million Canadian workers are affected by these kinds of funds, it is important that the lawmaker step in to ensure that everything is above board.

I want to congratulate my colleague from Charlesbourg—Jacques-Cartier on the excellent work he has done. I must admit, however, that we are not happy with the bill as it stands. Several of our recommendations and amendments have been incorporated into the bill, but the main one, with respect to duplication or interference by the federal government in Quebec's areas of responsibility—once again—was not. For that reason, we will not be supporting the bill.

Nevertheless, we did win on some points. We should be proud of that and recognize that it was thanks to the Bloc Quebecois that the amendments were accepted. We have improved the bill. Even though, on the whole, we are not in favour of this bill, some of the provisions we have suggested have been accepted.

Among others, there is the whole issue of insider trading. What is insider trading? One hears or reads this term often in the business and financial press. For example, we see that someone is going to be sentenced by a court for insider trading. It is not complicated. Insider trading is a situation where someone is in a position to give friends and family an unfair advantage. Having received privileged information, this insider will pass it on to someone else, who will become richer because of this privileged information.

For example, the chairman of a large company might see in the financial statements he receives that there is a serious operating deficit for the current year. He will also realize that, as soon as this information becomes public, it may have a negative impact on the value of the company's shares on the stock market. Therefore, he might say to people he knows, who have many shares—often family members and friends—that there is a report forecasting a serious operating deficit in the quarter. He warns them in advance that it would be wise to sell their shares because when the news comes out, they will drop in value by 20, 30 or 50%. That is insider trading.

The opposite is also true. If the president of a different company sees in the statements that earnings are very high and that the stock will probably rise in value, once again, he may engage in insider trading. He may say to his friends and family that perhaps they should—say, tomorrow morning—buy some company stock. He has an excellent financial statement and he believes that the value of the stock will rise as soon as the news is known.

Currently, Quebec legislation prohibits this. The securities commission prohibits this kind of behaviour. In Quebec, such acts carry consequences.

It is also understandable that such behaviour often has a negative impact on the funds. This is important. If I am a former employee of the Quebec government, I know I am entitled to the government and public employees pension plan. I am entitled to a pension at age 65, based on my years of service. My pension will be 2% per year of service based on my best five-year average salary. I know that the Quebec government has money and this means I am sure of getting paid.

However, if the government or governments do not take an interest in capital market fraud in relation to the funds that have been invested, there could be a negative impact on the overall amount in the fund, meaning that it could decrease.

There is also the danger of retired workers being told, “Sorry, you were entitled to certain benefits, but we can no longer maintain them, because the fund is no longer able to pay and so we are going to impose restrictions”.

As a result, it is important for us to be able to control this, throughout the business world, and ensure that those guilty of insider trading realize that, from now on, they will be subject to prosecution and heavy fines and even prison time, if convicted.

Thanks to the Bloc Quebecois, we managed to improve protection for whistle blowers in this bill. This occurs more and more frequentlty. We also asked the President of the Treasury Board to apply this to the federal public service. When a federal government employee, a Quebec government employee or a company employee learns of insider trading, they should be entitled to protection.

It is a difficult situation for an executive secretary, for instance, who attends a company board meeting and finds out the CEO is guilty of insider trading, telling those present at the meeting to buy or sell shares because they are going to increase in value. This secretary is often bound by confidentiality, but could perhaps give a warning by saying that some people are considering insider trading.

All those who currently work in business know that there are many pressure tactics that can be used on employees or officials. They can be asked to keep quiet, and warned that otherwise their lives could be made difficult.

I think it is important to provide some protection in the bill for what I would call the guardian angels, those who are not necessarily involved in the scam, but are witness to it and could, at some point, say they do not accept what is happening and denounce it to the appropriate people.

That is not what is happening; the code of silence applies. People have to live with a situation that they know poses a problem and they cannot say anything about it because they would become victims of repressive measures.

Again, I must commend my colleague from Charlesbourg—Jacques-Cartier, who insisted that this measure be included in the bill. The problem is what happens when the case goes to court.

The major problem with this bill—and there have already been indications of this—is that the federal government wants to interfere in the entire securities issue, while it is very clear in the Canadian constitution that this comes under the jurisdiction of Quebec and the provinces.

The same is true for administering the law. The administration of justice is Quebec's responsibility. Yet, this bill would allow federal prosecutors to take cases to court. I wish to point out that there already are provisions in Quebec's legislation and the provinces' legislation with respect to insider trading.

In fact, we did put forward amendments to prevent the government from interfering in fields of provincial jurisdiction. I mentioned the index. I was elected in 1993. Quebec has a securities commission, which does a fine job and checks, in a very proper fashion, any propsectus put out by a company. Before investors buy stocks, the companies should normally provide them with a prospectus. There had been abuse in the past, and Quebec's securities commission corrected this abuse.

I remember that in 1993-94, the federal government wanted to create a Canadian securities agency. Once again, this was in direct contradiction with the jurisdictions of the provinces and of Quebec, of course. Nation building had probably started, but that may not have been evident at the time. Today, it is increasingly evident, with massive intrusions in Quebec's jurisdictions.

In those days, the Bloc Quebecois was already the guardian of the jurisdictions of Quebec and the provinces; we had formally opposed the creation of this Canadian securities agency, which would have overseen the provincial commissions, including the Commission des valeurs mobilières du Québec.

Such an agency would have had some control over Quebec's commission. Again, it would not have minded its own business and would very obviously have intruded in an area of responsibility that belongs to Quebec.

From now on, federal prosecutors will be allowed to prosecute, to lay charges, and to do so under national terms and conditions. We are familiar with these kinds of national terms, which are often in contradiction with the ones in Quebec. Often, whatever program is developed in Ottawa will be imposed on Quebec.

In Quebec, we see things differently. We have a very distinctive way of doing things within our own jurisdictions. We often hear that federal legislation takes precedence over provincial legislation. We have seen what that led to in the case of the Young Offenders Act, which is probably the best example we have seen in this House. In Quebec, we had a very good rehabilitation rate. Our young offenders policy was based on reintegration into society, while the government's bill sought to break the young people, to send them to them to crime school and even to lock them up before they were adults. That is one example.

The bill we have before us is more or less the same. They want federal prosecutors to take to court cases that fall within an area of jurisdiction that does not belong to them. We have asked for many amendments, but unfortunately to no avail. Consequently, we will be forced to vote against the bill.

Overall, I believe the Quebec securities commission works well. It is equipped with the means to correct situations in its area of jurisdiction, and so there are fewer insider trading offences. There are fewer in Canada than in the U.S., but likely even fewer in Quebec than in the rest of Canada.

I feel it is important for governments to get involved, but the problem here is that the federal government is getting involved in something that is not its own business but that of Quebec. This is the fundamental reason for the Bloc Quebecois' opposition to this bill.

Even though it is likelihood that this bill will be passed, because as usual the Liberal majority will side with the minister who is sponsoring the bill, we will at least have the consolation of knowing that there have been improvements made as far as insider trading and whistle blower protection are concerned. This is a very important measure which, incidentally, ought to be extended to the entire federal structure, the entire federal public service. That way, by providing protection to people who witness abuse, a system that is cannot readily be improved could eventually be improved.

Overall, given federal interference in areas of Quebec jurisdiction, the Bloc Quebecois will be forced to oppose this bill. We will at least have the consolation of having improved certain aspects of it.

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

Mr. Speaker, I fully agree with you that it is not a point of order. I will close my speech with one question.

Is Bill C-46 not a clear manifestation of the fact that the federal govenment would like to get its paws on the securities commission? What it has not managed to do by the front door, it will manage to do by the back, by involving federal prosecutors. This is a role they ought not to have. The government ought to be respecting the jurisdictions involved here.

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

Mr. Speaker, I want to thank my colleague for his speech. He has certainly shown that, in each and every bill, we can see that the federal government tries to encroach more and more on provincial jurisdictions.

The same thing goes for this bill, which deals with the whole issue of corporate fraud. I would ask my colleague to tell us if he does not see anything insidious in the fact that the federal government is trying to allow federal prosecutors to play a role in an area under provincial jurisdiction.

We know that the idea of creating a national securities commission has been around for several years. When he was finance minister, the member for LaSalle—Émard raised this issue on several occasions and wanted this project to become a reality. However, he met with all kinds of obstacles, particularly from provincial governments, since they have a system that works.

For the government, is Bill C-46 not—

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

If the trend continues. We know that in this House—pardon me but they did provoke me to some extent, and they will pay for it—there is the front row, which I call the row of those on their way out. I think that soon there will be so many ministers without any responsibilities that this row will go all the way to the Prime Minister. They are kept either in the front or in the back. It will be up to the whip, I hope, the new whip, the minister of this or that. No one knows where we are going.

I can tell the hon. members one thing: the Bloc Quebecois knows where it is going with respect to Bill C-46. It reiterates its opposition to this bill because it interferes with provincial jurisdictions. If you want to help Quebec, do so within your jurisdictions, and let us act within ours.

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Once again, they are trying to get me off track. I have no problem telling them that Bill C-46 does not offer a response to the problems we are experiencing with people likely to run into situations like those that have occurred in the States.

The only thing that Bill C-46 does is to give the Canadian government more leeway. I am repeating myself over and over again, because that is how parents sometimes have to talk if they want to be heard. If we want to convince the Liberals over there, who have been acting like kids for the past few minutes, then I will have to keep saying the same thing over and over again. I want to convince them that Bill C-46 addresses an area that is under provincial jurisdiction, not federal.

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Mr. Speaker, as for what I am hearing in this House, I will never allow an adversary to crush Quebec once more. Never. That is, I think, perfectly clear.

The purpose in life of the members of the Bloc Quebecois is to defend the interests of Quebec, and in so doing to promote the fact that one day we shall have our own country, Quebec.

Returning to Bill C-46, as hon. members are aware, the Bloc Quebecois was putting pressure on the federal government as long ago as the fall of 2002 to take steps to tighten up the provisions of the Criminal Code—their responsibility— in order to better equip the authorities to deal with corporate fraud.

Everyone will remember the sad events in the U.S., the scandals with Enron and other companies, in which people lost their fortunes, lost every cent they had, because there were no provisions in place, no laws to protect them. We in the Bloc Quebecois therefore called upon the Canadian government to pass legislation in this area. Since the fall of 2002, moreover—and now here we are in the fall of 2003—the bill has not yet been passed. There is a lot of foot-dragging going on, but all we know is that we are being rushed headlong toward the end of this week.

If that does happen, we will be able to talk about the democratic deficit. It will mean that we will barely have sat at all in 2003. Virtually nothing will have been accomplished here because, once again, we are dealing with the two leader phenomenon. With that going on, there is constant tension between the two people involved, and Canada and Quebec are the ones who are paying for it.

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Mr. Speaker, I would appreciate it if the members opposite would take the time to listen to me. It does not upset me; I will just raise my voice. I am used to controversy; it does not bother me one bit.

If these people think they can distract me and get me off topic, we will be talking for a long time, because I do not need notes to speak about nation building and all the interference of the federal government in provincial jurisdictions. I could talk about it for a long time. They will cut me off and tell me my 20 minutes are up. If it bothers the members opposite when I tell the truth, that is their problem.

Thus, I was saying that the regulation of financial markets comes under the jurisdiction of Quebec and the provinces. That is clear. Sometimes I have the impression that even though they patriated their beautiful Constitution by force in 1982, they are not familiar with it, or if they are, they interpret it badly. The way they interpret it, they can interfere in Quebec's jurisdiction all they want.

This is also true with regard to the administration of justice. I hope that the Minister of Justice is listening. Quebec and the provinces have responsibility for this. Once again, there is an attempt in Bill C-46 to give the federal government responsibilities that do not belong to it. In terms of the proposed reforms, the Attorney General of Canada would be responsible, jointly with the provinces and the territories, for laying charges related to certain kinds of fraud under the Criminal Code.

Here again we have nation building at work. Under the pretext of establishing excellent cooperation between the federal government and the provinces, areas belonging to the Quebec government is being taken over.

Initially, the Bloc Quebecois was in favour of Bill C-46. The Bloc Quebecois tried once again to trust the Liberals. However, once again, the Bloc was forced to change its mind, because every time the Liberal government does something, Quebec suffers. It is always encroaching on Quebec's areas of jurisdiction. Bill C-46 is no exception, on the contrary. It consolidates the Liberal efforts since 1993, and particularly since 1996, when the Minister of Intergovernmental Affairs arrived. He is trying to ensure nation building at Quebec's expense and in order to get involved in Quebec's responsibilities.

As I said when I started, this is not reality Parliament, it is the sad truth. This proves that, day after day, everything this government does is designed to ensure that Quebec is diminished and reduced to being a province like the others.

I remember what the Minister of Agriculture and Agri-Food said. Quebec agriculture has a distinct character. Quebec has vested rights. What did the Minister of Agriculture and Agri-Food say in response? “It will be treated like any other province.”

Clearly, nation building is omnipresent. No one wants to admit it. This leads me back to the motion introduced by my colleague from Trois-Rivières. We asked if Quebec was a nation, and they all said, “No”. Even the 25 federal Liberal members answered no, while the National Assembly unanimously answered, “Yes”. There is no consistency.

My time is running out. I should conclude my remarks. With all the interruptions, could the Chair inform me of how much time I have remaining?

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Mr. Speaker, I thank you very much for your kind words about me. You know that I am an experienced parliamentarian and I did have a previous career in radio, so I sometimes like to add a little humour, and mix humour and reality. I was talking about nation building.

I come back to nation building. It is not very complicated. At present there is legislation in Quebec governing this whole issue of the regulation of financial markets, as discussed in Bill C-46.

The government now wants to have federal prosecutors in charge of prosecutions. That annoys us a little, because since 1993, every time there is a crisis, every time there is a world-shaking event, every time there is a conflict between the provinces and the Canadian government, every time something happens between another country and Canada, this government intervenes, legislates, and uses the opportunity to come and encroach on provincial jurisdictions.

The government has acted this way ever since 1993. That is what we mean by nation building. I am coming to the bill now.

The provision that it will be federal prosecutors who prosecute the offences—

[The Deputy Speaker]

Is there anyone else who wishes to speak on this point of order?

The rule of relevancy is very generous and flexible. However, as we say at home, do not push your luck.

I have no objection to setting the tone, preparing arguments and other things, but we still have to come back to Bill C-46 that is currently under consideration. The member for Lotbinière—L'Érable is probably leading into his arguments, as is common practice among his colleagues from both sides of the House. I am certain that soon, he will start to talk about Bill C-46.

[Claude Duplain, Liberal, Portneuf, QC]

Mr. Speaker, the hon. member was supposed to talk to us about Bill C-46. What he is talking about is of no interest. He is talking about reality television and it is irrelevant.

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Mr. Speaker, I too will speak on Bill C-46. Everything has been said, but once again, this bill is part of the nation building effort undertaken by this government since the 1995 referendum to try and take jurisdictions away from the provinces and centralize everything in its hands.

My neighbour, the hon. member for Trois-Rivières, who is a staunch advocate for the provinces, condemns nation building and the Liberal government's actions every time he rises in this place. Again, Bill C-46 is a fine example of the federal government's attitude. It is stepping into areas of provincial jurisdiction.

I take this opportunity to say that when this government should be taking its responsibilities, it hides. It is not there, and we are left waiting. But it is all there when it comes to encroaching on our provincial jurisdictions.

A case in point is the current farm crisis in Quebec. The money is in Ottawa. This is a federal responsibility since the crisis involves two countries. it is my understanding that when two countries are having bilateral problems, they have to talk, come to an agreement and act to support those going through a crisis. They are not doing their job.

In that respect, I would like to make a small digression. In Quebec, as you know, many television viewers tune in to what is called reality TV. Here we have “Parliament and Reality”.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, Bill C-46 falls tragically short of any meaningful codes of conduct for the financial markets. In fact I refer to an article from the Globe & Mail of September 26, 2002, where it said that the meagre fines contemplated in the bill would give analysts a licence to shill, not to kill but shill.

What I am getting at is the practice of misrepresenting the value of certain stocks by recommending a strong buy. In other words, it is a recommendation to purchase, when in actual fact the analyst knows full well that the stock is not doing well at all. This kind of corruption, this kind of shilling, is simply because an analyst has a vested interest or even shares in a company, and is misrepresenting the value of a certain company or stock to investors. No wonder there is a crisis in confidence if this is the type of thing that is going on.

I can give an example. Scotia Capital treated Royal Group Technologies as a strong buy recommendation on September 13. Three days later Royal issued a profit warning that clobbered the stock. The Scotia report failed to disclose that Scotia itself owned 5.5% of Royal. Imagine small time stock investors. They are simply at a terrible disadvantage. In a situations like that, the government has to step in to regulate these markets.

Here is another example. TD Newcrest had a buy on Telus but its research reports did not disclose that chief executive officer of Telus, Darren Entwistle, was a TD Bank director. Essentially, we have all this incest going on at that level.

All these directors and analysts for the major accounting firms are misrepresenting the value of stocks at the peril of Canadian investors and at the peril even of the institutional investors like the union I represent.

I have a great deal of interest in this because the retirement security of honest working people is being squandered and misused in situations like this.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, it is hard to resume debate on this corporate fraud bill with the disturbing information just brought to our attention by the government House leader, moving closure on the first nations governance act. People have lost count the number of times the government has had to use closure to ram through its legislative changes.

I was outlining some of the shortcomings of Bill C-46 because the pension investments of Canadians are at risk under the current securities regime. We have seen evidence of this with the absolute collapse of Wall Street and the ethical paucity of Wall Street and Bay Street where voluntary compliance to ethical standards has not been enough to provide security to Canadians.

I do not know if it is a coincidence or not that our now privately invested Canada Pension Plan Investment Board has lost $4.2 billion out of $22 billion on the securities market. Certainly, it is cause for alarm for Canadians. They want to have confidence in the people that are investing their money.

Some of us disagreed that the money should have been gambled on the open market to begin with. Our fears have been realized. We would have been better off if we had dug a hole in the ground and put that $22 million into a hole because at least the same amount of money would still be there when we went to dig it up. Instead, $4.2 billion has been lost out of it.

We used to loan that money to municipalities and to provinces at a fairly low interest rate of 2% so that they could do capital infrastructure projects. Even with 2% return on that money, we would still have our equity or the base principal and 2% interest. Instead, it has been lost. As a result, more ordinary Canadians are taking a keen interest in the securities marketplace and financial institutions.

We are more vulnerable because our government has not had the courage to put in place strong regulatory changes such as the Sarbanes-Oxley act. Instead, we find ourselves with Bill C-46 which we are debating today.

I would like to outline some of the things that a true corporate fraud bill would deal with. Ordinary working people right across the country would be pleased to see it.

The independence of auditors is absolutely crucial. Corporate officers should be required to report any time they receive loans from their companies. Investors should know if some of these practices are taking place, but there is currently no requirement to disclose them. We found the CEO of Tyco, a Canadian by the way, with $30 million and $40 million worth of outstanding loans when his company collapsed. There have been examples of hundreds of millions of dollars worth of loans.

There are other examples where the stock options being used as part of the executive compensation exceed the net worth of the company, but they does not have to be listed on the expense column of the financial statements. Why not? If somebody is going to roll the dice and gamble with my pension income on the Canada Pension Plan Investment Board, at least we should be going in with our eyes open and know whether these irresponsible CEOs and board of directors are approving a practice that has resulted in catastrophic losses for working people in the United States and in this country as well.

We also need a national securities commission, not 13 separate independent securities commissions. We need one national securities commission with national standards because the operations of these companies are not isolated within the provinces their head office is housed. The operations of these companies are often national, transnational and international. Why does Canada have 13 separate securities commissions with 13 different sets of rules, when even the head of what used to be called the business council on national issues is calling for one single securities commission?

Those are the types of changes we would have expected to see in Bill C-46 if we were serious about cracking down on corporate fraud and white collar crime as it affects blue collar people.

On the compensation packages of directors, I crashed the shareholder meetings of two major institutions recently with some proxy votes. I do not own any shares in these big corporations. I often find that a single director will sit on many boards. In one case, for example, George Cohon, the CEO of McDonald's of Canada sits on 50 boards of directors, each of which meet ten times a year. No one really believes that these guys actually make it to all their directors meetings. In fact, they only attend one meeting per year where they approve the executive compensation for each other. It is an incestuous little pool and it is going on behind the shareholder's back. The shareholder does not know.

Therefore, we would have amended Bill C-46 to require CEOs to justify and defend their compensation packages to stakeholders.

When I crashed the shareholders meeting of the Bank of Montreal, I moved a motion to that effect. Further, we moved a motion that the CEO be limited to a salary 20 times that of the average employee, which seems pretty generous. In actual fact, the compensation package for the CEO of the Bank of Montreal that year was 120 times that of the average employee. The international average is 13 times that of the average employee.

We did the same thing for the Royal Bank of Canada. We moved nine resolutions to democratize and to protect the rights of shareholders from the actions of some of these corporations. One motion that we moved almost passed with 49.6% to 50.4% to have gender parity on the board of directors of the Royal Bank of Canada. I think it surprised them that a motion from the floor would come that close to succeeding.

We would have recommended other changes in the best interests to protect Canadian pension investments on an otherwise irrational marketplace. There is no stability in today's marketplace. This is what is causing the crisis in the confidence of many institutional investors and in fact threatens to bring down the entire system.

I have a number of pieces of information I would like to share with the House today. I prepared a motion back in 2002 which would have given some direction to the Minister of Finance in changing the Canada Business Corporations Act to address some of these serious concerns. The motion is quite simple. It stated:

That, in the opinion of this House, the government should encourage regulatory changes by securities commissions to ensure the independence of financial auditors by: (a) prohibiting accounting firms which provide audit services from providing other accounting or financial consulting services to the same company; (b) requiring companies to disclose to shareholders in their annual report if their auditor has provided other accounting or financial consulting services to them; and (c) requiring companies to disclose to shareholders in their annual report the amount paid in audit fees and the amount paid for other non-audit financial services

I raised this because quite often today the practice is to throw in the audit almost as a loss leader because the real money is in the other financial services that an accounting firm sells. We believe this is a bad practice that puts at risk the pension investment security for many Canadians who rely on an honest system.

We are disappointed that instead of looking at the amendments to Bill C-46 that we are not looking at legislation that has real teeth, such as the Sarbanes-Oxley act in the United States.

Interestingly enough, we are being regulated by American legislation in that many of our companies that do business in the United States find themselves subject to the Sarbanes-Oxley act. We are having the American congress dictate guidelines to Canada that would provide some security, but we are falling far behind.

The amendment replacing subsection 382(1) states that it might reasonably be expected to effect the material value of any of the securities of the corporation. The current legislation only captures fraud that significantly effects the integrity of the system. It contradicts in a way the government's own standard enshrined in the Canada Business Corporations Act. We do not find any comfort in that amendment or in any of the amendments put forward.

In the interests of Canadian working people who have their pension retirement funds invested in the marketplace, the government has an obligation to take concrete steps to ensure that we are not vulnerable to the type of catastrophic meltdown that has taken place in the United States. We are not there yet, and Bill C-46 falls short of giving that security.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, the point I was beginning to make was there comes a time when white collar crime becomes a blue collar issue, a working class issue, a working person's issue. Even if most ordinary working people in Canada do not invest in the stock markets or the financial markets, almost all of us are indirectly involved through our employee pension plans and our health and welfare plans. Even the Canada Pension Plan is now privately invested on the open market.

Therefore, Canadians have to wake up frankly, and realize that there is a serious problem of confidence in our financial marketplace. We have to be able to trust the financial statements of the companies in which our retirement income is invested. Therefore, many Canadians have been horrified to watch the meltdown on Wall Street and an equal crisis in confidence on Bay Street, as they watched in horror WorldCom, Enron, Nortel, ImClone, Tyco. We could go on and on because there has been an absolute epidemic of unethical practices revealed on the financial markets of North America, which has created a genuine crisis in confidence.

Compare Bill C-46, as we have it today, which is to deal with capital markets fraud and evidence-gathering, with the Sarbanes-Oxley act in the United States. Compare the difference between the protection of pension incomes in that country compared to Canada. The Prime Minister of Canada essentially ignored and was silent on the issue of the crisis of confidence. Our finance minister was virtually silent. His reaction in fact was to strike a wise person's committee and to ask Bay Street and the Institute of Chartered Accountant to get into a voluntary compliance with ethical standards.

Compare that with the United States when the President stood up and said that if companies were defrauding the American people, the administration would hound them down, find them, catch them and put them in jail. Whether they were members of a corporate board of directors or CEOs of companies, they would pay big time. That was the difference, the contrast in the approach.

As a representative of working people in my former life as a trade unionist, who has sat on the pension plans of the union movement and have some knowledge of how that money is managed on behalf of working people, believe me, I take no comfort in the reaction of the Canadian government to this crisis in confidence compared to the very legitimate efforts made in the United States.

The bill is silent on a number of issues. I do not see a lot of reference to it in the recommendations put forward in the proposed amendments, rather than the amendments that we now see. We were hoping to see a serious crackdown in some very glaring, obvious and easy to fix shortcomings of the current securities marketplace.

The first, to which I would like to speak, is the idea of the complete independence of auditors. What happened at Enron, what happened at WorldCom, what happened at Tyco is that the same chartered accounting firm, in this case, Arthur Anderson, which was keeping the books, doing tax consultation and database design, was also hired as the auditor.

How can we trust the financial statements of a company, if the same company is asked to keep the books and audit the books? That same situation exists in Canada today. Even with the voluntary measures undertaken by the Institute of Chartered Accountants, it sees nothing wrong with the company that is the auditor also doing the tax consultation, et cetera. Can it not see this glaring conflict of interest? I should mention that this could be remedied by a simple change to the Canada Business Corporations Act. It has been brought to the attention of the government and it has chosen not to act.

Another glaring issue that is quite easy to fix is the idea of expensing of stock options, that is, having these costs show up in the expense column of the company's financial statements.

If a company is going to use stock options as part of the executive compensation of the company, then investors should know. The liability of outstanding stock options often exceeds the net worth of the company. Even as a blue collar socialist, I know the danger signals associated with that.

If a person is going to use--

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am very pleased, on behalf of the NDP, to enter into the debate surrounding Bill C-46 at report stage.

By way of introducing the subject, I note that the bill is meant to address the pressing problems associated with what we call white collar crime. However, I want to develop the case, as I speak on this bill, that this is in fact very much a blue collar issue. In fact white collar crime is a blue collar issue and a working person's issue.

It is very difficult to even hear myself think with the amount of debate that is going on across the room.

[Odina Desrochers, Bloc, Lotbinière—L'Érable, QC]

Mr. Speaker, first I would like to thank my colleague from Jonquière who again was able to define the various elements of Bill C-46. This bill proves once again that the federal government is prepared to interfere in jurisdictions that belong strictly to Quebec.

Since 1997, the year I became an MP, I have seen many bills nibble away at Quebec's jurisdictions. I have also seen the one that Bernard Landry, the Leader of the Opposition in Quebec, so aptly described, at the Bloc Quebecois general assembly on Saturday, as the strangler. The strangler is the former finance minister, the member for LaSalle—Émard, who, since 1993, has been working at cutting funding to accumulate a large surplus. He then goes to the people he penalized, and who were short money, and he acts like Santa Claus.

It is November 3 and far too early to start playing Santa Claus. Halloween has just gone by.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I always address you with great respect. All through my speech I addressed you. Just now, however, someone I am very fond of called out to me. So, through you, I say hello to him.

Let us return to Bill C-46. With respect to revealing information that is inherently private, the Bloc Quebecois has questions concerning the extent to which this breach of privacy and human rights is necessary in order to achieve the objective of this bill.

This is an extremely important point. Even if this were the only point at issue, we would have to vote against the bill, because respect for privacy is important. We live in a country where we cultivate liberty. Every aspect of private life ought to be essentially confidential.

The involvement of federal prosecutors is something we have particular difficulty with. The regulation of financial markets comes under the jurisdiction of Quebec and the provinces. I hope that the government will finally take this in and understand that anything having to do with financial markets comes under the jurisdiction of Quebec and the provinces. The same is true for the administration of justice.

We cannot agree to these new provisions. In fact, to us they appear to confirm the federal government's new determination to encroach on the field of securities, which nevertheless comes under the jurisdiction of Quebec and the provinces.

For all these reasons and many others, as my colleagues, the hon. member for Charlesbourg—Jacques-Cartier and the hon. member for Joliette have said, the Bloc Quebecois is opposed to this bill. There are good elements in it, but it is missing many more that should have been included. Moreover, the government ought to have respected provincial jurisdiction and ought also to have respected the Quebec securities commission. We have such a commission and it does its work well.

I am opposed to the creation of a Canadian securities commission. In Quebec we are distinct and I hope that this government will finally understand that. We are a nation and we have acquired the tools we need to develop in a manner consistent with our identity. Never, never would Quebeckers, who have their own distinct character, ever want that used against the other provinces. We respect the other provinces. We ask the government to respect the guidelines, the tools and the jurisdiction that Quebec has developed over the years.

In regard to this bill, it does not. For that reason, the Bloc does not agree and therefore we will vote against Bill C-46.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I am pleased to rise in the House today to speak on Bill C-46. As my colleague from Charlesbourg—Jacques-Cartier has said, even though the Bloc Quebecois supported this bill at second reading, we must now state that we will be voting against it at this stage.

Why is the Bloc Quebecois going to vote against the bill? As the member for Charlesbourg—Jacques-Cartier and the member for Joliette and Bloc Quebecois public finance critic have said, they have been calling for amendments to the bill throughout the entire parliamentary process. There is no denying that the intent behind the bill was a good one. The Bloc Quebecois has suggested amendments in some very specific areas throughout the process, in order to provide the bill with more teeth in certain very specific situations.

The Bloc Quebecois is also categorically opposed to Canadian government interference in areas that fall under Quebec's jurisdiction over the regulation of financial markets. We have trouble understanding why this bill gives the Attorney General of Canada authority to prosecute certain Criminal Code offences relating to financial market fraud.

This is all the more a concern because the federal government has openly talked about creating a Canadian securities commission. Really now. We already have a securities commission in Quebec which works very well. The Bloc Quebecois is of the opinion that the regulation of securities clearly falls under the jurisdiction of the Government of Quebec, and we therefore disagree with what the federal government has in mind.

Since my election in 1997, I have been hearing about how the federal government should respect provincial areas of jurisdiction. Yet at every opportunity it enacts legislation to trample thoroughly over those areas of jurisdiction. It talks about cooperation, but we know what it means by that. Particularly at present, its idea of cooperation is to invade all possible areas of provincial jurisdiction so it can say “We are the boss, and you are going to have to go along with whatever we decide”.

Right from the word go, the Bloc Quebecois has been opposed to any kind of interference by the federal government in areas of provincial jurisdiction. We will continue that opposition as long as we draw breath.

We also oppose this bill because not a single amendment we proposed in committee has been accepted. Under these circumstances, the Bloc Quebecois cannot agree with the bill.

For the benefit of those who are watching us, I would like to read the summary of the bill:

This enactment amends the Criminal Code by creating a new offence of prohibited insider trading and creating a new offence to prohibit threatening or retaliating against employees for disclosing unlawful conduct. The enactment increases the maximum penalties and codifies aggravating and non-mitigating sentencing factors for fraud and certain related offences and provides for concurrent jurisdiction for the Attorney General of Canada to prosecute those offences.

The enactment also creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances.

This bill was originally introduced by this government because of the recent financial scandals in the United States. Several hon. members have already talked about this, but it is important to reiterate because that is truly where this all started. These scandals were a wake-up call.

They made us aware of how fragile our financial system was and of our dependence on it.

At first glance, we might think that only major investors are affected by financial market crises, but that is not so. The biggest players on the stock market are those who manage pension funds. Consequently, if a pension fund suffers major losses, it is small investors who might lose their life's savings and watch their retirement plans go up in smoke.

I would like to give some figures from 1998 on Canadian trusteed pension funds. At the time, these funds held assets of more than $500 billion. Of this amount, about $115 billion was invested in Canadian stocks and some $57 billion in foreign stocks. Four million Canadian workers actively contributed to these funds. Only financial assets of the chartered banks exceeded the capital held by the pension funds.

In addition, based on the above-mentioned figures, we can see that a financial crisis in Canada would have a direct impact on the retirement income of millions of households. Those households are the ones we have a duty to protect. Fortunately, Canadian stock markets have so far been relatively free of wrongdoing, with the exception of the Nortel and CINAR affairs.

However, the Bloc Quebecois feels that despite the fact that our securities regulation systems are, in the opinion of many experts, much more comprehensive than what existed in the United States before the financial crisis, it is nonetheless important to send a clear message that financial wrongdoing constitutes a serious crime that is not acceptable in our society.

These reasons and many others prompted the Bloc Quebecois, in the fall of 2002, to call for major changes to the Criminal Code in order to provide the appropriate authorities with better tools to fight financial crimes.

The Bloc Quebecois called repeatedly for the amendments we had put forward in the fall of the previous year and these would have made things better in many respects. First, we proposed adding a section to the Criminal Code to make insider trading a criminal offence. My hon. colleague from Charlesbourg—Jacques-Cartier described earlier for our benefit what insider trading is all about. This proposal was designed to send a clear message to company executives that the use of confidential information obtained in the performance of their duties for the purpose of making profits or avoiding losses would not be tolerated.

Making profits or avoiding losses in this manner impacts negatively on other investors who do not have access to the same privileged information. We can see this regularly. It has happened in the U.S. and pretty much everywhere. It is important to strengthen this aspect of the Criminal Code.

The Bloc Quebecois also proposed that a new offence of securities fraud be created. This offence, patterned on the measure adopted in the United States, would now carry a 10 year prison sentence and would prohibit fraud when selling or buying securities.

These provisions dealing with insider trading and employment related threats or retaliation are very important. Employees who blow the whistle on fraud in financial markets, or assist law enforcement officials in the investigation of such situations also need protection against employment related intimidation.

In fact, when it comes to money, people sometimes forget that, when fraud occurs, it is not the people who will be reported, but rather the situation.

When this kind of situation is reported, the individuals or employees reporting the crime should be protected. They are just doing their duty. They are being honest. They should not have a sword of Damocles hanging over their heads so that, if they report the crime, they will be subject to retaliation.

Protecting them is extremely important, because honesty must permeate every level of society. Where dishonesty exists, we must recognize the efforts of individuals working to openly and publically report it. These individuals must be congratulated and told that there is legislation to protect them.

Also, section 487.013 allows banks to disclose confidential information. I am perplexed by this section, and the Bloc Quebecois is also very perplexed in this regard.

This section allows banks to disclose confidential information such as a person's account number, status and type of account, the date on which it was opened and closed, the account holder's date of birth, and current or previous address.

First, this information is inherently private.

I would not like others to know all my personal information. This is confidential information. The Charter of Rights and Freedoms must protect this information.

So, when others ask for this information, this necessarily violates individual rights and privacy.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I am pleased to have the opportunity to speak on the bill for a couple of reasons. First it will give me the opportunity to speak for a bit on the companion legislation that was tabled on the same day as this legislation, and that is Bill C-45, the corporate manslaughter bill, and also on this piece of legislation, which certainly is timely.

To indicate some of the reasons we have the bill before us, I will read out of few of them just in case somewhere along the way someone has forgotten what prompted governments in the U.S. and Canada to finally put in place legislation to address some of the problems we are having in the corporate world and which are having an extremely detrimental effect on the markets. I say extremely because although things have been happening for a number of years it was not too severe and not quite as much money was being lost. Not quite as many people were affected, nor were so many of the pension funds of people we knew. Nothing was being done for a lot of years.

Over the course of the years from the early 1990s and on, we were hit with a number of problems. I will read through them just to remind Canadians of why we are here with the legislation and why it is personally important that the legislation gets support. I would agree with my colleagues on why we should strengthen it. We should be strengthening it in a number of areas.

There was the Enron Corporation. At one time the seventh largest company in the U.S., Enron announced in November 2001 that it had overstated its earnings back to 1997 by about $600 million U.S. Is that not great? It was by about $600 million U.S., give or take $1 million or maybe $100 million. The company camouflaged the huge debt in a web of off the balance sheet partnerships. The company collapsed in the biggest bankruptcy filing in U.S. corporate history. The shares now trade for pennies in the over the counter markets. The bottom line is that people's pension funds, employees' benefit plans and numerous areas are affected as a result of companies doing this type of underhanded businesses.

Tyco, the conglomerate company, abandoned plans to split into four parts when concerns arose over its accounting practices in the wake of the Enron fiasco. In early June, the company announced the resignation of its CEO, Dennis Kozlowski, who was later charged for allegedly avoiding payment of over $1 million U.S. in sales tax on $13.2 million U.S. in artwork. Tyco shares are down 80% since the start of the year.

There was Adelphia Communications. In March, the Pennsylvania based cable company said it had loaned billions of dollars to the founding Riga family. The family relinquished control of Adelphia, which defaulted on a $7 billion U.S. debt and filed for chapter 11 bankruptcy protection on June 25.

Livent, the Toronto entertainment company, collapsed in 1998 amid allegations of financial impropriety that led to its financial results being restated. Soon after the collapse, the new management of Livent filed a $225 million lawsuit against Garth Drabinsky and Myron Gottlieb, the two Canadians who founded the theatre company. Livent then fired Drabinsky and Gottlieb, saying they fraudulently manipulated financial records to hide losses of $100 million. They have countersued for $200 million. Livent also filed for bankruptcy protection, citing debts of $334 million.

When we see companies like this filing for bankruptcy protection, we have to wonder about those involved and whether or not there should be some very strong criminal legislation in place to ensure that they cannot do those types of things that have such a great effect, not just on their employees but on the markets overall and, again, on pension funds and pensioners.

Going on to ImClone and the Martha Stewart affair, the drug company's co-founder and former CEO, Sam Waksal, and his daughter were charged on June 12 with insider trading relating to sales of ImClone stock. In the days leading up to the release of the federal ruling that rejected the company's new cancer drug, Martha Stewart came under investigation after she sold nearly 4,000 shares of ImClone on December 27, a day before the regulator's announcement. She is a friend of Waksal's and shared the same stockbroker. ImClone shares are off more than 90% from the high. As for Martha Stewart, of course her shares are down a little bit these days too.

Then, of course, there is Canada's own Michael Cowpland. The founder and former CEO of the software company Corel Corporation is still involved in the OSC's case over insider trading allegations after a company he controlled sold $20 million worth of Corel shares five years ago, just before it posted poor earnings. The OSC has rejected a proposed settlement that would have seen Cowpland pay a $575,000 fine and his company pay $1 million.

I mentioned those examples for a couple of reasons. The next time someone in the House talks about corporations being good citizens and that we should always trust them and allow them voluntary recognition of certain practices, I want everybody to remember each and every one of those corporations and why we need legislation in place to hold them as well as individuals accountable for their crimes. Just because a corporation has millions of dollars does not mean it is a good corporate citizen unless there is legislation in place that ensures it remains a good corporate citizen.

I indicated the reasons for including capital markets fraud in the bill, but Bill C-46 is an act to amend the Criminal Code as it relates to capital markets fraud and evidence gathering. Evidence gathering relates to whistleblower protection to which a number of colleagues have already spoken today. There have been criticisms that the sanctions in place are not strong enough and will not provide protection for whistleblowers. I have to agree that stronger legislation needs to be in place.

If employees or others know that these kinds of actions are taking place and they do not feel secure and feel that their livelihood will be jeopardized as a result of their evidence, it will be tougher to get these types of actions halted in the early stages. People must be assured that if they disclose this information they will not have to worry about getting another job in their field.

This is not just about being with one employer. We all know what blacklisting can do within business sectors in the world. There is a tendency to blacklist anyone who is seen as a squealer or a whistleblower. It has become a negative thing to squeal or whistleblow even if someone who has been committing a criminal act is caught, especially if that individual is in the corporate world. We have to ensure that we provide strong sanctions so people can feel safe if they whistleblow.

A number of my colleagues in the House have tried to bring in whistleblower protection for our own public service employees. Some individuals in the Office of the Privacy Commissioner wanted to mention things that had been going on but because they could not be assured of protection, actions went on for a period of time that ended up costing taxpayers huge amounts of dollars. As a result, huge amounts of taxpayer dollars were spent in that office without proper scrutiny. Had there been whistleblower protection within the public service, I submit that would not have happened.

In spite of the government bringing forward this piece of legislation, we still do not have whistleblower legislation in place that will protect public servants. The minister has stated that she does not think it is necessary because public servants would not do that kind of thing.

I need to remind people again of various situations that have happened in a number of government departments where deputy ministers or assistant deputy ministers have absconded with funds. There have been criticisms about the Indian health branch and a number of other departments. It is crucially important that there be whistleblower protection for the public service as well.

There is one area in Bill C-46 which has not been discussed a lot today and I want to make a point of emphasizing it. In spite of always being concerned about taxpayers' dollars being spent, I know what a tough job it is to ensure that legislation is enforced. Legislation can become just words on paper unless some enforcement mechanisms are in place.

I was pleased to see that the federal government would create a number of integrated market enforcement teams composed of RCMP officers, federal lawyers and other investigators such as forensic accountants to deal with capital market fraud cases. They will be located in cities throughout Canada and are scheduled to become operational over the next two years. They will work with securities regulators as well as provincial and local police forces.

It is crucially important to ensure that these types of mechanisms are in place, otherwise the legislation is not worth the paper it is written on. If there is going to be meaningful action against corporate fraud, there have to be people who are trained in those areas to get to the crux of the problem and do the job that is needed.

I want to take the time to comment on the Office of the Superintendent of Financial Institutions, OSFI, which deals with pensions and keeps track of pension funds in Canada. There has been criticism that there are not enough dollars in pension funds and OSFI is supposed to be keeping tabs on them. The bottom line is that in a good number of instances, OSFI does not have the resources to keep tabs on those pension funds.

As a result, we have ended up with situations like the Air Canada pension fund fiasco where the company did not put enough dollars into the pension fund. By the time OSFI got around to telling the company it had to put in enough money, Air Canada was going bankrupt. We now have a situation where a number of employees are not getting their pension funds. Certainly their families, their communities and Canadians throughout the country are being affected by the failure to properly support a program that is in place to keep tabs on pension funds.

My colleague from Regina—Qu'Appelle had introduced amendments at committee stage to strengthen Bill C-46. One of those was in regard to whistleblower protection. I emphasize again that there was a need to do that. Ideally it would have increased the penalties for employers who intimidated employees who were taking part in whistleblowing. In the other area, it was to have stronger penalties for insider trading.

Quite frankly I want to commend the government for bringing forward this legislation a whole lot quicker than it brought forward the legislation on corporate manslaughter, the corporate liability bill, commonly referred to as the Westray bill, which was introduced at the same time as this legislation. Bill C-45 also addressed corporate responsibility, but it did not address something that seems to hit home so much more with people, which is really too bad.

Bill C-46 deals with the money aspect and it certainly hits home with people, but Bill C-45 dealt with the lives of workers who were injured or killed on the job as a result of gross negligence and disregard by corporations. It took the government almost 11 years to finally come through with the legislation. I am extremely pleased that the House and the other place have seen fit to finally pass that legislation.

I will commend the government on Bill C-46 and indicate that it should be strengthened, but I will also make the point of emphasizing that it took far too long for Bill C-45 to come into place. I personally believe that a number of accidents have happened since that time that may have resulted in corporations being held criminally responsible for the deaths of workers. I am not going to mention specific instances, but I think those corporations out there that have had accidents like that know who they are.

Corporations will know that from the day the Westray bill, the corporate liability legislation, Bill C-45 takes effect, they will not have that freedom any more. At least there is going to be a challenge out there. If that is enough to smarten up corporations to put in place better work processes by not ignoring safety mechanisms, then it has done the job. It is far better to have that legislation in place to ensure that there is a bit of fear.

To this point there has been nothing. Somehow being fined a couple of thousand dollars, whether it be $10,000 or $50,000, because they did not want to fix an unsafe action in the workplace that might cost them $100,000 was no big deal. Somehow the workers' lives were an okay kind of bargain for certain employers to say, “To heck with it. It is more cost effective this way, so if we lose a couple of lives, no big deal”.

That is not going to happen any more, or at least I hope it will not happen any more. I hope corporations recognize that if they take a life, they will be giving up something at least close to a life on their part. Certainly if the legislation does not do the trick, we will be back here ensuring that the legislation is strengthened.

In January 2002 the Canadian Democracy and Corporate Accountability Commission issued a call for the Canadian government and corporations to follow the wishes of the majority of Canadians and to adopt measures to expand corporate accountability.

The commission did not just talk about corporate accountability with respect to the dollars that corporations were making or with regard to lives. It expected that corporations would look at things differently and would take a lot of factors into consideration when they dealt with whether or not they were good corporate citizens. It would consider whether or not they were following good human rights practices, whether they dealt with companies that followed good human rights practices, good labour standards, good environmental standards.

In the same way that people say there is honour among thieves, there was a time when there was honour among business people, that things were done in a certain way because it was beneficial for society. Somewhere in the course of our history not only in Canada but in the U.S. and throughout the world that has been lost. Somehow the bottom line is about making the most money with total disregard for the environment, for lives and for everyone else. Times have changed. People have said they will not accept that any more and if corporations are not good corporate citizens, they will make their lives miserable. That is the way it should be.

Things are changing in the world. There have been too many Enrons, too many Tycos, too many issues with ships spilling oil into the oceans. The fines have been so limited that they did not worry about cleaning it up because it really did not affect their bottom line. In some cases corporations can deduct the cost of their fines from their income tax. That is unacceptable. Those are the kinds of things we cannot allow to continue.

I mentioned the Canadian Democracy and Corporate Accountability Commission. A good friend and a former leader of the NDP, Ed Broadbent, was very much a part of that commission. He has been involved with others as well.

Members of the commission travelled throughout Canada. They not only talked to a few people here in Ottawa and a few in one province and here and there, they talked to people throughout the country. The message the commission heard was that Canadians want to see good corporate citizens in every aspect, in dealing with the environment, workers' lives, human rights. That is the route we have to take.

The NDP will certainly be supporting the legislation. We want to make it perfectly clear that we would like to see it strengthened in a number of areas, certainly the whistleblower protection and as well the amounts of the fines and penalties that corporations should have to pay in a number of areas.

I cannot think of the countries offhand, but there are countries in the world that actually put in place fines that are commensurate with a person's income or wealth. For a person who is a millionaire and is operating a business that is making millions of dollars, there is a $2,000 fine for some environmental damage or corporate fraud, the fine is a percentage of the person's income or wealth. For someone who makes $200, a fine of $20 has an impact, but a fine of $20 for someone who makes $2 million has no impact.

Maybe it is time we put in place those penalties that are a percentage of the amount of yearly income or profit that someone makes. We would truly see some strong action taken for corporations to improve their actions in this world and penalties that really did fit the crime.

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Mr. Speaker, it is a pleasure to represent the Progressive Conservative Party on third reading of Bill C-46, which is a response to the recent spate of corporate scandals that have plagued the United States and weakened investor confidence in capital markets around the world. Scandals associated with companies, such as Enron, WorldCom and ImClone, have precipitated calls to strengthen corporate governance standards and to better enforce laws governing capital market activities.

Governments have responded to the fall-out from these events by moving to improved corporate governance, enhanced auditor independence, increased corporate accountability, facilitate and ensure holder oversight of corporate activities, and increased penalties for wrongdoing.

The United States was first off the mark with the Sarbanes-Oxley act of 2002. Signing the law on July 30, 2002, Sarbanes-Oxley introduced far-reaching measures designed to heighten corporate disclosure and accountability, improve auditor oversight and independence, create new offences, and increase penalties for corporate fraud.

The question I raise is why it has taken this government so long to put in place legislation. The Americans have been at least a year ahead of us.

Let me read the key amendment to the Criminal Code in Bill C-46, clause 2, subsection 380. This is the focus of the legislation. Part 2 states:

Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, with intent to defraud, affects the public market price of stocks, shares, merchandise or anything that is offered for sale to the public is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years.

Fourteen years is a long time; only if it is implemented. Again we have heard in the debate today that the government of the day certainly make all kinds of legislation but when it comes to enforcing penalties that is a totally different issue. Until the track record on the enforcement side changes, obviously the confidence in this government and its legislation will certainly be questionable.

For most people who work hard for a living and who contribute to a pension on a weekly or monthly basis, their pension contribution is very important. Most Canadians are not in control of their pension funds. They rely on agencies or brokerage houses to ensure that there is some security for the money that has been put into pension plans.

As a former teacher, I have invested 26 years of hard labour into my pension plan, and I, like most Canadians, would like some sense of security that our pension money will not be stolen.

Most Canadians work hard, believe in pension savings and somewhere down the road, whether at 50 or 60 years old when they retire, they want to know there will something there for them. They do not want to worry that someone took their pension money and lost it, and that there was no recourse for the people who took the money.

That is why we should have had this legislation in place, certainly after the Enron scandals in the U.S. Canadians expect that. It is not good enough for the government to say that it is a provincial mandate and authority.

The federal government gets involved in all kinds of issues, health care being one example. As members know, the government only contributes 15¢ on the dollar, yet it wants to set standards for the country. Canadians agree that there needs to be national standards but that the government should be paying its share.

In Canada, the federal and provincial governments, as well as security regulators, share responsibility for enforcing laws pertaining to corporate and securities activities. Consequently, both levels of government have been moving to confront the governance and regulatory issues raised by these recent corporate scandals and their concomitant impact on investor confidence.

Ontario, for example, has enacted new legislation and the Ontario Securities Commission has issued draft rules relating to the role and the composition of audit committees, certification of corporate financial statements by chief executive officers and chief financial officers, and requirements for the financial statements of publicly traded companies are to be audited by a firm in good standing with the Canadian Public Accountability Board.

There are many changes in the bill and hopefully they will have an impact in terms of developing a regime of greater security for the money that is put into the investment business. Canadians expect that.

The bill would amend the definition of attorney general in the Criminal Code to give the Attorney General of Canada concurrent jurisdiction with provincial attorneys general to prosecute certain capital market fraud cases, including those currently outlined in section 380 of the code, fraud; section 382, market manipulation; and section 400, distributing false prospectuses, statements or accounts; as well as the proposed new offences of illegal insider trading.

The federal government should work to coordinate activities with the provinces in relation to such cases by establishing prosecution protocols. Furthermore, federal involvement in this area is expected to be limited to cases that threaten the national interest and the integrity of capital markets. As I said, it should be and hopefully it will be so that we have a greater sense of cooperation between the federal government and the provincial governments.

As we have heard many times in the House, there is too much conflict in this country between the federal government and provincial governments. Certainly, in the interest of Canadians, which is why we are here and which is the intent of this place, the federal government should work closely with the provincial governments. At the same time it should realize that it should not intrude into provincial jurisdictions without sitting down and working through the process with a sense of cooperation.

Bill C-46 would increase the maximum prison sentences for the existing offences of fraud and fraud affecting the public market under section 380 of the Criminal Code from 10 to 14 years. Again, as has been alluded to in the House, it is not the numbers on the paper, it is about the enforcement and the application, so that we do not bargain away, in a judicial process, the penalties that are in the legislation.

As was said today by a lawyer who attended the hearings on Bill C-46, “it is not what is on paper, it is what it is in reality”. Unless we put on paper mandatory requirements, mandatory sentencing, and certainly in cases of jail time, then it will not apply. We can send these folks away for 50 years but that does not mean it will happen.

Maximum terms of imprisonment for market manipulation offences would increase from five to ten years. Market manipulation involves practices that create a market for securities that have little or no bearing on their actual value, which is obviously fraud. It includes activities such as washed sales, where there is a purchase and sale but no change in the beneficial ownership of a security; and match orders, where a purchase order or a sale order for a security are substantially the same size, at substantially the same time and the same price, and are entered by either the same person or two different persons.

Also in the act are new sections establishing four aggravating circumstances that a court can consider when imposing a sentence for market fraud offences. These are as follows: the amount involved in the fraud exceeded $1 million or the offence has adversely affected or had the potential to adversely affect the stability of the Canadian economy or financial system or any financial market in Canada, or investor confidence in such a market. Another new add-on is that large numbers of victims were involved and that the perpetrator took advantage of his or her elevated status or reputation in the community in committing the offence. The presence of these facts will enable courts to impose tougher penalties.

There are also new offences under the heading of insider trading. Bill C-46 creates new criminal offences with respect to prohibited insider trading and tipping information. That is really the key function of the bill. Improper insider trading is already prohibited under the Canada Business Corporations Act and under provincial securities laws.

The new Criminal Code offences are intended to deal with the more egregious cases that merit stiff criminal penalties. Insider trading is commonly referred to in respect of the purchase or sale of securities when using material non-public information that could affect the price of such securities. It also covers tipping such information, that is, providing inside information to a third party for that party's benefit or the benefit of the insider.

The bill defines inside information as information about a company or security that “has not been generally disclosed” and “could reasonably be expected to significantly affect the market price or value of a security”. Persons subject to prosecution include those who: possess inside information because they are shareholders of the company issuing the security, referred to as the issuer; have a business or professional relationship with the issuer; obtain the information in the course of a proposed merger, takeover or reorganization of the issuer; obtain the information in the course of their employment duties or in the office of the issuer or an entity referred to above; or receive the information from a person who obtained it by virtue of the positions or relationships mentioned above. The offence will carry a maximum term of imprisonment of 10 years.

Under the heading of tipping, which means to knowingly convey inside information to another person when one knows there is a risk that the person may use the information to buy or sell a security, or to convey that information to another person who will trade in a security, we see that it can be treated as an indictable or summary conviction offence. Under the indictable offence, tipping carries a maximum prison term of five years.

I do not have a lot of time, so I will move on. There are changes in the whistleblowing area as well as in evidence gathering production orders. The government is playing catch-up with United States lawmakers, who have already passed legislation not just to strengthen criminal sanctions but also to reform the way corporations are governed. Boards of directors, auditors and auditor committees all have key roles to play in protecting the interests of shareholders. Indeed, the scandals that rocked the capital market in 2001-02 are widely seen to be the result of poor corporate governance, lax auditing and accounting standards and oversight, and incentives provided by executive compensation arrangements.

In spite of this, the government's background information on Bill C-46 does not once mention the role of good corporate governance legislation. Shortly after the government tabled Bill C-46, the Senate banking committee completed a year long study of the circumstances that resulted in the American corporate scandals. The committee was particularly interested in whether these circumstances might occur in Canada with similar results and, if so, how they might be avoided. The committee called for tougher sanctions, whistleblowing protection for those who report irregularities and increased resources to investigate wrongdoing.

It also recommended legislative measures: to require that a majority of board members be independent; to require the development of a code of ethics to be followed by all board members; to require that audit committee members be independent and financially literate; to limit the non-audit services that auditors can provide to their audit clients; to require an organization's chief executive officer and chief financial officer to certify that the annual financial statements fairly represent the organization's results and financial condition; and last, to prohibit compensation committee members from being a member of management and require them to have expertise in compensation and human resources.

I will close by saying that the Progressive Conservative Party will support the bill.

[Richard Marceau, Bloc, Charlesbourg—Jacques-Cartier, QC]

Mr. Speaker, I thought we were debating Bill C-46, not Bill C-20 on child pornography. Consequently, the pace of this debate is a bit surprising. I also marvel at my previous colleague's definition of brief remarks. If he was being brief, I would not want to hear him give a longer speech.

That said, I rise to speak on Bill C-46 with some disappointment as we had supported this bill at second reading and I had spoken in support of it some time ago.

At the time, I expressed the wish, as I did again in committee, that the government would consider possible amendments, including one on a matter I will address later. Unfortunately, the government has been inflexible, perhaps in the belief that it is the keeper of absolute truth and the ruler by divine right. No matter what the reason, the government's rigidity, inflexibility and closed-mindedness mean that today I invite my Bloc colleagues to vote against Bill C-46, which contains, however, numerous important provisions and clauses that we support.

There is, however, one basic provision in this bill which we in the Bloc Quebecois cannot support and on which we cannot agree with the government. It is the reason we will be voting against Bill C-46.

I felt it was important to make this clear right from the start. Given the inflexibility of the government, I will explain why our position has changed.

Bill C-46, which we have before us today, amends the Criminal Code and creates two new offences: prohibited insider trading and threatening or retaliating against employees for disclosing unlawful conduct. It increases the maximum penalties and codifiesaggravating and non-mitigating sentencing factors for fraud and certainrelated offences and provides for concurrent jurisdiction for theAttorney General of Canada to prosecute those offences.

Bill C-46 also creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances.

Let us place all of this in context. The recent financial scandals in the United States, the Enron affair for instance, have made us all aware of the fragility of our financial system and, unfortunately, of how dependent we are on it.

Although we may think at first that only major investors are affected by a financial crisis, that is not the case. The biggest players on the stock market, in fact, are the pension funds. If a pension fund suffers major losses, therefore, the little investors are the ones who can end up losing their life's savings and watching their retirement plans go up in smoke. That is what is so worrisome.

As well, according to the financial analysts, there has been a trend recently for retirement trust funds to go more for stocks than for fixed income securities. A financial crisis in Canada would have a direct impact on the retirement income of millions of households. Those households are the ones we, as parliamentarians elected to represent the population, have a duty to protect.

Fortunately—and we do not yet know the reason for it—Canadian stock markets have so far been relatively free of wrongdoing, with the exception of Nortel and CINAR. I raised the latter issue again today in oral question period.

We can feel that something is not clear in this CINAR affair, and the Bloc Quebecois is determined to uncover what may be hidden, particularly what may lie behind the CINAR affair.

It is the opinion of the Bloc Quebecois that, while several of the experts we consulted believe that our securities regulatory systems are much more comprehensive than the ones the U.S. had before the financial crisis I referred to earlier, it is important to send the clear message that financial wrongdoing is a serious crime that will not be tolerated in our society.

This is what prompted my hon. colleague from Joliette and myself, in the fall of 2002—more than one year ago—to call for major amendments to the Criminal Code of Canada to provide the appropriate authorities with better tools to fight financial crimes.

Let us take a brief look at these proposed changes to the Criminal Code I put forward back in the fall of 2002. In our press briefing, we proposed adding a section 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 in the performance of their duties for the purpose of making profits or avoiding losses would not be tolerated. The fact is that making profits or avoiding losses in this manner impacts negatively on other investors who do not have access to the same privileged information.

This provision would have been added after section 382 of the Criminal Code. It would have created an offence of insider trading, which would have carried a maximum sentence of ten years' imprisonment. As we can see, the government accepted our suggestion and included a new offence of insider trading in the bill.

The Bloc Quebecois also proposed that a new offence be created for securities fraud. This offence was patterned on the measure adopted in the United States. We say so freely and without fear. It would carry a ten-year prison sentence and prohibit fraud when selling or buying securities

We had also proposed two amendments to section 397 of the Criminal Code. This section clearly stipulates that fraud is committed by someone who:

(a) destroys, mutilates, alters, falsifies or makes a false entry in, or

(b) 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 felt that this sentence was not dissuasive enough. Consequently, we 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. Therefore, we do not see why it is an offence to defraud creditors and not shareholders.

In committee, we suggested very specific amendments incorporating the elements that I just listed. Unfortunately, although as always, the Bloc Quebecois put forward these amendments, changes and proposals in a constructive manner, the government rejected them.

I would like to make a small digression to mention, or rather to deplore, the lack of respect the government has shown lately to the members of this House, particularly to those who sit on the Standing Committee on Justice.

Bill after bill comes before us. It is top speed and full steam ahead on the bill to decriminalize marijuana. The committee is also studying soliciting and prostitution. The government, when it sets the schedule for committees or the House, does not pay any attention to the fact that for many of us it is extremely difficult to be here in the House to debate government bills, and at the same time, to sit on committees. Even though, every Christmas, when asked what I want most, I always say I would like the gift of ubiquity, no one ever gives it to me.

So, while we were debating a government bill here in the House and I was scheduled to speak on behalf of my political party, the Standing Committee on Justice was meeting at the same time, and going about its business, despite the fact that several members of that committee were in the House. I could not defend the amendments I had put forward.

I think that is quite deplorable from a government that, probably sensing the end of its regime approaching, wants to get all its bills passed as quickly as possible, and therefore the work is not done well, because the members who follow the issues—on both sides of the House, in fact, because my Liberal colleagues are in the same situation—cannot contribute as much as they should to improving the legislation before them.

The government shows little consideration for its own legislation, its own bills, as seen in the fact that it does not give the members the time they need to properly examine the bills before them, and this will count against it.

When we are talking about such essential things as Bill C-46, commonly called the Westray bill, which is now before the House, or Bill C-20, the child pornography bill, or Bill C-36 on decriminalizing marijuana, in my opinion it is essential to proceed at a pace that allows the members to be here in the House and in committee at the proper times, but also to digest, assimilate, and understand the many suggestions made by the witnesses who come before us.

In fact, why spend thousands of dollars calling witnesses to appear and why ask them to come before the committee to explain their point of view and suggest amendments and improvements if the members opposite cannot digest the information provided.

All this to say that the constructive, intelligent, consistent and non-partisan amendments I moved in committee should have been moved by a member from the other side of the House. I am not questioning the hon. member's competency. I am in no way accusing him of bad faith. However, the fact remains that the amendments could not be moved, debated and defended by the member who sponsored them.

That concludes this essential digression to explain the current environment in which the members are working. Now I want to get back to Bill C-46 itself.

The Criminal Code would create a new offence prohibiting insider trading, with a maximum ten-year prison sentence.

Although insider trading is currently prohibited under provincial legislation regulating the sale of securities within Canada and under the Canada Business Corporations Act, this new offence under the Criminal Code will apply for cases requiring harsher sentencing.

Since this new offence was directly inspired by the proposal my hon. colleague from Joliette and I made over a year ago, we are pleased to see its inclusion in Bill C-46.

Employees who disclose to or assist law enforcement officers investigating capital markets fraud also need protection against intimidation. These employees often have a key role to play in disclosing scandals in companies, but they may be intimidated or threatened, including through measures against their job or their livelihood.

Creation of a new offence of threat or retaliation relating to employment would encourage people with inside information to co-operate with law enforcement officials and would punish those threatening or making use of reprisals. This offence would be punishable with up to five years' imprisonment. The Bloc Quebecois is in favour of this provision.

To strengthen penalties in cases of fraud on financial markets, and to make sure that the punishment fits the crime, the proposed reforms would increase maximum sentences for existing fraud offences, and would establish aggravating circumstances, which the courts should take into consideration in sentencing.

Maximum prison sentences would rise from 10 to 14 years for the present fraud offences under the Criminal Code, and for those affecting the public market. Maximum sentences for market manipulation offences would increase from 5 to 10 years.

The proposed reforms would also include a list of specific aggravating circumstances allowing the courts to impose stiffer sentences for the most serious offences. Factors such as the extent of the economic impact or any negative impact on investor confidence or market stability could lead to increased sentences. Moreover, a person's reputation and standing in the community or work environment, which have always been considered mitigating factors that can reduce penalties, could not apply in such a case. Those guilty of serious market wrongdoing are often able to get away with their crimes precisely because of these factors.

We feel these are interesting proposals, but we regret that the government did not consider our suggestions with respect to increasing the sentences under section 397 of the Criminal Code.

I will conclude by explaining why we are against Bill C-46: the involvement of federal prosecutors. As members know, financial market regulation comes under the jurisdiction of Quebec and the other provinces, as does the administration of justice. Under Bill C-46, 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 collaborate—that is always a key word with the Liberals, but we know what it means—with the provinces to ensure proper and efficient concurrent jurisdiction by establishing prosecution protocols.

We absolutely cannot support these new provisions. They all seem to confirm the federal government's desire to infringe upon yet another area of Quebec and provincial jurisdiction, the securities market.

In committee, I proposed an amendment to the bill that was constructive and would deny federal prosecutors the right to prosecute in these cases. The government rejected it.

Knowing the federal government's penchant for interfering in the regulation of securities markets, we are opposed to Bill C-46, because the Bloc Quebecois would never consent to the federal government's meddling, however minimally, in provincial jurisdictions.

Because of the government's inflexibility and desire to intrude in the jurisdictions of Quebec and the provinces, the Bloc Quebecois is voting against Bill C-46.

[Jay Hill, Canadian Alliance, Prince George—Peace River, BC]

Mr. Speaker, I see the Minister of Justice is in the chamber. Perhaps with the unanimous consent of the House he would get up and answer that question. It would be much more appropriate for him to answer the question than for me to try to answer the question.

As I referred to in my remarks to Bill C-46 a few moments ago, a question was posed to the Minister of Justice this very day about this by the member for Wild Rose during question period. All of us, unfortunately, have come to learn that the 45 minutes every day in what is referred to as question period, is referred to as question period and not answer period for a reason. All too often the case is that we are left waiting for answers.

The hon. Minister of Human Resources Development says that except for her. I would have to concur I guess since occasionally she does make some effort to actually address the question and provide an answer. A few of her colleagues do likewise on any given day, and actually do make some effort at answering the questions that the opposition poses. However all too often the opposite is the case.

It happened again today when the Minister of Justice, when asked in question period by the member for Wild Rose about removing any potential defence of the indefensible, any potential defence for the possession and distribution of child pornography, started referring to psychiatrists and psychologists and members of the medical profession and police during their investigations. He did not want to remove any defence because then the police officer who conducted the investigation could be convicted of possessing that child pornography. That is absolutely ridiculous.

I think the Minister of Justice, even though he is a lawyer, has to know that is a ridiculous statement to make. What we and what Canadians are referring to and what parents are referring to is the illegal possession and distribution of child pornography and the exploitation of children.

There has to be a way that we can bring forward laws, as the member for Wild Rose is constantly saying. He has been on this issue for years now. There must be a way that we can draft laws that send a message to the courts that there is no defence for such a thing. There is no artistic merit in exploiting young children, none.

What we are seeing here once again today is an example of the frustration on the opposition benches in dealing with these types of emotional issues. However imagine that we are just mirroring the frustration that we witness every time we go back to our ridings. I know the Liberal members of Parliament in the government must be hearing the same things. The people in Ontario are not that different from the people in Wild Rose or the people in northern British Columbia, where I come from. Today during petitions Liberal members stood and presented petitions on behalf of some of these issues, so it is not that different.

Our country is huge. Yes, Canadians in Atlantic Canada have different opinions from those in British Columbia, as do Canadians in Alberta from those in Quebec, and as do Canadians in the Northwest Territories from those in Ontario, but some things bind us together. The things that bind us together, the values that Canadians hold the dearest and clutch to their breasts, are things like an absolute detest for child pornography. It is something that runs from coast to coast to coast. No one can tell me that someone in rural Ontario, in urban Toronto, in Vancouver or in Fort St. John, where I come from, is going to think any differently about child pornography.

What the member has been asking me, and what I cannot give him an answer to, is why the government will not move in that regard, even when the member brings forward a motion stating that we remove all defence for the possession and distribution of child pornography. The House voted on it and it was unanimously approved but nothing happened.

The government wonders why Canadians cease to vote after a while. It wonders why people are opting out of the political process. It is that frustration that we are hearing being echoed in every corner of the country on so many of these issues.

Nothing is more fundamental than protecting our children. My God, what else is there in the end? Without them our society is not worth living in.

[Myron Thompson, Canadian Alliance, Wild Rose, AB]

Mr. Speaker, I appreciate the member's speech. I also appreciate his question about the legislation, which has been asked several times: will it achieve its intent? That is a question we have to ask ourselves every time any kind of legislation comes forward. Will it achieve the intent? Like Bill C-46, will it achieve the intent with whistleblowers? Will it achieve the intent with corporate criminals?

Will we clean up our own house when we deal with corrupt activities within our government? We cannot send corporate vice-executives who are guilty of fraud, or whatever the corporate crime might be, to other parts of Europe to be ambassadors. We just cannot continue down that path. That achieves nothing.

Nothing is achieved when Liberals come up with a bill like Bill C-20, but they will not incorporate a clause in it that eliminates all defences that exploit children, like the illegal use of pornography. The minister continually wants to talk about how the doctors have it, psychologists have it and the police have it in their possession, that it is for a good intent, for the public good, and that we need to have that defence in there. That is not what we are talking about. We are talking about defending children.

I realize the justice minister is a lawyer. I sometimes get the impression that the Liberals want to create more court cases to keep all the lawyers busy. I cannot imagine where they are coming from on all this, but it is just one example after another, as the member mentioned in his speech. He brought up several different issues.

Why can we not be specific about what we want to achieve, so there is no question about the intent?

The intent about child pornography was made here last Tuesday when 100% of the members who were present voted for the motion that favoured developing legislation, which would say that there would be no defence for child pornography when it exploited children, for possession, distribution, or anything. I do not have trouble understanding that. I understand that to mean exactly what it says, and that is the kind of legislation for which we are looking.

Would the member comment on why the minister and the government cannot be more specific and put it in words where most people would understand our intentions loud and clear? We will protect our children. We will protect our corporations. We will protect our taxpayers. We will do the right thing by getting it done without all this legislation that never clearly indicates whether the intent will be met.

[Jay Hill, Canadian Alliance, Prince George—Peace River, BC]

Mr. Speaker, I appreciate the opportunity to make some brief remarks today on Bill C-46, an act to amend the Criminal Code specifically as it deals with capital markets fraud and evidence gathering. I would like to say a couple of things at the outset of my remarks.

The Canadian Alliance as the official opposition will support the legislation, although that does not mean we do not have some concerns about it. I would direct anyone interested in exactly what those concerns are to read them as laid out very eloquently by the hon. member for Provencher, the official opposition's justice critic, in the House during the debate on Bill C-46 on September 29. He highlighted a number of concerns with the legislation. I will not go over them in great detail today.

While we support the bill, it is not without some reservation. I tried to draw the attention of the chamber and indeed the attention of the Parliamentary Secretary to the Minister of Justice just moments ago about one of those concerns. I can say quite honestly that he did not provide any further clarification that would convince me and convince Canadians that by making these changes in Bill C-46 and bringing forward additional maximum sentences it somehow would deter individuals from this type of corporate crime.

As my colleague from Okanagan just said, there are even some concerns about the aspect of trying to bring about some protection for whistleblowers, to try to protect those who would voluntarily come forward and reveal where fraudulent activities are taking place. All we see is a five year maximum sentence deterrent in Bill C-46. It is quite questionable whether that would be sufficient to encourage individuals to come forward or whether more would need to be done to provide adequate protection for individuals so that they would feel confident in coming forward, that their jobs would be protected and their personal safety would be protected.

In all too many cases as we recognize following the disastrous operations of Enron, WorldCom and others in the United States, we are dealing not with millions, tens of millions or even hundreds of millions of dollars, but in some cases we are dealing with billions of dollars of potential fraud. When it gets to that extent, the profitability of that fraudulent activity becomes so huge we could imagine there would be a lot of incentive for those who were committing that type of fraud to keep people quiet. If they could not do it by buying people off, if the people who saw that activity going on inside a corporation had enormous personal integrity and resisted the brown envelope or whatever it was to try to buy their support for those activities, when dealing in those kinds of numbers, there certainly would be the means for people to resort to physical intimidation. In some cases they may even use the threat of death not only to those individuals but to their loved ones.

We want to ensure that whatever steps are necessary to protect those individuals are taken. We want to send a clear message to the corporate sector that where that type of activity is taking place, we as law makers and the justice system in Canada will take extraordinary measures to protect those individuals. Those individuals need to have some assurance that if they come forward with evidence, they and their families will be protected and as my colleague from Okanagan said, not only from financial ruin but that they will be protected from any potential physical harm as well.

As the parliamentary secretary laid out, Bill C-46 does a number of things. It would bring in maximum sentences to deal with those convicted of employment related threats or retaliation, the so-called whistleblower protection. It would increase the maximum to 10 years for those convicted of insider trading. It would also increase the maximum from 10 years to 14 years in cases of fraudulent activity.

As I pointed out, one of our big concerns is that all too often maximum sentences are never imposed. There are innumerable examples that I could give both within white collar crime and other criminal activity in Canada. In response to my question on this, the parliamentary secretary left the impression that by increasing maximum sentences in Bill C-46, we collectively as lawmakers in the highest court in the country would be sending the message to the courts that they should get tough and impose harsher sentences when they convict individuals of this kind of activity.

That is all fine and good, but we have tried that in other cases in the past. Certainly in the 10 years that I have been here, I have seen it time and time again. We in good conscience have believed the government when it has brought forward either new maximum sentences or has increased the maximum sentence allowable for certain crimes. In practical terms however in the real world outside this chamber, those sentences are never used. Because there is no minimum sentence, all too often the judges will award conditional sentences or house arrest for those individuals.

That does not deter criminal activity. People tend to believe it is sending the opposite message. It sends the message that the court system does not believe that the crime is terrible. When we go to the expense of catching the individuals, dragging them through court, gathering and presenting the evidence which sometimes takes years, and the individuals are finally convicted, what happens is they get sent home on house arrest.

That does not provide much of a deterrent especially in those cases which deal with a potential profit of billions of dollars. Individuals will not be deterred from resorting to fraudulent activity and the potential to make billions of dollars by suggesting that if they get caught they will be sent home with an electronic anklet and told to stay inside their homes for a year or two. That will not provide much of a deterrent.

As well intentioned as the bill is, and we will be supporting it, without minimum sentences, I am not convinced that the bill will achieve the goal that all of us are collectively hoping to achieve which is to deter this type of criminal activity. I am not convinced of that. That is one of my concerns.

The second concern that really jumps out at me is the part of the bill that deals with setting up the integrated market enforcement teams led by the RCMP and the funding that will be provided for that. The bill states that the funding will be up to $120 million over five years. As I alluded to moments ago, the problem is that we are dealing with very complex cases of fraud in many cases. As the Parliamentary Secretary to the Minister of Justice indicated during his remarks, some of these cases take a long time and a lot of effort. A huge team is involved in gathering the evidence. We are going to move ahead with putting together these integrated market enforcement teams led by the RCMP and we are going to set aside $120 million over five years.

Even a cursory examination of some of the white collar criminal fraud cases in Canada would indicate that some of these individual cases take tens of millions of dollars of resources to investigate. It costs a pile of money for one case.

Again, while I applaud the initiative in setting up these teams, trying to bring the people together, the best people in the country to go after these corporate criminals and to ensure that they are brought to justice, I am not convinced we are going to do it with such a small amount of financial resources. That is the second concern I have.

Perhaps I will wind up my brief remarks on Bill C-46 by suggesting there is great disappointment I think not only for many people in the opposition benches in this chamber over the last number of years, but I would argue for a great many Canadians who are concerned for their personal safety of their families and children. We cannot pick up a newspaper without seeing cases.

I was reading over the weekend about another case of swarming here. A young lad on a bus was attacked by a group of other youngsters. These types of activities are happening all too often.

I have three young children who are all in their 20s now. Regardless of political stripe, I think all members of Parliament, if they are parents, and some are grandparents, would share this concern. I cannot imagine anything worse than to lose a child. I cannot imagine anything worse than to find on any given day that one's child has been threatened or has been physically assaulted.

Yet the government is moving ahead with Bill C-46 to crack down on corporate crime and fraud, which is a worthwhile objective. No one is disputing that. However, it has failed in so many other instances, dealing with the Criminal Code of Canada. It has failed Canadians and their children. It has failed all of us, I am afraid.

I mentioned conditional sentencing as it applies to these crimes. All too often the courts in Canada are applying conditional sentencing, basically house arrest, in some cases for manslaughter, rape, crimes for which conditional sentencing was never intended to be used. Yet we see the courts applying that. It is shameful

As a parent I cannot imagine, if I were to lose one of my children to criminals. Were they to be killed, to me it is semantics whether we call it manslaughter or murder. I know there is a difference. One is supposed to be to prove intent, but the net result is that someone died, someone was murdered whether the intent was there or not.

I hear all the time from my constituents in northern British Columbia that they are sick and tired of a justice system where people are not held accountable or responsible for their actions.

We heard it again in an instance that was brought forth in question period an hour ago by my colleague from Langley—Abbotsford. An individual was drunk, and that was his defence for murdering his daughter. It appalls me that people who commit horrendous crimes are not held accountable or responsible. The punishment does not fit the crime. Despite the assurances of the justice minister, parliamentary secretary and other Liberals, criminals all too often are not held accountable and the punishment does not fit the crime.

I draw the attention of the House to the use of conditional sentencing and that it should not be used for violent crime. I have been fighting against this ever since this administration brought in conditional sentencing six or seven years ago.

Another area where the government could be moving and bringing in changes is to restrict the use of concurrent sentences and plea bargaining. The government could restrict that use and bring in consecutive sentencing where people who are convicted of multiple murders or multiple crimes get sentences tacked on to their prison term for each additional crime. That would provide a deterrent for criminal activity. Concurrent sentencing versus consecutive sentencing would provide a deterrent.

Finally, I cannot resist the urge to mention my colleague's raison d'être these days, the issue of child pornography. My colleague from Wild Rose is in the chamber today. He has fought tirelessly to force the government and urge the government and the Minister of Justice to bring in a law that will prevent any illegal possession and distribution of child pornography.

Simply put, there is no defending the indefensible. It is indefensible that individuals should possess and distribute child pornography. We should have laws in Canada that send a clear message to those who would do so and to the court system that we will not tolerate that. Our society will not tolerate individuals possessing, distributing, making money or exploiting our children, period. Yet we have seen the government fail to bring in that legislation.

I have been in the chamber now for 10 years. If the government wants to be serious about cracking down on criminal activity in Canada, then these are some of the areas in which it could move. We do not see it happening.

I will tell the House that my constituents in Prince George—Peace River are becoming very frustrated waiting for the government to protect our children and protect the most vulnerable in Canadian society.

[Jay Hill, Canadian Alliance, Prince George—Peace River, BC]

Mr. Speaker, I listened to the remarks of the Parliamentary Secretary to the Minister of Justice and I note after some 10 years now that I have had to endure speeches such as that, it seems to me that the less the government does with a piece of legislation, the more puffed up it becomes in pronouncing all the great good it will do.

Nevertheless, I want to ask the parliamentary secretary questions relating to the changes that would be brought in by Bill C-46. He referred to them during his remarks, such as this new five year maximum prison sentence for those convicted of employment related threats or retaliation against employees, the so-called whistleblower protection. He also mentioned the 10 year maximum for those convicted of insider trading and the maximum sentence for fraud to be raised from 10 to 14 years.

Presumably, these types of initiatives that the government is undertaking with Bill C-46 would be to deter individuals from resorting to those types of activities, at least that would be my assumption. However, I note that all too often in cases involving white collar crime and in indeed even criminal activity, it is not the maximum or anywhere near the maximum sentence that is imposed by the courts. It is quite the opposite.

In fact all too often--ever since the government, back in the mid-1990s, brought in conditional sentencing, which is a guise and a fancy term for house arrest--individuals who should be sent to jail to at least deter others from those types of activities are instead sent home under house arrest or conditional sentencing.

What assurances can the Parliamentary Secretary to the Minister of Justice offer the House and Canadians that by putting in these maximums that they will provide the anticipated deterrents for these types of criminal activity in the corporate world? What assurance can he give that we will not see merely minimum sentences, or in some cases no sentence at all if we consider house arrest a sentence, being imposed for serious white collar crime?

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, Bill C-46 on capital markets fraud and evidence gathering has now been returned to us by the Standing Committee on Justice and Human Rights without amendment. I am happy to rise to speak to it on this third reading.

Members are well aware of the crisis in investor confidence in capital markets around the world that resulted from the recent major corporate scandals in the United States. Responding to this crisis has engaged governments at all levels and the stakeholders in those markets in Canada as well as in many other countries.

Bill C-46 addresses one aspect of that response: legislative measures to combat the criminal law dimension of market misconduct. It addresses the federal government's and Parliament's responsibility to ensure that police and prosecution authorities have effective legislative tools and the capacity to use those tools to deter and punish fraud and other criminal behaviour that threatens the integrity of our capital markets and investor confidence in those markets.

Bill C-46 is thus part of a package of enforcement measures that includes the creation of the RCMP led integrated market enforcement teams. As members have heard, these IMET units will focus the combined skills of investigators, lawyers, forensic accounting services and other disciplines on major cases of capital markets fraud. They would be located in our four major financial centres, Toronto, Vancouver, Montreal and Calgary and would add new, dedicated resources to the enforcement of fraud cases that threaten the national interest in the integrity of our capital markets.

Budget 2003 committed the funding required for this federal enforcement effort and also made commitments as to the accompanying elements of the legislative arm of this effort. Bill C-46 fulfilled that second commitment. Those elements comprised four separate areas: first, offences; second, sentencing; third, concurrent federal jurisdiction to prosecute; and fourth, enhanced evidence gathering tools.

Bill C-46 targets capital markets fraud with new offences and sentencing enhancements while at the same time enhancing generally the sentencing of fraud, which is a rapidly expanding and ever more damaging criminal problem, as well as facilitating evidence gathering in regard to all criminal offences.

In the wake of the scandals in the United States and the wide-ranging legislative measures taken in response to them at the federal level in the U.S., known as the Sarbanes-Oxley Act, the federal government conducted a thorough examination of the Criminal Code and consulted with federal and provincial enforcement authorities to see if our offences needed to be strengthened to deal with the same problem.

We found that the responsible authorities agreed that we already had strong and effective criminal laws to deal with capital markets fraud. Both police and prosecution authorities emphasized in particular that there was no need to add more specialized market fraud offences to the Criminal Code and that, rather, this indeed could be counterproductive.

The basic fraud offence in the code, section 380, is the offence most often used in capital markets fraud cases. It is comprehensive, well understood and thoroughly tested and interpreted by the courts. The existing market specific offences are in fact relatively rarely used, although the Criminal Code does have a panoply of such offences, including manipulation of stock market transactions, section 382, and filing a false prospectus, section 400. It also has strong offences covering obstruction of justice and other relevant criminal activity that could threaten the integrity of the capital markets.

Two specific gaps were identified. Bill C-46 addresses both of those gaps. The first of these involves improper insider trading. This misuse of personal advantage and responsibility strikes at the core of investor confidence.

It is already covered by all provincial securities legislation and by the Canada Business Corporations Act, but stakeholders strongly advise that a Criminal Code offence will add an additional and powerful weapon against this damaging activity that threatens the integrity of our capital markets. A criminal offence for serious cases of prohibited insider trading adds the social stigma of the criminal law and more severe penalties for this violation of public trust.

The offence that Bill C-46 will add to the Criminal Code in the proposed new section 382.1 is based on the model found most commonly in provincial securities legislation. It is fashioned to capture only that improper trading conduct that is currently prohibited by the legislation, but with the added mental element required for a Criminal Code offence and a criminal law level of penalty.

The other proposed new offence would seek to encourage employees to report unlawful conduct within their companies and cooperate with law enforcement by prohibiting employment related threats or retaliation against them for so doing.

U.S. and Canadian experience has shown that employees can play an important role in disclosing this conduct to the authorities. It was found that threats and actions aimed at such persons' employment are not adequately covered in the existing offences of intimidation or obstruction of justice. This targeted offence will close this gap. It will address the protection of what is often called whistleblowing in those circumstances where such a deterrent measure is appropriate for a Criminal Code offence, where the threatening or retaliatory action in employment situations is akin to intimidation or obstruction of justice. It will have a broad application to any appropriate case but will be particularly helpful to the enforcement of capital markets fraud cases.

The second component of Bill C-46 is the sentencing enhancements directed at fraud, and in particular, capital markets fraud. The bill will raise the maximum prison term for the primary fraud offence, that is, section 380, from 10 to 14 years. Fraud overall, as noted, is becoming an increasingly more serious criminal problem.

This will address both capital markets fraud and such pernicious fraud cases as major telemarketing frauds. It will also raise the maximum sentence for the market specific offence of fraudulent manipulation of stock exchange transactions from 5 to 10 years. I would note that a maximum term of imprisonment of 14 years, which the bill would apply to the offence most often used in capital markets fraud cases, section 380, is, next to the maximum term of life imprisonment, the highest maximum sentence in our criminal law. In addition, Bill C-46 will add certain aggravating and non-mitigating sentencing factors that will point judges to those cases of fraud that need greater denunciation and deterrence, whether they are cases of capital markets fraud or other major frauds that do great economic and social damage to our society.

Third, Bill C-46 will also give federal authorities a role in prosecuting these fraud cases in addition to the existing provincial prosecutorial role and responsibility in these cases.

This addition to the concurrent jurisdiction of the Attorney General of Canada to prosecute certain cases under the Criminal Code is an initiative that has been much misunderstood. It is not, for a start, a constitutional issue concerning the division of powers.

The authority of Parliament to confer such jurisdiction on federal prosecution authorities under the Criminal Code has been unequivocally confirmed by the Supreme Court of Canada, and Parliament has chosen to do so recently in certain criminal organization offences and all terrorism offences.

As in those cases, the new federal prosecutorial role in regard to capital markets fraud cases will respond to an immediate issue of great national concern.

Nevertheless, the definition of attorney general in section 2 of the Criminal Code reflects the traditional role of the provincial prosecuting authorities in dealing with the prosecution of most crime in their provinces. The federal government respects this traditional role.

The new federal prosecutorial role, created by Bill C-46 would, as noted, focus only on major cases of capital markets fraud that threaten the national interest and integrity of our crucial capital markets.

Moreover, this role would be both complementary and supplementary to the existing provincial prosecutorial role in these cases. The federal government would seek only to add its resources and expertise to help to ensure that these cases could be effectively prosecuted in all provinces.

All government in Canada currently face challenges to prosecutorial capacity. This initiative would help to address those challenges in regard to the national problem of capital markets fraud. To achieve this end, federal authorities have already had productive discussions with provincial prosecution authorities on the core principles of proposed prosecution protocols that would coordinate this partnership effort.

These proposed core principles would affirm the existing and primary role of the provinces in this area and would add federal resources only in a supplementary and a backstop role. These protocols would ensure that there is a coordinated and cooperative approach to the vigorous and effective prosecution of major cases of capital markets fraud.

The fourth and last component of Bill C-46 would facilitate evidence gathering. Federal and provincial law enforcement authorities have long argued for the need of additional production order powers to complement the existing investigative powers under the Criminal Code. Existing search warrant powers under the code allow police officers to search places for evidence, but this judicially authorized production order would add a power to require persons to produce existing relevant information, or to prepare and produce documents based on the existence of relevant information.

This requirement would be directed only at those third parties who are themselves not under investigation and would require the production to the police of relevant information, within a specified period of time, which is under their possession or control whether it is stored inside or outside of Canada.

Bill C-46 would create two levels of production order. First, the general production order would be available in the same circumstances in which a search warrant is now available, with all of the same constitutional and procedural safeguards. Second, the more narrowly targeted specific production order would provide a first step investigative tool. It would be placed on an appropriately lower criminal standard where there would be reasonable grounds to suspect that the information would assist in the investigation of an offence, but it would be limited to specific types of threshold information about which there is a relatively low expectation of privacy.

This would extend only to such general financial information concerning account holders as the name, address, account number, the date an account was opened and its active status. It would not, however, extend to such personal information as the transactions or amounts in those accounts.

While these production order powers would be available in regard to the enforcement of all criminal offences, they would be particularly helpful in the timely and effective gathering of financial information that is the core element in the investigation of capital markets fraud cases.

In conclusion, Bill C-46 has been welcomed and has received the solid overall endorsement of stakeholders in law enforcement, representatives of provincial security regulatory agencies, the securities industry, and from members from all sides of this House.

Together with the commitment of additional enforcement resources through the integrated market enforcement teams, this criminal law enforcement initiative would help to deter and punish fraudulent activity that threatens the integrity of the capital markets that are vital to Canadian economic life. It would help to ensure that those who engage in this socially and economically damaging criminal activity are detected, charged, convicted and appropriately punished.

I would urge all members of the House to support the passage of Bill C-46.

Business of the House

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

Mr. Speaker, this afternoon we will return to consideration of Bill C-32, the Criminal Code amendments, followed by Bill C-54. If we get through this, we will proceed to consideration of Bills C-19 and C-6, two bills on first nations. If we have time, we will also look at Bill C-51.

If that is a bit too ambitious, the first item for consideration tomorrow will be Bill C-6, the specific claims legislation. After oral question period, we will come back to Bill C-54, which we debated this morning, concerning fiscal arrangements. If there is time, this will be followed by Bill C-46, the market fraud bill, and Bills C-19, on first nations, and S-13, concerning the Statistics Act.

Next week, we will continue to consider bills that have not been completed, beginning on Monday with Bill C-46, on financial institutions. We will add to that list Bill C-23, the sexual offenders legislation.

By mid-week, we hope to be in a position to consider Bill C-52, the radio communications bill, and Bill C-20, the child protection legislation, as mentioned by the Minister of Justice during oral question period.

Committees of the House

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Justice and Human Rights.

Pursuant to its order of reference of Tuesday, April 8, 2003, your committee has considered Bill C-23, an act respecting the registration of information relating to sex offenders, to amend the Criminal Code and to make consequential amendments to other Acts, and agreed to report it with amendment.

I also have the honour to present, in both official languages, the seventh report of the Standing Committee on Justice and Human Rights.

Pursuant to its order of reference of Wednesday, October 8, 2003, your committee has considered Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence-gathering), and has agreed to report it without amendment.

Criminal Code

[Chuck Cadman, Canadian Alliance, Surrey North, BC]

moved that Bill C-338, an act to amend the Criminal Code (street racing), be read the second time and referred to a committee.

Mr. Speaker,I am pleased to rise today to debate the private member's bill I have brought forward on behalf of the citizens of Surrey North.

The bill proposes to amend the Criminal Code with respect to the activity commonly referred to as street racing. It was introduced because Canadians want the federal government to address the problem.

Street racing is killing or seriously injuring innocent people. The carnage caused by this reckless behaviour is on the rise in Vancouver, Edmonton, Winnipeg, Toronto and other cities.

Bill C-338 proposes to do something about it and today I ask the government to take action to stop street racing by supporting its passage.

Bill C-338 would amend the Criminal Code to provide that street racing is to be considered an aggravating circumstance for the purposes of sentencing a person convicted of an offence committed by means of a motor vehicle under section 220, criminal negligence causing death; or section 221, criminal negligence causing bodily harm; or subsection 249(3), dangerous operation causing bodily harm; or subsection 249(4) dangerous operation causing death.

The bill also provides for mandatory nationwide driving prohibitions to be served consecutively to any other sentence imposed.

On a first offence, a judge must suspend driving privileges for a period of one to three years; for a second offence, two to five years; and for subsequent offences, three years to life. Also, if death was caused on the first or second offence, a lifetime prohibition will be imposed on the second conviction.

Canadians want anyone who seriously injures or kills as a result of street racing to be prohibited from operating a motor vehicle for a significant period of time. They do not want individuals convicted of this carnage to serve a sentence and then be allowed to immediately get behind the wheel of a car. Neither do they want such individuals to simply move to another province to obtain a driver's licence.

Letters, phone calls and e-mails to my office from across Canada have expressed outrage over the carnage caused by street racing and lenient sentences being imposed, including conditional sentences. The victims do not support using house arrest for anyone convicted of being responsible for a street race crash that has either killed or seriously injured someone.

The British Columbia Automobile Association has advised me that its members are clearly in favour of swift and severe penalties for street racers. In its 2002 member opinion survey, its members expressed support for all penalties used to punish racers, including two year driver's licence suspensions, vehicle impoundment, fines and demerit points.

Last February 6 I received an e-mail from Margaret-Ann Blaney, minister of justice for New Brunswick. She has forwarded my bill and accompanying information to her officials in the justice department. She said that the suspension of driving privileges was of particular interest to her officials.

On February 4, Gord Mackintosh, minister of justice and attorney general of Manitoba, wrote me an e-mail concerning Bill C-338. He said the following:

Since the current Government of Manitoba was elected in 1999, it has introduced strong new measures to deal with dangerous drivers such as tougher driver's licence suspension provisions, including lifetime suspensions, and vehicle forfeiture for the most serious offenders. Amendments made to our Highway Traffic Act this past session have given our provincial street racing offence the highest maximum fine and the highest demerit point level available for provincial driving offences under that legislation.

I agree that it is important to ensure that there are appropriate measures to deter individuals from engaging in reckless driving behaviour that puts others at risk. I perceive that the challenge in pursuing Criminal Code changes is to weigh the effect of what may be inconsistencies in treatment between impaired driving and street racing offenders and to ensure that they are all workable.

You have raised an important issue.

In a January 21 letter to me, Robert Runciman, the then minister of public safety and security in Ontario, declared the following:

Street racing is a serious offence that puts all road users at risk and we must not tolerate it on our roadways. I am pleased that your proposed amendment to the Code would address the issue of street racing during the sentencing process. Mandatory driving prohibitions need to be served consecutively to any other sentence imposed by the courts. I hope your initiative will succeed.

Ontario responded to street racing by proposing legislation empowering police officers to immediately seize a vehicle and suspend a driver's licence for 48 hours. It also proposed to prohibit the use of equipment and substances, such as nitrous oxide, used to boost the performance of engines for the purpose of racing. Unfortunately, the legislation was not enacted due to the recent election. Hopefully the new Ontario minister of transport will reintroduce this legislation.

Jamie Muir, minister of justice for Nova Scotia, wrote to me on January 22 stating:

Although the police have not reported any particular problem enforcing the Provincial prohibition of street racing in this area, this appears to be an effective tool for helping to control the problem where it exists.

Dave Hancock, the minister of justice for Alberta, wrote on January 9 to say:

Street racing is a dangerous practice, which should be an aggravating factor for sentencing certain offenders.

He reminded me that Alberta has significantly increased the penalty for the provincial offence of street racing in the traffic safety act.

The Alberta justice minister went on to suggest that Bill C-338 could be amended to include impaired driving cases. I would have no problem considering amending Bill C-338 to apply to anyone convicted of impaired driving causing death or bodily harm where it can be established that street racing was a factor.

In my home province of British Columbia, Surrey-Green Timbers MLA, Brenda Locke, called on the federal government to crack down on street racers in a motion she introduced in the B.C. legislature.

With the passage of her motion on April 7 of this year, B.C. sent a strong message. Locke's motion calls on Ottawa to remove conditional sentencing for street racers who kill or maim innocent victims. An amendment was introduced to encompass all criminals convicted of a serious violent crime. Both the amendment and the motion passed in the B.C. legislature.

The motion was brought forward in honour of the lives of innocent victims of street racing: Jerry Kithithee, Constable Jimmy Ng and Irene Thorpe. Those three individuals were brutally killed by young men whose reckless, selfish, irresponsible and deliberate actions stole their lives and broke many hearts. There have been more since.

The motion was an important step in urging the federal government to make the necessary changes to the Criminal Code to make our roads safer. It was a de facto endorsement of Bill C-338, which I introduced in this place months earlier. Bill C-338 proposes the Criminal Code changes that B.C. seeks.

Street racing is the height of recklessness and a deliberate endangerment to communities. British Columbians understand the magnitude and the consequences of this activity and question why the courts treat it so lightly and ineffectively.

British Columbians seek justice for street racers and their victims. There have been numerous incidents where victims simply do not see justice.

A number of support groups in British Columbia support a crackdown on street racing. They include Family Survivors Against Street Racers, Our Angels in Heaven and Mothers Against Drunk Drivers.

B.C.'s solicitor general and minister of public safety, Rich Coleman, confirms that 60 vehicles involved in street racing have been seized and 180 driver's licences were suspended since amendments were made to provincial legislation in 2002.

Mr. Coleman stated the following:

This government has for some time been telling the federal government that in cases of offences involving violence, death and sexual assault, we don't believe there should be the opportunity for conditional sentences within the law. We have taken that to the table of the federal justice ministers.

Geoff Plant, the attorney general of British Columbia, says that conditional sentences have no role to play in street racing offences. He states:

The Criminal Code needs to be tightened up in the area of conditional sentencing so that conditional sentences are rarely, if ever, available for a crime of this nature.

MLA Locke concluded her remarks on the passage of her motion by saying:

It has been my privilege to work alongside Nina and her family as well as the Member of Parliament for Surrey North and other volunteers. I want to thank the Member of Parliament for Surrey North for aggressively raising this issue in the Parliament of Canada.

I should point out that the Nina referred to in this case is Nina Rivet who is a sister of Irene Thorpe, the woman who was run down by a street racer while out for a walk one evening.

What is the position of the Liberal government?

In response to a letter from me late last year, the Minister of Justice does not appear to be interested in helping to stop street racing. He says that mandatory minimum criminal penalties “do not work from the point of view of general deterrence and recidivism”.

There is no empirical evidence linking deterrence and recidivism as they relate to street racing. In fact, in a recent B.C. case, the driver who was eventually convicted for the street racing crash that caused the death of Irene Thorpe was arrested for speeding while he was out on bail, even though his licence was suspended as a condition of that bail. This counters the minister's contention because it shows clearly that there is a need for legal deterrence. There is a recidivism problem.

The minister also says that driving prohibitions should remain discretionary. He says that sometimes they may not be necessary because of long terms of punishment handed down to street racers who kill or seriously injure. The problem with the minister's contention is that no one has ever received any of these long prison terms for convictions resulting from street racing.

House arrest is being used for street racers who kill or injure people. This is inappropriate from the standpoint of the victims or their survivors and the protection and safety of communities that have a serious street racing problem.

The government also maintains that there are only a few minimum sentences provided for in the Criminal Code and that it is not willing to add more, such as the mandatory drivers' licence suspensions called for in this bill, but there are many areas in the Criminal Code that provide minimum sentences. I counted 26 offences in the 2004 Martin's Annual Criminal Code that carry a minimum sentence upon conviction. And many Canadians agree that there should be more minimum sentences for many more offences in the Criminal Code. Our criminal justice system needs more teeth.

The government also believes that taking account of aggravating circumstances for the purposes of sentencing is a very rare tool provided for in the Criminal Code. The justice minister suggested that aggravating circumstances for sentencing are virtually limited to hate motivated crimes, abuse of position of trust and authority, spousal and child abuse, criminal organization and terrorism.

In fact, there are other examples. Bill C-15A, passed in June 2002, made home invasion an aggravating factor in sentencing for certain offences. A judge sentencing a person for unlawful confinement, robbery, extortion or break and enter must consider it an aggravating circumstance if the offence was committed in an occupied dwelling where the offender was either aware that it was occupied or was reckless in this regard, and where he or she used violence or threats of violence against a person or property.

I point out that when I presented a motion to that effect at the justice committee a year or more earlier, government members called me silly, and yet they enacted it themselves a year later.

Bill C-46, currently before the justice committee, in clause 3 sets out four aggravating factors for sentencing purposes with respect to fraudulent manipulation of the public markets.

The minister's lame excuses betray a lack of serious consideration being given to this issue by this government. There is no requirement to equate street racing with other crimes in order to allow it to be considered as an aggravating circumstance.

I expect that the government will hang its argument against my bill on its refusal to consider minimum sentences and the use of aggravating circumstances when sentencing. Those are not good enough grounds for the government to fail to address the problem of street racing.

Sanctions should reflect the fact that street racing is an activity that goes beyond the regular criminal activities involving motor vehicles that are covered by the Criminal Code. Driving prohibitions must be nationwide to prevent anyone convicted of causing death or serious injury while street racing from simply moving to another province and continuing to drive.

As street racing incidents causing death and serious injury continue to occur in our major cities, passage of Bill C-338 would serve as a deterrent. This is a proactive legislative measure that would provide one step in the fight to stop street racing.

Today the government has the opportunity to support Bill C-338. It has an opportunity to stand up for the victims and to hold the perpetrators properly accountable.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I would simply like to point out that, in the debate on Bill C-46, the Bloc Quebecois had made a certain number of proposals, in fall 2002, following the Enron and WorldCom scandals and also our own scandal with respect to doctoring the books at CINAR.

We had proposed tightening the Criminal Code. A number of the Bloc Quebecois' proposals are now in Bill C-46. We are very happy to see that, but, at the same time, we wanted to ask much broader questions. As I mentioned earlier in my question to the member from the NDP, it would be desirable in the follow up to Bill C-46 for a hard look to be taken at these issues, especially by the Standing Committee on Finance. I had already proposed that, but unfortunately, it still does not seem to top the list of priorities.

We had also hoped that there would have been a very serious look at the use of tax havens by Canadian companies. We know that Barbados, for instance, a country with which the former finance minister signed a tax agreement, has become the third most popular destination for Canadian direct investments.

We cannot say that, on the one hand, Canada will be very strict when it comes to financial practices and then, at the same time, legalize or tolerate jurisdictions that close their eyes to a number of these practices.

Earlier I mentioned that the OECD lawyer, Mark Pieth, had suggested that the OECD member states should consider this. I think that this Parliament should seriously consider this over the next few months.

The other aspect we must consider is the issue of responsible investing and measures benefiting investors and companies with responsible attitudes, not only in terms of their management practices, but also how they invest their funds.

To this end, even if we agree in principle, Bill C-46 is at most a first step toward proper regulations on administrative practices.

Bill C-46 contains a sticking point preventing the Bloc from voting in its favour. The extent of prosecution by crown prosecutors needs clarification.

During discussions on the bill, we were told that there will be prosecution protocols. Clearly, we will never vote for a bill that could be a Trojan horse for an idea the federal government has long promoted, in Ottawa and Toronto, that being the implementation of a Canada-wide securities commission.

We believe that this area comes under provincial jurisdiction, particularly in Quebec, and that our system is a good one. As proof, there have been no scandals, with the exception of CINAR, on the sort of scale seen in the United States, which does have a national securities commission.

We feel that our system has worked well. As a result, Bill C-46 must not be used to implement any secret agenda. Accordingly, we will withhold our judgment until third reading.

I wanted to speak because I thought it important to situate this debate on Bill C-46.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the hon. member for his speech. First, he said that the New Democratic Party had a very broad vision of what the market rules are. In other words, they needed to be limited to ensure that small investors, especially workers who invest their money in pension funds, are not swindled by financial or other harmful practices with respect to securities in particular.

I want to know what he thinks about the suggestion from Mark Pieth, OECD's expert on money laundering, who, after the Enron and other scandals, advised governments to work on regulations concerning the use of tax havens by their national companies.

I would like to know if, in his opinion, beyond Bill C-46, we should not be working on limiting the use of tax havens by Canadian and other companies.

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Madam Speaker, it gives me great pleasure to speak on behalf of my party and the hon. member for Regina—Qu'Appelle to Bill C-46.

Bill C-46 is the sister bill to Bill C-45, the Westray bill. I want to say at the outset that my party supports the bill in principle, although we would have liked a few amendments and further discussion in committee.

I consider the bill to be important legislation and something that is long overdue. Our research department has indicated to me that David Lewis, Ed Broadbent, Tommy Douglas and others of our party asked for corporate accountability for a long time. Now we are starting to slowly see a bit of that. We have to give credit where it is due, which is to the media for the way it covered the Enron story and the Bre-X story.

Canadians are saying that enough is enough. Canadians are concerned about where their investment dollars go. Workers and their families are concerned about where their pension dollar goes. Nothing can make people more sick to their stomach in terms of our own money than when we see the head of Enron living in a lavish mansion in Florida, with I do not know how many rooms, while the workers at Enron have lost all their pensionable savings. How that can happen in a free and open democratic society like the United States is beyond me.

The question is, can it happen here? Without legislation it probably could.

We are hoping this particular bill has teeth. In order to have teeth, as my hon. colleague said earlier, we must ensure that the authorities who oversee and regulate this type of legislation, whether it be a commission, the RCMP, domestic police services or whoever, have the final authority to investigate, bring charges and make them stick. They will also need the resources because we know these corporations have deep pockets. They could tie up cases of this type in the courts for a long time. It is just the way the legal system is sometimes.

We must ensure that the people who will be prosecuting these companies or corporations in the future have the resources and the technical ability to carry it through. Otherwise, this will fall like a deck of cards.

Another concern is the protection of employees. Although the bill does discuss whistleblower protection, we do not think it goes far enough. Clause 6 of Bill C-46 makes threats and retaliation against employees an offence punishable either as an indictable offence, which carries the maximum sentence of five years, or as a summary offence.

It is quite curious that the government is introducing a law that exposes an employer who makes threats to a punishment that is less than that of extortion. This is especially worrisome when the purpose of clause 6 is to deter employers from committing economic extortion. What we mean by that is that the threat will always be there for employees. What will happen to an employee who decides that someone in the legal or political world needs to know that what is happening in the company is simply not right? Many people will hold back because they do not want to lose their jobs.

As well, if people are in a particular trade or in the financial services world and they become blacklisted, who will hire them? No one should be punished for telling the truth but a lot of people in the corporate world have that fear hanging over them. We also have it in the public service world.

I will just go off track for a moment. It is interesting that the commissioner of the Coast Guard, Mr. Adams, would write a letter to all his employees and say that if any of them have contact with a member of Parliament the Coast Guard wants to know the details of any conversations.

Why would the commissioner of the Coast Guard want to know about my conversation with an employee of the Coast Guard? It is none of the commissioner's business. In a free and open, democratic society, people, in my opinion, have the right to speak to their member of Parliament on any subject.

To turn back to the corporate world, we want to ensure that when people within the corporate world see, hear or feel that something is drastically wrong they will be allowed to speak openly. If they are wrong, the court of public opinion will weigh heavily upon them, but if they are right, they will be doing our country a great service.

As I said before, many of these corporations hire lot of people in this country, and thankfully they do, which is part of the good thing about businesses in this country working hand in hand with government to create a mixed economy, something I have always supported. However the reality is that we must protect people's pensions. We must ensure they have proper working environments and reliable salaries and wages to base their living on.

I come from the airline world. When Canadian Airlines merged with Air Canada I could not help but notice that Air Canada wanted to delay or hold back some of its employees' pension liability funds. We simply will never accept that. The 11th commandment in the world is “Thou shalt not fool around with thy pension”. A pension is what a lot of people work for, be they in the auto industry, the forestry industry, the airline industry or even members of Parliament for that matter.

The fact is that when we leave our places of employment after many years of service we rely on that pension plan to ease ourselves into retirement. For anybody, be it government or business, to attempt to fool around with that pension plan is despicable and criminal.

I am hoping the bill will deal with issues of that nature down the road. I think the essence of the bill is accountability, transparency, openness and fairness. It would ensure that when corporations show us their books and tell us that they were audited fairly by an independent agency that they will not be buffaloing, masking the figures or whatever, that those are the facts.

Who will ever forget Bre-X? I remember people telling me many years ago that I had to get into this Bre-X because it was so hot. They told me that I would be able to retire early if I invested in Bre-X. It was around $95 a share at that time. I possibly should have invested and left when it reached about $130 or $140 but I do not think I would have. I probably would have been like most investors, been a little greedy, held on and then lost everything. Why? Because Bre-X and the people behind it lied to the investors and to the Canadian people. It was out and out fraud.

How many people lost their shirts on that? How many investors were shaken in the stock market because the stock market commissions were not able to or could not, for whatever reason, find out until it was too late? This bill should send a clear warning to companies telling them that if they are thinking about attempting to defraud investors, to screw their employees and everything else, we will keep a very close eye on them. Again, we can only keep that close eye on them if we have the resources and the manpower to get that job done.

It may be my perception but, like anywhere else in a capitalist society, people can make large amounts of money if they are smart, know the right people and have a lot of luck at the same time. The thing is that a lot of those companies in the United States, and the list goes on and on, are corrupt. They use smoke and mirrors. They have influence and conduct insider trading. It goes on and on, and a lot of them get away with it.

However it appears that the United States is not afraid to go after the big guys. We saw the impeachment of Richard Nixon. We saw them go after Bill Clinton. We saw them go after the seventh largest corporation in the United States, Enron. The Americans do not appear to be afraid of these individuals, the amount of money they have or their influence. If they have done something wrong or it is perceived that they have done something wrong in the United States the government will go after them.

The problem in the United States, as it is here, is that far too many companies get away with those kinds of things and that is completely unacceptable.

I will give a quick analysis that was done by our research department. The integrity of our public markets and strong investor confidence has been an important issue for security regulators for a long time because these principles are the necessary foundation for any successful market.

We in the NDP always question the market system of our economy. Many of us in the NDP like a mixed market economy, one with the private sector along with government. We think government could be an appropriate tool and an appropriate avenue to work with private business to develop the economy so that we can equally share our resources across the country. As our famous leader of the CCF, J. S. Woodsworth, once said “What we desire for ourselves, we wish for all”.

If the market is perceived to be corrupt or influenced in any way, shape or form by some shady characters or some outside sources that makes investors very nervous and they will put their money somewhere else.

The main contribution that Bill C-46 makes to this effort is to act as a greater deterrent to would-be insider traders and provide courts with the authority to compel the production of documents to determine the nature and extent of insider trading.

Insider trading is a tempting way to take care of one's friends. If we had a lot of stock, let us say in Air Canada, which I believe is trading now at anywhere between $1.10 and $1.30, and we knew tomorrow that a big deal would be coming up for Air Canada that could raise the price of shares, would we not love to know that information beforehand so we could either buy more or sell out, depending on the circumstances? There are not too many Canadians who would not love to have that type of information but that information, called insider trading, is extremely dangerous to the confidence of all other investors.

What happens is that only a select few, those in the inner circle of whatever that kind of information will assist, will get it, while the vast majority of investors will be left out in the cold. That is simply wrong. I am glad to see that the bill actually tries to do something about that.

The codification of aggravating sentencing factors and the elimination of mitigating factors, such as status and reputation, if those attributes were relevant to the commission of the offence, will develop a more consistent and certain punishment regime. That is something we support. If corporate criminals want to commit those kinds of act and break the trust of investors and ordinary Canadians, we believe they should be punished to the fullest extent of the law. We like the idea of punishment for fraud going from 10 years to 14 years, fraud affecting capital markets going from 10 years to 14 years and market manipulation going from 5 years to 10 years.

I want to make sure that it just does not say “Here is your 14 year sentence but, by the way, if you serve one-third of it, with good behaviour off you go”. No. We have to make a strong deterrent and make sure that 14 years means 14 years.

I know of other concerns. Let us look at someone who commits a criminal act and gets eight years. I had an individual in my riding who had eight previous impaired charges and on the ninth one he actually killed someone, an 18 year old girl. He was sentenced to eight years but only served two of them. Many citizens in my riding, including myself, were extremely upset when that sentence was reduced.

It is just like Bill C-46 on corporate crime. When the head of a major company, which employees thousands of people, defrauds their pension plans, he or she only gets a few years while the employees lose all their savings and lose everything, which means that if they had no private savings of their own and have no other means of supporting themselves they will then turn to the government for assistance. The government should try to prevent that by making sure that if the bill says 14 years, then that is what the person gets, not 3 years and not if they are really good in jail they can go early. That is nonsense.

The NDP will ensure that further amendments come to this bill. We have always said that corporate accountability, business accountability, is extremely important. To the best of our ability we will make the government aware that any agencies or regulatory authorities must have the manpower and the resources to carry out identification and charging, to ensure that they have the wherewithal to carry through with those cases.

As I said earlier, companies can be charged but when the companies have all kinds of money to fight these cases, they can tie them up in the courts for a long, long time with appeal after appeal. Our judicial system must have the authority, the manpower and the staying power to ensure that cases result in convictions. In the end we must protect the investors, protect our workers and protect fellow businesses not only in this country but around the world. If we prove to investors around the world who are looking to invest in Canada that we have a fair, transparent and open system, that would go a long way in building our economy in the future.

There is still an unanswered question to which I have not received a satisfactory answer. It has to do with trade deals such as the WTO, NAFTA, or whatever they may be. Now that many of these companies are becoming very international in their nature, will this domestic law stand up to those trade deals in terms of people who own companies but do not actually reside in Canada? Will we be able to bring them to court satisfactorily with these trade deals hanging over us? Will those trade deals impede us from bringing this type of domestic legislation to the forefront? I do not know, but I would like those questions answered.

I am proud to say that our party will be supporting this bill in principle.

[Roy Cullen, Liberal, Etobicoke North, ON]

Madam Speaker, with respect to the first question as to which body would be responsible for enforcement, we need to differentiate between civil and criminal enforcement, and compliance and sanctions.

Bill C-46 deals with criminal behaviour in terms of fraudulent activity, misrepresenting financial information, insider trading and protecting whistle-blowers. That is precisely one of the aspects with which the bill deals. It deals with criminal sanctions and calls for prison terms and fines.

Market enforcement teams would be established across Canada, as I said earlier, over the next of years. They would be composed of RCMP investigators, forensic accountants, lawyers and other investigative experts. The teams would be responsible for tracking down corporate criminals and deterring future occurrences of these crimes.

On the civil side, we have the Ontario Securities Commission that has sanctions of prison terms and fines for CEOs and chief financial officers who misrepresent economic realities in the financial statements. We have the Canada Business Corporations Act which could also have some civil penalties.

The point we have also made is that if we were to increase the sanctions under the Canada Business Corporations Act, the member is absolutely right to note that we would have to have the teeth and resources to monitor compliance and then we would have to have the resources to prosecute where companies were not following through on their responsibilities under the Canada Business Corporations Act, or indeed under the rules of the Ontario Securities Commission. But the Ontario Securities Commission would be something with which they would deal.

As Canadians, we should be monitoring how effective and productive these different players are in dealing with these issues because we will gain some experience and knowledge of how it is all working as we move forward.

[Roy Cullen, Liberal, Etobicoke North, ON]

Madam Speaker, I am pleased to participate in this debate on Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence gathering). This is a very important piece of the puzzle that is needed in Canada to reassert and re-establish confidence in capital markets.

The stories we hear about Enron and WorldCom in the United States create some questions in our minds as to what this means for Canada. We have heard of the Sarbanes-Oxley legislation in the United States and many wonder why we are not implementing similar legislation. A number of us on this side of the House decided to pursue this question.

The capital markets provide the lubrication for the efficient operation of Canada's economy. If the markets are threatened, the economic growth in Canada is impeded. Fewer jobs are created and the economic well-being of Canadians is attacked.

When we look at what has gone on in the United States with Enron and WorldCom and the response in terms of the congressional and legislative approach in Sarbanes-Oxley, we need to understand that Canada has a different set of capital markets. Canada has a different mosaic in terms of the jurisdictions that are involved in the capital markets. We need to design our own solutions here in Canada.

Bill C-46 is a very good start. It deals mostly with the enforcement and compliance components of dealing with capital markets fraud. Bill C-46 introduces new measures to strengthen enforcement against serious capital market fraud offences, measures previously outlined in budget 2003. This legislation tackles capital market fraud by creating a new Criminal Code offence of improper insider trading. It also protects employees who report unlawful conduct within their corporation from retaliation by creating a new employment related intimidation offence.

Bill C-46 also raises the maximum sentences for existing fraud offences and establishes aggravating factors to assist the courts in determining a sentence that would reflect the seriousness of the crime. It also enhances the evidence gathering tools available to investigators by amending the Criminal Code.

These are very important measures supported by the six integrated market enforcement teams that will be established across Canada over the next two years. These teams will be comprised of RCMP investigators, forensic accountants, lawyers and other investigative experts. These teams will be responsible for tracking down corporate criminals and deterring future occurrences of these crimes. This is a very important enforcement and compliance measure which I certainly support.

Canada is exposed to economic crime along the lines of Enron and WorldCom. In fact, many would argue that we have had some occurrences of that already. Many members in the House and many individuals across Canada are familiar with Bre-X Minerals. YBM Magnex, Philip Services, Livent Inc., Laidlaw, Cinar and Castor Holdings were fairly sizeable market frauds perpetuated here in Canada. We need to deal with this in Canada as well.

When we look at the approach to dealing with this type of economic fraud in Canada, we find that there is quite a quilt of different players and different jurisdictions. For example, the Canadian Public Accountability Board has been set up to monitor the independence and the role of auditors when they examine financial statements.

This body, which is actually chaired by the former governor of the Bank of Canada, will establish the rules by which audit firms can engage in non-audit work, such as tax work or management consulting, for audit clients of listed companies. It will set these guidelines in the sense of when auditing firms will be seen to have crossed the line of conflict of interest. It will also ensure that the firms that are auditing public companies have established mechanisms for quality control, for professional development. It will have the authority to delist auditors who fail to comply with the rules that have been established by this particular entity.

Our group that looked at this believes that this needs to be given a chance to work. We have confidence that it will work and it will deal with the question of auditor independence and auditor quality control.

When we look at the Sarbanes-Oxley legislation that was passed in the United States, there are many important best practices that are established in Sarbanes-Oxley dealing with the separation of the chairman and CEO roles, the question of the independence of directors and a host of other issues. What we need to do here in Canada is make sure that we pick those best practices that were established and where there is general consensus within the financial and investor community, these best practices should be adopted, whether they are in Canada, the United States or anywhere.

There is an important tool in Canada to show leadership in this particular area, and that is the Canada Business Corporations Act. The Canada Business Corporations Act affects many companies in Canada. In terms of the breadth of coverage of the Canada Business Corporations Act, it is something like 17% of all companies in Canada. It is quite a sizeable grouping of companies that are incorporated under this federal statute.

It is through this act that the federal government can exert some leadership by building into the Canada Business Corporations Act some of the best practices that most observers would conclude are the best practices in terms of corporate governance and a host of other items. One of those is the splitting of the chairman and CEO roles. It is probably more advantageous to separate those roles so that the chairman operates more independently and can act on a more objective basis on behalf of all the shareholders.

We have the question of the independence of the boards of directors. Too often we find that the board of directors is selected indirectly by the executive management group of corporations. They ultimately can become beholden to the management of the company. It seems to me that we need to have independent directors on the boards of public companies and we need quite a large number of them.

Let us look at the audit committees. Probably most public companies today have audit committees. It is quite important that these audit committees have directors that are well versed in financial reporting and financial affairs so that they can diligently do their work, listen to the reports of the external auditors and the internal auditors and take the steps that are necessary to protect the interests of the shareholders and other stakeholders.

In Canada, as I said earlier, there are a number of jurisdictions involved in dealing with corporate governance. For example, the federal government is responsible for the regulation of trade and commerce. It is responsible for banking and the incorporation of banks. It is responsible for patents and copyright. It is responsible for peace, order and good government and other matters not exclusively assigned to the provinces.

By the same measure, provinces are responsible for the incorporation of companies with provincial objects. They are responsible for property and civil rights in the province. They are responsible for the management of lands and resources and generally all matters of a merely local or private nature in the province.

As I said earlier when I gave the percentage of 17%, that is the percentage of listed companies that are federally incorporated. In fact the Canada Business Corporations Act applies to roughly 40% of all corporations, listed or not, in Canada.

One of the aspects that our little group on this side of the House looked at was whether we need to differentiate the rules on corporate governance as they relate to large corporations and small corporations. We felt that we should. How to define large corporations versus small corporations is something that needs to be looked at in more detail. Our group felt that large corporations have the breadth of resources, the scope of management and the scope of operation that they could be expected to have corporate governance at a higher level than some small companies that are restrained simply by the economies of scale, the very size and scope of their operations.

In Canada we need to ensure that we have capital markets that are operating efficiently and effectively. We also have players that monitor and regulate the securities industry. There are securities commissions in every province across Canada.

One initiative that our government has been pursuing for some time is to have a national securities commission or regulator that would bring all the provincial securities commissions under one roof. This would be the most cost effective and the most efficient way of doing it. If a company wants to list in Canada, right now it has to go to all the various provincial securities regulators. A national securities agency would be very efficient and effective.

Unfortunately the politics, as they sometimes do, get caught in the middle of this. Certain provinces want to see that happen and others do not. However, in terms of corporate governance and in terms of the efficiency and effectiveness of capital markets, having a national securities regulator would certainly go a long way to improving our corporate governance in Canada and would restore more confidence in the capital markets.

One of the securities commissions that plays a very lead role across Canada is the Ontario Securities Commission, simply because of its size, the number of listings, the number of companies in Ontario, the Toronto Stock Exchange being in Toronto, and much of the activity that takes place in Ontario and the large concentration of industrial activity. The Ontario Securities Commission falls under the Ontario Securities Act. This regulatory body is responsible for overseeing the securities industry in Ontario. It plays quite an important role in monitoring the compliance in corporate governance and financial reporting.

One thing we learned from the financial debacles in the United States and Canada, whether it was Enron, WorldCom, Livent here in Canada, or Bre-X, is the importance of financial reports that are accurate and reflect economic reality. The public companies especially have to come up with quarterly reports. There is huge pressure on management to show continued growth and earnings per share. Sometimes they are caught in a situation where they perhaps have to compromise their principles and distort the economic realities so that their shares can keep moving forward, especially if they have executive compensation schemes and stock options.

Stock options for executives is something that is here to stay. Our group on this side looked at the need for those stock option schemes and the way that executives and the management team are compensated to be clearly transparent. If the president has a number of stock options, it should not be hidden away in note 25 of the annual report. It should be highlighted, perhaps in the chairman's report or the president's report. It should be fully disclosed so that all shareholders are aware of the extent to which the management team participates in the profitability of the firm.

The group that we assembled would like to see some of the best practices of corporate governance incorporated into the Canada Business Corporations Act. There should be sanctions for failure to disclose financial information in a responsible and accurate way, especially for the CEO and the chief financial officer. If it is shown that the CEO and the chief financial officer misrepresented the financial statements of the company, there should be severe sanctions for that because there are many Canadians--directly or indirectly, through the stock market, pension plans or mutual funds--who are relying on the integrity of the financial reports.

Right now, under the Canada Business Corporations Act, the sanctions for misreporting financial information is minimal. We would like to see that beefed up along the lines of the measures that were introduced by the Ontario Securities Commission and along the lines of the legislation before us here today in terms of the Criminal Code.

In Ontario the penalties in the budget measures act of 2002 increased the fines and maximum prison terms for general offences, such as misrepresenting corporate financials from $1 million to $5 million and prison sentences from two years to five years less a day. The American equivalent, increased by the Sarbanes-Oxley act of 2002, is a fine of up to $5 million and/or up to a maximum prison sentence of 20 years.

As I said earlier, we believe that the Canada Business Corporations Act could be amended to increase both the fines and prison terms so that they are more in line with those of the Ontario Securities Commission. That would mean a fine of up to $5 million and/or a prison sentence of up to five years less a day.

Bill C-46 is an important bill and I want to talk about why we should support it in the House. It is part of a thrust of initiatives that must be looked at in a coherent way in Canada. We cannot just say Sarbanes-Oxley. It would not apply in Canada. If we were to legislate Sarbanes-Oxley here in the House of Commons, it would be thrown out because we do not have that kind of constitutional power.

However, by the same token, the Canadian Public Accountability Board must do its job in ensuring that auditing quality controls are good and that there are no conflicts. The Ontario Security Commission must pushing for strong rules in terms of good corporate governance, independent directors, separation of duties between the chairman and the CEO. There must be a requirement for good, honest financial reporting and severe sanctions. The Canada Business Corporations Act must incorporate the very best practices and ensure that if CEOs and chief financial officers do not play by the rules they will either go to jail or will pay heavy fines. Then Canadians would be protected, the capital markets would be efficient and effective, and people would have confidence in the capital markets in Canada.

In conclusion, this is a bill worthy of the support of the House. We should be pushing and promoting these other measures, especially the Canada Business Corporations Act amendments. I am confident that our government will bring forward those solutions in the not too distant future.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I want to put a few points on the record in regard to Bill C-46, an act to amend the Criminal Code in relation to capital markets fraud, and to enable the authorities to investigate, prosecute and imprison for wrongdoing.

A short time ago I was talking about an article I happened to be reading in the latest edition of Business Week. The bill is in response to what has happened in the United States and, to a lesser degree, obviously, to what has happened in Canada.

The United States congress, which is the equivalent of our Parliament, recently passed a bill called the Sarbanes-Oxley act of 2002 that will tighten up the criminal code in relation to some of the wrongdoings in the business world, and in the investment world in particular.

One of the famous cases, which I am sure everyone has heard about, was Kozlowski of Tyco International, an individual who was reported to have stolen $170 million from the company he represented as chief executive officer. In addition to that, there were unauthorized loans and bonuses to fraud investors of that company of another $430 million. The trial is underway in Manhattan as we speak.

That is not the only case. There have been many. We have all heard of the Enron scandal where individuals cooked the books and used accounting deceptions and procedures to make it appear as though the company was making money instead of losing money. As a result of that, companies like Enron and WorldCom have gone broke and the employees and shareholders have been left penniless, with the exception of the chief executive officers of those companies. Some of those trials are still ongoing and we have yet to know what the outcome of those will be.

The most famous example of alleged wrongdoing in the marketplace is Martha Stewart. The article I was reading from the latest edition of Business Week talks about some of the improprieties that might have been conducted by Martha Stewart and her company in terms of insider trading.

I only have to remind the House of when the bubble burst for Dotcom and how some of the investment companies themselves worked the system to drive up the initial price offerings of companies, only to cash in the initial offerings that they received at brokerage houses. It was discovered there were no earnings behind those inflated prices, no history of earning money and no potential to earn money. As a result of that a lot of people suffered needlessly. Innocent investors suffered. You and I know some of those people, Madam Speaker. They are our friends and neighbours who were, the term which is often used is not very sophisticated, sucked into that type of investment thinking they were good investments but which were not good investments.

The bill before us now would attempt to crack down on some of that illegal activity. It would increase the maximum sentences for existing fraud offences, establish a list of aggravating factors to aid the courts in sentencing, allow the courts to issue production orders to obtain data and documents from persons not under investigation and establish concurrent federal jurisdiction to prosecute certain capital market fraud cases. That is where the act would have to work in conjunction with the provinces, which would have the lead in any of those prosecutions because of the jurisdiction the provinces enjoy in these areas.

One point I briefly touched on was insider trader. This is where people within the industry provide information to allow their friends to buy shares at a particular price, knowing full well the price will be driven up by a certain announcement, an approval or whatever.

Bill C-46 creates a new criminal offence of insider trading. It is already illegal. It would create a new criminal offence with harsher penalties. This is a topic that members have heard me speak to time and time again in the House.

In fact I have a bill before the House now, Bill C-241, entitled the whistleblower's bill. It would provide whistleblowers within the public service a level of protection. When they see something wrong within government, public servants can in fact blow the whistle. In other words, they can report that wrongdoing knowing full well that their jobs will be protected. They will not be run out of the government or dismissed from the government or treated unfairly in any way for uncovering wrongdoing.

One thing Bill C-46 would do is provide whistleblowing protection to employees who expose wrongdoing under federal or provincial law. A new criminal offence of employment related threats or retaliation would carry a maximum term of five years. In other words, people within the corporate structure could in fact be prosecuted under criminal law for subjecting their employees to that type of harassment or punishment simply because they were reporting wrongdoing. I think that would allow many more people to come forward when they see that happening within capital markets or within investment houses.

One of the best examples of that I believe was with one of the top executives of Merrill Lynch. Knowing full well what was going on within Enron, he was very reluctant to classify Enron as a good buy in the investment market. He was punished by his own company. He was ostracized and humiliated. Eventually he had to leave the corporation simply because he was telling the truth. This type of legislation would protect individuals like him.

The current maximum sentence for fraud and fraud affecting the public market would rise from 10 years to 14 years. The sentences would be stiffened up. The maximum term for fraudulent manipulation of stock exchange transactions would rise to ten years from five years.

The other component of Bill C-46, which I never thought of myself until going through this legislation and understanding some of the work the committee did and how it actually arrived at this specific component, is it adds a list of specific aggravating factors that would result in harsher penalties, such as the extent of economic damage caused or the impact on market stability.

Again, if we look at Enron, it is the biggest corporate collapse in the history of the United States. The penalty for that would be much more severe because a lot of hardship was imposed on an awful lot of people, not only its employees but individual investors who had put their entire life savings into some of Enron's stock. They wreaked havoc on the lives of a lot of people, including some of their employees. Those types of aggravating factors would be considered when sentencing was handed out.

A person's reputation and status in the community or workplace can no longer be considered as a mitigating factor in lower penalties in cases where those who commit capital markets fraud rely on those very factors to carry out their crimes. Let us take the example of Martha Stewart. I hate to pick on her. I am not sure that is fair.

However, we could argue that Ms. Stewart has done some good in the community, even though we do not see all of it. No one would argue that in terms of donations or sponsoring specific groups. What now will happen is her profile in the community will no longer be considered a factor in terms of the sentencing. In other words, all the good we do will not be part of the sentencing. We will be treated as harshly as the next person, despite some of the public good we may have done.

If we look at the Enron case, that was the defence some of the executives used; look at the public good and how well they had behaved themselves in the community in terms of charitable donations, et cetera. This would discourage that. In other words, it really boils down to the fact that they can not hide under that cover. They would be sentenced on the severity of the offence they perpetrated and could not hide under the cover of a public name or having done public good in the past.

We support the bill and hope that it can be strengthened as we go along. Normally this would be left up to our justice critic to debate this but our justice critic now just happens to be our party leader. I am not sure where it is in terms of parliamentary committee.

I do know the Senate banking committee spent about a year looking at the bill. During its study, it examined other jurisdictions like the United States. The U.S. Congress passed a bill, which mentioned earlier, about a year ago now. Some of the things that were recommended are not in this bill, and I just want to put those on the record.

There are obviously a lot of good things in the bill, but some things have been left out and here are just a few of them.

Code of ethics--

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

Madam Speaker, we are indeed casting a critical eye on this bill. We must ensure that, within the federal jurisdiction, we have the best legislation possible and that the Criminal Code is strengthened. Potential defrauders must know that if they engage in illegal activities, they will have to pay the price. That is the federal government's responsibility.

We must ensure that we have the best legislation possible in that area but, at the same time, we must ensure that the provincial jurisdiction with regard to securities is respected. Indeed, we have seen over the last few years that there is no consensus in Canada on the issue of transferring this responsibility to the federal government.

Earlier, my colleague from Joliette talked about a committee that will have to make recommendations on this subject. We must simply ensure that, through Bill C-46, we are not doing now what the member for LaSalle—Émard wants to do when he becomes prime minister, which is encroaching on provincial jurisdictions.

We hope that the final version of Bill C-46 will respect Quebec's jurisdiction while including in the Criminal Code the tools needed to reassure investors, particularly small investors, as to the safety of the system governing the whole issue of security trading.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Madam Speaker, I was reading the latest edition of Business Week on this very topic and I wanted to bring some timely information to the House.

I have a question for the member. I am fascinated by the federal and provincial jurisdiction in this area. My understanding is that Bill C-46 would give added strength to the federal government but recognizing that jurisdiction is provincial, not taking away from the province. I know that is a sensitive issue in the province of Quebec. However my understanding is that it would strengthen the federal role but would not diminish the provincial role. Is that his understanding of Bill C-46?

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, I will begin by congratulating the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques for his presentation. This is no easy subject. In these 20 minutes he has managed to explain in layman's terms the key principles of the bill we have before us.

I would like to revisit one particular aspect, the one crucial for us, namely the regulation of financial markets and the recurring plan of the federal government to create a Canadian securities commission.

I imagine that everyone is well aware that the present finance minister has sought the advice of Harold MacKay in this undertaking—the selfsame Harold MacKay who authored the MacKay report, which led to Bill C-8, a bill we passed after the last election. Mr. MacKay proposed the creation of a wise persons' committee to advise the minister on the best route to take to regulate the securities market across Canada.

This wise persons' committee should soon submit its recommendation, which, as on many issues, is likely to be along the lines of establishing a Canadian securities commission. Membership would be voluntary, to put pressure on the provinces and Quebec as well. The Ontario Securities Commission clearly supports this initiative of a Canada-wide securities commission. The federal government's game plan will be to make sure all the provinces are onside, so as to isolate Quebec, and say, “Look, we are not forcing you to get onside, but since you are alone on your side, this will be a problem”.

I would like to ask the hon. member this: based on the questions he raised and what I just said, is the danger with Bill C-46 not a classic in terms of federal government interference, using a real problem and real concerns of the public—in this case, small investors and future retirees—about losing a portion of their savings because of financial fraud?

This is a real problem. We see it in the municipalities, which have financial needs with respect to infrastructures, we see it with child poverty. So, in response to a real problem, a real concern, a solution, be it legislative or financial, is proposed along with a slew of terms and conditions that result in us living in an increasingly centralized country, while what the Fathers of Confederation had in mind was a confederation. Without the guarantees the hon. member referred to, Bill C-46 may well become another part in this huge puzzle of the federal government intended to centralize Canada and make it a unitarian state.

That is my question for him.

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

Madam Speaker, I am pleased to speak today on Bill C-46. The Bloc Quebecois is in favour of the bill in principle, but reserves its decision on the division at third reading stage until we see how the government reacts to our amendments.

I would remind members that, as early as 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. The Bloc is therefore delighted that the government has given in to our pressures and has taken our opinions into account and retained some of our suggestions.

We do, however, find it unfortunate that not all of our suggestions were accepted. For this reason, we advise you that, barring major amendments at third reading, we could decide to vote against it, even if we do agree with the principle at this second reading stage.

These major reservations, however, relate to an aspect of the bill that we shall be trying to amend at the committee stage. 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 has publicly announced its intention of establishing a Canadian securities regulator. Having a Canadian Securities Commission was one of the obsessions of the former finance minister, soon to be the prime minister of Canada. And this would be done despite the fact that jurisdiction over this area is clearly indicated, despite the fact that the securities commissions in each province have made their choice clear. The former finance minister, the member for LaSalle—Émard, seemed intent on getting his way on this.

We are concerned about what Bill C-46 will turn out like if it is not amended in order to ensure clear respect of Quebec's jurisdiction. For us, regulation of securities clearly falls under the jurisdiction of the Government of Quebec. We therefore disagree with the federal government's intentions in this regard and want to be sure that no encroachments of jurisdiction will result.

But, I want to talk in general terms about this legislation. This enactment amends the Criminal Code by creating a new offence of prohibited insider trading and creating a new offence to prohibit threatening or retaliating against employees for disclosing unlawful conduct. The enactment increases the maximum penalties and codifies aggravating and non-mitigating sentencing factors for fraud and certain related offences. In other words, the allowable sentences are being increased so as to deter people from committing this kind of offence.

Furthermore, in keeping with the Criminal Code, the enactment provides for concurrent jurisdiction for the Attorney General of Canada to prosecute those offences, taking into consideration the reservations I mentioned earlier.

In addition, the enactment also creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances, to make it easier to build a solid case, without getting lost in a legal labyrinth when information is quickly needed to serve as evidence, and to ensure that any necessary changes can be made as soon as possible.

Clearly, this bill follows on the heels of recent corporate scandals in the United States. We only need mention Enron. These scandals have made us aware of how fragile our financial system is and how much we rely on it.

During the 1930s, before the crash, many of our parents and grandparents grew up believing that the stock market was undoubtedly a bit corrupt. After the crash, this sector had to rebuild a more honest, proper and appropriate image or reality. But recent scandals have tarnished the reputation of the financial sector, which desperately needs an unassailable, solid image. Investments take a beating when we can no longer trust the institutions charged with ensuring the transparency of financial transactions. The result is fewer transactions and disinterest on the part of investors. We must remedy such situations.

Although at first we thought that only large investors were affected by a stock market crisis, that is not the case. As I was saying, the biggest players on the stock markets are the pension funds. As a result, if a pension fund suffers large losses, it is the small investors who can lose their life savings and see their retirement projects go up in smoke.

That is why it was time for the federal government to intervene in this matter. The Bloc Quebecois has been speaking out on this subject for over a year. It is a question of ensuring that, at the end of the day, the people who have invested in the pension funds and who do not necessarily have day to day control over what happens to them, the people who trust the companies who administer the funds, will not have the surprise of finding themselves, at retirement, with assets that are not what they might have expected. This situation has been begging for a solution.

For example, in 1998, the Canadian trusteed pension funds held assets of more than $500 billion. Of that $500 billion held in pension fund assets, about $115 billion was invested in Canadian stocks and some $57 billion in foreign stocks. Four million Quebec and Canadian workers contribute to these funds. Only the financial assets of the chartered banks exceed the capital held by the pension funds.

That illustrates the importance of this market, the importance of assuring these small investors, those who invest trustingly, through their pension funds, that their money is well invested.

In addition, analysts have recently observed that trusteed pension funds tend to favour investment in stocks rather than in fixed interest securities. It is all the more important to ensure the validity and security of the system.

In light of the previously mentioned figures, it is clear that a financial crisis would have a direct impact on the retirement incomes of millions of households and it is precisely those households that we have to protect.

Fortunately, to date, Canadian markets have been relatively spared from professional misconduct, except for the cases involving CINAR and Nortel.

In the CINAR case, the Bloc Quebecois condemned it in this House and revealed that there indeed had been major fraud within this company. Today, the company has started up again with new directors, but we do not know the full story, because the federal government signed an agreement through Revenue Canada to put out the fire.

It was clear in this situation that interests close to the Liberal government were called into question, as were some people who were friends of the current regime. A way was found to prevent them from getting the sentences they deserve and that should have been handed down in these cases.

Nonetheless, the CINAR and Nortel crises, and everything that happened in the United States, should encourage us to ensure that our legislation is well drafted and stronger, in order to discourage cheats who might want to abuse the system.

However, the Bloc Quebecois feels that despite the fact that our securities regulation systems are, in the opinion of many experts, much more comprehensive than what 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 that is not acceptable in our society.

Let us learn from what happened in the United States. The messages were not clear enough. People had a field day and thought they could do all kinds of things like artificially inflating companies, and conducting all kinds of financial transactions that eluded pension fund administrators.

By the time a scandal breaks, it is too late for people who invested in these companies in good faith, thinking these were rather sound investments. We are not talking about investments in high risk areas. That is not how it was presented to the people who invested in good faith.

In the United States, a really fraudulent system was set up. Here, in Quebec and Canada, this did not happen because we were better protected to begin with; still, there are lessons to be learned, to ensure that in the future the system will be much more efficective than it is right now.

That is why, in the fall of 2002, the Bloc Quebecois called for major changes to be made to the Canadian Criminal Code in order to provide the appropriate authorities with better tools to fight crimes of a financial nature.

What are these changes the Bloc Quebecois is calling for? In a nutshell, since the fall of last year, we have 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 in the performance of their duties for the purpose of making profits or avoiding losses would not be tolerated.

The idea is to avoid situations where, having heard that a transaction is about to take place, a person lines her own pockets during the time when no one else, or almost no one else, is aware of the transaction.

Perhaps we thought for a long time that it was enough to rely on the good faith of people. We are realizing that we need measures, actions and stiff penalties to prevent insider trading. Such offences are one of the most tragic ways that investors' confidence in the system can be shaken.

These offenders figure, “Others in the company, such as executive officers, stand to profit, while I, by the time news of the transaction reaches me, will not have the chance to buy and sell shares the usual way, since the game will be almost over and what could be gained will already have been gained because others have beat me to it, using information before they should have to pocket piles of money”. This way, they make profits or avoid losses at the expense of other investors who do not have access to the same information. This sums up my point.

We wanted this provision to be added after section 382 of the Criminal Code. It would have created an offence of insider trading, which would have carried a maximum sentence of ten years' imprisonment so that people would be well aware of the consequences they could face before they decided to engage in such a behaviour. Then, should they be found guilty of such an offence, they would have to pay dearly.

We see that the government accepted our suggestion and included a new offence of insider trading in the bill. We are pleased about that. The Bloc Quebecois also proposed that a new offence be created for securities fraud. This offence, which would be patterned on the measures adopted in the United States and which would also carry a ten-year prison term, would prohibit fraud when selling or buying securities.

The Bloc also proposed two amendments to section 397 of the Criminal Code. This section clearly stipulates that fraud is committed by someone who:

(a) destroys, mutilates, alters, falsifies or makes a false entry in, or

(b) omits a material particular from, or alters a material particular in,

a book, paper, writing, valuable security or document.

These provisions could have applied to falsified financial statements. It was noticed when gathering evidence, particularly in the American cases, that documents had disappeared and that the tools needed to punish those who had made these documents disappear were not available since no punishment was provided for in the Criminal Code.

Furthermore, subsection 2 makes it a specific offence if documents are falsified with the intent to defraud creditors. This makes it even more relevant. In both cases, the sentence is five years. We, in the Bloc Quebecois, believe that this kind of sentence is not harsh enough to have a deterrent effect. Consequently, we propose that the maximum sentence be increased to ten years so that the message is clearer. People must understand that this type of behaviour will not be tolerated and that those who are caught will have to pay a very high price.

Finally, we suggest that a third paragraph be added to section 397. This paragraph would deal with falsification of documents with intent to defraud stockholders. We think that stockholders, whose investments are not secured, unlike most creditors, constitute a category that is more vulnerable because they have no way of recovering their investment. Consequently, we cannot see why there is a specific offence of fraud that creditors might be the victims of, and there is no similar offence concerning stockholders. We are trying to correct this situation and we hope that the bill will correct it.

Thus, the bill contains provisions on insider trading. As I said, the Bloc is pleased to see them included in the bill. It also prohibits threatening or retaliating against employees for disclosing unlawful conduct or for assisting law enforcement officers to investigate cases of capital market fraud. These employees also need to be protected against intimidation. Of course, when a scandal occurs, when we learn suddenly that someone, particularly if it is at the top level, has committed fraud, we can be sure that some people in the company will keep a low profile. If we want them to have a lawful conduct, we must provide these employees with the leeway and the protection they need to be able to act.

These employees often have a key role to play in disclosing scandals in companies, but they may be intimidated or threatened, including through measures against their job or their livelihood. Someone may suggest that, if a certain document is found, perhaps they will lose their job and will be made to pay the price.

People must be protected from this; otherwise the threat can be such that some may cave in. Even if it cannot be justified, some do it. Moreover, at the present time we do not have the necessary tools. They must be given adequate protection.

Creation of a new offence of threat or reprisal relating to employment would encourage people with inside information to co-operate with law enforcement officials and would punish those threatening or making use of reprisals. This offence would be punishable with up to five years' imprisonment. Obviously, we are in favour of this provision too.

Some of the provisions regarding insider trading, threats or reprisals were requested by the Bloc Quebecois and we hope they will be made into law.

To strengthen penalties in cases of fraud on financial markets, and to make sure that the punishment fits the crime, the proposed reforms would increase maximum sentences for existing fraud offences, and would establish aggravating circumstances, which the courts should take into consideration in sentencing.

Maximum sentences would rise from 10 to 14 years for the present fraud offences under the Criminal Code, and for those affecting the public market. Maximum prison sentences for market manipulation offences would increase from 5 to 10 years.

The proposed reforms would also include a list of specific aggravating circumstances allowing the courts to impose stiffer sentences for the most serious offences. Factors such as the extent of the economic impact or any negative impact on investor confidence or market stability could lead to increased sentences.

The message is very clear, if you work in that sector and if you act illegally in such a way that it has a major impact on investors' confidence, you deserve to be penalized accordingly.

On this side, we want to send a clear message to people who work in that sector, namely that there is no room for fraud because too many people are involved. Also, we are talking about the money of too many people—who often are not the direct investors—who can lose their savings because of this type of behaviour.

Moreover, a person's reputation and standing in the community or work environment, which have always been considered mitigating factors that can reduce penalties, could not apply in such a case. It would not be possible to say that the person in question was generously involved in various volunteer activities or that sort of thing. If a crime of this nature is committed, such factors cannot be used to reduce the penalty.

Finally this is a sector in which these factors are often used to minimize the impact of a crime when the wrongdoers are found out, because they are often people with important positions or philanthropic activities. But the philanthropic aspect does not, in our opinion, justify reduced penalties.

And now, the improvements: this bill provides for improved evidence-gathering procedures. Some sections have the effect of compelling professionals not to respect their duty of confidentiality. Under certain circumstances, this bill can compel a professional to produce documents and even prepare documents that may concern confidential matters, which could certainly come under someone's privacy.

Therefore, even though these sections provide that orders to produce may be subject to certain conditions in order to protect privileged communications such as lawyer-client privilege, the fact remains that some confidential information could be divulged, under certain circumstances.

Thus we might wonder if the fact of compelling a professional to communicate confidential information could undermine the confidential relationship between clients and professionals. I think that this is one idea we should explore in committee in order to ensure that the planned measures maintain the necessary balance in this regard, while still ensuring that the bill will have a dissuasive effect.

We also ought to mention section 487.015 of this bill, which is an attempt to respond to this concern by enabling anyone named in an order under the two preceding sections to apply to a judge for an exemption from the requirement to produce any document, data or information referred to in the order.

If a person says he does not want to provide the information and has good reason not to do so, he may go before the judge and obtain an exemption. So this is a kind of safety net for the protection of the information, but it does not automatically lead to the protection of such information; the judge is called upon to assess the appropriateness of the request.

It remains to be seen what criteria judges will use for denying the disclosure of confidential information. It will therefore be important at committee stage for witnesses to tell us what these criteria might be, and for us to study the proposals and suggestions. We will need to see whether it is appropriate for them to be incorporated in the act, or as regulations, or whether we need to take some other form of action to ensure that there is a clear understanding of the leeway available for obtaining authorization not to transmit this personal information.

Clause 487.013 allows the banks to disclose confidential information such as the account number, status and type, and the date on which it was opened or closed. As well, they can provide the account holder’s date of birth, currentaddress and any previous addresses.

We must point out immediately that this information is an integral part of a person's private life. When they are requested, the individual's privacy is of necessity being encroached upon. It is incumbent upon us to question just how necessary this breach of privacy is to the objective of this bill.

Quebec and Canada have workable laws to protect privacy. These could still be improved, but it is important that the principle be respected. We would be very pleased if the clause by clause study of the bill, and the contributions of those appearing before the committee could cast some more light on this, so that we can shape the bill accordingly.

Finally, I will address the charges by federal prosecutors. As I said at the start, this is where we in the Bloc Quebecois have a problem, and this is why. The regulation of financial markets is an area that comes under the jurisdiction of Quebec and the provinces, as does the administration of justice.

Under this bill, the Attorney General of Canada would have concurrent jurisdiction with the provinces and 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 a narrow range of cases that threaten the national interest in the integrity of capital markets.

These limits need to be very precisely defined. There may be a way to vote in favour of this bill, if we receive enough guarantees on this point and on the whole issue of federal prosecutors.

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.

But between statements of good faith by the federal government and reality, there is often a grey area. I understand that measures to protect provincial jurisdictions should be adequate, clear and precise, and meet the approval of the Government of Quebec and the other provinces.

For many years, the federal government, through the former finance minister, the member for LaSalle—Émard, wanted to implement a Canada-wide securities commission, and thereby intervene directly in provincial jurisdiction. We have to make sure that the federal government does not achieve through the back door what it has so far failed to do through the front door.

We now see what the hon. member for LaSalle—Émard thinks about transferring money to the municipalities. In a very roundabout fashion, he is proposing direct involvement in the municipalities in full view of the provinces. He is blackmailing the municipalities, saying that if they want money, they must tell their province to sign the agreement. This amounts to political bargaining, which is unacceptable and does not respect areas of jurisdiction.

So, if this can be done with the sales tax, it may be possible to do it indirectly through this bill. We must ensure that this is not the direction we are heading in.

Consequently, we cannot support these new provisions. They confirm, in our minds, the federal government's new desire to get involved in the securities sector, which is the responsibility of Quebec and the provinces, as I just demonstrated.

Overall, however, this bill respects a number of the Bloc Quebecois' proposals. It will provide our system, in Quebec and Canada, with the tighter controls it needs, at a time when people have lost confidence, to some extent, in the markets and the securities sector.

So, we must send a clear signal. This bill contains some interesting measures to reinforce a system that, fortunately, in Quebec, was already better than the Canadian system.

The only thing left to do is ensure that Quebec's jurisdiction is respected. If so, the Bloc Quebecois will vote in favour of this bill at second reading. Once there have been consultations and once the committee has heard from witnesses, if we are assured that Quebec's constitutional jurisdiction will be respected, we will vote in favour of the bill at third reading. We will thus have helped create legislation to build an even better securities sector, and we will have also made a satisfactory contribution to the Quebec and Canadian economies.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak in the House today to Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence-gathering).

It is tempting to go down the road, as several speakers have, about the government and its practices versus what it is trying to accomplish in the bill, but I will not do that. I want to talk about this specific bill and feature some of the things that I think are positive but also some of the major weaknesses that need to be discussed.

I know that with the coming election boundary changes we are fast-tracking that bill for the member for LaSalle—Émard to make sure the provincial requirements for new seats will happen. That is something that has been going over the summer and it is happening right now.

I would expect the same thing to happen to Bill C-46. Because it is important for Canadian families and for businesses we need to ensure the business of the House is not ground out. I do not want to see that hypocrisy. The bill is certainly owed to the general public.

The mere fact that we are talking about this shows us that the entire free market system has been shattered by unprecedented corporate fraud. Formerly reputable accounting firms, business leaders and banks have been shaken to their foundations, and it is not just in Canada. WorldCom, Xerox and Enron are good examples in the United States of what has driven us to recognize that there are problems.

These problems highlight a systemic or financial system. It is systemic because it is not just isolated to one or two groups or organizations. They have far-reaching effects and they involve multiple companies and organizations that we do not even know about.

We have focused exclusively on the top, not just the medium and the small, which we still do not know about. Plenty of excellent corporations, which are working very well within the system, are being punished as well because others are abusing it. We need to make sure that stops. There is no doubt about that.

The current spin by the financial market backers and government backers is that this is individual ethics rather than a systemic problem. However the reality is that right now we require the toughest policing between lawyers, police officers and investigators and l to ensure that people can come forth with information and we can gather information. That is a significant change over the last several years. That is an identification that we have systemic problems with our system that is hurting, not only people who invest money but the development of our free market economy, and that has to change.

One of the issues that is not addressed in the bill is another question that needs to be raised. I believe it is fraud. We have a system right now where a CEO can come into a company, cut thousands of workers, sell equipment and assets, raise the price of the stock for the short term, get a big cash handout, a series of bonuses and then leave the company in ruin. That also has to be addressed. The bill does not address that but we should start talking about that as a change to the system.

We have literally thousands of workers who have lost their jobs and people who have lost their investments for a short term, and that has to stop.

This has been driven by a number of issues that have happened in the United States and worldwide, as we said, where millions of dollars have been lost.

The U.S. congress responded by passing the Sarbanes-Oxley act and enhancing enforcement and funding to support investigations and prosecutions. It was very swift and clear on this and here we are still fumbling with it through our system. That is not acceptable.

After listening to thee discussions today from the government side and the opposition parties, it sounds like there is support. My hope is that we will continue to press that and ensure that we at least have some improvements. Where those improvements should go in terms of the length and distance, everything from the actual types of tools that the prosecutors have to the actual fines and jail time, might be different but we have to make sure that something gets through.

I hope we go for some very strong laws and improvements that the bill requires.

On June 12, 2003, Bill C-46, a companion to Bill C-45, the Westray bill, was tabled and presented as a Canadian response to the Enron fiasco and the Sarbanes-Oxley act. It is important to note that we are talking as well about some environmental and human safety issues at the workplace. It would make people responsible for their actions and they no longer would be able to hide behind a corporate identity or symbol. It would actually bring to the forefront people who make decisions and who are derelict in their duties.

This is something that is actually important and exciting, because it gives those people providing good, stable jobs with the best practices the ability to compete with those who cheat the system.

This package intended to maintain investors' confidence in Canada's publicly traded companies includes spending of $120 million over the next five years, together with proposed amendments to the Criminal Code. The money would go towards the creation of six integrated market teams, IMETs, made up of RCMP investigators, federal lawyers and other experts.

That in itself is acknowledgment once again of systemic problems. We have a government that has a record of dismantling public service and privatizing. That is the record over the last 10 years. The government is now admitting it needs to create another body to deal with this problem. If it is $120 million, I do not believe that is going to be sufficient, because the document itself outlines the fact that government is going to go after the major perpetrators, that they will not be able to get to the other ones. The government is scratching the surface with this.

Despite that, the $120 million may not even be enough money for policing the greatest of crimes. Hopefully when we get to the committee stage we will hear from delegations and from witnesses and experts who will bring numbers forward. I would expect that suggestions will be made to raise that amount of $120 million to provide for appropriate legal repercussions and prosecution so that people do not get away.

Bill C-46 makes insider trading a criminal offence with a 10 year sentence. The bill targets employees of corporations and others who use privileged information not available to other investors to benefit themselves. That is a significant achievement in itself. It shows that there actually will be some repercussions. I do not believe that is enough. I will get into that later with a comparison of what is happening in the United States. I believe we need to go farther than that.

It also creates a new offence punishable by up to five years in jail to prohibit intimidating or retaliating against employees who report fraud and other unlawful practices or conduct in the financial markets. This will protect employees from employment related harassment and punishment; that is whistle-blowing. Members of the New Democratic Party have been calling and advocating for whistle-blowing protection for many years. It is a good feature to have, but five years is not enough to protect an employee.

We know that some of these people may not necessarily even get prison time. They could be out and they could also hold other jobs with competitors. They could have inroads with groups, organizations or other investors and that could have a repercussion on employees. I want to see greater detail on how we can protect those employees to make sure that when they step forward they have the confidence that not only will their business will support them, but also that outside of that the Government of Canada and the institutions of justice will protect them and their family.

Without that, we are going to lose many files. We will see many cases requiring more investigation and cost. We have to simply say that we will not let people hang out to dry by themselves, that we are going to protect them and their families when they have the courage to step forward. That has not happened enough in the past.

Right now the bill also codifies non-mitigating factors. For example, if a corporation has been a good corporate citizen and used that leverage, then it will be used against a corporation not to lessen a fine. That is an improvement. That is a first step and there is no doubt about that.

I think we should be looking at other things over a company's history to see what taxable deductions it has been using. Has it been lunches? How much booze has been written off? What about the environment? Has it actually caused environmental problems and written them back as a tax deduction? That can currently be done in the government's program. A company can spill or create a toxic waste and actually get a fine and then at the same time claim it back on income tax. Has the company done these things?

There are political donations, golf games, and all the different things that a company has used through their system. They should be examined. The corporation should be made to pay it back if it has actually had someone on the take or was basically using information or those experiences to better their position or to share that arrangement amongst people. The reality is that taxpayers end up paying for that as they write off those deductions. Taxpayers are subsidizing those deductions. All of that should be added to the actual bill.

Right now Bill C-46 creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances. One of the good things about the bill is that these production orders may be issued without another party's knowledge, which will allow investigators to gather evidence from third parties such as banks and auditors without tipping off the subject of their investigation.

That goes back to my position on whistle-blowers. We would be able to save millions of dollars, strengthen cases and ensure that justice would be done if we can get that information and cooperation, but that takes the confidence of those people stepping forward. As it is right now, I do not believe the bill provides that confidence. It does not provide that ironclad commitment required. We know that this type of system will actually create better opportunities for us to prosecute and to be successful, but once again, that has to be enshrined in such a way that people feel protected.

As things stand right now, there is a deterrent effect. Punishment for fraud would increase from 10 to 14 years, for fraud affecting capital markets from 10 to 14 years, and for market manipulation from 5 to 10 years. I believe that is not enough. That has to change. We should be looking for stiffer penalties. As well, if damages are over $1 million fines could be increased. Perhaps we have to look at lowering that $1 million. I am not sure whether I am comfortable with that and I am looking forward to hearing witnesses come forward to discuss that.

The bill also allows the Crown to prosecute for insider trading. That is very important. We think that should move forward right away.

One of the concerns we do have with the bill it is that there are still some vague definitions involved. There is an issue of vague information in regard to insider trading, that is, how significant is significant? The definition is not there. We know that there can be increased penalties because significant information comes forward or there is significant alteration on the market, but who is going to define that? I do not think that leaving this entirely to the courts is good. Whether it is a 15% drop in the stock or a financial issue affecting later performance, those are things we have concerns about. We would like to see these further defined.

There is another aspect of Bill C-46. Once again I will go back to whistle-blowing; I can do this quite a bit because we have been talking about whistle-blowing for years. Instead of amending the Criminal Code we should keep the broader definition of extortion so that it still exposes offenders to an indictable offence punishable by life in prison. What we can do is make sure that it is one of the harshest penalties out there.

There is no mention in the bill of accessories to fraud or wilful blindness. I am going to go through a brief scenario on Enron to give an example of some of the weaknesses of the bill that we need to discuss. Obviously the offence of fraud requires an element of intent to deceive, but what happens when there is no intent to defraud yet the failure to act allowed the deception to take place in itself?

For instance, let us take the example of the Enron fiasco, which in part prompted this legislation. There, the accounting firm of Arthur Andersen admitted to making “errors in judgment”. It shredded thousands of documents relating to its audit of Enron and suspected or knew that Enron was breaking security regulations.

Most cases prosecuted under this legislation will not involve outside firms such as accounting firms so closely involved in the actual offence, but the example illustrates how an outside firm's omissions can contribute to commission of the offence itself. That is why under Bill C-46 we need to explore the possibility of imposing a legal duty on outside firms dealing with financial statements or companies to take reasonable steps to verify or scrutinize the accounting practices of their clients to expose them to criminal liability.

It is not good enough to just pass the buck. We would have those groups and organizations that are actually paid as businesses having to show their confidence in what the corporation has put forth to the market to prove and back up what they have done; they could not hide. That is one of the weaknesses of the bill. It does not go after them the way it should and it would allow situations like that of Enron to continue to happen.

It has become obvious that it is not practical to rely only on the deterrent effects of criminal legislation to prevent such disasters. What is needed are better watchdogs to oversee the affairs of corporations and to ensure that businesses' accounting practices comply with the law that all material information is being disclosed.

Once again it goes back to the whole concept of whistle-blowing to gather that information and ensure that it can be used, and it cannot be just the corporation. We must have those accounting firms responsible. They as well would be responsible. If we look at some of the accounting cases, and I am going to read out a couple of them, we know that they are very important to the actual criminal liability issue. One is Enron, as I mentioned. I will not go through that again except to say that basically in 1997 it overstated its earnings by about $600 million U.S. It should have been responsible and so should all the partners who signed off on that.

Tyco allegedly avoided payment of $1 million U.S. in sales tax on $13.2 million in artwork. They did not show that. They should have been responsible. Adelphia Communications lent billions of dollars to the founders, the Rigas family. The family relinquished control of Adelphia which had defaulted on $7 billion U.S. in debt and filed for chapter 11 bankruptcy protection on June 25. Once again its loan documents and information were not accounted for. Livent is another one where financial records were manipulated to hide losses of $100 million.

Once again, those who sign off on this business need to be responsible and should be considered as part of the offence in itself.

I am going to compare some of the differences between the United States and Canada as we discuss Bill C-46.

Right now for insider trading, Canada gives 10 years in prison. In the United States, the maximum sentence for insider trading is going to increase from 10 years to 20 years, with a fine of up to $5 million U.S. That is the minimum.

For threatening whistle-blowers in Canada, there is up to five years in prison. In the United States it is going to be up to 10 years in prison.

On increased enforcement, they are actually going to be hiring 200 new investigators, lawyers, and auditors and establishing an accounting oversight committee to monitor and regulate accounting industries. That once again goes back to my argument on the accounting, that they are actually identifying that and providing a resource for that.

The sentence for fraud in Canada is raised from 10 years to 14 years. In the U.S. it is actually going up to 20 years in jail.

I agree with the debate about whether or not there should be minimum sentences provided. My concern quite frankly is that a judge could give a minimum sentence which would not act as a deterrent. A person would get a couple of years perhaps and there would be no real repercussions on his or her life beyond that. Maybe there would be some professional repercussions but it would not be the same compared to the businesses and the families that had lost their savings and their ability to plan financially for their futures. I have some real concerns that we may not get the type of deterrents we are seeking.

The government needs to look at this. We need to focus if we are really going to attack this problem. It is systemic. It is not something that happens to one or two companies. We know that fraud occurs and market practices are very vulnerable to a number of people who are taking advantage of the system. We need to be in front making sure that justice is going to happen.

We have a different perspective on corporate crime here in Canada. We see street crime and we act on those things a little differently, but regarding white collar crime we have done very little or nothing at all. That has to change. This bill should move quickly through Parliament to ensure that Canadians are protected and that their investments are there for the future.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Rob Anders, Canadian Alliance, Calgary West, AB]

Mr. Speaker, I have some questions for my colleague with regard to the whole concept of capital markets fraud. I think we have a prime example of that in the new Liberal leader and I will enunciate why.

The new Liberal leader has been committing a form of tax evasion for years. Talk about capital markets fraud. Somebody who owns Canada Steamship Lines, plus a total of about 132 other related companies, has been hiding his money and his profits offshore. The hypocrisy of it is that while he served as the finance minister in this place he bragged about how Canadian taxes were so good, but he was hiding his money offshore and not paying Canadian tax. Why? He obviously thought Canadian taxes were awfully high. I would say that is a good example of capital markets fraud, which Bill C-46 is all about. The former finance minister would know capital markets fraud all too well.

What does my colleague think about Paul Martin Sr. having acquired Canada Steamship Lines for pennies on the dollar? This was a crown asset that was sold to Paul Martin for next to nothing. Talk about capital markets fraud and taking money--

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Mr. Speaker, I am pleased to rise today to speak to Bill C-46. For our viewers this evening, let me begin by reading a summary of Bill C-46:

This enactment amends the Criminal Code by creating a new offence of prohibited insider trading and creating a new offence to prohibit threatening or retaliating against employees for disclosing unlawful conduct. The enactment increases the maximum penalties and codifies aggravating and non-mitigating sentencing factors for fraud and certain related offences and provides for concurrent jurisdiction for the Attorney General of Canada to prosecute those offences.

That indeed is a tall order.

The Progressive Conservative Party supports Bill C-46 in principle.

Why have we seen this legislation come into being? Recent major accounting deceptions and other corporate scandals, such as those of Enron and WorldCom in the United States, have resulted in multi-billion dollar losses and have devastated investor confidence. The United States has already responded with the Sarbanes-Oxley Act of 2002 and with increased resources for investigations and prosecutions.

The Canadian government is now acting to increase the resources available for enforcement of existing Canadian laws and to strengthen existing criminal sanctions. What we gather from that statement is the government wants to be seen and perceived as being tougher on crimes, certainly capital market crimes. Yet at the same time we see the government being really soft on criminals. It is easy to say one thing but, as the old saying goes, to walk the talk is something else.

Even in the field of immigration enforcement, Ontario has a total of eight immigration enforcement officers. That is in a province the size of the Ontario. It just does not make any sense.

The Youth Criminal Justice Act has created a lot of problems from coast to coast to coast. Communities are dealing with vandalism and youth crime and their hands are tied. They really do not know how to deal with it. In fact I have spoken to attorneys general of the provinces and they have the same problem. They really question why the new Youth Criminal Justice Act is the way it is. It is actually worse than the Young Offenders Act which it supposedly replaced.

In the field of immigration, which I am very familiar with, I am told that staffing levels are not up to 1994 levels. When the Liberals came into power, they made all those big cuts, like $24 billion in health care. They also did the same thing in immigration even though the work probably tripled or quadrupled from 1993 to today. It is easy for the government to say it will be tough on crime, and now we are looking at a new bill. However to be tough on crime, it has to put in the resources.

Some members spoke today about mandatory sentencing. On my way back to Ottawa, I read in the paper that the attorney general of Manitoba, Gord Mackintosh, was asking the federal government to change the Criminal Code so that no bail would be granted to repeat offenders. It is creating a problem in the field. There is a huge disconnect with what we believe should taking place and what is actually taking place out in the real world.

There are new offences under this act. Insider trading is already illegal under the provincial securities laws and the Canadian Business Corporation Act. In instances that merit a more severe response, Bill C-46 creates the new criminal offence of inside trading with a maximum prison term of 10 years.

Bill C-46 also provides whistleblowing protection for employees who expose wrongdoing under federal or provincial law. A new criminal offence of employee related threats or retaliation would carry a maximum prison term of five years.

Bill C-46 is really about making the private sector and the capital market sector more accountable. Governments and certainly this government should eat their own words. If they really want to be accountable, they should demonstrate that by the way they spend taxpayer money. How accountable are they?

The bill talks about capital market fraud. The Auditor General has criticized the government for keeping the House of Commons in the dark when it comes to the way it has spent the money on the failed gun registry. It is fraudulent how it spends billions of taxpayer dollars. If it wants to tell taxpayers, the citizens of the country, how things should operate, then it should set the example.

When we examine the long gun registry from the fraudulent point of view and the waste of taxpayer money, this is really what we are trying to do here today. Bill C-46 is about the capital market, people's money being used in a fraudulent manner or in misleading investments in the private sector. With the long gun registry, even today the government still has not reported to Parliament what the total cost of the program has been so far. The government still has not reported to Parliament what the total cost will be to implement the firearms program.

The Treasury Board officials finally admitted that even they will not know the total cost of the firearms program until the fall. The government has been hiding the truth from Parliament and the public for seven years and has not been any more forthright in the last five months, over this past summer, or even this fall. Even when we ask questions about the new estimates of the Department of the Solicitor General, the Solicitor General refuses outright to say that there is a new $10 million in his account for the long gun registry.

The government estimates are still grossly under reported because of the justice department's plans and priorities report for 2003-04, which was tabled this past March, has 111 blanks. We are talking about the government's use of taxpayer money.

The government also refuses to reveal the cost of enforcement compliance as recommended by the Auditor General. The government refused to release a cost benefit analysis on the firearms program by declaring it a cabinet secret.

When we talk about accountability, it leaves a lot to be desired in the way the government handles taxpayer dollars.

Bill C-46 is supposed to be tougher on crime with tougher Criminal Code sentences. The current maximum sentence for fraud affecting the public market will rise to 14 years from 10 years and the maximum term for fraudulent manipulation of stock exchange transactions will rise to 10 years from 5 years.

Perhaps we need tougher minimum sentencing. In other words, we need mandatory minimum sentencing for people who are convicted of capital market fraud.

Bill C-46 also adds a list of specific aggravating factors that would result in harsher penalties such as the extent of economic damage caused or the impact on market stability. A person's reputation and status in the community or workplace can no longer be considered as a mitigating factor to lower penalties in cases where those who commit capital market fraud rely on those very factors to carry out their crimes.

In the area of evidence gathering, Bill C-46 introduces production orders as a tool for criminal investigations. Production orders are already part of the Competition Act. They are also less intrusive alternatives to search orders. They would compel a third party to produce pertinent documents within a specific time period. Failure to comply could result in a jail term of up to six months and a fine of up to $250,000.

Regarding concurrent jurisdiction, currently the Criminal Code gives the provinces responsibility for prosecuting cases that involve capital market fraud. With Bill C-46, either the federal or provincial governments may prosecute such cases. The government says that the federal involvement would be limited to a narrow range of cases that threaten the national interest.

As I mentioned earlier, the provinces need to be wary when the feds promise that they will fund prosecution under the federal courts. We have many examples where funding relationships between the federal government and provincial governments on paper appear to be in order. However in practical terms, in real costs, day to day activity, it just does not work out. Health care is a good example. We all know the problems of health care across Canada. As was mentioned, when it was first started, the cost was shared between provincial and federal government, fifty-fifty. Now we are down to about 15¢, I believe.

Another good example is the long gun registry on the prosecution side. Eight provinces have already indicated that they will not prosecute long gun registration offences and that they will let the federal courts deal with the prosecution of people who have breached Bill C-68, those hunters or firearm users who either do not have the gun registered or do not have a possession certificate. Up to today I know probably hundreds of people who have been stopped and caught for that breach, yet no charges have been laid by the federal government.

I know the reason why no charges are being laid. The government is in no way willing to spend millions of dollars prosecuting innocent Canadians who do not have their family heirloom or some rabbit gun their grandfathers passed on to them registered.

In terms of the financial relationship with Bill C-46 provinces have to tread very carefully.

The government is playing catch-up with the United States lawmakers who have already passed legislation, not just to strengthen criminal sanctions but also to reform the way corporations are governed. Boards of directors, auditors and audit committees all have key roles to play in protecting the interests of shareholders. Indeed the scandals that rocked the capital market of 2001-02 are widely seen to be the result of poor corporate governance, lax auditing, accounting standards and oversight and the incentives provided by executive compensation arrangements. In spite of this, the government's background information on Bill C-46 does not once mention the role of good corporate governance legislation.

Shortly after the government tabled Bill C-46, the Senate banking committee completed a year long study of the circumstances that resulted in the American corporate scandals. The committee was particularly interested in whether these circumstances might occur in Canada with similar results and if so, how they might be avoided.

While the committee called for tougher sanctions, whistleblowing protection for those who report financial irregularities and increased resources to investigate wrongdoing, it also recommended legislative measures to: require that a majority of board members be independent; require the development of a code of ethics to be followed by all board members; require audit committee members to be independent and financially literate; limit the non-audit services that auditors can provide to their audit clients; require the chief executive officer and the chief financial officer to certify that the annual financial statements fairly represented the organization's results and financial conditions; and prohibit compensation committee members from being a member of management and require them to have expertise in compensation and human resources.

The challenge will be to separate jurisdiction between the provinces and the federal government. We must be aware that father does not always know best. The Progressive Conservative Party looks forward to the further hearing process at committee level.

[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.

[Vic Toews, Canadian Alliance, Provencher, MB]

My colleague from British Columbia is reminding me of the young offenders act.

I was a provincial minister of justice in Manitoba, and I remember arguing with the federal government. It gave us a few million dollars, but its contribution fell short of the implementation costs of the young offenders act. The provinces were then stuck with the prosecutions.

In order to administer its own legislation, the federal government is probably paying somewhere in the range of 10%, 15% or 20%. I say to those provinces that might be charmed with $120 million to get exactly what they are getting in writing. They should not take the word of those guys. We have seen them fail in honouring their word time and time again.

Under Bill C-46 the Attorney General of Canada would be permitted to prosecute a narrow range of cases that threaten the national interest and the integrity of capital markets. Frankly, I would say to the provinces to let the federal government prosecute them all. Then the federal government will find out how expensive, cumbersome, and complicated it is to prosecute these cases. There are thousands of justice department lawyers who draft all this legislation, lawyers who do not have to go into court to defend that legislation and prosecute under it.

We have seen these lawyers draft gang legislation that is absolutely worthless because it is so complex. We are fighting a 21st century problem in terms of gangs with 19th century legislation. We have lawyers in the justice department who are more concerned about what the courts will say about the charter of rights than actually prosecuting criminals and telling the courts why it is important to put these criminals away.

We have turned the system on its head and now the Attorney General of Canada says he would prosecute a narrow range of these crimes. I say to the provinces to let the federal government prosecute all of these cases. It will see that the $120 million will maybe last one year, not over five years.

Generally speaking, however, with the exception of the resourcing issue and with the failure of the government to place minimum sentences, I am in support of the general thrust of the legislation. Canadians agree that confidence in our nation's corporate sector and stock markets must be retained. However, it is difficult for Canadians to take the justice minister and his parliamentary secretary seriously when they say it is important to be tough on corporate abuse of money invested by the public when nothing is being done to prevent the abuse of taxpayers' dollars by the Liberal government.

Just two weeks ago, the member for St. Albert revealed that a former assistant to the heritage minister spent over $50,000 on food and travel in just under two years and had not provided adequate information for most of the bills. Last week, or the week before last, concerns over $600,000 in questionable expense accounts by the director of the National Gallery of Canada added to this growing list of waste and mismanagement. The list is not limited to staff or appointed officials. It extends all the way up to the upper echelons of government.

Last year, private companies such as Groupe Everest and Lafleur Communications came under criminal investigation after intense pressure from the Canadian Alliance. The Auditor General's report said that senior bureaucrats broke every rule in the book by awarding contracts to these Liberal Party contributors.

Corruption in the sponsorship program has led to revelations of waste in $230 million of government advertising spending. Several Liberal ministers have been forced to resign after even the Prime Minister could no longer defend their actions.

The former public works minister, Alfonso Gagliano, was implicated in questionable advertising contracts and was conveniently shuffled out of cabinet into a Liberal patronage position as ambassador to Denmark.

The former defence minister was fired following the revelation he gave an untendered contract to a personal friend. The former solicitor general came under investigation by the ethics counsellor and resigned after he was found to have breached ethical guidelines in giving contracts to party friends.

This is the government that now says we have to get tough on the private sector and the abuse of the money that the public invests in capital markets. Yet this is a government that has taken absolutely no steps to clean up its own House. It is another example why government members do not want to see minimum sentences in place.

They simply want, as I said earlier, to wink at the judges and say that this is just business as usual and that the government must up the end of the sentences, but the judges should not worry because they can do whatever they want on the bottom end.

The justice minister is quick to point out that 55% of Canadians have lost confidence in the stock market as a result of recent corporate scandals. It is funny how he forgot to mention that the 2002 poll showed that 69% of Canadians viewed the federal political system as corrupt.

Here the justice minister is motivated to act in respect of the private sector when 55% of Canadians want to see changes in the stock market. Yet when 69% of Canadians say that the federal system is corrupt, there is an absolute silence coming from the justice minister and his parliamentary secretary in respect of this very important issue.

Canada's federal Liberal government needs to get busy cleaning up its own house if it is to have any credibility in enforcing any new laws designed to deter corporate crime.

Having said that, I think it is important for members to follow the legislation closely, bring forward appropriate amendments and support legislation that indeed deters fraud in capital markets. This is an important bill and at this point it should be advanced.

[Vic Toews, Canadian Alliance, Provencher, MB]

Mr. Speaker, I am pleased to participate in today's debate on Bill C-46, an act to amend the Criminal Code dealing with offences related to capital markets fraud. This legislation has been developed in reaction to corporate scandals that have surfaced in the United States and weakened investor confidence in capital markets worldwide. Similar American legislation was passed last July, the Sarbanes-Oxley Act of 2002.

As we have heard from the Parliamentary Secretary to the Minister of Justice, Bill C-46 proposes a number of changes that are intended to strengthen confidence in the markets, and protect investors from fraud and other unlawful conduct.

Under the new legislation we would find a new Criminal Code offence prohibiting insider trading which would carry a maximum penalty of 10 years imprisonment. A second new Criminal Code offence would prohibit employment related threats or retaliation which would protect so-called whistle-blowers, carrying a maximum sentence of 5 years imprisonment. The maximum sentences for existing fraud offences in the Criminal Code would be increased up to 14 years imprisonment from the current 10 years, while the penalty for fraudulent manipulation of stock exchange transactions would be increased to 10 years from 5 years.

The parliamentary secretary indicated that there would be specific aggravating factors for sentencing which would now include the extent of the economic damage done by the offence. Current mitigating factors, as he indicated, such as reputation or status, would be inapplicable to those committing serious capital market frauds if they were to rely on those very factors to commit the offence.

These are the concerns that I have in respect of this bill and they do relate to the sentencing provisions. This is a government that has consistently stated that it will get tough on crime. If we go to the Youth Criminal Justice Act or to the dangerous offenders legislation, there have always been those nice, colourful catch phrases designed to lead people from the truth of what the legislation was all about.

Last week we saw the Supreme Court of Canada correct the former minister of justice, who said he was bringing in legislation to protect Canadians from dangerous offenders. In fact, when the legislation was analyzed, as it was by the courts and confirmed by the Supreme Court of Canada, the legislation that was passed in 1997 made it easier for criminals to avoid staying behind bars. The option of a long term offender status now allows these dangerous offenders to apply under long term offender status and receive community based sentences or a form of parole.

The other point that the government has consistently stated when it talked about getting tough dealt with increasing maximum sentences. However, everyone knows it is not serious about taking steps to prevent crime by putting meaningful consequences in place because in fact what it does is never put minimum sentences in place. Whether a sentence is 10 years or 14 years, we have seen what the courts have done. They have simply applied the other avenues to allow individuals to escape responsibility through the use of conditional sentences, suspended sentences or other types of alternatives to incarceration.

I have seen that happen in the legal profession that I used to be a part of. When I started out in the practice of law, it was not uncommon for lawyers who defrauded clients to receive substantial penitentiary sentences.

Over the last number of years, of course, those lawyers who defrauded individuals, who caused incredible damage to people's savings and to the reputation of the law society, have been receiving conditional sentences. They have been able to avoid going to prison because of the tendency of the courts now, as directed by the legislation, to consider alternatives other than incarceration.

Here we see again the same kind of pattern. We hear the government say it will get tough on people who defraud investors, and yet it puts no minimum sentences in place. What the government is doing is simply winking to the judges and telling them not to worry about what it is saying about tough sentences, they can do whatever they like.

Given the direction that judges are required to follow in other parts of the Criminal Code, we will see the same kind of sentencing patterns and the alternatives to incarceration with Bill C-46. It has happened in the context of dangerous offenders and young offenders. It has happened in virtually every so-called sentencing reform that the government has brought forward. My concern is that if we want to get tough on individuals who defraud investors in the markets, minimum sentences must be put in place.

The parliamentary secretary indicated that additional investigative and prosecutorial resources would be provided in the most serious cases of capital markets fraud, including up to $120 million of federal money over the next five years. That amount is a joke. We have recently seen in the context of the Alberta gang trial where over $20 million was spent just to defend individuals, and the trial ultimately collapsed. The tens of millions of dollars that was spent in that trial is all gone. The sum of $120 million will go absolutely nowhere if we want to be serious about prosecuting this kind of fraud.

I noted the parliamentary secretary stating that the government would make some kind of agreement with the provinces. All I can say to the provinces is to beware. We have seen these kinds of agreements with the federal government before. Let us recall the medicare partnership of fifty-fifty. Now the federal government pays about 15%. Let us recall the deal on legal aid of fifty-fifty partners. Now the federal government is at about 15% or 20%.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak to Bill C-46. I have concerns about whether it will get through the House business and provide the confidence which is so required. Nevertheless hopefully that will happen.

I would like to ask the hon. member specifically about the commitment to have prison time set forth. The sentences are weaker than in the United States. My concern which are Canadians, be they pensioners or investors or businesses, affected by these scandals. We have individuals who might eventually walk away with a minimum sentence or a sentence that does not have prison time and this could virtually have an effect on someone's life for 10, 20 or 30 years as well as the assets of their family.

I want to ask specifically about that part of the bill and what else could be looked at in committee stage to increase the enforcement. Right now I see this as using kid gloves in dealing with corporate crooks, and that will not build confidence.

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, investor confidence is crucial to the life of Canada's capital markets and to our economy as a whole. American corporate scandals shook the credibility of global capital markets in 2001 and 2002. Multi-billion dollar accounting deceptions and other corporate scandals dominated international business media headlines during this period. Because of their far-reaching effect, these scandals have damaged investor confidence well beyond the American borders.

A survey conducted in 2002 revealed a dramatic drop in investor confidence following the collapse of WorldCom, with the majority of those surveyed believing that both the American and Canadian economies will continue to suffer as long as similar corporate misdeeds impact as they do on investor confidence.

In addition, a public survey in 2002 suggested that the majority of Canadians have lost confidence in the stock market and that Canadians show support for initiatives that are aimed at boosting financial transparency and stiffening penalties for those who transgress.

Currently, in partnership with provinces, regulators and law enforcement, the Government of Canada is working very hard to ensure the integrity of Canada's financial markets, although in the wake of recent American corporate scandals, the Government of Canada wants to make certain that this work will not only continue but is strengthened.

On September 30, 2002, the Speech from the Throne committed the Government of Canada to:

reviewing and where necessary changing its laws and strengthening enforcement to ensure that government standards for federally incorporated companies and other financial institutions remain of the highest order.

The Government of Canada has committed to constructing a response that is tailored to investor and law enforcement needs. One aspect of Canadian law that had to be addressed was criminal legislation dealing with serious capital markets fraud.

The government has come forward with legislative enforcement measures to deter the would-be perpetrators from committing serious capital markets fraud offences, to facilitate the gathering of evidence against those who have committed serious fraud offences, and to ensure that those who are convicted of such offences are punished appropriately.

I am pleased today to debate Bill C-46, an act to amend the Criminal Code, dealing with capital markets fraud and evidence gathering. This bill represents the government's response to the criminal law dimension to market misconduct, a very important step toward restoring investor confidence in our capital markets and in our economy generally. As members will soon hear, and which will become plainly obvious, those who engage in capital markets fraud will face a significantly increased risk of being caught, charged, convicted and punished.

The key to deterrence is greater certainty of detection and prosecution and the prospect of appropriately severe punishment. We can therefore also hope and expect that an enhanced criminal justice response to market fraud will serve to dissuade many who might otherwise contemplate such unlawful conduct.

I would like to turn to the IMETs part of the bill. First, to strengthen the national enforcement presence pertaining to serious capital markets fraud offences, budget 2003 included $30 million in funding to create up to nine integrated market enforcement teams, or what we refer to as IMETs. These are composed of RCMP investigators, forensic accountants, and federal prosecution service legal advisers and prosecutors in Toronto, Montreal, Vancouver and Calgary.

These teams would investigate serious Criminal Code capital market fraud offences that are of national significance and involve publicly traded companies whose actions have posed a genuine threat to investor confidence and economic stability in Canada. These teams will make use of existing Criminal Code provisions and those in new measures in Bill C-46 once the bill is passed into law.

Bill C-46 addresses four key areas in particular: first, new offences; second, sentencing measures; third, concurrent federal jurisdiction to prosecute certain offences; and fourth, enhanced evidence gathering tools.

Our review of the Criminal Code in the light of the American response to the crisis in investor confidence showed that we already have strong and effective laws to deal with capital markets fraud, including an effective fraud offence and offences of obstruction of justice and for filing a false prospectus and so on.

What we did find was that there appeared to be two gaps. Bill C-46 would effectively fill those gaps. In particular, Bill C-46 would create new offences for, first, prohibited insider trading and, second, employment related intimidation aimed at deterring corporate insiders from reporting illegal conduct and assisting the authorities.

When insiders of corporations use their special access to material inside information that is not available to other investors in order to benefit themselves, the investor confidence that is required in order to sustain the credibility of our vital capital markets can be seriously undermined. This activity can cause significant economic harm to individual investors, firms and the integrity of the Canadian economy as a whole.

Improper insider trading is currently prohibited under the provincial securities laws and under the Canada Business Corporations Act. However, the use of the criminal law is a necessary additional instrument for deterring this kind of corporate malfeasance because of its symbolic value and because of the more severe penalties available.

The addition of an offence to the Criminal Code to prohibit and punish improper insider trading as a criminal offence would provide an additional tool to deal with those cases that merited a more severe response and ultimately would help stabilize investor confidence.

Members may recall how insiders who disclosed illegal conduct played an important role in uncovering the recent American scandals. Our Criminal Code does contain certain offences that prohibit intimidation, which basically means trying to stop someone from doing anything they would otherwise have a right to do, such as talk to the police, by threatening them with violence or harm. The Criminal Code also prohibits attempts to obstruct the course of justice, which relates to interference with investigations and the prosecution of crime.

Threats and actions directed at a person's employment, done with the purpose of preventing them from cooperating with law enforcement or to punish them where they have done so, are not adequately covered by these existing offences.

Once again, the Government of Canada has responded. The addition of a targeted offence in Bill C-46 will help to deter this kind of inappropriate conduct on the part of employers and will consequently help encourage insiders to cooperate with law enforcement. This new offence will send a strong message that this form of intimidation will not be tolerated. I would like to point out to members that this offence will apply to efforts to stop employees from speaking to a law enforcement body about any kind of illegal conduct, not just securities fraud.

Encouraging those with knowledge of wrongdoing to cooperate with the authorities will facilitate the detection of capital markets fraud and other forms of corporate malfeasance, as well as aid in the enforcement of federal and provincial offences under securities regulatory laws and other laws governing corporate actions.

Now I would like to talk about the sentencing that the bill encompasses. In keeping with the Government of Canada's commitment to ensuring that those convicted of capital markets fraud and white collar crime in general are punished appropriately for their wrongful conduct and the harm they cause to Canadians, Bill C-46 contains significant sentencing proposals.

In addition to the 10 year maximum sentence for the proposed insider trading offence and the 5 year maximum sentence for the proposed employment related intimidation offence, Bill C-46 also would increase the maximum sentence for fraud from 10 years to 14 years and double the maximum sentence for fraudulent manipulation of the stock market transactions from 5 years to 10 years. It should be noted that a maximum prison term of 14 years is the highest term of imprisonment in the Criminal Code short of imprisonment for life.

These sentencing initiatives therefore raise the maximum sentences for capital markets fraud to a level that recognizes their serious nature and crippling effects that they can have on our economy.

In addition, as a direction to our courts, Bill C-46 includes a codification of aggravating and non-mitigating sentencing factors for fraud and other market related offences, ensuring that the sentences the courts hand down for these offences will reflect the seriousness of the economic and social damage that such offences can inflict on our society. The government believes these codified factors will also improve the sentencing of white collar crime in general.

Let me deal with the area of concurrent jurisdiction. The partnership is a key and breathes life into Bill C-46. As such we propose to use concurrent prosecutorial jurisdiction over fraud to supplement provincial jurisdiction and provincial resources in regard to the major cases of capital markets fraud that are the focus of integrated market enforcement team initiative.

Federal involvement would be limited to a narrow range of cases that threaten the national interest in the integrity of capital markets.

Let me be clear. We do not intend to replace or overtake provincial prosecutorial jurisdiction but rather to compliment it. To this end officials within the Department of Justice have been engaged in a dialogue with provincial prosecutorial authorities on the development of joint protocols that would protect provincial jurisdiction while allowing for supplementary application of federal prosecutorial resources where necessary and desirable.

To ensure proper coordination, the Government of Canada will work with the provinces to establish prosecution protocols that will ensure a coordinated and effective implementation of the concurrent jurisdiction. The concurrent jurisdiction proposal responds to an immediate national concern of investor confidence in Canadian financial markets. Through effective partnerships with our provincial colleagues, we can strengthen investor confidence and bring those who threaten it to justice. I look forward to continuing this relationship.

We also have to look at how we gather evidence in situations of this type. I would turn to the provisions of Bill C-46 that relate to this evidence gathering.

In the Speech from the Throne the government committed itself to creating better tools to enhance the evidence gathering capabilities of investigators. Bill C-46 does just that with Criminal Code amendments that create production orders. Production orders are similar to search warrants. Whereas a search warrant allows police to search a certain place for evidence, a production order compels a person to produce the relevant information to the police.

Although this investigative tool is new to the Criminal Code, it already exists in Canadian law, notably under the Competition Act and in limited circumstances under other statutes. Further, it could also be characterized as a codification of current practices. For example, today when a police officer enters a bank with a warrant to seize records, he does not usually shut down the bank to get those records. Nor will he seize the bank's computer system.

What generally happens is that the holder of the information sought in the warrant will generally produce that information to the police himself. The reason for this is twofold: first, it is more convenient for the bank, since its business operations are not being interrupted; and second, it is more cost effective and less time consuming for the police.

The production orders in Bill C-46 have been introduced in the context of the capital markets fraud, however, as crafted they will not only apply to capital market investigations but also to all Criminal Code offences where a regular search warrant could be obtained. Because the new production orders have this broad scope, we thought it was necessary to include the same judicial safeguards required by the Criminal Code search warrant provisions.

Law enforcement agencies and crown prosecutors have been asking for a new investigative tool for some time and with the proliferation of the Internet and the widespread adoption of new communications technologies, the timing is right for this form of investigative tool.

The production orders will solve a number of nagging issues for investigators including extraterritorial searches and timing issues. Under these new orders, persons who have possession or control of documents, data or information will have to produce that information whether it resides in Canada or abroad. Thus, as long as they have possession or control over the relevant information, they will be required to produce it no matter where it is located. This solves the problem that has in part been created by inexpensive overseas data warehousing.

Second, the new production orders will be time sensitive so that the third party served with the order will either have to produce the information within the time specified in the order or report back to the court within the specified time as to why he or she cannot comply. This solves the problem of the inherent nature of informal arrangements which is they are informal and they often lack specific mechanisms such as timing mechanisms.

In some cases police have had to wait for up to a year to obtain information from a third party holder of that information. This bill introduces two types of production orders to the Criminal Code to enhance the general evidence gathering capabilities of the investigators. The general production order will require a person other than the individual under investigation to produce documents, or data or to create a document based on the existing documents or data and produce it.

For example, a production order served on a bank could require the bank to compile existing but non-related information on a client and give it to the police. Before issuing the order, the judge or justice must be satisfied that there are reasonable grounds to believe an offence has been committed, that the specific documents or data will afford evidence relating to the commission of the offence and that the recipient of the order has possession or control of these documents or data. These are the same basic judicial safeguards as required by the existing Criminal Code search warrant provisions.

The second type of production order is the specific production order. It has been designed to be a first step investigative tool and is limited to specific types of information for which there is a lower expectation of privacy. A judge or justice will have to be satisfied that there are reasonable grounds to suspect that the information will assist in the investigation of an offence. This type of order, with a narrower scope, would only apply to financial institutions and other organizations specified in the legislation.

Therefore, the general details relating to bank accounts such as the name of an account holder, or type and status of an account could be obtained through a specific production order.

I am pleased to have spoken to this bill today. The bill reflects the government's criminal law response to serious securities fraud that poses real risk to investor confidence in the stability of our markets and economy.

[Paul Devillers, Liberal, for the Minister of Justice and Attorney General of Canada]

moved that Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence-gathering), be read the second time and referred to a committee.

Business Of The House

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

Mr. Speaker, the hon. member across is a little impatient with his future holidays. He will probably have to wait some time.

This afternoon we will continue to debate second reading of Bill C-48, the natural resources taxation bill. I understand that the bill is nearing completion.

When it is complete, we will then debate Bill C-50, the veterans' benefits bill sponsored by my colleague, the Minister of Veterans Affairs, followed by the consideration of the Senate amendments to Bill C-10B, the cruelty to animal bill.

If time is left, we would deal with third reading of Bill C-17, the public safety bill, and second reading of Bill C-46, the market fraud bill.

In the unlikely event that we do not complete all of that this afternoon, on Friday we would begin with a reference to committee before second reading of Bill C-41, the amendments and corrections bill. The opposition House leader and I have had a brief conversation about this

We would then proceed with Bill C-37, respecting improvements to Canadian Forces pension benefits.

We will then return to any bills already mentioned today in the unlikely event that some of them are not fully completed.

On Monday, we would begin with Bill C-17, the public safety bill, and then return to the list previously described.

Tuesday, September 30, and Thursday, October 2, shall both be allotted days.

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.

Parliament of Canada Act

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, it is great to be back to make a couple of speeches on the first day of the autumn session of Parliament. I would like to welcome everyone, especially the new pages. I would like to assure my constituents in Yukon that the new pages have already completed the most important part of their training and fully understand that Yukon is the best constituency in the country.

Before I go into details on the amendment to Bill C-34, the previous speaker discussed the general legislative climate this fall. I would like to follow up on that because it is a very aggressive and detailed legislative agenda and I hope people do not lose track of that.

There are many bills that we are in the midst of bringing forward and must continue with such as, Bill C-34, which we are talking about now; but also Bill C-13, assisted human reproduction; C-22, family law; C-38, marijuana; Bill C-45, which I hope to talk about later today concerning the Westray bill for worker safety; Bill C-46, market fraud; Bill C-19, resource taxation; Bill C-6, first nations specific claims resolution for the economic development of first nations; archives legislation; bills related to child pornography and the sex offenders registry; citizenship; as well as urgent veteran's needs.

And then of course all the committees are working. The finance committee will be doing its pre-budget work. There are always important issues in foreign affairs. The health committee has to work on the West Nile virus and the agriculture committee on mad cow disease.

This is a very detailed agenda and continues to be one of the most productive legislative agendas we must get through. I hope people do not get sidetracked in the House or in the media about other things or go off these important changes that affect real people in Canada.

I am pleased to address the NDP amendment at report stage with respect to Bill C-34, a bill which would establish an independent ethics commissioner reporting to Parliament. The amendment proposes the deletion of clause 38 of the bill in its entirety.

This clause would change subsection 2(2) of the Federal Courts Act by adding references to both the ethics commissioner and Senate ethics officer so that the activities of the ethics commissioner and Senate ethics officer are not subject to review by the Federal Court, whether by judicial review or by appeal.

The Parliamentary Secretary to the Government House Leader has already explained why the NDP amendment is inappropriate and should be rejected. I want to comment on the need to preserve the House's privileges in this area.

The House and its members have traditionally been responsible for their ethical conduct. This is a tradition we in the House have had since Confederation and which we share with other parliamentary democracies.

Let me set out how the bill preserves this tradition of parliamentary privilege and ensures the House's accountability to Canadians.

Clause 38 amends a provision in the Federal Courts Act which itself exists for greater certainty to ensure that the activities of Parliament and parliamentarians are excluded from review by the Federal Court. Given the role of the ethics commissioner and the Senate ethics officer in dealing with the conduct of parliamentarians, it is logical that those provisions be extended to these two officers of Parliament.

This clause is but one of several provisions in the bill intended to ensure that the House, and not the courts, continues to have the ultimate responsibility, and accountability, for the ethical conduct of its members. For instance, the bill would create an ethics commissioner as an officer of the House.

Section 72.05 includes express recognition that the ethics commissioner “enjoys the privileges and immunities of the House of Commons and its members in carrying out his or her duties and functions”. This section also provides express recognition that the bill does not in any way limit the powers, privileges, rights or immunities of the House or of its members.

Further, Section 72.12 would ensure that the ethics commissioner and his or her staff could not be taken to court in respect to their official activities. This section also acknowledges that the commissioner and his or her office are protected by the privileges and immunities accorded to Parliament as an institution. Similar provisions have been made for the Senate ethics officer throughout the bill.

Collectively, these provisions, including clause 38, are essential if we are to create an ethics commissioner who, in respect of matters pertaining to members of the House, is to function as the legislation requires and is accountable to the House.

In this regard, the bill states that the ethics commissioner's functions in relation to members would be carried out “under the general direction of any committee of the House of Commons that may be designated or established by the House for that purpose”.

Canadians expect members of the House to establish and abide by ethical rules. This is only proper because as parliamentarians we are ultimately accountable to the public, both for our own ethical behaviour and for the steps taken by the ethics commissioner as an officer of Parliament.

In our view, the proposed amendment would seriously undermine Parliament's long standing privileges, the ability of the House to properly assign duties and functions to the ethics commissioner, and the House's ultimately accountability for the ethical conduct of its members.

It would undermine the ability of the House to govern its affairs and would open up the possibility that the courts might be called upon to second guess or review the actions of the ethics commissioner.

Canadians have every right to expect that the House would create and enforce the highest ethical guidelines for members. They know and expect that the House and its members are ultimately accountable for the ethical code it will implement. They do not want parliamentarians to transfer this responsibility to the courts. Accordingly, I would encourage members of the House not to support the amendment.

I want to conclude by again referencing the previous speaker's speech when he commented on the tremendous potential leadership awaiting in the wings for the country and how popular that is with Canadians. We will have a great transition to even more exciting times, but as I was saying at the beginning of my speech I hope that the important things that affect the lives of Canadians, which I mentioned and the number of bills that we will be dealing with throughout the fall, winter and spring, would not be lost in the simple transition of politics.

Criminal Code

[Martin Cauchon, Liberal, Minister of Justice and Attorney General of Canada]

moved for leave to present Bill C-46, An Act to amend the Criminal Code (capital markets fraud and evidence-gathering).

(Motions deemed adopted, bill read the first time and printed)