Bill C-52 (Historical)

Retribution on Behalf of Victims of White Collar Crime Act

An Act to amend the Criminal Code (sentencing for fraud)

This enactment amends the Criminal Code to
(a) provide a mandatory minimum sentence of imprisonment for a term of two years for fraud with a value that exceeds one million dollars;
(b) provide additional aggravating factors for sentencing;
(c) create a discretionary prohibition order for offenders convicted of fraud to prevent them from having authority over the money or real property of others;
(d) require consideration of restitution for victims of fraud; and
(e) clarify that the sentencing court may consider community impact statements from a community that has been harmed by the fraud.

Retribution on Behalf of Victims of White Collar Crime Act

[Paul Dewar, NDP, Ottawa Centre, ON]

Madam Speaker, I want to respond to a couple of things the parliamentary secretary said. It is one thing to go after criminals and those who have taken advantage of people, and of course people want to see that happen, but the problem we are having is the approach the government is taking.

White collar crime is not new to the NDP. We have been after this since the arc. We have to take a look at propositions because the government does not look at the regulatory options

If we are to go after the perpetrators after the crime is done, the money is gone. They have stuffed it away somewhere. We have seen this time and time again. We have to go after regulations. We have to make sure we follow the money when it comes to getting serious about it.

The hon. member is talking about pensions. There were 4,000 on the lawn of Parliament Hill yesterday and the government said, “Sorry, too bad, so sad”. What is the government doing about those people? What will it do seriously about that because there is a deficit in fairness for them.

We could go on talking and saying we will crack down on white collar crime, which is great, but what will you do to get to the root of it, to get to the people who have basically taken the money that people have worked for their whole lives and stuffed it somewhere else? You will not get that money after these guys have been caught. You have to get it before. What is your government doing about that?

[The Acting Speaker, Denise Savoie]

I am sure that the hon. member is not talking about my government, but I will ask the hon. parliamentary secretary to respond.

[Alice Wong, Conservative, Richmond, BC]

Madam Speaker, I find it very disturbing for the member opposite to compare the private pension to fraud. Is he suggesting that it is the company's desire to cheat its employees right from the beginning? I find that very disturbing.

However, let us get back to the bill. The bill provides the court with the authority to provide restitution, to restore the money that these people have lost. This can be done. They can be given the means to chase their money. The judges could freeze some of the properties or money of the people that have allegedly been charged.

There are similar situations when people are prohibited from leaving the country because of crime. I am sure that these elements could be possible if the House decides that other measures are needed. I am sure that those could be done. It does not stop us from passing the bill. Without these tools, the judges simply cannot do this.

[The Acting Speaker, Denise Savoie]

There is one minute left. I will ask the member for Eglinton—Lawrence to ask a very brief question.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Madam Speaker, I guess everybody would be in agreement that, when a crime is committed and proven, those who perpetrate the crime should suffer the appropriate indignities and commit to the appropriate restitution in order to mitigate some, if not all, of the damage that they have committed.

However, the most important issue in terms of fighting crime, because I think that is what the House intends by this kind of legislation, is to put in place the mechanisms in order to prevent such things from happening. In other words, what are the deterrents that are put in place? What are the investigative authorities? How many police are in place? How many Crown attorneys and other judges are put in place so that there can be an appropriate investigation and a quick determination of justice?

Where is that in this bill?

[The Acting Speaker, Denise Savoie]

I would like to give the parliamentary secretary 30 seconds to respond to that.

[Alice Wong, Conservative, Richmond, BC]

Madam Speaker, I think that the best response right now is to pass the bill first and then look at the mechanism. It is wrong to put the cart before the horse. The horse has to come first. This is exactly what we are asking. Pass the bill and then let us work on it together.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, it is a pleasure in the brief time remaining to speak in favour of Bill C-52, which is a much needed piece of legislation.

Over the course of the last few months, unfortunately, we have seen some very serious white collar crimes occurring in North America and elsewhere which have literally ruined the lives of thousands, if not hundreds of thousands, of North American residents.

We have all read the stories about Bernie Madoff and Earl Jones and how those two individuals set up Ponzi schemes that have literally bilked unsuspecting citizens of their entire life savings in some cases. This piece of legislation seeks to address those inequities. We seek, by this piece of legislation, to set in place a legislative process that would ultimately cause the Bernie Madoffs and the Earl Joneses of this world to think twice before they even begin to enter into the Ponzi schemes that we have seen.

As much as anything, this piece of legislation would send a very strong message to those people who are considering trying to set up a Ponzi scheme, a money for nothing, cheques for free type of thing, where they prey on innocent people.

Many times those innocent victims are senior citizens, people who have invested their life savings in a scheme because they trusted the individual who brought the so-called investment opportunity to them in the first place.

Think of the shock, think of the depression that some of these people would be feeling after they found out that their entire life savings, which they counted on to live on in their golden years, was completely gone. Many of these people have considered drastic steps, such as suicide. Some have attempted suicide. What have we done to try and correct it up to this point in time? We have done precious little.

Many times we have seen examples where fraudsters have gotten away with literally a slap on the wrist. They have served their sentences, whatever they may be in length, in conditional arrest, in the sanctity and the safety of their homes. This is no way to send a strong message to those would-be criminals out there that this has to stop.

We have to protect Canadians, and by protecting them I mean ensuring that if there are Ponzi schemes out there, if there are people out there who would even attempt this type of scheme to bilk money out of innocent victims again, they will be dealt with severely.

That is what this bill is about and that--

[The Acting Speaker, Barry Devolin]

I must interrupt the member at this time. When the House returns to this matter, he will have 17 minutes remaining.

It being 5:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from October 22 consideration of the motion that Bill C-52, An Act to amend the Criminal Code (sentencing for fraud), be read the second time and referred to a committee.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am glad to have the opportunity to be the first to speak today in favour of Bill C-52 regarding white collar crime recently introduced by the Minister of Justice.

I am a carpenter by trade and a union leader by occupation in the years before I was elected. Let me be the first to say here today that white collar crime is in fact very much a blue collar issue. Ordinary working Canadians should be very much concerned and consumed by the issue of white collar crime because if for no other reason we need to be able to trust the financial statements, companies, corporations and institutions where our pension plans, our workplace health and benefit plans, and in fact our savings are invested.

In recent years that confidence has been shattered to the core. Working people across North America are starting to wake up to the fact that what is happening around us today has put our retirement security in profound risk. Even playing by all the rules and following the recommendations of our financial investors and doing all the right things, like prioritizing our pension security in labour negotiations as opposed to a wage increase for today, all of that has been thrown into question. In fact, it has been more than thrown into question, it has been compromised and jeopardized to the degree that we are facing an income security crisis in our elder years.

It is very appropriate and timely that today's debate is about increasing the penalties for those who would put at risk the savings of the good working people of this country.

Let me begin by saying that what we are experiencing today is a predictable consequence of the frenzy throughout the 1970s, 1980s and 1990s to deregulate our financial institutions, to deregulate the marketplace, to get the heavy hand of government out of the way of the free market. That was the mantra throughout the 1970s, 1980s and 1990s.

Now we are seeing the predictable consequences of what I call the Reaganomics, this international trend toward deregulation with Maggie Thatcher, Ronald Reagan and Brian Mulroney cutting, hacking and slashing all the oversight and regulatory regimes in our financial marketplace. At the same time, in concert with that, the financial community was putting in place the most incomprehensible financial instruments one could possibly imagine, increasingly complex.

Fewer and fewer young people were going into engineering school and more and more were going into financial engineering school so they could devise these incomprehensible financial instruments like derivatives, hedge funds, and God knows what, as a smokescreen for a level of malfeasance and conspiracy to defraud that has never been seen before in the history of mankind.

I am not overstating this. There was a conspiracy on Wall Street and Bay Street to cloud financial activity to such a degree that they could get away with murder. As soon as greed entered that formula, the consequences, I say, are predictable.

Woody Guthrie had a great line. He said, “some will rob you with a six-gun, and some with a fountain pen”. The fountain pen guys have been robbing us blind, fleecing us mercilessly, shamelessly, revelling in it, and building new financial instruments to rob us with.

There is a famous poem, Mr. Speaker, that you may be familiar with. The frustration that I am experiencing dates back many centuries. It reads:

The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from off the goose.
The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.
The poor and wretched don't escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.
The law locks up the man or woman
Who steals the goose from off the common
And geese will still a common lack
Till they go and steal it back.

This is a poem from 1600 in medieval England that expressed the frustration of having a two-tiered judicial system where if people stole a loaf of bread they ended up in prison. My colleague from Edmonton is agreeing with me. But if people in fact stole the common from the goose, they were more likely to walk free.

It has been pretty common knowledge in Canada and in fact in North America until, hopefully, today that rich guys just do not go to jail. Rich guys might get caught up in some fraud or Ponzi scheme or financial scheme that defrauds seniors. They might get caught and they might get embarrassed or humiliated down at the country club, but they are not likely to go to prison.

If they did, they went to some country club where they played golf with their buddies. They were allowed to bring their horses to the prison so they could groom their horses in the private stables at the prison. They would not want to deprive a guy of being able to play polo, that would be cruel and unusual punishment to separate people from their polo ponies just because they are in prison. They are country club prisons.

That infuriates people. I know why they do not send rich guys to normal penitentiaries. It is because there is no room for them. Those jail cells are full of young aboriginal kids who stole the hub caps off of BMWs. They locked them up instead of the guys who own the BMWs and who might be guilty of a far greater crime in terms of this financial mischief that they have been up to.

When I began my comments by saying that we have to be able to trust the financial statements of the institutions where we invest our retirement savings, it is not just the people who deliberately defraud workers we need to be after. We need to look at a corporate accountability regime where the financial statements are easily understood, are transparent, and are without the glaring and ridiculous contradictions that exist.

Let me give an example where we could build off the spirit of this bill and improve the accountability regime of financial institutions. It is still permitted, believe it or not, that the auditor of a company does not have to be independent of the company. In fact, the auditor of a financial institution can provide the tax advice and other financial services to that business and then still be the auditor of that business.

How can individuals who design the income tax strategy for a big corporation be the auditors of those same books that they were in fact contracted to design? It is an inherent conflict of interest that we somehow tolerate when common sense itself would demand that we want the books audited by a fully, completely independent auditors so that the statements that they sign off on are free of any bias or prejudice about that company. That is just one example about how loosey-goosey and wild west our financial marketplace is in this country.

The NDP feels quite comfortable in supporting this bill about getting tough on crime in the white collar sense for a change. In fact, we welcome this shift on the part of the Conservative Party to look at some of the most heinous offences occurring in our system.

In actual fact, getting tough on crime, while we are not opposed to that idea, the Conservatives would have us believe that violent crimes, property crimes and other Criminal Code violations are on the increase when they are actually on the wane. Even in areas of high crime, like my own riding of Winnipeg Centre, the incidents of violent crime is actually on the decline. The incidents of white collar crime is on the increase.

Our attentions are well placed today when we decide to priorize and to look to what I see as a far greater offence in many ways and that is cheating working people out of large amounts of money.

Again, I have tried to sketch what I believe is some of the history and origins of the problem that we find ourselves in today. The rampant push for deregulation was proven to be misguided ideology. One of the reasons that our banking system survived the international economical downturn in a better way than a lot of other countries is that we did manage to thwart some of the deregulation that was being demanded in this country.

Ever since I have been a member of Parliament, there has been a push by the big banks to merge, to deregulate further, to model themselves actually very much after their counterparts in the United States. Thank God we did not because now people are looking to Canada with some well justified praise that we have weathered the financial economic crisis more capably and more ably than other countries.

Therefore, it was ideologically driven, that whole Reaganomics, Thatcherism and Mulroneyism that wanted to get government out of anything, let the free market prevail, laissez-faire capitalism, we will float all boats and so on. We now know that completely unregulated, laissez-faire capitalism leads to some people doing very well and the rest of us being left behind and very vulnerable to the lack of accountability that comes with either deregulating or hiding behind the facade of unreasonably complex financial vehicles constructed for the sole purpose of hiding the true activity that is going on behind the scenes.

I know, Mr. Speaker, you are a big fan of Michael Moore and I would like to believe that you would be a big fan of Michael Moore's latest movie. Interestingly enough, he challenges some of the basic tenets of capitalism as we know it today in his latest film. He stops Wall Street brokers coming out of their businesses where they sell financial instruments to well-meaning pensioners and so on and he asked them, “Just what is a derivative? Let's go for coffee. Can you explain to me the derivatives that you sell pension plan investors and hard-working people? Just what are some of the other complex financial instruments that your financial engineers have designed to show a profit where no such profit really exists to reap a profit on selling short or selling long on things that never existed, that are selling futures, et cetera.”

The whole system got so corrupted by greed that it bears no resemblance to actual wealth or the creation of wealth. It is not even backed up by any corresponding material, et cetera. We are trading trades. We are trading futures of trading. We are trading on the insurance that somebody bet on losing money on a hedge fund and so on. It no longer has any bearing whatsoever to producing a widget and selling interest in that company, and selling shares in that company which was a much purer form of the financial marketplace.

Those who would deliberately conspire to defraud pensioners and working people should be punished in a special way. It is easy to let anger overtake in a situation like this. I will not overstate the situation but I cannot say strongly enough how we need to be able to put--

[An hon. member]

What about capital punishment?

[Pat Martin, NDP, Winnipeg Centre, MB]

No. I am not arguing for capital punishment, as my colleague suggests. I might be getting there, as tempting as that may be for those like the Madoffs of the world who conspire to defraud seniors out of their heard earned pensions.

It is imperative and it is entirely appropriate that Parliament should condemn in the strongest possible terms these activities with new legislation that contemplates mandatory prison sentences for violators of this nature.

It is not often members hear an NDP member advocating mandatory prison sentences. In most cases we do not agree with that. We like to leave the choice whether to apply prison time to the judges. Our rationale for that is we do not believe the average street criminal is deterred by mandatory prison sentences and therefore it is not justified to take the discretion away from a judge.

In this case we believe white collar criminals will be deterred by the prospect that if they get caught in this type of Criminal Code violation, they are going to go to jail for a mandatory minimum sentence. They are not just going to have to hang their head in shame around the cocktail parties for a little while. They are going to actually go to prison. They are going to go to prison and they are going to serve hard time. It is not going to be hopefully some country club where they can bring their polo ponies with them and keep them in their own private stables.

That is why we can support the bill. It proposes fairly modest and simple amendments. This is not a long piece of legislation amending section 380 of the Criminal Code dealing with fraud affecting the public market. We think this same principle could be applied further and we would encourage the Minister of Justice to investigate other places this same reasoning and rationale could be applied. At least one example of where it could be applied would be to crimes regarding the environment.

We think mandatory minimum jail sentences for the board of directors and the CEO of a company that knowingly and willingly dumps PCBs into the Red River, for instance, should be introduced if we really want to deter that kind of heinous crime against large groups of people. That really perhaps sums up why this is justified as well. This type of crime is different from a break and enter into a house where someone's television set is stolen. These crimes by their nature and by their very design are intended to affect large numbers of people.

These Ponzi schemes suck in thousands, if not tens of thousands, of unsuspecting seniors who quite often are concerned about their retirement security. They hear an offer that sounds too good to be true, but they do not want to believe that cliché, so they buy into a Ponzi scheme that again is a hollow shell, or a shell game. It is not based on any substance.

I would argue that to a great extent, a lot of our financial marketplace is one big Ponzi scheme. When there is the type of trading that takes place on derivatives on the insurance against the losses of a company that has not even been set up yet, what is that if not a gigantic, complex Ponzi scheme? We have people investing in mines for which a shovel has not even been put in the ground and it is at three or four degrees of separation that people are investing. People are investing in the futures to offset the insurance based on a projection of earnings that might exist when they finally dig the hole. That is not security of any nature. People do not own a piece of a goldmine, but a piece of an insurance policy that someone else bought to protect themselves to hedge off the losses.

It is just incomprehensible gobbledygook and ordinary Canadians need someone to translate all this, because when it is translated, it turns out it is again some hollow shell game designed by a clever financial engineering student who put up a smokescreen so that they could loot people's goodwill and best interests. That is where we come full circle to the time-honoured poem that was used as a protest chant appropriately in the Commons in Westminster instead of the Commons in Ottawa:

The law locks up the man or the woman
Who steals the goose from off the common.
But leaves the greater villain loose
Who steals the common from off the goose.

We have to put these things into perspective. I raised the fact that I understood why white-collar criminals were often sent off to country clubs instead of to real prisons: the real prison cells are full of some young aboriginal guys who have stolen a loaf of bread to feed their family, speaking figuratively. There is no room because of the appalling overrepresentation of aboriginal people in our prison system.

I recently read a book by Pierre Berton, about 1967, the last time Canada was happy. He talks about the Kingston Penitentiary, the women's penitentiary in your own riding of Kingston and the Islands, Mr. Speaker.

I challenge you, Mr. Speaker, to guess the percentage of inmates who were aboriginal women in the Kingston Penitentiary in the year 1967. Some might say 50%, which would be shocking, or 60%, but no, it was 100%. All of them, every single prisoner in that penitentiary was an aboriginal woman in that particular snapshot in time. When they represent 4% of the population, to have 100% of the prison full of aboriginal women means we have an appalling and embarrassing overrepresentation and we are punishing property crimes and even crimes that often are not violent with real prison time while we are letting white-collar criminals walk free. They get a hearty slap on the back and a handshake when they show these big rates of return to a privileged few, but they are actually ripping off thousands of Canadians. It is about time they went to prison, and they can rot there as far as I am concerned.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I am certainly glad I got over my recent illness in time to come back and listen to the speech of the member for Winnipeg Centre this morning.

While I would like to congratulate him and his colleagues for supporting this bill, in his presentation he is being a little unfair to the vast numbers of people who are accountants, lawyers, financial advisers and people who work in banks. The aspersion that he is casting in his presentation is that they are all crooks. That is most unfair. In any sector, we will find a small percentage of people who in fact like to work outside the law, which is a nice way of putting it, but we cannot paint everybody with the same brush, so I think he was unfair there.

I have a huge question though. The member for Winnipeg Centre and his colleagues have stood in this House and opposed mandatory sentences for crimes such as child molestation, murder and other heinous crimes such as those. They have opposed mandatory sentences when we have brought them forward, and they have filibustered bills that we have had in committee to get tough and impose mandatory sentences on those who commit crimes such as these, yet they stand today and appear to unanimously support mandatory sentences for white-collar crimes.

While we thank them for their support in this bill, there is a strange contrast between them supporting mandatory sentences for white-collar crimes but resisting and opposing so strongly mandatory sentences for people in our society who molest children, who commit sexual assaults against women, who murder people, who rape people, or who injure people severely through aggravated assault.

I wonder if the member could just stand and tell us why he would support mandatory sentences for white-collars crimes but not for these other heinous crimes that I have just mentioned. His party has opposed mandatory sentences at every single turn.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, to set the record straight, we voted in favour of every piece of legislation he just cited. The only place where we found fault was that lumped into the mandatory minimum sentences, they also included theft over $5,000, which means if that some teenager were to steal a car worth $5,001, that crime would fall under this category for mandatory minimum sentences. Nobody in their right mind would object to sentences for certain heinous violations that he outlined with great sensation.

The second thing is that we do not really need more apologists for the big banks in Ottawa here. They have plenty of champions.

The one thing for which I will give due credit to the former prime minister, Jean Chrétien, is that he opened the door for the legislation that we are seeing today on while-collar crime, which would put white-collar criminals in jail, when he banned political contributions from businesses, unions and corporations under Bill C-24. It was no longer necessary to suckhole to Bay Street. It was no longer necessary to treat bankers with kid gloves, because the bankers used to be the biggest donors to both the Liberal Party and the Conservative Party. The Liberal Party, to its credit, decided to end that.

Nobody should be able to buy an election. Nobody should be able to buy public policy. Nobody should be able to buy soft sentencing for white-collar criminals.

Now there is nothing stopping us from treating white-collar criminals as what they are, a scourge on society who do far more damage, one could argue, than the kid who steals the hubcaps off a BMW. The guy who drives that BMW might be guilty of far more heinous offences. We should reserve a jail sentence for him, not just for the kid who steals the hubcaps.