Evidence of meeting #48 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was gender.
A recording is available from Parliament.
Director, Publish What You Pay Canada
Those countries are in the process of implementing. As to the exact kind of information, I don't know at this point what you'll be able to find out about each beneficial owner. They will have—
February 21st, 2017 / 10:05 a.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Are they doing a balancing between this right to privacy and public disclosure? Are these discussions being had in any of these other jurisdictions?
Director, Publish What You Pay Canada
Yes, when the U.S. looked at this more seriously in the previous administration, there were definitely discussions about balancing. I think one of the challenges is that the balance is shifting on this particular issue. As corporate structures become more complex and as tax evasion and avoidance become a bigger issue, as does money laundering, those interests are shifting. I think that as a society we need to step back and reflect on how much it has shifted and if the public interest now outweighs the privacy interests of those individuals.
The truth of the matter is, it is far less costly to share information through a public system. It provides access to all the authorities that need it, and also to journalists and citizens. For example, in Canada, securities commissions are not deemed to be law enforcement agencies. When they conduct an investigation into a company, they cannot access any beneficial ownership information. It reduces the barriers.
Developing countries that don't have an agreement with Canada to share information can access that information. I think now would be a great time for a parliamentary study of this issue and what steps Canada needs to take to address money laundering and tax evasion and how much there has been a shift on this issue.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
I wondered if either of the groups here would comment on the residency requirement and whether the bill should firm that up. If you don't have any comments, it's okay. I just wondered if you had any comments on that.
There are no comments on that one.
Okay, what about say on pay? Have you any comments on that one?
Executive Director, Centre for Women in Politics and Public Leadership, Carleton University
What was that?
Conservative
Ben Lobb Conservative Huron—Bruce, ON
Say on pay, meaning whether boards should have any ability to have a say on pay for senior executives.
No? That's okay.
Director, Publish What You Pay Canada
Unfortunately, it's not my area of expertise.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
Fair enough. I just thought I would ask.
I wonder, Ms. Beckton, if you could give me some more comments on this legislation.
My opinion is that it should be a little tougher because we're not mandating to corporations in this legislation that 50% of their senior management has to be women, visible minorities, or anything like that. We're talking about boards of directors, the basic governance of a company. I'm not trying to diminish the importance of boards of directors because, obviously, they are vitally important to keep senior management on guard, but it just blows my mind that they aren't making this a little tougher on corporations, to encourage them to beef up their boards.
Even to Mr. Masse's point on people with disabilities, there is nothing in there on that either. Try going into some of these businesses and seeing how amenable they are to people with disabilities or other things. Do you have any comments on that?
Executive Director, Centre for Women in Politics and Public Leadership, Carleton University
To be effective, you need to have very specific legislation that articulates what the goal is. It would be enhanced by the addition of targets, whether they're in the legislation, or specifically stated when the legislation goes out.
Coming back to your statement about boards, I think boards are very important. The more gender representation and diversity you have on boards, the more likely you are to see that increasing and becoming a priority for the corporate leadership. Strong boards with good diversity will also ask the tough questions of their senior management in the corporations. They will ask the senior management what they are doing, because if they are not seeing it at the table....
I think that if you want to be effective, you need to have targets. You need to have measures. You need to have something that compels corporations to really look at what they're doing in terms of gender and diversity, and to be able to explain it and put it on the table, not only with their boards of directors or their shareholders but with the public at large, with Canada at large.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
Fair enough.
I would encourage both groups here today, if you have amendments specifically around this area, to please send them forward.
I know that Mr. Masse or I would be happy to bring those amendments forward at committee when we go to clause-by-clause consideration, and we'll see if the Liberals have any courage to put them in or not.
Liberal
The Chair Liberal Dan Ruimy
You're welcome.
We're going to move on to Mr. Masse.
You have five minutes.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
I'll be quick just to make sure that even the committee understands this. If we get a review period, it could be spent as a matter of moments in a committee, it could be another full hearing, it could be an hour, and it could be scoped down to any particular item.
This committee has dealt with previous legislation. I've passed many amendments to legislation that have been basically a two-year review. It then gives the opportunity, say, for example, for the main body to come back or for interests from the government to give an update so to speak.
We could literally spend a half an hour on something, we could pass it in moments, or we could have full hearings. It's now a choice and it gives the minister some powers—and I think there were some people critical of my description of the minister's powers in this. It's like a carrot and stick approach. We're watching, and if there's some good behaviour that comes along in front of us, we'll get a chance to review that.
I want to quickly transition, though, over to the effects of what we could do against organized crime in this bill. I had a single-event sports betting bill that narrowly failed in Parliament. It was less about betting on single sports than it was about getting rid of organized crime. In fact, we had ex-Interpol agents, ex-RCMP, ex-provincial police, in a series, who couldn't testify in their jobs but outside their jobs they were and had been working on it. The bill would have taken about $10 billion away from much of the organized crime that was going to human trafficking, including the sex trade. That would eliminate money laundering for a series of different issues related to everything from drugs to anything under the sun. The most lucrative aspect for organized crime is single-event sports betting, and it's a global phenomenon in a sense that it is being addressed.
I'll turn to Ms. Woodside here.
Considering that Canada just signed the EU trade agreement and that the EU is well-advanced on this, we're described as an outlier. Now there's a term called “snow washing” related to Canada. By taking these steps and others that you're proposing in front of this committee, do you think the legislation would remove Canada's stigma of at least being, I guess, in the doldrums of an advancement of getting to organized crime?
Director, Publish What You Pay Canada
Beneficial ownership opacity has been identified by the Toronto Star, which I think, had a part in coining the term “snow washing”, by many groups in Canada, and internationally at different global forums, as the key issue in tackling organized crime, money laundering, and tax evasion.
This is the critical piece of information that authorities are missing, that people can't find out. Who is actually controlling a company? The evidence supporting this is very strong. The model that Canada has adopted or has decided to not change, to continue with, is one that relies upon financial institutions and other bodies to collect information and do the best they can to verify it, which they largely can't do. Then if authorities need that information, they access it from financial institutions and they share it internally.
One of the documents that has received insufficient attention in Canada is the Financial Action Task Force evaluation, which was released in October of 2016. In this evaluation, they called on Canada to give priority action to beneficial ownership, and they pointed out some important problems.
First, they found that Canada does not have mechanisms to verify information, so financial institutions can't do this. Financial institutions in other jurisdictions that have been engaged in these conversations have said they need this information and that they cannot verify this information independently. BMO, for example, has been a global supporter of a global beneficial ownership registry, which was launched last year by many different civil society organizations including the B Team, which is a business civil society organization.
This has been recognized by financial institutions in that it's very difficult for them to fulfill this obligation.
One of the things that could be done would be to look at the FATF evaluation, which points, firstly, to the verification of information. Secondly, it says that when that information is shared, the legal hurdles to sharing the information make it so slow that the RCMP is not getting information in a timely fashion, which is hampering investigations. We are pushing for a public registry and that will overcome all those legal hurdles. The evaluation points to that.
The third thing is that they're not investigating them at all, and you have to ask why. It's very difficult to investigate something when you don't have the information. In Canada, we do not want our authorities to give up investigating companies, because that's how the label of “snow washing” sticks.
NDP
Brian Masse NDP Windsor West, ON
My last question is very quick.
As the legislation stands, if unchanged, do you think it would be a loss for Canada, yes or no?
Director, Publish What You Pay Canada
This is a really important missed opportunity as it stands.
Executive Director, Centre for Women in Politics and Public Leadership, Carleton University
I think it would be very important to send a signal, loud and clear, that you want increased gender participation with some targets and some measures.
Liberal
The Chair Liberal Dan Ruimy
Thank you.
On that note, thank you to our witnesses for a great testimonial hearing. We are going to break for two minutes, come back into committee, and discuss some committee business.
[Proceedings continue in camera]