Thank you, Mr. Chair.
Thank you, members of the Standing Committee on Justice and Human Rights for inviting me to participate today.
I have come to speak to you about remediation agreements and deferred prosecution agreements as a defence counsel who has been involved in negotiating such agreements.
As you well know, the regime in Canada on the criminal side is recent and so there are not a lot of deferred prosecution agreements in that context, but in the securities regulatory enforcement context and other contexts involving serious allegations of complex corporate misconduct, those prosecutors have a panoply of tools in their tool box to deal with corporate misconduct.
In terms of that, one of those tools is a deferred prosecution agreement. I have been involved for many years in a number of contexts to ensure that the tool was available to prosecutors. It has a negative connotation in some spheres as being a way for corporations to buy out from their responsibility, and that misconstrues the nature of a deferred prosecution agreement and the unique nature of a corporate organization that is facing allegations of corporate misconduct such as bribery and securities law disclosure violations.
The corporate entity that is charged with that offence or is facing an investigation into such allegations is unique and different from individuals charged with those very same allegations of misconduct.
The deferred prosecution agreement, in terms of its nature, does hold the corporate entity to account for the misconduct. It does meet, in my respectful view, all of the objectives that are necessary for a robust criminal justice system. It allows, more importantly, for benefits that aren't available from the rigidity of a binary conviction or no-conviction regime.
In particular, provided that a deferred prosecution agreement regime is robust—and in my respectful opinion the regime implemented by Canada is a robust regime. It's very similar to that adopted in the U.K. and has improvements, I think, that make it different from the regime adopted south of the border in the United States.
For example, corporations availing themselves of a deferred prosecution agreement will admit and will take account and responsibility for their conduct. There will be a statement of facts in any deferred prosecution agreement that outlines the nature of the conduct involved. There will be terms in a deferred prosecution agreement that include remediation terms, both in terms of enhancements to internal compliance regimes and a financial penalty, so reparation for the conduct accused.
In terms of the criminal justice objectives, it meets those in terms of assuming responsibility. It meets those in terms of ensuring the harm is addressed in the marketplace and to those affected by the conduct. It meets that in terms of ensuring deterrence.
The most important part of a deferred prosecution remediation agreement is that it allows for a very timely resolution. Complex issues and complex conduct are involved, so typically, these prosecutions take multiple years before there is any statement to the public or any guidance to the public in terms of what is expected.
The real benefit of a deferred prosecution agreement for the country as a whole and for our markets is that it allows for us to move that needle. It allows for a prosecutor to make a statement regarding what is expected in terms of evolving best practices for corporate governance for compliance regimes in a very timely manner without the delay that we would see in a normal prosecution.
The other very important part is that it avoids the collateral damage. A corporation acts through individuals, and if a corporation is to take steps to address alleged misconduct, to improve its regime and to address the wrongdoing done by individuals through disciplinary actions or through a change in the upper level or the medium level of management to remove those who are responsible for the misconduct and, in that situation, to improve its own internal compliance regime through a remediation agreement, then it meets the objective by moving the needle, as I said before, in terms of enhancing best practices for corporate governance for corporations and setting a standard that all Canadian corporations will have to meet in improving that standard.
The collateral damage from the binary conviction or no-conviction regime is that today's stakeholders pay the price of a conviction. So in certain circumstances, it may be appropriate to explore a deferred prosecution agreement to avoid that collateral damage. The collateral damage will be felt by all who are involved with the corporation. Whether they are employees, pensioners, business partners, suppliers or downstream or upstream business partners to that organization, they will feel that impact if that organization faces a conviction, with the resulting reputational harm, as well as the harm to its business from a conviction that may make it impossible for a corporation to continue to operate.
So, there's a real risk in certain circumstances that a corporation could, for lack of a better expression, wither away and cease to exist, with all of the collateral damage to those who rely on the corporation for economic benefits. In those situations, the prosecutor may, in balancing with what the other panel members discussed—being the public interest—look at those factors in determining that here are some circumstances that make sense for looking at something other than that convict or no-convict regime.
It's important to know that a deferred prosecution agreement is not a non-prosecution agreement, which is another tool available to prosecutors in other jurisdictions. That is a situation where a corporation is not charged and does not take any account for its conduct. Here, in the deferred prosecution agreement, a corporation does. The corporation is charged. The state, through the DPP, enters into a remediation agreement, which allows for a suspension of the prosecution against the corporation, and that suspension is a contingent suspension. The corporation must meet all of the terms of the remediation agreement, which as I outlined earlier, would include a number of terms of certain steps the corporation has to take regarding its own internal organization and internal regime for compliance: the payment of a financial penalty; often the imposition of a monitor, an independent third party to review the steps that the corporation takes; and often an obligation to report to the court or to the prosecutor on its progress in meeting the terms of the remediation agreement.
If the remediation agreement is breached, then in those circumstances, the corporation will be prosecuted. If all of the terms of the agreement are met by the corporation, then the charges are dismissed.
The important objective in the criminal justice system of holding others accountable for their wrongdoing is met in these circumstances and met in a way that avoids the sometimes very draconian result that can occur when a corporation is facing a conviction.
When Canada considered implementing such a regime, it was able to look to other states that had implemented deferred prosecution regimes or similar ones, and it did. Canada now has, with the benefit of a deferred prosecution regime, this effective tool similar to those of many other states globally, including the U.K., the United States, other members of the EU, and Australia, which most recently adopted a deferred prosecution regime.
We have the benefit of looking at the experience—the U.S. has had a deferred prosecution regime in place since the early 1990s, the longest period of time in that list of countries. Its regime is different from Canada's. What we see demonstrated from their regime is that it's used in limited circumstances, and that's where it's meant to be used. Certain conditions have to be met so a corporation will qualify to be considered for a deferred prosecution agreement. For example, in 2018 alone, across the United States there were 24 deferred prosecution agreements and non-prosecution agreements. That is not an astounding number, given the number of active investigations and the number of cases on the go.
The U.K. adopted a deferred prosecution regime in 2013, and there have been only four deferred prosecution agreements. The fear around their use is not realized when we look at other jurisdictions.
In Canada's regime, we have some very important attributes that make it robust, and that includes conditions that the prosecutor must meet to even consider negotiating remediation agreements. One of those, interestingly and importantly, is that the DPP requires the consent of the Attorney General prior to beginning the negotiations. The prosecutor performs a gatekeeping role; the courts perform another very important gatekeeping role, and then finally and most importantly, the regime ensures transparency. We move the deterrence ball forward and we move the needle forward on best practice for corporations, because all DPAs will be made publicly available, unless there are reasons for the court to defer the publication.
I'll move it across to my colleague Mr. Jull who will also speak to deferred prosecution agreements.