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House of Commons Hansard #136 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was federal.

Topics

Business of the HouseGovernment Orders

4:45 p.m.

Northumberland Ontario

Liberal

Paul MacKlin LiberalParliamentary Secretary to the Minister of Justice and Attorney General of Canada

Madam Speaker, discussions have taken place between all parties, as well as the member for Churchill, concerning the taking of the division on Motion No. 197 scheduled at the conclusion of private members' business later this day. I believe you would find consent for the following motion. I move:

That at the conclusion of today's debate on Motion No. 197, all questions necessary to dispose of the motion be deemed put, a recorded division deemed requested and deferred to Tuesday, October 21, 2003, at the end of Government Orders.

Business of the HouseGovernment Orders

4:45 p.m.

The Acting Speaker (Ms. Bakopanos)

The House has heard the terms of the motion. Is it agreed?

Business of the HouseGovernment Orders

4:45 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of 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.

Criminal CodeGovernment Orders

October 8th, 2003 / 4:45 p.m.

NDP

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

Madam Speaker, the hon. member who spoke previously talked about his judgment. In many cases I respect his judgment. I have a couple of questions for him on this particular legislation.

He did not quite clearly say what would be the governing body that would oversee these companies, corporations and businesses alike who commit these types of acts. Would it be a branch of the RCMP or would it be a separate organization on its own that would have complete authority to go in to do audits, checks and bring charges forward?

There is the other concern about whistle-blower protection for employees. As we know, there have been a few major cases in the United States, a tobacco company and Enron, for instance. How does he foresee the bill protecting employees who use their initiative to blow the whistle on these particular types of corporations?

His government entered into NAFTA talks with the United States, Canada and Mexico. Does he foresee any problems with those trade deals when it comes to enacting this type of legislation on a domestic basis?

Criminal CodeGovernment Orders

4:45 p.m.

Liberal

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.

Criminal CodeGovernment Orders

4:45 p.m.

NDP

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

Madam Speaker, does the member foresee any kind of problems in the future regarding the trade deals we have signed in terms of many companies and corporations being of an international or multinational type basis? Does he see any problems in initiating this type of domestic law when it comes to these trade deals?

Criminal CodeGovernment Orders

4:50 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Madam Speaker, I guess in a word, no.

However, to add to that, the intent in the world community of financial players is to have some element of harmonization around these rules. For example, in Canada we have companies that are cross-listed on the TSX and also the New York Stock Exchange, and they could be on other exchanges as well.

I know there is a lot of discussion going on now on how this can be harmonized to the extent possible. If anything, there will be a push toward harmonization. A company reporting in Canada and listed on the TSX and the New York Stock Exchange will have the same requirements so that it does not have to go through the motions once or twice.

The member is aware that under the WTO there is a move afoot on financial services to free up the trade in financial services. Our government is very much involved with that WTO initiative. I think it is ongoing and it will be a positive step when it comes to fruition. I do not see any conflicts in terms of trade rules.

Criminal CodeGovernment Orders

4:50 p.m.

NDP

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.

Criminal CodeGovernment Orders

5:05 p.m.

Bloc

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.

Criminal CodeGovernment Orders

5:10 p.m.

NDP

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

Mr. Speaker, my hon. colleague from the Bloc Quebecois has raised a very important point about the extension of this bill in the consideration of tax havens around the world. The Bloc actually had a motion on this aspect, and I believe it concerned either the Barbados or the Bahamas, which we fully supported. The government did not, but we fully supported that motion.

We know that companies have the ability to hide their money, to move it in all kinds of directions. That is something that as an international community we definitely have to work on.

The House passed a motion a few years ago regarding the Tobin tax, a small, very minute tax on financial speculation in order to use that money for the common good of the world.

There is one thing I will say to the Bloc member. One very successful pension plan is the one in Quebec. My father-in-law is now retired and that pension plan like anything else is probably not doing as well as it could be, but it has done extremely well for the people of Quebec. The people of Quebec should be quite proud of that pension plan because it was a very good thing. Not only my father-in-law but many people I have spoken to in Quebec rely upon that very seriously for their income.

It is a very successful plan. If we had more plans like that throughout our country and around the world for families and employers and businesses, it would go a long way in alleviating financial concerns for people in their retirement.

Criminal CodeGovernment Orders

5:10 p.m.

Northumberland Ontario

Liberal

Paul MacKlin LiberalParliamentary Secretary to the Minister of Justice and Attorney General of Canada

Mr. Speaker, I would like to make a few comments on my hon. friend's commentary. I want to congratulate him on supporting this bill in principle.

He made some comments that were directed toward the enforcement of this bill and ultimately how we make it function within our market process. He is likely aware of the integrated market enforcement teams that are being set up by the RCMP as a process of trying to put together a system that will adequately enforce these measures with skilled people who are up to date in the technology of the day and the ways in which one goes about this.

With respect to funding, under that initiative there would be $8.1 million spent in this fiscal year, or at least designated for that purpose. In the subsequent year there would be $13.2 million and $17.5 million in each of the subsequent three years.

If the member has any concerns about the fact that we are prepared to put our money behind the enforcement process, I think we are definitely prepared to do so. Does the member think that this is the right approach?

Criminal CodeGovernment Orders

5:10 p.m.

NDP

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

Mr. Speaker, I certainly do not question the intent of the hon. member's statement regarding the fact that money has been allocated to the integrated market enforcement team. He did not say whether it was new money or just readjusted money within the RCMP.

Anybody who has followed the RCMP over the last few years knows that they are starved for resources. We are short approximately 2,000 RCMP officers in the country today. They simply do not have the ability to do all the tasks that we ask them to do.

When we are setting up something new called an integrated market enforcement team, which includes RCMP investigators, federal lawyers, et cetera, I guess I can answer a question with a question, is it new money for this team or is it money that has been taken from somewhere else in the budget of the RCMP? What has been cut or what has been overlooked in order to do this?

If he would like to say it is brand new money, then I would say good for him. But if it is money that has been taken out of a department that is already starved for resources, for example we have heard that they are contemplating closing the forensic labs in Halifax, Regina and Edmonton, that is something we simply would not accept.

That is the kind of concern we have in terms of money going toward the agency. Is it new money out of the general overall budget or is it money that has been redirected within the existing RCMP budget?

Criminal CodeGovernment Orders

5:15 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, if the member were to make one change to the bill that was substantive enough to get the support of the NDP, what change would that be?

Criminal CodeGovernment Orders

5:15 p.m.

NDP

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

Mr. Speaker, there are all kinds of them but off the top, without having a chance to go through in my mind what it should be, I would say it would be to strengthen the whistleblower protection, make sure that it is stronger. There should be an ironclad guarantee, without consequences, that employees who blow the whistle, who state on the public record what has happened, are protected, that their families are protected, that their incomes are protected. Their salaries and their futures must be protected. The people who tried to use economic terrorism against those employees, or groups of employees, the people who actually commit that type of infraction, the employers, must be dealt with severely and harshly. I guess that is the one thing.

I should remind the hon. member that we support the bill in principle. We would like to see it go to committee so we can bring forward witnesses to see if we can make the bill even better than it is.

Criminal CodeGovernment Orders

5:15 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I am glad that the member raised the whistleblower aspect because it was a key issue in the Radwanski case. That is how Parliament was able to address that situation.

I know that the member's colleague in the NDP has been a very strong advocate for whistleblower legislation. I have a concern about whether or not the pendulum would swing too far. I think the member would admit that if due care was not taken in terms of whistleblower legislation, frivolous allegations could be made which might become public and which might damage the reputation or the productivity of the person the allegation was posed against.

Is the member of the view that the whistleblower legislation has to be done carefully? Should there be a review of the allegation by an independent tribunal to ensure it was not a frivolous and vexatious allegation in terms of the impact on others?

Criminal CodeGovernment Orders

5:15 p.m.

NDP

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

Mr. Speaker, I agree with the hon. member. Frivolous accusations can destroy people's careers. He is in the political world and knows very well what happens when people make frivolous accusations against politicians. Those allegations stick for a long time.

We have to ensure that employees have a venue in which to be heard. They must have an opportunity to go to an independent third party with what they perceive to be the facts. We have to ensure that they know their comments will be held in private and they will not be punished in any way for bringing those allegations or concerns forward. We have to let them know that their allegations and concerns will be seriously investigated to ensure there is validity behind them.

Criminal CodeGovernment Orders

5:15 p.m.

Bloc

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.

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5:20 p.m.

The Acting Speaker (Mr. Bélair)

Is the House ready for the question?

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5:20 p.m.

Some hon. members

Question.

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5:20 p.m.

The Acting Speaker (Mr. Bélair)

The question is on the motion. Is it the pleasure of the House to adopt the motion?

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5:20 p.m.

Some hon. members

Agreed.

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5:20 p.m.

An hon. member

On division.

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5:20 p.m.

The Acting Speaker (Mr. Bélair)

I declare the motion carried.

(Motion agreed to, bill read the second time and referred to a committee)

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5:20 p.m.

Liberal

Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, I think you would find agreement to suspend for five minutes and then at 5:30 to proceed with the previously requested recorded division.