House of Commons Hansard #149 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was c-46.
Criminal CodeGovernment Orders
The Deputy Speaker
Order, please. The Minister of State and Leader of the Government in the House of Commons on a point of order.
Don Boudria LiberalMinister of State and Leader of the Government in the House of Commons
Mr. Speaker, my apologies first to my hon. colleague for interrupting his speech.
An agreement could not be reached under the provisions of Standing Orders 78(1) or 78(2) with respect to the stage of consideration of Senate amendments of Bill C-6, an act to establish the Canadian Centre for the Independent Resolution of First Nations Specific Claims to provide for the filing, negotiation and resolution of specific claims and to make related amendments to other acts.
Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at the said stage.
I regret the filibuster which has been going on for the last few days.
The House resumed consideration of Bill C-46, an act to amend the Criminal Code (capital markets fraud and evidence-gathering), as reported without amendment from the committee.
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.
Bev Desjarlais NDP Churchill, MB
Mr. Speaker, I want to thank my colleague for reminding us here in the House today as well Canadians that at one time the Canada pension plan funds were used to guarantee or to give loans to municipalities and cities throughout the country at a very affordable rate. That allowed them to build or support their infrastructure.
One of the serious lackings we have seen over the last decade has been the failure to put enough dollars into infrastructure. We have heard from municipalities, cities, people and first nations throughout the country of the shortfalls in the infrastructure budgets.
Does the member think it might be beneficial at this point in time to re-evaluate where Canada pension funds are going? I am sure that people who are investing in those funds want to be supportive of their communities. Does he think municipalities would like to see that happen again as well, where there is an investment in Canada rather than an investment in corporate leaders who were misusing funds.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, this is a serious problem. A couple of years ago, when the dot com craze was happening, investors were getting a return of 15% to 18%. I guess the Government of Canada had a look at the Canada pension plan and said that if it only invested that on the open market, it could get a better rate of return. The results have been catastrophic. The government lost 20% of the money it was given. That is $4.2 billion that we will never get back. That was in the most recent fiscal year.
During that period of time, the government gave the CEO a $100,000 raise and a 20% bonus for doing such a great job. Imagine the kind of bonus he would get if he actually made money. The other members on the board of directors got 50% bonuses for losing $4.2 billion. That is the 11 person Canada Pension Plan Investment Board, made up not with people of necessarily any expertise. One of the people on that board is the Liberal MP whom I beat when I won my seat in Winnipeg Centre. We never really beat Liberals, we just make them rich because they get these fallback positions, such as this scandalous situation of the Canada Pension Plan Investment Board.
The past practice was that we would use the Canada pension plan to finance, fund and lend to municipalities and provinces, at a low rate of interest, large amounts of money to capitalize necessary infrastructure projects. That no longer happens. Granted we were only getting 2% interest when we loaned money to build sewage treatment plants or any number of things in the communities, but getting 2% interest is a heck of a lot better than losing 20%. It is better than rolling the dice and gambling our pension fund money away.
I would like to know just how this happened because it happened under the radar. The Government of Canada put together this Canada Pension Plan Investment Board. It started out with $17 million, of which it promptly lost $2 million. When the rate of contribution went to 9.9%, all of a sudden the money really started to flow in. The board got it up to $22 billion. Now it has lost $4.2 billion of that, and it predicts it will have $70 billion to invest on the open market within 10 years.
Imagine the amount of money the board will lose if it continues at the current rate of loss. Imagine the amount of necessary infrastructure work that could be done across the country not only in terms of the infrastructure deficit that most communities face, but also in terms of the green infrastructure, the very necessary retrofitting infrastructure that needs to be done in the coming years.
The hon. member could not be more bang on in terms of the best use for this Canada Pension Plan Investment Board money.
Jocelyne Girard-Bujold Bloc Jonquière, QC
Mr. Speaker, I have listened attentively to my colleague from the NDP, whose speech contained so many negative comments on this bill that I was obliged to ask his colleague whether the NDP was for or against it. She told me they were in favour. I therefore found this rather odd.
I have two little questions for him. I would like to know his views on proposed section 487.013, which allows banks to disclose such confidential information as the account number of an account holder, the status and type of account and the date on which the account was opened or closed, the person's social insurance number and date of birth.
Does the hon. member not feel this bill encroaches on an individual's right to privacy? I would like his comments on this.
I would also like to hear his comments on the fact that federal attorneys may prosecute, when we know that financial markets fall under provincial jurisdiction.
I am asking these questions because I have not heard any of his colleagues address these clauses of the bill.
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.
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”.
Odina Desrochers Bloc Lotbinière—L'Érable, QC
It bothers many of my colleagues opposite when I resort to humour to tell them what they are like.
As I said, in this Parliament we have “Parliament and Reality”. This means that we are dealing with a two-headed government. This is a very popular expression these days. This happens when there is one king on his way out and a future Liberal king to be crowned within two weeks. That is what a two-headed government is all about. Do you know what “Parliament and Reality” is about? It is when there is no one taking their responsibilities in this place.
We could also call this the “Martin Story”, with parallel caucus meetings. No one is making decisions here anymore. But when it comes to invading areas of provincial jurisdiction, it is a different story.
Criminal CodeGovernment Orders
The Deputy Speaker
The Parliamentary Secretary to the Minister of Agriculture and Agri-Food, on a point of order.
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.
Michel Guimond Bloc Beauport—Montmorency—Côte-De- Beaupré—Île-D'Orléans, QC
Mr. Speaker, I think the member for Lotbinière—L'Érable should be given the time to express his thoughts.
With all due respect, my colleague from Portneuf did not even let him finish his sentence. He wanted to make an analogy or use an allegory to illustrate his point. An allegory, by definition, is a figure of speech used to make us aware of reality. I think that is what my colleague from Lotbinière—L'Érable wanted to do. Out of respect, he should be given time to make his point.
Criminal CodeGovernment Orders
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.
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—
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, 10 minutes is not long, given the circumstances.
Criminal CodeGovernment Orders
An hon. member
It is so short that he is wasting his time instead of using it.
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
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.