Mr. Speaker, it is a pleasure for me to speak today on Bill C-46, which, as you know, establishes new offences under the Criminal Code with regard to capital markets fraud, particularly when it concerns employee pension funds.
People tend to think that only large investors will be affected by the kind of legislation before the House today.
However, when it comes to investment interest rates, those investing the most in the stock markets and even banks are often big companies investing their employee pension funds.
On a daily basis, public sector funds even undergo a certain number of operations to leverage the savings of both private and public sector employees. As a result, when they retire, these people will get a decent pension. So it is extremely important for us to ensure that we protect these small investors.
Recently, there have been major scandals that Quebec and Canada have so far managed to escape. However, it is feared that what has happened in the United States might happen here.
Everyone remembers the infamous Enron scandal. Several U.S. companies had misappropriated funds, but Enron, in particular, truly created a crisis in the retirement fund of its own employees, who had been convinced to invest their retirement money in Enron shares or the like.
Consequently, when Enron started to take on water and sink, the entire employee retirement fund sank with it. People who had worked there for several years are now without a pension.
I have here some data on Canadian trusteed pension funds. For instance, Canadian trusteed pension funds have over $500 billion in assets. It is easy to understand the importance of the bill before the House today.
It must be said that $500 billion is a lot of money. Some day, these funds will be used for retirement; they are already being used for that purpose today. Indeed, when people retire and stop working today, they are often at retirement age and want the company they have worked for to pay their pension beneifts.
It is the same thing in the public sector in Quebec and in Ottawa. There are procedures. People are entitled to a retirement pension. They apply and receive their pension; in the public sector it is no different. However, the public sector is somewhat protected by the government.
In the private sector, the Criminal Code must be very clear on punishing people, especially people who commit fraud, which can have extremely harmful consequences for private sector pension funds. It is important to tighten up the Criminal Code to try to prevent such a thing from happening.
There is also the example of Singer, in my riding. Not only did the company not pay into the fund, but it took off with the rest of the fund. Instead of improving this fund over the years, it stopped paying premiums, often without the workers' knowledge. Some former employees in Saint-Jean receive a pension of roughly $20 a month.
This goes to show that it would be very useful to tighten up criteria and warn fraudsters and inside traders—I will explain what insider traders are in a moment—that they will have to answer for their actions, probably face severe fines and even a prison sentence.
Out of the $500 billion I mentioned earlier, $115 billion is invested in Canadian stocks. Once again, if a group of companies tampers with or benefits from specific information to make money or sell stocks before their price declines, we can see how this can affect the little guy.
The little guy goes to work every day. He relies on his employer, his union and his pension fund to see to it that his money is invested properly. We must be confident that the companies in which the funds invest are protected against such fraud.
Also, $57 billion is invested in foreign stocks. More than 4 million workers contribute to these funds. Clearly, when 4 million Canadian workers are affected by these kinds of funds, it is important that the lawmaker step in to ensure that everything is above board.
I want to congratulate my colleague from Charlesbourg—Jacques-Cartier on the excellent work he has done. I must admit, however, that we are not happy with the bill as it stands. Several of our recommendations and amendments have been incorporated into the bill, but the main one, with respect to duplication or interference by the federal government in Quebec's areas of responsibility—once again—was not. For that reason, we will not be supporting the bill.
Nevertheless, we did win on some points. We should be proud of that and recognize that it was thanks to the Bloc Quebecois that the amendments were accepted. We have improved the bill. Even though, on the whole, we are not in favour of this bill, some of the provisions we have suggested have been accepted.
Among others, there is the whole issue of insider trading. What is insider trading? One hears or reads this term often in the business and financial press. For example, we see that someone is going to be sentenced by a court for insider trading. It is not complicated. Insider trading is a situation where someone is in a position to give friends and family an unfair advantage. Having received privileged information, this insider will pass it on to someone else, who will become richer because of this privileged information.
For example, the chairman of a large company might see in the financial statements he receives that there is a serious operating deficit for the current year. He will also realize that, as soon as this information becomes public, it may have a negative impact on the value of the company's shares on the stock market. Therefore, he might say to people he knows, who have many shares—often family members and friends—that there is a report forecasting a serious operating deficit in the quarter. He warns them in advance that it would be wise to sell their shares because when the news comes out, they will drop in value by 20, 30 or 50%. That is insider trading.
The opposite is also true. If the president of a different company sees in the statements that earnings are very high and that the stock will probably rise in value, once again, he may engage in insider trading. He may say to his friends and family that perhaps they should—say, tomorrow morning—buy some company stock. He has an excellent financial statement and he believes that the value of the stock will rise as soon as the news is known.
Currently, Quebec legislation prohibits this. The securities commission prohibits this kind of behaviour. In Quebec, such acts carry consequences.
It is also understandable that such behaviour often has a negative impact on the funds. This is important. If I am a former employee of the Quebec government, I know I am entitled to the government and public employees pension plan. I am entitled to a pension at age 65, based on my years of service. My pension will be 2% per year of service based on my best five-year average salary. I know that the Quebec government has money and this means I am sure of getting paid.
However, if the government or governments do not take an interest in capital market fraud in relation to the funds that have been invested, there could be a negative impact on the overall amount in the fund, meaning that it could decrease.
There is also the danger of retired workers being told, “Sorry, you were entitled to certain benefits, but we can no longer maintain them, because the fund is no longer able to pay and so we are going to impose restrictions”.
As a result, it is important for us to be able to control this, throughout the business world, and ensure that those guilty of insider trading realize that, from now on, they will be subject to prosecution and heavy fines and even prison time, if convicted.
Thanks to the Bloc Quebecois, we managed to improve protection for whistle blowers in this bill. This occurs more and more frequentlty. We also asked the President of the Treasury Board to apply this to the federal public service. When a federal government employee, a Quebec government employee or a company employee learns of insider trading, they should be entitled to protection.
It is a difficult situation for an executive secretary, for instance, who attends a company board meeting and finds out the CEO is guilty of insider trading, telling those present at the meeting to buy or sell shares because they are going to increase in value. This secretary is often bound by confidentiality, but could perhaps give a warning by saying that some people are considering insider trading.
All those who currently work in business know that there are many pressure tactics that can be used on employees or officials. They can be asked to keep quiet, and warned that otherwise their lives could be made difficult.
I think it is important to provide some protection in the bill for what I would call the guardian angels, those who are not necessarily involved in the scam, but are witness to it and could, at some point, say they do not accept what is happening and denounce it to the appropriate people.
That is not what is happening; the code of silence applies. People have to live with a situation that they know poses a problem and they cannot say anything about it because they would become victims of repressive measures.
Again, I must commend my colleague from Charlesbourg—Jacques-Cartier, who insisted that this measure be included in the bill. The problem is what happens when the case goes to court.
The major problem with this bill—and there have already been indications of this—is that the federal government wants to interfere in the entire securities issue, while it is very clear in the Canadian constitution that this comes under the jurisdiction of Quebec and the provinces.
The same is true for administering the law. The administration of justice is Quebec's responsibility. Yet, this bill would allow federal prosecutors to take cases to court. I wish to point out that there already are provisions in Quebec's legislation and the provinces' legislation with respect to insider trading.
In fact, we did put forward amendments to prevent the government from interfering in fields of provincial jurisdiction. I mentioned the index. I was elected in 1993. Quebec has a securities commission, which does a fine job and checks, in a very proper fashion, any propsectus put out by a company. Before investors buy stocks, the companies should normally provide them with a prospectus. There had been abuse in the past, and Quebec's securities commission corrected this abuse.
I remember that in 1993-94, the federal government wanted to create a Canadian securities agency. Once again, this was in direct contradiction with the jurisdictions of the provinces and of Quebec, of course. Nation building had probably started, but that may not have been evident at the time. Today, it is increasingly evident, with massive intrusions in Quebec's jurisdictions.
In those days, the Bloc Quebecois was already the guardian of the jurisdictions of Quebec and the provinces; we had formally opposed the creation of this Canadian securities agency, which would have overseen the provincial commissions, including the Commission des valeurs mobilières du Québec.
Such an agency would have had some control over Quebec's commission. Again, it would not have minded its own business and would very obviously have intruded in an area of responsibility that belongs to Quebec.
From now on, federal prosecutors will be allowed to prosecute, to lay charges, and to do so under national terms and conditions. We are familiar with these kinds of national terms, which are often in contradiction with the ones in Quebec. Often, whatever program is developed in Ottawa will be imposed on Quebec.
In Quebec, we see things differently. We have a very distinctive way of doing things within our own jurisdictions. We often hear that federal legislation takes precedence over provincial legislation. We have seen what that led to in the case of the Young Offenders Act, which is probably the best example we have seen in this House. In Quebec, we had a very good rehabilitation rate. Our young offenders policy was based on reintegration into society, while the government's bill sought to break the young people, to send them to them to crime school and even to lock them up before they were adults. That is one example.
The bill we have before us is more or less the same. They want federal prosecutors to take to court cases that fall within an area of jurisdiction that does not belong to them. We have asked for many amendments, but unfortunately to no avail. Consequently, we will be forced to vote against the bill.
Overall, I believe the Quebec securities commission works well. It is equipped with the means to correct situations in its area of jurisdiction, and so there are fewer insider trading offences. There are fewer in Canada than in the U.S., but likely even fewer in Quebec than in the rest of Canada.
I feel it is important for governments to get involved, but the problem here is that the federal government is getting involved in something that is not its own business but that of Quebec. This is the fundamental reason for the Bloc Quebecois' opposition to this bill.
Even though it is likelihood that this bill will be passed, because as usual the Liberal majority will side with the minister who is sponsoring the bill, we will at least have the consolation of knowing that there have been improvements made as far as insider trading and whistle blower protection are concerned. This is a very important measure which, incidentally, ought to be extended to the entire federal structure, the entire federal public service. That way, by providing protection to people who witness abuse, a system that is cannot readily be improved could eventually be improved.
Overall, given federal interference in areas of Quebec jurisdiction, the Bloc Quebecois will be forced to oppose this bill. We will at least have the consolation of having improved certain aspects of it.