Pat Martin

[Criminal Code, November 3rd, 2003]

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.

[Criminal Code, November 3rd, 2003]

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.

[Criminal Code, November 3rd, 2003]

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.

[Criminal Code, November 3rd, 2003]

Mr. Speaker, the point I was beginning to make was there comes a time when white collar crime becomes a blue collar issue, a working class issue, a working person's issue. Even if most ordinary working people in Canada do not invest in the stock markets or the financial markets, almost all of us are indirectly involved through our employee pension plans and our health and welfare plans. Even the Canada Pension Plan is now privately invested on the open market.

Therefore, Canadians have to wake up frankly, and realize that there is a serious problem of confidence in our financial marketplace. We have to be able to trust the financial statements of the companies in which our retirement income is invested. Therefore, many Canadians have been horrified to watch the meltdown on Wall Street and an equal crisis in confidence on Bay Street, as they watched in horror WorldCom, Enron, Nortel, ImClone, Tyco. We could go on and on because there has been an absolute epidemic of unethical practices revealed on the financial markets of North America, which has created a genuine crisis in confidence.

Compare Bill C-46, as we have it today, which is to deal with capital markets fraud and evidence-gathering, with the Sarbanes-Oxley act in the United States. Compare the difference between the protection of pension incomes in that country compared to Canada. The Prime Minister of Canada essentially ignored and was silent on the issue of the crisis of confidence. Our finance minister was virtually silent. His reaction in fact was to strike a wise person's committee and to ask Bay Street and the Institute of Chartered Accountant to get into a voluntary compliance with ethical standards.

Compare that with the United States when the President stood up and said that if companies were defrauding the American people, the administration would hound them down, find them, catch them and put them in jail. Whether they were members of a corporate board of directors or CEOs of companies, they would pay big time. That was the difference, the contrast in the approach.

As a representative of working people in my former life as a trade unionist, who has sat on the pension plans of the union movement and have some knowledge of how that money is managed on behalf of working people, believe me, I take no comfort in the reaction of the Canadian government to this crisis in confidence compared to the very legitimate efforts made in the United States.

The bill is silent on a number of issues. I do not see a lot of reference to it in the recommendations put forward in the proposed amendments, rather than the amendments that we now see. We were hoping to see a serious crackdown in some very glaring, obvious and easy to fix shortcomings of the current securities marketplace.

The first, to which I would like to speak, is the idea of the complete independence of auditors. What happened at Enron, what happened at WorldCom, what happened at Tyco is that the same chartered accounting firm, in this case, Arthur Anderson, which was keeping the books, doing tax consultation and database design, was also hired as the auditor.

How can we trust the financial statements of a company, if the same company is asked to keep the books and audit the books? That same situation exists in Canada today. Even with the voluntary measures undertaken by the Institute of Chartered Accountants, it sees nothing wrong with the company that is the auditor also doing the tax consultation, et cetera. Can it not see this glaring conflict of interest? I should mention that this could be remedied by a simple change to the Canada Business Corporations Act. It has been brought to the attention of the government and it has chosen not to act.

Another glaring issue that is quite easy to fix is the idea of expensing of stock options, that is, having these costs show up in the expense column of the company's financial statements.

If a company is going to use stock options as part of the executive compensation of the company, then investors should know. The liability of outstanding stock options often exceeds the net worth of the company. Even as a blue collar socialist, I know the danger signals associated with that.

If a person is going to use--

[Criminal Code, November 3rd, 2003]

Mr. Speaker, I am very pleased, on behalf of the NDP, to enter into the debate surrounding Bill C-46 at report stage.

By way of introducing the subject, I note that the bill is meant to address the pressing problems associated with what we call white collar crime. However, I want to develop the case, as I speak on this bill, that this is in fact very much a blue collar issue. In fact white collar crime is a blue collar issue and a working person's issue.

It is very difficult to even hear myself think with the amount of debate that is going on across the room.

[Immigration and Refugee Protection Act, November 3rd, 2003]

Mr. Speaker, I for one could not be more proud or honoured to be a seconder for the bill introduced by the member for Vancouver East regarding family reunification.

Her idea of once in a lifetime, where new Canadians who would otherwise be unable to sponsor a family class member would, under the bill, be able to do such a thing. The bill meets a need that I am certain has been brought to the attention of virtually every member of Parliament in the House. Who among us has not had people come to our offices who wish to reunite with a family member but who find the rules so restrictive that they are unable to do so?

I believe it is the position of the hon. member for Vancouver East, and I concur, that the current rules under family reunification fail to recognize the reality of many traditional cultures from source countries, from immigrants who have extended families who perhaps live in a far closer network than we are used to in North America.

I can use, as an example, one case I know of quite well where a non-married aunt in a family unit actually was the primary caregiver for the children when both of the parents were out of the house scraping by to earn an income. This reference is from the Philippines. The aunt raised the children in that case. It was very important for those children, who now reside in Canada, to bring that family member to Canada to join them as she was reaching her senior years. That would be one case in point where the current rules do not accurately address the reality of the family structure in the source immigration countries. The hon. member's bill is sensitive to that issue.

Other members from other parties have raised details as to why this may be a problem in terms of resources. I do not accept that by allowing the hon. member's bill to go forward it would open the floodgates and cause a rush of immigration that our system would not be able to handle, for the simple reason that her bill does not change anything else in terms of who would be eligible and how a person would qualify. The sponsoring family, or the sponsoring new Canadian, would still have to meet the very onerous issues regarding income and the financial aspects to the current system.

One of the biggest barriers to more family reunification into the inner city of Winnipeg is that we are held to the same standard in terms of the amount of annual income the sponsor must have in order to sponsor another person. It, more than anything, is the barrier to more family reunification sponsorship.

I believe, as I think all members here recognize, that the family reunification aspect of our immigration system is one of the key pillars on which our system is built. I would wholly support this measure which I believe would enable more families to sponsor more immigrants without putting an undue burden on the current system or adding to what I do accept is an unreasonable backlog.

I have often heard the Minister of Citizenship and Immigration deny that there is a backlog in the system. That is simply putting one's head in the sand. The previous minister said, in a very creative way, that it was not a backlog but a waiting list. Whether it is a backlog or a waiting list, it has the same net effect that people are waiting years.

I will point out one other basic unfairness in the existing system that the hon. member's bill would recognize. While people are waiting in this country to get their earnings up to a sufficient point to sponsor, for instance, a child from the Philippines, that child may pass the age of 18, or the current age of 22. As the years tick away, this family has to make the most gut wrenching choice of their lives, which child to sponsor at which time, while the child is getting older. Ten years can go by before the new Canadian can get the earning capability to sponsor enough of their family members to truly reunify that family and by then the person may be over 22 years old.

In the case of this simple rule change, that family could now sponsor that 25 year old adult child who was no less valued but was forced to be separated from the family unit for whatever reason in terms of the way that the family came to this country.

This is an issue of basic fairness. It creates opportunities. It does not create an undue burden, I believe, on the system. I wish more members would realize that.

[Federal-Provincial Fiscal Arrangements Act, October 31st, 2003]

Madam Speaker, I do not know where the bulk of the surplus came from but I do know where $20.8 million came from. It came out of my riding in terms of EI money that used to be spent on income maintenance and benefits for people which under the new rules is not. That is $20.8 million per year.

I wonder if the hon. member for Dartmouth can say how much the EI changes cost her riding per year that is adding to this enormous surplus.

[Federal-Provincial Fiscal Arrangements Act, October 31st, 2003]

Madam Speaker, as seatmates the member for Dartmouth and I have often had many conversations but it is rare that we get to have one on the record so it is my pleasure to continue this dialogue.

I wonder what the member's views are of dealing with surpluses, the last point she mentioned. A recent paper on fiscal imbalance from the finance department of September 2003 states that the federal government will not apply 100% of its future surpluses to debt reduction. I remember a time about two years ago when the Liberal government said it would be one-third, one-third, one-third, that any surplus would be divided equally in thirds. It would be one-third tax cuts, one-third debt reduction and one-third spending on programs.

What does the hon. member feel about this reversal? The current Minister of Finance is threatening to apply again, for the third year in a row, every penny of the surplus to debt reduction and not one cent to spending in regions such as her own.

[Federal-Provincial Fiscal Arrangements Act, October 31st, 2003]

Madam Speaker, along the same lines, I would like to ask the hon. member what her view is of the issue. Does it translate into pure politics? Does she think that the ruling Liberal government is wise to be going after the money now with an election looming six months from now?

I wonder what she thinks the reaction will be from ordinary citizens all over Atlantic Canada if the Liberal government follows through with these punitive measures of clawing back money that is already spent. It was not adequate to begin with but it was eagerly spent as soon as it was received. If the government actually followed through with the threats to claw this money back from these struggling regions, does she not think it would be political suicide for the federal government to do that? Would it not want to rethink that as a political strategy?

[Federal-Provincial Fiscal Arrangements Act, October 31st, 2003]

Madam Speaker, I thank my colleague from Dartmouth for a very instructive and informative speech. I learned a great deal about some of the issues facing some of the provinces, especially in the Atlantic region.

A lot of us in the west would be interested to know that what we expected to be a brand new era for these two provinces with the harvesting of offshore oil and gas has failed to yield results. It has not brought the anticipated relief. Listening to the hon. member, I can certainly empathize with this situation.

I note from her speech that the budget promised $10.3 billion in equalization to the provinces last year. According to the fiscal reference tables from finance they did in fact receive $10.3 billion but during the same period of time, the government also clawed back $2.3 billion.

I understand the hon. member's point. Nova Scotia, due to the census and the double whammy of losing population due to lack of opportunity, is being doubly disadvantaged by having its equalization payments cut on a per capita basis given the population it has lost.

The member is a representative from Atlantic Canada. Rather than managing poverty, which is essentially what the government has been doing with regions of Atlantic Canada, would it not be logical to simply allow Newfoundland and Labrador and Nova Scotia to keep all the revenue from oil and gas for a fixed period of 20 years until we actually equalize those provinces and the opportunities available to those provinces? Then perhaps we could look at negotiating the type of clawback that exists today. Would that not be a logical step in terms of a permanent solution to the disadvantages that unfortunately exist in some of those regions?