There are one or two members who weren't here at the last meeting, so I'll just do this quick overview.
I and Mr. Lemay had asked for certain data from Mr. Don Head, Head of Corrections Canada. He in fact had provided that. I now have information, which I didn't have then, that on November 13, having committed to do that for us in advance of the clause-by-clause meeting on Bill on November 16, unfortunately he sent the letter, although it was addressed to the clerk of this committee, to the minister's office of Public Safety and National Security. That letter then sat there until it was handed to me yesterday; I received a copy of it from the government House leader yesterday. I believe it has been now delivered today to all members of the committee. This is the advice from my office this afternoon, anyway.
So we have finally received it. Of course, we received it after clause-by-clause and after the debate took place in the House on Monday and Tuesday of this week. There was absolutely no reason given, either by Mr. Head or the minister's office, and the minister himself, as to why the material wasn't provided to us as had been promised and undertaken by Mr. Head in the meeting when he attended on November 4.
There is, I think, ample precedent, Mr. Chair, for the fact that when that type of undertaking is given it is to be complied with by a public servant. If Mr. Head felt that he was under some compunction or compulsion to give that to the minister before it got to this committee, I'm not sure where he would have come by that. That's not the proper process. But at the very least, if he passed it on to the minister's office, the minister's office should have been responsible for getting it to this committee in a timely fashion, as had been committed to this committee.
If they couldn't have done that, Mr. Chair, they should have advised the committee and the committee could have taken appropriate steps to ensure that the material was before us before we conducted clause-by-clause by adjourning clause-by-clause to a later date until the information was received.
The information clearly was pertinent. I say that from having only had some time to go over it. It was clearly pertinent to the issues that were contained in Bill and it would have been very much pointed to, at least by me and Mr. Lemay, as to why Bill C-36 should not have proceeded as prepared.
Mr. Chair, again, for maybe a couple of the members who weren't here on Monday, what is required at this point, if I can go ahead with my point of privilege in the House, is for this committee to send a report to the House to advise the Speaker, who has authority to determine whether in fact there has been a breach of my parliamentary privilege and that of Mr. Lemay's, and I think of the committee as a whole. In order for the Speaker to be able to determine that, the Speaker has to have a report from us as to what in fact occurred. And, again, I had given the committee a summary of the report that I thought was appropriate. I read that into the record on Monday afternoon at our last meeting.
In addition, there is some urgency on this, as I again made the point on Monday. If you are going to pursue a point of privilege, you have to pursue it at the first opportunity. For me, that opportunity arose on Monday morning when I found out that in fact this material that I and Mr. Lemay had requested and committed to receive had never been delivered to us, as I had been informed previously, and as I understand some other members of the committee had. We in fact never got it. We were advised that it had been given to us. We thought we had simply misplaced it or we had simply not seen it.
I became aware that it had never been received and that the minister's office had somehow intervened in this process. My time in bringing my point of privilege started running on Monday. I think the general rule is that you should get this before the House within a day or two. This is now the second day, I suppose you could argue maybe even the third day. The Speaker has made it clear in the past, not only this Speaker but others, that you must move on this quickly.
So it's absolutely essential that we deal with this today, that we issue the report, get it back to the House either tomorrow or Friday, so I can bring my point of privilege before the House.
I am going to try to stay calm, which will be very difficult, considering the comments I have just heard from the parliamentary secretary.
It is not our fault if you have overloaded, and I do mean overloaded, the committee. You have introduced nine bills. You want to amend just about the entire Criminal Code, and you would like us to do it expeditiously. That is what I call disrespect, and you are being disrespectful to the members of this committee and the House of Commons, period. The document is now in our possession, we should have received it on November 13. Someone hid it or forgot to send it, and it is the privilege of the members of this committee and the members of this House to speak out against that. I don't know that this will be the decision of the chair—I somewhat doubt that—but it seems to me that this is an attitude we must speak out against. This has to stop.
It is not our fault if you call so many witnesses that we don't have the time to hear them. It's too bad and I would like to apologize personally to the witnesses who have made a long trip to come here today. Everyone knew... I apologize to the chair, but he knew, and you knew as well, that the discussion on this motion would be continuing today. You knew it and you still took the risk of inviting witnesses. When I see the list of witnesses invited to appear today, I am outraged for them. I am telling you that, and I hope you will take note: you are not going to derail us, to bulldoze us. You are going to take your time, you are going to calm down, and we are doing to do it peacefully. These are extremely important bills. For example, in a few minutes, some of us are going to have to go to the House to speak to Bill . That isn't stopping.
So take your time, take a deep breath, and submit the documents. You knew that you had to submit them before November 16 and it could have been done. I have the French version here; it was signed on November 13. There was nothing to stop you from giving them to us and it is that failure that seems to me to be deplorable on the government's part.
Thank you, Mr. Chair.
Very briefly, I'll simply give my thoughts on whether or not the motion that Mr. Comartin has raised here relates to parliamentary privilege.
In my mind, it definitely does. Members of this committee, while conducting a study on a bill, in this case Bill , properly asked questions of one of the witnesses. The witness said he had the information to be able to answer the questions but not in his physical possession at that time. He was then asked if he could provide that information to the members of the committee through the chair before November 16, as we were going to clause-by-clause at that time. The witness clearly stated that, yes, he could do so.
On November 16 we presented ourselves for clause-by-clause, and some members asked where the information was from that witness. They were informed that the information had been sent to their offices, that it had been distributed to all members.
In answer to Mr. Moore's statement, those members, having being informed they were in possession of the information they felt they needed to properly conduct their duties and responsibilities as parliamentarians and proceed to clause-by-clause as it would inform their decisions on the clause-by-clause, did not make an issue of it because they assumed the fault was theirs or that of their staff.
It was only once we had completed clause-by-clause that we were informed, or at least some members were informed, that this information had been available but had been...I hesitate to use the word “diverted”, but had landed in the office of the minister and had not been distributed to members of this committee. Therefore, these members, Mr. Comartin in particular and Mr. Lemay, proceeded to clause-by-clause based on erroneous information.
I believe it does relate to parliamentary privilege. We have a duty and a responsibility to do what we feel is necessary to prepare ourselves when we're conducting a study of legislation in that particular case. Some members felt they needed certain information prior to feeling comfortable to moving to clause-by-clause. They were informed they would get the information. In fact, they did not get it but were misinformed that they had gotten the information.
My view is that it does relate to parliamentary privilege and to a potential breach of parliamentary privilege.
All right. I will rule on whether this is a matter that relates to a point of privilege. I'm using as my reference the newly issued O'Brien and Bosc.
I'd like to first of all highlight the fact that the peculiar rights, as they're referred to, I'll divide into two categories. One is extended to members individually, and then there are those that are extended to the House collectively. From everything I've heard, I believe this deals with the rights extended to members individually.
There are five heads under that right. First of all, there is freedom of speech, which this doesn't impact. There is freedom from arrest and civil actions, which it doesn't impact. There is exemption from jury duty, which, again, is not applicable. There is exemption from being subpoenaed to attend court as a witness. The fifth one is freedom from obstruction, interference, intimidation, and molestation. I believe, from the material I've seen from Mr. Comartin, and from the comments he's made both today and on November 23, he's referring to obstruction and interference.
My role is to determine whether the matter raised by Mr. Comartin relates to privilege. I also note that the point of privilege raised is against a minister of the crown specifically and relates specifically to the Minister of Public Safety.
I have consulted with the clerk and have reviewed O'Brien and Bosc. There's no specific case in point that previous speakers have ruled on. There are some cases that are similar, and for those of you who wish to check this later, I refer to page 115 of O'Brien and Bosc , and specifically to footnote 242.
Speaker Milliken on February 25, 2004, was dealing with a prima facie breach of privilege concerning misleading statements in the 1999-2000 report on plans and priorities of the Department of Public Works and Government Services.
What's important are the two sentences I will read right now, again in that footnote 242 on page 115:
||The Speaker found no evidence to indicate that departmental officials had deliberately intended to deceive and obstruct Members. He noted, however, that if the Standing Committee on Public Accounts were to present the House with such evidence, it could constitute grounds for raising a question of privilege.
I note there the words “deliberately intended”. I believe the words “obstruct” and “interfere” imply an element of intent and an element of deliberation.
I wanted to refer to some of Mr. Comartin's comments leading up to this matter being dealt with today. I'm going to refer back to his comments on November 23, when he referred to a discussion he had with Mr. Lukiwski, the Deputy House Leader of the Conservative Party.
He said that he--referring to Mr. Don Head--believed he gave it--referring presumably to the information Mr. Comartin was seeking--to “the Minister of Public Safety and National Security. Mr. Lukiwski confirmed early this afternoon that, in fact, the minister had it, has had it since at least last week, last Monday, has not seen it, is reviewing it, and will provide it to us in a week's time”.
That causes me some concern, because I believe Mr. Comartin assumes the information he received from the clerk, as well as from Mr. Lukiwski, is correct that in fact the minister had not seen that information at the time Mr. Comartin apparently was considering this point of privilege. Yet later on he remarks that “there has been direct interference by the minister in a situation where he should not have had any involvement at all”.
Then I go on again to quote Mr. Comartin as follows:
||Whether or not the information was withheld intentionally or unintentionally, the minister has nonetheless, without reasonable excuse, refused to answer a question or provide information required by the committee, which created the possibility of a finding of obstruction by the minister in the committee's work.
So I have to draw from Mr. Comartin's comments at our last meeting that he's not sure whether in fact the information was withheld intentionally or unintentionally. He alleges “without reasonable excuse”. I'm not aware that the minister has ever been provided an opportunity to answer that claim—certainly not here at this committee. And I'm not sure that simply referring to the possibility of finding obstruction is enough to make out that this matter relates to privilege.
To wind this up, I want to say that a matter of privilege is not simply conjecture. Alleging that a minister has infringed upon a member's privileges by deliberately and with intent obstructing or interfering with a member's work is a very serious charge. Before I would find that a matter relates to a point of privilege, I would have to be confident that the member raising the point of privilege is alleging an actual intentional act to interfere or obstruct.
As I say, I don't have any clear direction in O'Brien and Bosc on the issue. There are no cases specifically on that point. I can just draw from the cases there that are somewhat similar and come to a conclusion on that.
I don't believe a point of privilege was ever intended to be used as a fishing expedition, although I'm sure that was not Mr. Comartin's intent here. This committee and Mr. Comartin himself have means available to secure a clarification from the minister as to the reasons for the delay in receiving the documentation Mr. Head provided on or about November 13.
I also want to note that we often face cases where information is delayed, and for many different reasons. I can think of many different reasons why a minister would not be able to immediately provide information, which would provide a reasonable excuse. The allegation is that there is no reasonable excuse here. I would think it would behoove us to first determine the cause of such delays through other means before resorting to a point of privilege.
It's for those reasons that I am unable to find that the matters Mr. Comartin has raised relate to a matter of privilege. I do want to assure the members of this committee that I take questions of privilege very seriously. If a matter properly deserves to be treated as relating to a point of privilege, I will act accordingly.
I thank all of you for your input into that process.
Thank you very much for the accommodation. I'm sorry, but obviously I thought I was starting at 3:30.
To begin with, the Association québécoise des avocats et avocates de la défense would like to thank the committee for this opportunity to talk to you about our concerns regarding Bill .
The AQAAD is composed of more than 600 members who practise mainly criminal law, and each region is represented on our board of directors. The needs of the regions are very diverse, and when we present submissions we try to consider the needs of both northern communities and urban communities.
The AQAAD is aware of recent problems involving frauds that caused substantial losses for many members of the public. Quebec has been particularly affected by the embezzling of funds invested by individuals, but we do not believe that the judicial system has responded to this situation adequately. The AQAAD has always taken the position, in principle, of favouring judicial discretion, so is inevitably opposed to mandatory minimum prison terms.
In recent years, we have seen a significant erosion of judges' discretionary authority, and we deplore that situation. Repeated attacks undermine the credibility of the system and jeopardize its ability to operate. Bill provides for a two-year mandatory minimum sentence. The Quebec Court of Appeal put us on notice several years ago when it refused to impose conditional sentences of imprisonment for substantial frauds. We will recall the guilty pleas or verdicts in certain cases that affected Parliament more directly, and the Court of Appeal definitely put us on notice that firm prison terms should be handed down. So we recognize that principle and we respect it.
However, I think we have to recognize that there are exceptional cases and that major injustices could result. The amendments proposed to subsection 1.1 of section 380 refer to "the total value of the subject-matter of the offences", or,in the French version, "la valeur totale de l'objet des infractions en cause". We have to remember that under section 21 of the Criminal Code there are various ways of being a party to an offence that might involve a very significant total sum, but where an individual who played a very minimal or secondary role would fall within the provisions you are proposing. So I think the specific role should be taken into consideration, and the need to individualize sentencing is not being respected when this kind of minimum sentence is imposed.
I also think we have to remember that the Criminal Code provides for a maximum term of 14 years for any fraud over $5,000. So judges have all the latitude they need, lots of elbow room, to impose sentences well over what is proposed, in appropriate cases.
There is also another clause that concerns us. We see that you want to impose the condition that a person not work in places that could result in more offences being committed, but the Criminal Code already provides for this possibility. Paragraph 732.1(3)(h) provides that when a probation is made, the court may prescribe that the offender
||(h) comply with such other reasonable conditions as the court considers desirable, subject to any regulations ... for protecting society and for facilitating the offender’s successful reintegration into the community.
So the Criminal Code already provides for this possibility in probation orders. We must remember that the people who sit on parole boards, both provincially and federally, have complete authority to impose exactly these kinds of conditions. And believe me, they do their jobs well and they regularly impose all sorts of conditions for protecting society.
So our position, in principle, as representatives of the Association québécoise des avocats de la défense, is that we have to stop usurping the discretion of the courts. I think this bill does not meet any legal need and can only be a response to a political need. This is what concerns us: that there will be a constant erosion of judicial discretion.
Thank you, Mr. Chairman.
The Insurance Bureau of Canada is the national trade association that represents Canada's home, car, and business insurers. As a national trade association, we have an investigative services division that has a staff of 59, of which I am the head. Our team includes a number of seasoned former police veterans who spend their days investigating organized insurance crimes involving staged auto collisions and auto theft. This is a very busy job for our people due to the growth in Canada of organized crime.
Insurance fraud is a big business in Canada. In just home, business, and auto insurance, it is estimated to be a $3-billion-a-year business. On average, 10% to 15% of all claims have an element of fraud. Consider for a moment that our industry paid out $25 billion in claims in 2008 and you'll see the scope of the problem. Let's be clear as to where that money has to come from; it comes from individual Canadians in the form of higher premiums.
Organized crime long ago saw an opportunity in insurance fraud. Why? Because it is a low-risk, high-profit business. The penalties are minor, and jail time is rarely handed out, even for cases involving substantial fraud. In the brief time I have here, I want to tell you about just one type of highly organized insurance fraud: staged auto collisions.
Phoney car crashes are a big business in the Greater Toronto Area, which is considered the staged auto-collision capital of Canada. These complex schemes frequently involve organized criminals linked with tow-truck operators, body shops, paralegals, and registered health care providers. I also refer to them as rehab centres or rehab clinics. In one particular investigation, which is ongoing right now, 41 staged auto collisions are alleged to have taken place involving fraudulent auto physical damage and fraudulent accident benefit claims. Further investigation suggests a possible 116 additional alleged staged collisions involving this criminal organization.
Altogether, we estimate that this one project alone could cost insurers and their customers between $20 million and $25 million in potential fraud. To date, over 200 charges have been laid against 38 individuals.
Staged collisions involve not only those intentionally causing the collision but also the innocent drivers who are placed at great risk of serious injury or death. Particularly dangerous is the “swoop and squat”, in which two cars intentionally box in the innocent driver. A third car quickly passes in front and then jams on the brakes, forcing the innocent driver to rear-end the vehicle ahead. The vehicle struck in the rear is usually carrying several passengers who paid for their seats so that they can claim to be injured. They submit fraudulent accident benefit claims, which are supported by rehab clinics.
In more elaborate schemes, a runner recruits drivers and passengers to play roles in a carefully scripted, choreographed, controlled crash. Bogus witnesses are positioned near the staged collision to support the criminals' account and to contradict the innocent driver's testimony.
IBC's investigative services investigates, on average, over 30 such projects a year. Unfortunately, those convicted and sentenced usually receive conditional sentences, and restitution is rarely ordered. In keeping up with organized crime, however, designated investigative bodies, like ours, and police and prosecutors need more tools. A strengthened Criminal Code to get tough on these types of crimes is a top priority, and we were pleased to see that the House of Commons has already passed Bill in regard to auto theft.
This legislation, Bill , is another positive step that takes direct aim at the kind of organized criminals our industry battles every day. Tougher penalties for fraudsters will send a clear message that Canadians will no longer tolerate having their savings targeted by criminals.
It is time for the fraudsters' free ride to end, and Bill makes strong steps in that direction. We urge parliamentarians to pass this legislation.
Thank you. We would be pleased to answer any questions committee members may have.
Thank you, Mr. Chairman.
I'll tell you a bit about our organization. It's been in existence for 57 years. It started largely in the province of Saskatchewan and it has grown to where we now have 380 organizations affiliated to our federation, with an approximate total membership in excess of a million individual seniors.
What has been happening in the last few years is that more and more of our members are depending upon their individual investments for their retirement income. As you know, the number of people who are covered by a pension plan has been declining for some time, and therefore a good number of our members have to operate in the market.
We appreciate that Parliament is moving on Bill , and I think it's a step in the right direction. However, I want to assure the committee members and the chair that it's not quite sufficient for our members. Let me give you an example.
In the Bre-X case, you had a situation where it was a publicly sold security. Let me tell you that the president of Bre-X had an exit strategy all along. How are you going to get hold of the president of Bre-X who is now, I understand, living either in the Turks and Caicos Islands or somewhere, beyond the Canadian jurisdiction? To a certain extent, with that bill, unless you have an extradition agreement, really nothing will happen.
The other thing is that when seniors are defrauded, quite often they're ashamed to report it. To a certain extent, they're leery of the rest of the family because they feel they should have consulted the family. But we then find out that somebody does goes ahead and lay a complaint and the person is prosecuted.
You know, there's nothing in the legislation that says, if a person is found guilty of fraud, they're not only found guilty of the fraud perpetrated on the person who complained...but there should be compensation and restitution for all of the people who got defrauded by that particular person. I think to a certain extent the bill falls short.
We passed a resolution at our convention, which emphasizes the direction we seniors would like to go in. I'd like to read that resolution:
||Whereas the federal government, in the January 27, 2009, budget set out the plan for regulatory reform of Canada's capital markets; and whereas the expert panel on securities regulation that reported in the Hawkin Report, published January 2, 2009, recommends reform of the multiple and provincial Canadian securities regulatory schemes to a single Canadian securities regulator; and whereas the Canadian capital markets need efficient, effective, and shareholder-friendly regulatory protection; and whereas a change in the Canadian securities regulatory schemes has the support of the majority of the provinces; and whereas a single securities regulator will enhance the detection and prosecution of serious capital market crimes, where the current fragmented system of provincial securities regulations has shown that it cannot prevent such crimes; and whereas the current financial crisis has provided the motivation and optimism that such a reform to a single Canadian securities regulator will work and be supported by most provinces; therefore it be resolved that the National Pensioners and Senior Citizens Federation lobby the federal government and opposition parties to establish a national securities regulator through legislation that enhances the right of investments.
The reason it's so important for seniors to have a regulatory framework is that, to us, prevention is really the answer to stopping crimes. If you have a strong regulatory system, where, for instance, we could separate people who either sell or advise in the security field into different parts, that would be a beginning. If we could license them properly and bond them properly, that would be another help. We think the answer to white-collar crime, especially as far as seniors are concerned, rests more on the side of regulation than really punishment, because, as I said, these crooks are pretty smart. They always have an exit strategy. We know it's awfully hard to recuperate these fraudulent gains.
Quite often they ship it out of the country, they transfer it to the rest of the family and so on, and it makes it very difficult. And for an average senior to have access to the judicial system, it's very hard. We're saying prevention is the answer to white-collar crime, especially when it comes to the question of seniors.
Thank you very much, Mr. Chairman.
Thank you, Mr. Chairman, and members of the committee.
On behalf of the directors of the Canadian Justice Review Board, I wish to thank the committee members for providing the opportunity to appear here this afternoon. I've provided the committee clerk with a brief that highlights our concerns in more detail, and I understand you have received copies of it electronically.
The key point that I would like to emphasize is that Bill deals only with the sentencing aspect of an otherwise very lengthy process, and by its nature, it already provides many opportunities to avoid sentencing in the long run.
The brief contains a list of some of the many possible escape routes. I hope you will review and consider those in terms of the content of this legislation. My friend here has alluded to some of those escape routes.
Yesterday's Ottawa Citizen carried an opinion piece from Mr. James Morton, entitled “We need 21st-century law”. Mr. Morton is, among other things, an adjunct professor at Osgoode Hall. In my opinion, a key passage in his article touched on the matters being considered here today. Mr. Morton asks, “Is crime really best dealt with by prisons?” He answers the question by saying that in some cases—white-collar crime—probably yes, but in other cases, as with most drug-related crime, probably not. But here we're dealing with white-collar crime. Bill seeks to address white-collar crime and it does so in the general context of the criminal justice system's goal of preventing crime.
Fraud has a legal definition in the Criminal Code, but fraud can be very difficult to prove. If the goal is to prevent damage to society, and more specifically financial damage, then perhaps it's time to define in the Criminal Code some of the other undesirable white-collar activities—for example, creative accounting. In my opinion, this bill would be considerably improved if it did that.
If we were speaking of fraud alone, then the Canadian Justice Review Board submits that a two-year prison term is not an effective deterrent, especially given our current parole board policies. We ask that you, as legislators, consider a mandatory five-year sentence.
Ms. Hazel Magnussen, who is a colleague of mine operating in Victoria, British Columbia, who is also the secretary of the Canadian Justice Review Board, specializes in victims' rights issues. Over the past two years or more, she has been conferring with the Federal Ombudsman for Victims of Crime, Mr. Steve Sullivan, and also with our own board member Professor Ted DeCoste. As a result, they designed a curriculum that Ted DeCoste was able to introduce for law students at the University of Alberta that raises awareness of victims' rights.
Since Mr. Sullivan may also be appearing in front of this committee, I don't want to steal any of his thunder, but I would like to point out that the Canadian Justice Review Board agrees with sentiments he expressed in a November press release. He said:
||I am pleased to see the federal government moving forward on important victims’ issues like financial crime and restitution...I am however concerned that the restitution piece of this new legislation applies only to victims of fraud. We need to ensure that we are supporting all victims who may have been devastated financially as a result of a crime.
If I may, I'd like to return quickly to the comments I made a few moments ago and reiterate that this legislation would be greatly improved if it brought within the ambit of the Criminal Code some of these other socially unacceptable practices often associated with what we might call the financial industry, and also legislated significant penalties for those behaviours, including restitution.
Fraud is not the only problem. I believe it's very upsetting, or depressing, for the general public to hear or read about major financial swindles and then learn that even those fraudsters who admit guilt receive what many consider to be laughable sentences, such as house arrest or early six-month parole.
What Bill should be doing is restoring public confidence in the justice system by giving society a legal framework that applies to the 21st century's financial world.
In closing, I would like to thank the committee again for the invitation to appear. I trust that you will give some consideration as to the recommendations we've made.
First, I would also like to thank the committee for giving me the opportunity to address it. I would like to note that I am before you here today as a professor of criminal law and also as the co-chair of the master's program on fighting financial crime, a program offered in Montreal. So I hope that I am somewhat neutral on this subject.
Before making my presentation, I would like to reply to the question that Mr. Lessard just asked, whether two-year minimum sentences might be considered to be consecutive where there are several frauds in one case. I think the answer is no, because when the Criminal Code provides for consecutive sentences, it says so specifically. We might think of firearms offences. It adds that the sentence for those offences must be consecutive. The same is true in relation to criminal organization offences. That is not the case here, so I don't think it could be seen as consecutive, at least not as that being mandatory.
My observations will address the six main points in the bill. I would like to start with the two-year minimum sentence. I think that there are in fact still fraud cases where judges are giving sentences of less than two years. We need only consider the Coffin case, which went to the Quebec Court of Appeal not so long ago, relating to the sponsorship scandal. So adding a two-year minimum sentences does have an impact, and I don't think it will mean downward pressure. Traditionally, when a minimum sentence is added, a section, judges increase the average sentence, they don't decrease it. So I do not anticipate a downward effect.
That being said, there are still problems. Ms. Joncas spoke here about the case of an accomplice. Obviously this is a problem. An accomplice does not have the same degree of responsibility as the actual perpetrator. An exception might be made for them.
Another even more important factor is the amount of the fraud. A minimum sentence is to be added for frauds of $1 million and over. In my opinion, that minimum sentence would not apply in cases like Vincent Lacroix's. Why? Because in Vincent Lacroix's case, even though his total fraud was $115 million, his individual frauds were all under $1 million. In that situation, all the counts would probably be for fraud under $1 million, and there would be no two-year minimum sentence on any count. Ultimately, it will not change greatly, because his total sentence will be more than two years. But in my opinion, taking the amount of the fraud into consideration is a bad idea, because if there are multiple victims, the fraud may exceed $1 million in total, but be less than $1 million for each victim.
Conversely, the amount of the fraud does not include the benefit to the accused. For example, if I sell buildings worth $2 million and I tell my clients I am certified by the APCHQ when that is a lie, even if I receive no benefit, even if I intend for the buildings to actually be built, that's fraud, and the amount of the fraud is equal to the value of the building, $2 million, even if the benefit to me personally is limited to my profit in the building. So setting the figure for the amount of the fraud at $1 million causes problems, in my opinion.
Even more importantly, adding a minimum sentence and increasing the maximum sentences—in the case of section 380 we have both—should be done more comprehensively. In this case, fraud is the target, but nothing has been done about sexual assault with a knife, under section 272 of the Criminal Code, or incest, under section 155 of the Criminal Code. Might society see this approach as creating a hierarchy of crimes? Might they not think, in the public's eyes, that fraud over $1 million is more serious than sexual assault with a knife, or more serious than incest? The message sent by the bill is that this is in fact the case, because there is a two-year minimum sentence for fraud.
So playing with parts of the Criminal Code, adding minimum sentences in some places and not adding them in others, might send a bizarre message. This should be done comprehensively. There is a justification for minimum sentences. They can be good, but this should perhaps be done more comprehensively.
Regarding restitution for victims, this adds little in my opinion, because it is already provided in section 738. So the bill makes no change in that regard. It simply imposes certain duties on judges. But in itself, it will not facilitate restitution for victims. The problem is still the difficulty of establishing the actual losses in criminal law, which will mean that in any event the victims will have to go to the civil courts.
As well, obviously there is the accused's genuine insolvency, or apparent insolvency. In the case of genuine insolvency, the accused has no money, they can't pay. In the case of apparent insolvency, you have to know where they have put the money. If they have hidden it in a tax haven, the restitution order won't change anything.
The addition to the list of aggravating circumstances is essentially a codification of current law. Here again, no additional protection is being offered to the public against fraud. It is worthwhile to codify the current law, but it should be done as part of a broader reform of the Criminal Code. Some parts of the Code are up to date and have really been improved, while other parts are not. For example, section 181, about spreading false news, which the Supreme Court held to be unconstitutional in 1992 in the Keegstra decision, is still in the Criminal Code. When we talk about updating the Criminal Code and a section that the Supreme Court held to be unconstitutional in 1992 is still in the Code, I think there is some work to be done on reform.
Regarding the fourth measure, entitled "Judge required to record aggravating circumstances and to state reasons for refusal to order restitution", I don't understand why that is required in the case of fraud when it is not required in the case of other crimes. Why should a judge be specifically required to record the aggravating or mitigating circumstances in a fraud case, but not be required to do it in a sexual assault case, for example? I find it hard to understand why this measure is being called for.
Measure 5, which is probably the most interesting feature of the bill, in my opinion, is entitled "Prohibition on having authority over the affairs of another person". As was noted earlier, this covers a much broader area than probation. Probation is for a maximum of three years and may be applied only where there is a prison term of no more than two years.
Here, that kind of limit is not imposed. If I am not mistaken, the model you have in mind is much more along the lines of the prohibition for driving while impaired. We know that in the case of drunk driving, the judge may, for example, order a 10-year or 15-year driving prohibition, or even a lifetime prohibition, upon conviction. In my opinion, it is a very good idea to want a similar measure for fraud cases.
Obviously, however, this raises the question of supervising orders prohibiting handling the affairs of another person. In the case of driving, it is relatively easy. There are police on the roads who can do random checks of drivers' licences. In the case of another person's affairs, does this mean that the person will be under a probation officer for the rest of the order? We can assume it does, but the idea is worthwhile and it is probably the measure in the bill that offers the most protection for the public. When we talk about preventing fraud, protecting the public, it is really the only measure in the bill that is clearly dedicated to that idea.
And the sixth aspect of the bill deals with the "Victim statement on behalf of the community". In my opinion, that already happens and the bill adds little to the current situation, other than that it might provide better guidelines for how it works.
In conclusion, I would like to make a more general comment on the bill. I agree with what was said earlier: people who commit fraud can be deterred. Fraud is not an impulsive crime like some murders or some sexual assaults. It is not a crime associated with drug addiction, like selling or possessing narcotics. It is ordinarily a well thought-out and planned crime. In this situation, the fraud artist often does a cost-benefit analysis. They consider the benefits of committing a crime and the potential costs. At this state, deterrence can play an important role. That being said, deterrence is based on two factors: severity of sentence and certainty of sentence. I see that here there is a lot of work being done on severity of sentence, and that is laudable.
However, if a person has a one in 100 chance of getting a 14-year sentence, the cost-benefit balance is still tipped in their favour. That is why the work must focus not just on severity of sentence, but also on certainty of sentence. Are we catching more fraud artists? Are we catching them faster? That could have a real deterrent effect.
I will conclude by giving you the example of Mr. Madoff in the United States. Everyone believes that a 150-year sentence in Mr. Madoff's case has a deterrent effect. When I read about the Madoff case, I kind of said to myself that I was sorry I had never done what he did. Why? Because he led an extraordinary life, in the best hotels and the best houses on the planet; the travelled, and led a life we can hardly even imagine. Obviously, he got 150 years in prison, but he is 70 years old. If I compare the costs and benefits, in his case, I am not sure there is a deterrent factor.
Thank you. I appreciate your testimony and you patience with the committee's work. I have some questions for Mr. Kube and Mr. Roy. Unfortunately, Mr. Nichol, I did not hear your presentation, and that is why I will not be asking you any questions.
Bill , in its present form, applies only to crimes of fraud, in general. As you said, that doesn't cover cases like Bre-X. A fraudulent prospectus was issued by a company. It also doesn't apply to insider trading, and so on.
Do you think the bill should be amended so that it applies to other fraudulent acts that are already regarded as criminal, to ensure equality, if I can use that expression?
Mr. Roy, you said it might be wise to create an exception for accomplices to fraud, given that the evidence often shows, beyond a reasonable doubt, obviously, that their role was minimal. In your opinion, how could we be sure, in terms of the drafting, that an accomplice who did play a relatively major role in the case was dealt with? Could there be aggravating factors that would determine whether the person should be subject to a mandatory minimum sentence?
You also talked about prohibitions on someone convicted of fraud handling other people's affairs. If the bill is amended to give a judge the power to impose such a prohibition, will other sections of the Criminal Code have to be amended to be sure that this makes sense? What I want to talk about here is what you said earlier, probation, monitoring a person who is subject to the prohibition.
Was that short enough?
My question is for Mr. Dubin and Mr. Prouse. I don't know which one may be able to answer.
When you are a lawyer and you practice both criminal law and civil law, which is what I did for nearly 30 years, and I am still a lawyer in good standing with the Barreau, you know that quite often, in fraud cases, there is insurance that covers the fraud; that is, the insurance companies have to pay the client, unless the client was a party to the fraud.
There are also the cases we have seen recently. To explain the problem, let's say that a lot of people work in securities, and there are brokers who have mutually reinsured themselves precisely to prevent potential frauds. For example, in the case of Vincent Lacroix, there was one group that was reimbursed and one group that was not. It depended on the types of contracts or companies that were behind it.
I may have been out at the point when you might have talked about this, but this is how I understand the main point in this regard. In most of these cases, as Mr. Roy said, when a person, an individual, for example a retired person, is a victim of fraud, they aren't covered because the person who allegedly sold a contract of some sort didn't have a licence, etc. So they are on their own with their problem.
In your case, at the Insurance Bureau of Canada, what are the total losses, for your clients, that you insure?
I understand that you support us, and I am very glad of that, but what order of grandeur are you talking about when you say you are losing money? I know that in Quebec you have lost a lot in recent times, but in Alberta, there is a $100 million fraud, and in other provinces, it is even... Can you give me an order of grandeur, when we're talking about fraud?