With committee members here and witnesses ready, we are going to start in 30 seconds.
Please take your seats.
Good afternoon, everyone.
Pursuant to Standing Order 108(2), we are continuing our work on remediation agreements, the Shawcross doctrine and the discussions between the Office of the Attorney General and government colleagues.
This hour we have two witnesses on the Shawcross doctrine.
It's a pleasure to welcome Mary Condon. Ms. Condon is the interim dean at Osgoode Hall Law School. Welcome, Ms. Condon.
We also have with us Maxime St-Hilaire, associate professor, faculty of law, Université de Sherbrooke.
Welcome, Mr. St-Hilaire.
Colleagues, to recap what I mentioned at the previous meeting, I am going to hold strictly to time allocations more so than I normally do. I would ask everyone to let witnesses complete their answers, but witnesses to be brief so committee members can get in their questions during their allotted time.
I appreciate your both being here.
We will start with Ms. Condon.
Good afternoon, committee members. Thank you for the invitation to speak to you today and for your flexibility in allowing me to appear remotely.
My topic today is that of prosecutorial discretion and the Shawcross doctrine, and I would begin by saying that I was lucky enough to study this topic with two world-renowned Canadian experts, Professor John Edwards and Professor Philip Stenning. I will draw on their works in these remarks about the legal principles involved, for about eight to 10 minutes.
Speaking as an academic, I thought it would be important to start with some first principles to put the Shawcross doctrine into perspective.
As members of the committee know, an Attorney General is required to fulfill multiple roles. He or she is required to be a legal adviser to parliament and to the government, but he or she also exercises the prerogative power to prosecute criminal offences, and it is this power that is the focus of attention today.
It is now established by constitutional convention that the Attorney General will make an independent decision to prosecute or not to prosecute. This requires making a two-step determination about, first, the sufficiency of the evidence and, second, whether the prosecution is in the public interest. Because of the necessity to consider the public interest, commentators often say that the prosecutorial decisions made by an Attorney General are at the intersection of law and politics.
Because of this intersection, many jurisdictions have appointed a director of public prosecutions in order to insulate prosecutorial decision-making from the perception that political considerations are uppermost in the mind of the decision-maker. If a DPP is appointed, however, as has been the case in Canada, there are the same expectations that the DPP will exercise her or his prosecutorial power in the public interest.
So how is the Attorney General or DPP supposed to discern what is in the public interest in order to exercise their discretion? As Professor Edwards argues in his book, the task of the Attorney General or DPP is a difficult exercise of weighing a number of competing considerations. It's in this context that the Shawcross doctrine becomes relevant.
As members of the committee already know, this is a guideline that was first promulgated by Lord Shawcross, the Attorney General in the U.K. in the 1950s, and has since been relied upon in Canada. The doctrine says that the Attorney General must acquaint himself or herself with all the relevant facts and with the considerations that affect public policy. In doing so, he or she may consult with colleagues, and in some circumstances, as Shawcross noted, he or she would be foolish not to.
A good example of the need to consult in order to have a full appreciation of the issues is the well-known case in the U.K. from about 10 years ago, the BAE—or British Aerospace—case. Here, the issue was whether considerations of national security required that the Attorney General discontinue a prosecution. It was considered not reasonable to expect that the Attorney General himself would have a full understanding of what national security would require, so he would have to seek that advice in order to inform the decision.
In the case, the Attorney General consulted a wide range of informants, both inside and outside cabinet. The record shows that there were repeated meetings about the issue. The position taken by several of the Attorney General's parliamentary colleagues in the U.K., including the Prime Minister, was that national security did require that the prosecution be discontinued. I would also note in passing here that the Canadian DPP act explicitly says that the DPP is allowed to engage technical experts to provide advice.
However, the Shawcross doctrine is clear that the assistance and advice of colleagues is confined to informing the Attorney General of particular considerations which might affect her or his decision, and it “must not consist in telling him” or her “what the decision ought to be”. The Attorney General should not be put “under pressure” by colleagues and, in particular, should not be put under partisan political pressure.
Professor Edwards, for example, suggests in his book that the Attorney General should refuse to listen to arguments based on “political expediency”, but rather should apply his or her “judicial mind” to the circumstances at issue. This is necessary to maintain the integrity of the office and the integrity of the administration of justice.
Meanwhile, Professor Stenning and others have suggested that, leaving aside the problem of partisan advice, the most challenging issues arise when there are a number of competing legitimate interpretations of the public interest, so that the relative importance of each has to be assessed and balanced. Again, I would note that in the BAE case, other definitions of the public interest beyond national security were identified. Those included national commercial interests and harmonious relations between the U.K. and Saudi Arabia.
While the Attorney General in the BAE case indicated that he had not based his decision on these factors, it remains the case that where several legitimate public interest considerations are available, ultimate responsibility is placed on the Attorney General to interpret the advice given by parliamentary colleagues or others and to make an independent decision about how to assess them.
As I have said, in this process, considerations of the integrity of the administration of justice and the rule of law are repeatedly [Technical difficulty—Editor] No specific remedy is laid out in Shawcross's original account of his doctrine as to the consequences [Technical difficulty—Editor] if the principles he enumerated are breached.
Here, a key distinction should be made between parliamentary and legal accountability.
With respect to parliamentary accountability, having made an independent decision, the Attorney General can be rendered accountable to Parliament after a matter has been concluded by being asked to account for actions taken or not taken. Parliamentary accountability may also require that an Attorney General resign if he or she no longer has the confidence of cabinet.
Meanwhile, with respect to legal accountability for a prosecutorial decision, if the prosecution is proceeded with, there will ultimately be a judicial determination as to the appropriateness of the Attorney General's decision to prosecute, in terms of whether the charges result in acquittal or conviction.
On the other hand, where a prosecution is discontinued, as it was in the BAE case, for example, that decision was the subject of judicial review, with the House of Lords ultimately concluding that the rationale of national security was an appropriate one for the Attorney General to use to guide his decision. Another avenue of legal accountability that is available is the abuse of process doctrine.
Let me turn for my remaining couple of minutes to deferred prosecution agreements specifically, since the possibility of the DPP entering into one of these agreements was enacted into the Criminal Code in September 2018.
It's important to recognize that the provisions dealing with DPAs identify a long list of factors that the prosecutor is required to consider in order to determine if it's in the public interest to enter into a DPA, in addition to other conditions that must be met. There is also a list of factors identified that the prosecutor may not consider if the offence is alleged to have been committed under the Corruption of Foreign Public Officials Act. These factors are the national economic interest, the potential effect on relations with a state other than Canada or the identity of the organization or individual involved. It appears that these factors were drawn from the OECD's anti-bribery convention, which was also at issue in the BAE decision in the U.K., which I referred to earlier.
To conclude, then, the fact that the Criminal Code amendments about DPAs identify so many appropriate and inappropriate components of the public interest could make it more feasible for the DPP or Attorney General to ascertain what the public interest is in this context, although the ranking among the various considerations is still something that will need to be addressed on a case-by-case fact-specific basis.
Thank you for your attention. I'm happy to answer any questions.
I will really try to be brief. Today, I want to focus on and reproduce the essence of the post that I and my colleague Martine Valois from the Université de Montréal published on the blog called Advocates for the Rule of Law. I want to situate the Shawcross theory and the constitutional convention that applies here in a little wider perspective of a general framework. But I also want to analyze it in the light of what we can call global best practices for the independence of the public prosecutor, or, as we call it, the Attorney General.
I will go straight to the point and state my thesis right away; I will argue the case thereafter. I think that matter that has our attention at the moment gives us the opportunity to focus on how well the rule of law is implemented in Canada. I believe we can do better. My principal source for the global best practices in this area is the second report on the independence of the justice system produced by the Venice Commission, with its specific emphasis on the prosecution service.
Let me quickly explain what the Venice Commission is. The commission is made up of independent experts in constitutional law. It is an advisory body to the Council of Europe, which is now governed with an expanded agreement. The Venice Commission is made up of members from 47 countries that are part of the Council of Europe and 14 other countries that are not part of the council, including the United States. Canada has had observer status at the commission for a long time.
The global standards identified by the Venice Commission are not rules of international law. Rather, they are expert opinions on best practices, when it is possible to provide them.
The commission therefore specifically focused on the matter of an independent prosecution service. It notes at the outset that the institution of an independent public prosecutor is unknown in original common law. The institution comes instead from the European tradition of civil law. The commission notes that most common law countries have adopted the European model and have created positions such as director of public prosecutions, for example. Other ways of adopting the global standards include the solution used by the United Kingdom, where the independence of the Attorney General as a prosecutor is preserved by no longer being a member of the cabinet.
So what are the best practices for the independence of public prosecutions? The commission recognizes that it is normal for the executive to have policies for crimes and to have a kind of general influence over the prosecutor. However, the recognized global standards acknowledge that it should not be possible for the executive to give instructions on specific cases or to substitute itself for the prosecutor in deciding whether to prosecute or not. Those are the best practices.
In Canada, federally, the Director of Public Prosecutions Act, 2006, created the position of an independent director of public prosecutions. Subsection 10(1) and section 15 of the act allow the Attorney General to give instructions on specific cases or to substitute him or herself for the director of public prosecutions after publishing a notice in the Canada Gazette. The problem arises from the fact that the Attorney General remains a member of the executive. As a result, the act currently in effect in Canada does not meet global standards, in my opinion.
If the Attorney General were not a member of cabinet, as is the case in the United Kingdom, subsection 10(1) and section 15 of the act could be kept. However, since the Attorney General is still part of the executive, it is relatively clear, in my opinion, that it does not comply with the best practices, and that there should be a way to do better.
To my knowledge, the Shawcross theory goes back to 1951. I am not an expert in the doctrine to the extent my colleague is. But the existence of this constitutional convention changes none of the facts in Canada. We have created the position of an independent director of public prosecutions, while the Attorney General remains a member of cabinet, with all the power to become directly involved, even on specific cases, over and above the simple policy for prosecutions.
I would like to remind you that, although my colleague was talking about legal principles in her introduction, it became clear as her presentation proceeded, that we are actually talking about the Shawcross theory. This is a constitutional convention. It is not a legal standard; it is a standard that forms part of our political constitution.
With all its wisdom and finesse, the Shawcross theory, as a constitutional convention, is still limited in its effectiveness. This is because it remains difficult to know whether or not it has been applied or not in given cases, because of the secrecy of executive deliberations. It is a logical consequence of cabinet solidarity and of the solidarity of a government that receives its confidence from a bloc in the House. So the theory is limited in its effectiveness.
Besides, the theory took root in the United Kingdom where they did not have an independent prosecutor system such as the one we have tried to create here in Canada, albeit imperfectly. The theory also goes back to a time when they had not yet decided to align themselves with the European model a little more by excluding the Attorney General, as a prosecutor, from the executive.
In general, Canada should not try to become more conservatively British than the British themselves. We should be able to see how the United Kingdom has embraced the global standards borrowed from the European tradition. Then, two practical solutions present themselves: either exclude the Attorney General from the executive and create a distinct position of Minister of Justice, or, leave the Attorney General as a member of the executive, but repeal subsection 10(1) and section 15 of the Director of Public Prosecutions Act.
That is all I had to say.
Thank you both for joining us today.
The committee heard last week from the current , the deputy attorney general and the Clerk of the Privy Council. All three said that discussions between the Prime Minister, the PMO and the Attorney General and office are appropriate when discussing a matter like remediation agreements and particularly as it relates to the issue of SNC-Lavalin.
The Attorney General said that the Attorney General is “not an island. These are not easy decisions that face any Attorney General, and his or her ability to get the answer right on behalf of all Canadians is only improved through discussion and debate with the rest of cabinet....”
The Clerk of the Privy Council, who has served as a non-partisan public servant in Canada for decades, said, “I can tell you with complete assurance that my view of those conversations is that they were within the boundaries of what's lawful and appropriate.”
The deputy attorney general, Madame Drouin, who's also a non-partisan public servant, gave an example from the U.K., the same one Professor Condon alluded to. That's the BAE case. Madame Drouin, in referring to that U.K. case, said, “...the Prime Minister, saying that if the Attorney General continued the investigation and the prosecution, blood could be on the street. Finally, the director decided to stop the investigation and not to lay charges.” She stated that the case was the subject of a judicial review. She went on to say, “The House of Lords did say that this very difficult conversation didn't break the rule of law. That, I think, really illustrates how serious the conversation can be.”
Madame Drouin was alluding to the public safety considerations.
This question is for both of you. Do you share the assessment that it is appropriate for these kinds of difficult discussions between the Attorney General, the Prime Minister and offices about the potential use of, in this case, a remediation agreement?
I just want to go through some other comments that have come up in relation to this case and get your reaction to them. I note that each case, obviously, has to be taken on its own merits and that these things are decided on a case-by-case basis with general principles. However, when asked about this matter, former B.C. attorney general Brian Smith, who now works at Gowlings, said:
I would say it’s quite legitimate for the prime minister to have a discussion with her about using that section, and quite legitimate for that to be a discussion in cabinet, and that’s something that she would take into account when she decided [to use] her discretion or not [to ask or direct that remediation be offered].
The interesting thing about that quote is that Mr. Smith resigned as the British Columbia attorney general in 1988 because he felt that he was improperly pressured by the premier's office on legal matters. He resigned his position due to what he deemed to be undue pressure.
An article in the Lawyer's Daily refers to law professor Andrew Flavelle Martin of the University of British Columbia and states:
In Martin’s view, it would be appropriate for the attorney general to consult with the PMO on remediation—“for example for the PMO to say: ‘We’re very concerned about the economic impact and the lost jobs that would occur—we think you should do this.’ That would be fine. To direct her to do something, or to pressure her to do something, or for example [to say] ‘Do it or you’re fired’—that would be inappropriate, and very, very serious.”
Mark Freiman of Toronto is a former deputy attorney general of Ontario and ex-chief counsel to the Air India inquiry. According to an article in the Lawyer's Daily:
Freiman noted, however, that the attorney general is obliged to consider the public interest in deciding whether to go to trial or offer remediation, and in assessing the public interest it is necessary and proper for her to consult and receive input, including from the government.
Again, these individuals, all with legal expertise, are publicly stating that it is appropriate for there to be these types of discussions, all, of course, on a case-by-case basis, and that the appropriateness will depend on each circumstance.
Do you agree with the formulation of those individuals as they've arrived at their conclusions?
First of all, I did have a chance to listen in to the earlier presentation and to hear both of those presenters and most of the questions. I regret that I'm not there in person today, but I was able to hear it. Of course, they've covered a fair bit of ground in terms of the rule of law and the applicable legal principles that govern these issues.
I have some points of difference that I would like to address and would be happy to answer questions on.
In particular, I think that what we assess as being rational or not rational requires a much more profound understanding of the facts here. In terms of the law, I think we understand that the rule of law requires that all public officials, when they act, must have a lawful authority to point to that is consistent with the rule of law, consistent with our constitutional conventions and principles and consistent with the important independent role that the Attorney General plays.
A slight point of distinction, in my view, with respect to the matter is that there is a fair amount of discussion about the obligation of the Attorney General, when acting as an Attorney General...that they should resign. I did have a chance to listen, and I would have some distinct views on that from what I heard in your prior panel.
Again, we do not know the full facts, and facts are very significant. There are nuances that are very critical here. I think that there could be a rational explanation as to why an Attorney General, acting as the chief prosecutor and chief law officer of Canada, would not resign when their prosecutorial independence was challenged. That's because I think it is a constitutional requirement, consistent with the rule of law in Canada, that prosecutors do not resign, that they stand firm in the face of pressure, if there is pressure—and I appreciate that's not factually fully established—and they stand firmly in the defence of the rule of law.
Prosecutors are very rarely fired for doing their job. However, if an Attorney General was proven to have stood firm in her decision-making as a prosecutor and as a lead prosecutor for Canada, namely as the Attorney General enmeshed and embedded in this very significant and well-articulated rule of law function, I think there would have been a very concerning situation if she had been removed.
With regard to the issue of resignation versus removal, it may very well be that we have a situation where we have a prosecutor that was removed from her role as opposed to an Attorney General who should resign. In fact, prosecutors should not resign. Lead prosecutors, when they've taken a decision, should hold firm in their decision, and that is consistent with the rule of law.
Alternatively, I think it's important that those who may seek to influence or to engage the Attorney General when she's wearing that hat as Attorney General...and I agree with the former panellist that the Shawcross doctrine is a fairly flimsy basis in which to blanket oneself in terms of a public official saying, “I can approach the Attorney General and vigorously attempt to persuade her to another view because I have the Shawcross doctrine.” I think that Shawcross has to be understood more broadly within the Constitution of Canada, the principles of the rule of law, which have been very clearly upheld in the Manitoba language reference, the succession reference, the judge's reference and others.
I think the issue of the Attorney General acting as prosecutor is that they should remain firm. Someone who is seeking to invoke the Shawcross doctrine to say, “I have lawful authority to approach an Attorney General and seek to convince her of another view”, I think has a fairly flimsy foundation in terms of lawful authority. I would be very careful about pointing to that.
All public officials, members of the executive branch and administrative branch of government, must always point to lawful authority for the actions they take. It must be clearly articulated and it must be evident. I think if there are ambiguities of any kind, those ambiguities will always be resolved in favour of these very significant independent and quasi-judical roles, like the independence of the Attorney General of Canada.
Obviously, the independence and the role of the Attorney General are not always subject to scrutiny and review such as we are talking about it today. In the context of actual prosecutions, obviously there's been a fair amount of scrutiny of the role of the public prosecution service and the prosecutors of Canada, whether that be because of charter rights issues, whether that be because of issues where there's impropriety and there may be torts of malicious prosecution. These matters do come to the courts in different ways, but the actual exercise of the discretion to decide to pursue a prosecution is something that is really not looked at unless there is, I think as the late Justice Marc Rosenberg said, “flagrant impropriety”. I think that some of these principles are fairly well-established.
The prosecutorial function has to be exercised independently. We've identified that and we understand that. The decision points in the prosecution role, including the decision to pursue a prosecution, once that commences and we then go into a court process, whether that's a preliminary inquiry stage, whether that's a trial—and again, having been a judge and run many trials, there have been many times when we start a trial, and it ends up with a resolution where I certainly would have counsel before me to say, “Your Honour, we have a joint submission on a resolution of the matter we would like to put to you.” We were well out of the starting gates of the trial, but things changed.
In prosecutions, things do change, but they change within a scope of decision-making that has some very definite parameters. They change because there may be a difference in terms of the likelihood of conviction of one offence. They change to perhaps spare a victim having to testify. They change for a whole variety of reasons. Of course, we do promote resolution of matters without having every case fully tried.
When a prosecutor has decided to test, before a court, the evidence that the investigative branch of government has prepared for them to pursue a prosecution, that decision is a very significant decision point. There is limited lawful authority for anyone to intervene at that decision point and going forward. If, in the instance that you're examining—as I say, we don't know the facts—we're finding there are interventions that are seeking to address that decision point, I think that's a very significant issue that would attract concern for the rule of law in Canada.
Having worked closely with prosecutions and understanding how the prosecution service works, I can say that prosecutors are very well trained. They hold themselves and others to account, and if there's any indication that decisions stray from lawful considerations, they are able to establish boundaries. I'm not sure in this instance if this is a case where there was not the ability to establish boundaries, but perhaps this is an instance where a prosecutor was actually fired for establishing a boundary that was not popularly accepted. I'm not sure of that. I think there is some suspicion and concern about that.
I would also say that to the extent that we have any ambiguity about what the rules that apply are, that ambiguity rests in the issue of what lawful authority public officials or other members of the executive branch of government rely on to justify their actions. I haven't followed the matter very closely, but other than the Shawcross doctrine, which I think is a somewhat flimsy foundation for this, the lawful authority is somewhat shaky in terms of being able to intervene with a prosecutor.
I do think the facts are extremely important. It is not inappropriate for a public official to engage with prosecutors and say, “Should you require additional information, I am standing ready to provide it to you.” That's a fairly fair position. When we get beyond that position, that would be a more passive and respectful approach, and we get into a very vigorous position of saying, “I challenge you to take a different position.” I think we are into very serious issues with the rule of law.
There are a variety of factors at play, and some of them were identified by the previous panellists, but certainly, we would need to understand very clearly how that experience or situation may have unfolded. This is not to suggest, by any means, that an Attorney General is a thin-skinned individual who can't take push back; the issue is the propriety of entreaties that may be made to an Attorney General. The propriety really goes to the zone of, for what purpose?
If the purpose was to persuade the Attorney General as chief prosecutor to take a different position on a prosecution, it triggers a serious rule of law concern. How will we know whether that's serious or not? Well, obviously, you need to hear from those who may have been involved. Maybe this is completely unfounded and we have no reason to be concerned about the rule of law. I certainly would hope that this is the case. However, when I think about the spectrum of entreaties that can be made to an Attorney General, I think there's a range that would be very troubling to me, and there are some that would be deeply troubling to me.
One of the areas that would be most troubling to me would be if public officials and members of the executive went to an Attorney General and said, “I don't like the decision that you have reached and I would like you to get another opinion from someone else.” That would be very troubling. I'm not saying that is the case here, but that's an example, upon reflection, where I think it's somewhat of a repudiation of the decision point role for the Attorney General as lead prosecutor. If the discussion was, as I said earlier, to indicate point of information, “There's material that we may share, should you be interested in receiving it....”
In between those two extremes, one being “We may insist on you getting a different opinion because we don't agree or respect your opinion”—I'm not saying that applied here, but if that did pertain, it's very serious, and the other, “We're standing ready to provide information if you want it,” there's a whole range and degree of entreaties that could have occurred, all of which would engage serious rule of law issues and would need to be carefully examined incident by incident if they happened.
Obviously, in terms of the rule of law—
Thank you, members of the Standing Committee on Justice and Human Rights for inviting me to participate today.
I have come to speak to you about remediation agreements and deferred prosecution agreements as a defence counsel who has been involved in negotiating such agreements.
As you well know, the regime in Canada on the criminal side is recent and so there are not a lot of deferred prosecution agreements in that context, but in the securities regulatory enforcement context and other contexts involving serious allegations of complex corporate misconduct, those prosecutors have a panoply of tools in their tool box to deal with corporate misconduct.
In terms of that, one of those tools is a deferred prosecution agreement. I have been involved for many years in a number of contexts to ensure that the tool was available to prosecutors. It has a negative connotation in some spheres as being a way for corporations to buy out from their responsibility, and that misconstrues the nature of a deferred prosecution agreement and the unique nature of a corporate organization that is facing allegations of corporate misconduct such as bribery and securities law disclosure violations.
The corporate entity that is charged with that offence or is facing an investigation into such allegations is unique and different from individuals charged with those very same allegations of misconduct.
The deferred prosecution agreement, in terms of its nature, does hold the corporate entity to account for the misconduct. It does meet, in my respectful view, all of the objectives that are necessary for a robust criminal justice system. It allows, more importantly, for benefits that aren't available from the rigidity of a binary conviction or no-conviction regime.
In particular, provided that a deferred prosecution agreement regime is robust—and in my respectful opinion the regime implemented by Canada is a robust regime. It's very similar to that adopted in the U.K. and has improvements, I think, that make it different from the regime adopted south of the border in the United States.
For example, corporations availing themselves of a deferred prosecution agreement will admit and will take account and responsibility for their conduct. There will be a statement of facts in any deferred prosecution agreement that outlines the nature of the conduct involved. There will be terms in a deferred prosecution agreement that include remediation terms, both in terms of enhancements to internal compliance regimes and a financial penalty, so reparation for the conduct accused.
In terms of the criminal justice objectives, it meets those in terms of assuming responsibility. It meets those in terms of ensuring the harm is addressed in the marketplace and to those affected by the conduct. It meets that in terms of ensuring deterrence.
The most important part of a deferred prosecution remediation agreement is that it allows for a very timely resolution. Complex issues and complex conduct are involved, so typically, these prosecutions take multiple years before there is any statement to the public or any guidance to the public in terms of what is expected.
The real benefit of a deferred prosecution agreement for the country as a whole and for our markets is that it allows for us to move that needle. It allows for a prosecutor to make a statement regarding what is expected in terms of evolving best practices for corporate governance for compliance regimes in a very timely manner without the delay that we would see in a normal prosecution.
The other very important part is that it avoids the collateral damage. A corporation acts through individuals, and if a corporation is to take steps to address alleged misconduct, to improve its regime and to address the wrongdoing done by individuals through disciplinary actions or through a change in the upper level or the medium level of management to remove those who are responsible for the misconduct and, in that situation, to improve its own internal compliance regime through a remediation agreement, then it meets the objective by moving the needle, as I said before, in terms of enhancing best practices for corporate governance for corporations and setting a standard that all Canadian corporations will have to meet in improving that standard.
The collateral damage from the binary conviction or no-conviction regime is that today's stakeholders pay the price of a conviction. So in certain circumstances, it may be appropriate to explore a deferred prosecution agreement to avoid that collateral damage. The collateral damage will be felt by all who are involved with the corporation. Whether they are employees, pensioners, business partners, suppliers or downstream or upstream business partners to that organization, they will feel that impact if that organization faces a conviction, with the resulting reputational harm, as well as the harm to its business from a conviction that may make it impossible for a corporation to continue to operate.
So, there's a real risk in certain circumstances that a corporation could, for lack of a better expression, wither away and cease to exist, with all of the collateral damage to those who rely on the corporation for economic benefits. In those situations, the prosecutor may, in balancing with what the other panel members discussed—being the public interest—look at those factors in determining that here are some circumstances that make sense for looking at something other than that convict or no-convict regime.
It's important to know that a deferred prosecution agreement is not a non-prosecution agreement, which is another tool available to prosecutors in other jurisdictions. That is a situation where a corporation is not charged and does not take any account for its conduct. Here, in the deferred prosecution agreement, a corporation does. The corporation is charged. The state, through the DPP, enters into a remediation agreement, which allows for a suspension of the prosecution against the corporation, and that suspension is a contingent suspension. The corporation must meet all of the terms of the remediation agreement, which as I outlined earlier, would include a number of terms of certain steps the corporation has to take regarding its own internal organization and internal regime for compliance: the payment of a financial penalty; often the imposition of a monitor, an independent third party to review the steps that the corporation takes; and often an obligation to report to the court or to the prosecutor on its progress in meeting the terms of the remediation agreement.
If the remediation agreement is breached, then in those circumstances, the corporation will be prosecuted. If all of the terms of the agreement are met by the corporation, then the charges are dismissed.
The important objective in the criminal justice system of holding others accountable for their wrongdoing is met in these circumstances and met in a way that avoids the sometimes very draconian result that can occur when a corporation is facing a conviction.
When Canada considered implementing such a regime, it was able to look to other states that had implemented deferred prosecution regimes or similar ones, and it did. Canada now has, with the benefit of a deferred prosecution regime, this effective tool similar to those of many other states globally, including the U.K., the United States, other members of the EU, and Australia, which most recently adopted a deferred prosecution regime.
We have the benefit of looking at the experience—the U.S. has had a deferred prosecution regime in place since the early 1990s, the longest period of time in that list of countries. Its regime is different from Canada's. What we see demonstrated from their regime is that it's used in limited circumstances, and that's where it's meant to be used. Certain conditions have to be met so a corporation will qualify to be considered for a deferred prosecution agreement. For example, in 2018 alone, across the United States there were 24 deferred prosecution agreements and non-prosecution agreements. That is not an astounding number, given the number of active investigations and the number of cases on the go.
The U.K. adopted a deferred prosecution regime in 2013, and there have been only four deferred prosecution agreements. The fear around their use is not realized when we look at other jurisdictions.
In Canada's regime, we have some very important attributes that make it robust, and that includes conditions that the prosecutor must meet to even consider negotiating remediation agreements. One of those, interestingly and importantly, is that the DPP requires the consent of the Attorney General prior to beginning the negotiations. The prosecutor performs a gatekeeping role; the courts perform another very important gatekeeping role, and then finally and most importantly, the regime ensures transparency. We move the deterrence ball forward and we move the needle forward on best practice for corporations, because all DPAs will be made publicly available, unless there are reasons for the court to defer the publication.
I'll move it across to my colleague Mr. Jull who will also speak to deferred prosecution agreements.
Mr. Chair and members of the standing committee, it's an honour to be invited to attend to speak about remediation agreements.
Since 2014, I along with others have argued that we ought to have deferred prosecution agreements, and I was happy to see that in 2018 the legislation passed. The legislation sets out six purposes or objectives in the statute. I want to go through those.
The first purpose of these agreements is to denounce wrongdoing. The second is to hold organizations accountable. The third is to promote a compliance culture. The fourth purpose, and this is a very important one, is to encourage voluntary disclosure of wrongdoing. This is the idea of a company coming in from the cold and telling prosecutors something that the government hasn't discovered yet. I'm going to come back to that if I have time. The fifth purpose is to provide remedies for harms done to victims. The sixth purpose is to reduce the negative consequences for employees, customers, pensioners and others who did not engage in the wrongdoing.
I want to spend some time on that last objective. A similar test is used in the United Kingdom legislation, which refers to collateral effects on public employees and shareholders, as Ms. Berman has stated. I think we need to talk a little bit about this to understand it. Negative or collateral effects on persons who are not guilty of any wrongdoing are particularly acute if the particular corporation is doing a lot of government work. That is because a conviction in Canada leads to debarment, and with the present regime, it leads to debarment for a 10-year period, subject to reduction to a five-year period. That is a very real collateral effect on employees, pensioners and customers if the company can't tender or do government work for 10 years.
I don't want to, but I may find myself giving a little bit of a lecture on corporate criminal liability. You really have to understand corporate criminal liability as set out in the Criminal Code under section 22.2 to understand the dynamic of a corporation vis-à-vis the individuals.
Let me give you an example. There's only one such litigated case in Canada. It's called R. v. Pétroles Global Inc. In that decision, Justice Tôth said:
It will no longer be necessary for prosecutors to prove fault in the boardrooms or at the highest levels of a corporation: the fault even of middle managers may suffice.
It means that it is possible that senior managers or even middle managers, acting within the scope of their authority—and that's an important point—may have committed an offence such as bribery, while many of the employees had no idea about that act. Customers and pensioners are a further step removed from the circle of knowledge about that bribery. These are the people, in my submission, who are referred to in the purpose section to reduce the negative consequences of the wrongdoing for persons who were not part of it.
The reduction of negative consequences has economic consequences. An important question, then, is how this objective relates to the prohibition against considering the national economic interest. I want to turn to that. Subsection 715.32(3) of the Criminal Code states:
Despite paragraph (2)(i), if the organization is alleged to have committed an offence under section 3 or 4 of the Corruption of Foreign Public Officials Act, the prosecutor must not consider the national economic interest, the potential effect on relations with a state other than Canada or the identity of the organization or individual involved.
This section is very similar to the U.K. legislation and, as was mentioned earlier, is consistent with the OECD treaty.
When this legislation was passed, I wrote about it in my text. At the time, none of the recent events had occurred, so I went back and I looked at what I said at the time. I want to read to you what I said, and give a comment. What I said at the time about this provision is as follows:
This clause is designed to avoid political or economic factors interfering with the administration of justice. Conceivably this clause prevents an organization that is a prominent Canadian company from seeking special treatment on the basis that a conviction of the corporation would impact the national economic interest. There is, however, room for such a corporation to argue that it should be considered for a remediation agreement under the purpose section (f) to reduce the negative consequences of the wrongdoing for persons — employees, customers, pensioners and others — who did not engage in the wrongdoing, while holding responsible those individuals who did engage in that wrongdoing.
Members of the committee, you might ask how it is logically possible to consider the reduction of negative economic consequences for employees and pensioners and those not guilty of wrongdoing while at the same time not considering the impact on the national economic interest. It seems like a logical paradox, right?
I'm going to suggest that there is a way out of that logical paradox. It comes back to the concept of the essence of corporate criminal liability. If you have a situation where a crime is committed by senior or even middle-level officials, but there's a whole range of folks who had nothing to do with it, those two provisions work together. You can give a deferred prosecution to save those people from being affected, while at the same time it has absolutely nothing to do with economic interest. It's designed specifically to deal with protecting the people who had nothing to do with the bribery.
Let's take the complete reverse scenario. Suppose you have a company where the corruption extends right down to most of the employees. Suppose you have a company that really can't say they're a lot of innocent folks. If that company goes to the prosecutor and says, “We still need a deferred prosecution agreement, not because we're protecting innocent people but because it's in the national economic interest and you can't let us fail”, that's prohibitive, in my view, and then there are all sorts of permutations and combinations that apply to considering the situation for pensioners and/or customers in that scenario.
Each case, as has been said before by the prior speakers, needs to be evaluated on its facts. There are no simple answers here.
I want to briefly touch on something that Ms. Berman talked about. She has spoken a lot about deferred prosecutions not being what I call “free passes”, and I'm not going to spend much time on it because she's done such a great job on that. I think the one thing I would want to say is that when we talk about these arcane examples, you need a fact pattern to give it substance. Let me give you an example of one that happened recently.
Panasonic, in 2018, received a deferred prosecution agreement in the United States. They had been accused of paying bribes to get their entertainment systems, through a subsidiary, onto Middle East Airline planes. Over a period of time they paid about $7 million and disguised this as consulting fees when they weren't really consulting fees. Not only were they paying bribes, but they were falsifying books and records.
They received a deferred prosecution agreement, but to Ms. Berman's point, listen to the penalties. The disgorgement of the profit.... They made a profit of $126 million. That was disgorged. They had to pay that back. On top of that, they then had to pay a penalty of $135 million, and that was with a 20% discount. Then they had a monitor imposed for a period of two years. That's a good example of how powerful these can be.
There have been a lot of people talking about gatekeepers. I'm not going to comment on that because people have done such a fantastic job, except to reiterate one point, and that is, what people haven't been talking about a lot is the fact that because the Canadian system requires court approval, a judge ultimately has that ultimate approval.
I'm speaking completely hypothetically here. Even if an Attorney General felt pressured and ultimately put something before a court as a remediation agreement, a judge has the right to say he needs to know the factors. The judge in our legislation has to be satisfied that it's fair, that it's appropriate. A judge could say that if you are only considering the national economic interests, that's a prohibitive factor and he's not going to approve this agreement. There is that judicial check. We have to keep that in mind.
I'm starting to run out of time so I'll probably save this for questioning. If anybody's interested in it, I'm happy to talk about the whole concept of coming in from the cold and how it applies. I think this is important in this spectre.
This is complex, and we're neophytes as Canadians. I think we ought to give some serious thought to the passing of guidelines. This legislation gives the cabinet power to pass guidelines for the implementation of remediation agreements. I think we ought to set up a panel of some really smart people, some of whom have come before you. I'm not saying I'd be one of them, but get some really smart people together and study this so guidelines could be passed by way of regulation that would help the Attorney General, the cabinet and the parties understand the differences between some of the factors that may be more partisan and some of them that are more legal.
Well, there are issues of integrity and ethics. It's a spectrum. On the Criminal Code issue—and I'm not suggesting there's been a criminal offence—I'm saying that the integrity unit in the RCMP should thoroughly examine the issue, and they may very well be examining the issue. I think they indicated they were aware of the matter. These are issues about positive obligations.
If, for example, the Attorney General acting as the lead prosecutor for Canada in this very important role was actually fired from her job because she didn't make a decision that comported with her colleagues or whomever, and I'm not saying this is the case, but if she did get fired, I do not think the obligation is on her to resign. Arguably, a rational person may say you don't have to resign because you're being a prosecutor, but if there's evidence that a prosecutor was fired and there was an attempt to influence or direct her attention to something that didn't have lawful authority, then it does raise the spectre of obstruction of justice, because obstruction of justice requires a fear or favour element.
I think we have to come back to this key piece, which is, when someone is making entreaties to the Attorney General, is the subtext of those entreaties and is it implied in those entreaties that you will lose your job if you do not listen to me? This is why the rule of law issues become not only engaged, but it could potentially be very serious. I hope it isn't, because it affects public confidence, but because it's so serious, we have to look at it from every angle of integrity, including our normative systems that appear in our Criminal Code and our rule of law principles, which I appreciate you're studying today.
One of the critical rule of law principles, and I'm flipping it back, is saying that, if you seek to influence a prosecution, you had better be able to show lawful authority for your action. If your only basis of your lawful authority is a 1951 political convention that really doesn't even comport with our constitutional order in Canada, then I think we should be looking at that very carefully.
I agree as well with the Liberal member of Parliament for Toronto Beaches, Mr. Erskine-Smith, when it comes to the merits of a remediation agreement with this particular company SNC-Lavalin. He said:
Whether or not an intervention [by the Prime Minister's Office] may have been justified in substance, the real question is the nature of that intervention. Specifically, was undue pressure exerted, contrary to the constitutional convention of Attorney General independence?
That seems to me very similar to the points you are making here with us today.
Ms. Berman, you talked about the deferred prosecution agreements. I appreciate your experience in the field with corporate misconduct. The history of Canada in this area, and I want to see if you agree, is rather limited. Canada was criticized by the OECD in 2011 for its lack of investigators and weak penalties in the rare event of a conviction. Last year Transparency International, in its annual report entitled “Exporting Corruption”, talked about the fact that not only is Canada characterized by, quote, “limited enforcement”, it found that it was also one of four countries that had, quote, “regressed” in terms of the application of the Corruption of Foreign Public Officials Act.
It's rather grim. One hopes, therefore, that we continue with prosecutions. That might have been what led an independent director of public prosecutions to not waver, to not decide to enter into a DPP, and for the Attorney General to sustain that. After that, of course, the evidence would appear to show a considerable intervention by other cabinet ministers, PMO officials and the like to get her to change her mind.
Talk to us a little bit, if you would, please, about the importance of going after people under the Corruption of Foreign Public Officials Act and Canada's record in that regard.
Thank you to all the witnesses for joining us today. Each of your testimonies has been very instructive.
I come at this with a different perspective from yours. I chose a different path. I didn't go down the law school path, and I come to this committee through other means. In looking at these matters from a non-legal perspective, it strikes me that remediation agreements raise an issue for which there is public sympathy. If I can look at one of the things you said, Mr. Jull, it's regarding the purposes of a remediation agreement. It's to reduce harm that a criminal conviction of an organization could have for employees, shareholders and other third parties. In layman's terms, it's so innocent people don't pay the price for the misdeeds or wrongdoing or malfeasance of a few.
If we remember the reaction of Canadians to Sears pensioners who were last in line for their pensions, if we listen to the very real concerns of GM workers in Oshawa, workers shouldn't have to pay for the decisions or illegal activities of a few corporate executives or even, in your language, middle management.
I would feel the same way if this were an oil and gas company, a mining or construction company from the west whose workers could be vulnerable if they found themselves in the same situation as the workers, suppliers and pensioners of SNC-Lavalin. There has been some observation on this part of the act. It states that, when considering a remediation agreement and, Mr. Jull, you also referred to this:
if the organization is alleged to have committed an offence under section 3 or 4 of the Corruption of Foreign Public Officials Act, the prosecutor must not consider the national economic interest, the potential effect on relations with a state other than Canada or the identity of the organization or individual involved.
The national economic interest is a big term. You also pointed us to another part of the act that talks about mitigating the effects on workers. But even that term, “the national economic interest”, doesn't mean that the Attorney General couldn't consider the impacts on specific employees, for example, or pensioners, or the many thousands of people who work at the company and did nothing wrong. Furthermore, while the act does prohibit the consideration of the national economic interest, the act expressly states that factors that can be considered include “any other factor that the prosecutor considers relevant”.
Would you say that leaves quite a lot of room for the prosecutor, who could be the Attorney General, to consider a vague range of items, including the effects on the local economy of not proceeding with a remediation agreement? We've already established that the Attorney General can have discussions with the Prime Minister in his or her office about such considerations, and you can imagine these conversations to be quite wide ranging. Is it the case that the national economic interest doesn't mean that no economic interest whatsoever should be considered?