Newspaper article The Canadian Press

Plan to Ease Penalties for Corporate Crime Has Drawbacks: Internal Analysis

Newspaper article The Canadian Press

Plan to Ease Penalties for Corporate Crime Has Drawbacks: Internal Analysis

Article excerpt

Corporate crime leeway has drawbacks: report

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OTTAWA - A federal plan to take a bite out of corporate crime by allowing prosecutors to suspend criminal charges against companies has potential downsides, an internal analysis says -- including the risk it could fail to discourage misdeeds and erode public confidence in the legal system.

The Trudeau government has quietly tucked a proposal to amend the Criminal Code into its 582-page budget legislation. The measure would allow for the use of a tool sometimes referred to as a "deferred prosecution agreement," or DPA.

It's designed to encourage more companies to come forward to disclose corporate crimes and to identify individuals for prosecution. The primary goal of such regimes, which have been introduced in the U.S. and the U.K., is to dig up crimes that might not have otherwise come to light.

By striking one of these agreements with a prosecutor and meeting the terms of the deal, a company could avoid a criminal conviction and the resulting financial hit of being barred from bidding on lucrative public contracts for a period of 10 years.

A document prepared for the deputy minister of finance last year noted that DPAs come with "perceived advantages" and "perceived disadvantages."

"The chief argument that has been made against DPAs is that they may not deter misconduct," said a draft discussion paper on the topic prepared for Paul Rochon last August.

"Some argue that DPAs have become 'a cost of doing business,' allowing corporations to buy their way out of trouble by paying a financial penalty and passing the costs on to the consumer."

The document, obtained by The Canadian Press under the Access to Information Act, also warned about the dangers of the terms of a deferred prosecution agreement being considered too lenient, or of a DPA being applied in inappropriate cases.

"Then there is a risk of undermining public confidence in the criminal justice system," said the paper, prepared as a primer ahead of Ottawa's public consultations last fall on the idea.

The document also cited several advantages, including the fact they can require a company to introduce compliance measures and independent corporate monitoring. Other benefits, the paper said, include allowing the company to focus instead on conducting business to benefit investors, employees and others.

"DPAs may reduce the negative consequences for blameless employees, shareholders, customers, pensioners, suppliers and investors," the document said.

"DPAs may be more effective than criminal prosecution in improving compliance and corporate culture."

Eligibility for one of the agreements would be decided by a prosecutor, who would negotiate the terms of the agreement and have it approved by a court.

The company, however, would still face monetary penalties as well as a blow to its reputation, since the offences and the agreements would be made public. …

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