B.C. mulls changes to penalty collection
With more than half a billion dollars in financial penalties going uncollected over the past decade, the B.C. Securities Commission is suggesting three options to help the provincial government round up the money.
But the briefing document that B.C. Ministry of Finance officials put together for Finance Minister Carole James and obtained by Postmedia through freedom of information laws is so heavily redacted that no information about the three options is publicly available.
The existence of the nine-page document, however, provides evidence that the province is considering substantial changes to how it collects fines levied in investment fraud cases. The information about the changes was redacted in the document provided to Postmedia because it is considered policy advice to cabinet and therefore exempt from freedom-of-information requests.
The proposed changes were delivered to James on Nov. 22, 2017, just days after Postmedia published an investigation showing that from fiscal 2007-08 to 201617, the B.C. Securities Commission collected less than two per cent of the $510 million in fines it had issued.
During the past four months, the B.C. Finance Ministry has only said publicly that it has been reviewing proposals from the securities commission and examining what steps the province might take to improve penalty collection but also increase its focus on criminal prosecution of investment fraudsters.
Asked about the three options and any required legislative changes, the finance ministry would not comment.
“Briefing materials prepared for Cabinet consideration are confidential,” finance ministry spokeswoman Sonja Zoeller said in an email response. “Policy work on measures to support the BCSC’s fine collection efforts is ongoing.”
The B.C. Securities Commission also declined to discuss the three options and the required legislative changes.
“BCSC recommendations to the ministry are confidential,” securities commission spokeswoman Alison Walker said in an email. “The BCSC continues to work collaboratively with the ministry on possible new mechanisms to bolster our current efforts.”
The briefing document was “initiated” by Heather Wood, who is the assistant deputy minister of the policy and legislative division.
It reads: “Actions: Based on a preliminary examination of the issue, the BCSC has proposed three options to improve collection rates, which require legislative changes.”
Postmedia’s investigation into outstanding financial penalties was published on Nov. 17 last year and found that more than 80 fraudsters who have harmed thousands of investors — in B.C., other parts of Canada, the United States, and as far away as Switzerland — have escaped paying the largest penalties issued by the commission.
James quickly denounced the poor collection record and called on the securities commission to come up with ways to improve collection efforts and how the province can modernize its enforcement framework under the B.C. Securities Act.
She said that if new legislation was required, it could affect the timing of changes.
James also said she expected that some proposals may require working with the federal government and other provincial ministries.
The B.C. Securities Commission has acknowledged the poor collection rate, but says that is the nature of fraudulent activity. The perpetrators make collection difficult because they have usually spent or hidden the money, or fled.