Change could create two-tiered legal system
Special privileges for corporations not fair to everyone else, Declan Hill says.
Wachovia Bank executives laundered billions of dollars for Mexican drug cartels. Actually, the American bank officials did more than aid criminals with financial issues. In 2006, when one narco gang had problems shipping drugs across the U.s.-mexican border, the bank executives bought commercial jets for the cartel and arranged their delivery to Mexico.
Wachovia was not the only bank that helped dubious people. The American government announced that some HSBC executives worked closely with the North Korean, Sudanese and Iranian regimes to help break the international sanctions imposed on these governments in a manner U.S. officials described as “stunning failures of oversight — and worse.”
These deals were admitted to by bank officials. U.S. Senate investigators traced thousands of transactions. Whistleblowers were willing to testify. However, not a single bank staff was arrested, convicted or jailed. Rather, what these organizations and dozens of others did was confess to their misdemeanours and pay fines.
Welcome to the world of “deferred prosecutions” or “remediation agreements” for corporations. They are now, thanks to the Justin Trudeau government, coming to Canada.
Buried in an obscure clause in the spring 2018 mammoth budget bill, Canadian corporations have now been given, according to some anti-corruption experts, a “Get Out of Jail” pass.
Michael Spratt, an Ottawa defence lawyer, writes in his blog that these agreements are not available to individuals, only to “rich corporations. A single mom, with no criminal record, who is struggling to put food on the table, and who did not report a social assistance overpayment can face criminal charges. There are no … agreements for these people.”
The idea of two legal systems — one for the corporations, another for the rest of us — does not sit well with Garry Clement, an anti money laundering expert, who says: “Until we have someone from the board of directors of major corporations who are breaking the law doing the ‘perp walk’ they will continue to put greed before ethics.”
Defenders of remediation agreements claim that they will save court time by allowing corporations to admit their guilt and pay a fine rather than going through a long court trial with no guarantee of a conviction.
They claim the agreements will also spare the innocents.
“Had the U.S. authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized, ” said assistant attorney general Lanny Breuer at a 2012 press conference announcing the fines against HSBC.
This perspective seems to be shared by the Liberal government.
In the discussion paper before the current legislation, they write of “negative consequences for blameless employees, customers, pensions, suppliers and investors” of prosecuting potentially criminal corporate executives.
Some of Canada’s largest corporations defend the idea of deferred prosecutions. As the legislation was prepared, Snc-lavalin wrote a submission claiming that without the legislation Canada is at a “distinct competitive disadvantage” as “Canadian companies have already lost significant contracts abroad because global competitors have been able to impugn the integrity of the firm, despite comprehensive remediation action, while corruption charges are pending.”
Perhaps not coincidently, Snc-lavalin has the dubious distinction of receiving one of the longest bans in the history of the World Bank for the role some of its former executives played in a Bangladeshi bribe scandal.
Snc-lavalin is a strong financial donor to the Liberal government. It has also received billions of dollars in public contracts. It has also committed to a number of rigorous remedial actions.
But with another company, Canadians might see a scenario where corporate executives break the law, serve no jail time, then pay their company’s fine with taxpayers’ money.
Hill is a professor of investigations at the University of New Haven and author of two books about sports corruption.