For those interested in white collar enforcement trends in Canada, the 2018 Budget (the “Budget”), contained some important news. Specifically, as part of a broader commitment to “strengthening [Canada’s] approach to addressing corporate wrongdoing”, the Government announced its intention to introduce legislation to establish Deferred Prosecution Agreements (“DPAs”) as “an additional tool to hold corporate offenders to account”. This commitment followed the release of the results of the Government’s fall 2017 public consultation process, which revealed strong public support for the introduction of DPAs in Canada. This bulletin describes the potential impact of the Government’s announcement, and explains why it could prove to be a significant change to the current regime for tackling corporate crime in Canada.
What is a DPA?
A DPA is a voluntary agreement entered into between a prosecutor and a corporate accused which seeks to resolve alleged criminal wrongdoing in a way that results in the deferral of charges. Upon entering into the DPA, the prosecution is suspended or “deferred”, while the accused fulfills all of the DPA’s agreed upon terms. However, if the accused commits a significant breach of the terms of the DPA, then, subject to the specific procedure established by any specific DPA Regime, the charges may be revived and the prosecution continued.
DPAs commonly require the accused to cooperate with law enforcement, acknowledge their wrongdoing, give up any profits gained from the wrongful act, and pay a monetary fine; in exchange, the accused no longer faces the prospect of conviction for the relevant offence (provided they comply with the DPA terms).
The 2018 Budget announcement provided little in the way of detail as to how the Canadian DPA regime would operate, beyond stating that it would be established by legislation, and would be implemented through “Judicial Remediation Orders”. It is unclear what the specific procedure surrounding such “Judicial Remediation Orders” would be, but the announcement nonetheless clearly signals a significant role for the courts in the DPA process. In particular, it seems likely that the Canadian regime will resemble the U.K. DPA model., under which the courts act in a gatekeeper role, by ensuring that the terms of a given DPA are reasonable, proportionate, and serve the interests of justice, before approval can be given. This model stands in contrast to the U.S. approach to DPAs, which places much greater control in the hands of prosecutors.
What impact might DPAs have on white collar crime enforcement in Canada?
The availability of DPAs to address alleged corporate wrongdoing is potentially an extremely important development for the Canadian enforcement regime. Pursuing serious corporate wrongdoing typically requires the deployment of a very significant amount of resources; indeed, white collar investigations often require gathering and reviewing vast amounts of electronic and paper records, analyzing complex financial data, and to the extent the wrongdoings are international in scope, co-ordination with foreign law enforcement agencies (often against a politically charged back-drop). The limits of law enforcement budgets in Canada are well-documented, and from a practical perspective, the availability of DPAs is likely to help ameliorate some of the strain on law enforcement resources by providing a means resolve corporate prosecutions without having to bear the enormous demands associated with pursing every case to trial (or else abandoning them entirely). Indeed, the resources released by these resolutions might then be deployed to investigate and pursue a larger number of potential cases, helping to generate greater enforcement momentum, which in turn may help to increase awareness and vigilance in the Boardroom.
In addition to facilitating a more efficient utilization of limited resources to tackle financial crime, the introduction of DPAs also provides a potential opportunity to stimulate a proactive corporate compliance culture in Canada. For example, if the criteria guiding prosecutors and the courts on the use of DPAs recognize significant historic and/or current compliance efforts by the company as a positive factor, it would arguably incentivize companies to invest in compliance infrastructure. Additionally, the availability of DPAs could also be used to encourage self-reporting and/or fulsome co-operation by the company in connection with the Crown’s investigation.
In any event, the introduction of DPAs in Canada is a significant development and will be welcomed by many engaged in corporate compliance activity. The Government can also expect that any model it proposes for the DPA regime will be studied closely.