It appears that Canada is moving one step closer to joining other jurisdictions that permit deferred prosecution agreements (“DPAs”), in certain circumstances, as a tool available to law enforcement agencies.
On February 22, 2018, the Government of Canada released the results of its public consultation which sought input on expanding the Government’s “toolkit” to address corporate wrongdoing. The Government announced that it intends to respond to the consultation by introducing a DPA regime in Canada and making enhancements to the Integrity Regime.
The Government’s report provides a summary of the views of hundreds of stakeholders who participated in the consultation. Notably, the report indicates that a majority of participants supported having a Canadian DPA regime and building additional discretion and flexibility into the Integrity Regime.
Background: DPAs & the Integrity Regime
We have previously posted on the Government’s public consultation and provided a brief background on DPAs and the Integrity Regime: see our October 5, 2017 post. In short:
- DPAs are voluntary agreements negotiated between an accused and the prosecutor to allow the accused to avoid a trial and potential conviction in exchange for compliance with the terms of the DPA, which usually include full cooperation with law enforcement, financial penalties and other conditions.
- The Integrity Regime was introduced in 2015 to prevent suppliers with a record of unethical behaviour from being awarded contracts and real property agreements. Public Services and Procurement Canada determines whether a supplier is ineligible to do business with the government according to certain stipulated criteria.
The Government’s consultation was conducted between September 25 and December 8, 2017. The government met with over 370 Canadians, industry associations, businesses, non-governmental organizations and others, and received 75 written submissions. Osler co-authored a submission with Cassels Brock on introducing DPAs to Canada, and Osler lawyers also contributed to the CBA submission. The Government’s overview of the feedback received is available on the PSPC website.
The Government noted that a majority of respondents supported introducing a DPA regime in Canada which resembles the United Kingdom’s regime, in which DPAs are limited to serious economic crime, are subject to clear prosecutorial guidelines, and are mandatorily published.
The Government also announced that it will be enhancing its Integrity Regime. The report indicates that a majority of respondents asked for additional discretion and flexibility to be built into the Integrity Regime; specifically, that there be a fuller consideration of aggravating and mitigating factors in debarment period determinations.
Implications and next steps
The Government announced that it will enact legislation introducing DPAs in Canada and that it will make enhancements to its Integrity Regime. It has not yet indicated how or when it intends to implement such enhancements.
The clear preference from stakeholders was for Canada to implement a DPA regime which resembles the UK model. The benefits of DPAs include, in the view of the UK’s Serious Fraud Office, that they:
- enable an organization to make full reparation for criminal behaviour without the collateral damage of a conviction (e.g., severe financial penalties, reputational damage, etc.);
- are concluded under the supervision of a judge, who must determine that the DPA is “in the interests of justice” and that the terms are “fair, reasonable and proportionate”;
- avoid lengthy and costly trials; and
- are transparent, public events.
We have previously written about the successful use of DPAs to resolve outstanding investigations including Standard Bank and Tesco in the UK, and Telia and PTC Inc. in the US, in respect of matters including alleged violations of anti-bribery statutes and accounting irregularities. From a risk management perspective, DPAs would be a way for companies to address alleged wrongdoing, to the satisfaction of law enforcement agencies, without the extremely damaging effects of a drawn out prosecution and potential conviction. They would also offer an additional way to manage or mitigate the risks associated with concurrent civil, regulatory and criminal litigation arising out of the same conduct. These and are other changes can be expected to have significant implications for how businesses assess risk and approach litigation, investigations and enforcement.
No timetable has been provided for the introduction of DPAs in Canada, but the Government’s recent announcement is a welcome step toward enhancing the compliance and enforcement regime in Canada.