- Proposed legislative changes that follow from the Government of Canada’s 2017 public consultation on improving the Integrity Regime (discussed in a previous post) were recently introduced in Parliament.
- Specifically, on March 27, 2018, the Government announced its intention to amend the Criminal Code to create a “Remediation Agreement Regime” (RAR) that would function in a manner similar to other jurisdictions’ deferred prosecution agreement (DPA) programs. At the same time, the Government also announced significant enhancements to the Integrity Regime.
- By way of background:
- The Integrity Regime aims to ensure that the Government does business only with ethical suppliers, both in Canada and abroad. In particular, it sets out various criteria that could make a supplier ineligible (“debarred”) from doing business with the Government.
- The public consultation also considered the related issue of whether to introduce a Canadian version of the DPA regimes that exist in the United States, United Kingdom and elsewhere. DPAs allow a corporation to resolve criminal charges without a criminal conviction by fulfilling certain agreed-upon requirements.
- Feedback from the public consultation favoured making the Integrity Regime more flexible to account for aggravating and mitigating factors when considering a period of debarment. There was also strong support for the introduction of a Canadian DPA regime.
The New Remediation Agreement Regime
Under the RAR, remediation agreements would be entered into voluntarily by the Government and an organization accused of committing an offence. Any such agreement would be subject to court approval, including specific determinations by the judge that:
- The agreement is in the public interest; and
- Its terms are fair, reasonable and proportionate.
During the term of the remediation agreement, any criminal prosecution for conduct covered by the agreement would be put on hold. If the agreement is complied with, the charges would be stayed (by court order at the conclusion of the agreement) and a criminal conviction would be avoided. If, however, the accused organization failed to comply with the agreement, the charges could be revived and a criminal conviction would once again become a possibility.
Impact on voluntary disclosure
Like DPAs in the U.S. and U.K., the RAR is intended to hold organizations accountable for wrongdoing while allowing them, under certain conditions, to avoid a criminal conviction. It is anticipated that the possibility of negotiating a remediation agreement in lieu of a potential criminal conviction may encourage organizations to disclose wrongdoing and cooperate more readily with investigators.
Scope of the RAR
Remediation agreements under the RAR will only be available to organizations accused of specific economic-crime offences and wrongdoing. Notably, based on the current proposed amendments, offences under the Competition Act do not appear to be eligible under the RAR. As noted above, the availability of the RAR in any given circumstance is subject to prosecutorial discretion.
Remediation agreement terms
While the precise form of any given remediation agreement will vary depending on the circumstances, certain terms are proposed to be mandatory. These include requirements that the organization:
- Accept responsibility for and stop the wrongdoing;
- Pay a financial penalty;
- Relinquish any benefit from the wrongdoing;
- Enhance compliance measures; and
- Make reparations to any victims.
Integrity Regime Enhancements
In addition to introducing the RAR, the Government announced its intention to enhance the Integrity Regime by:
- Introducing greater flexibility into debarment decisions and the applicable time period of the debarment;
- Increasing the number of events that can trigger a debarment to include offences such as fraud, municipal corruption, provincial securities offences, as well as the debarment decisions of provinces, foreign jurisdictions and international organizations; and
- Expanding the scope of “business ethics” issues under the regime to include the commission of certain offences under the Canada Labour Code as well as being named to the Environmental Offenders Registry.
Timing and Implications
Subject to Parliamentary approval, the RAR will come into effect 90 days after Bill C-74, the Budget Implementation Act, 2018, No. 1, receives Royal Assent. This legislation will add a new Part XXII.1, “Remediation Agreement”, to the Criminal Code.
The enhanced Integrity Regime will be implemented through a revised Ineligibility and Suspension Policy that is to be released on November 15, 2018 with effect from January 1, 2019.
Although it is early days, it is anticipated that the combination of increased flexibility under the Integrity Regime and the ability to avoid the risk of criminal convictions by virtue of the RAR may increase in the number of investigations that are resolved on a consensual basis without criminal proceedings being necessary. Finally, these developments should contribute further to the voluntary detection, investigation, remediation and disclosure of alleged wrongdoing by organizations.