In light of the recent decision of R v. Dunn, in which the former CEO, CFO, and Controller of Nortel Networks Inc. were acquitted of fraud, the question of whether Canada is a tough jurisdiction for corporate criminals has again become a subject of popular discussion. Unfavourable comparisons are made to the United States (for example, this piece, or this one from 2009), where the news can seem replete with high-profile convictions of celebrity businesspeople. In Canada, however, the spectre of Bre-X haunts the collective imagination as a debacle: 15 years after the mining company's spectacular collapse, no-one has been successfully prosecuted in respect of it.
Is Canada soft on business crime? Does the risk-reward proposition of cooking books and deceiving investors favour the fraudulent? I don't know, and I suggest to you that nobody does. The data set of potential convictions is small, and "white collar crime" is an umbrella term covering everything from insider trading to bribing foreign officials to Ponzi schemes to reckless bonus-seeking by top-level management. The fact scenarios, witnesses, and available evidence vary broadly when dealing with corporate actors.
Against this uncertainty, I can say most definitely that, however we evaluate the state of corporate crime in Canada, one popular means of doing so is unambiguously bad for the purpose: the rate of convictions versus acquittals at trial.
If the criminal justice system is feeble in the face of corporate wrongdoing, I suggest the root of the weakness would be a mixture of the following problems:
- The law does not actually penalize the acts in question, a statutory problem;
- The crimes are hard to prove on the facts, being an evidentiary problem;
- The Crown, or the Bench, don't understand the complexities of the evidence, a competence problem;
- The Crown, or the police, do not want to investigate or bring prosecutions of white collar crime, either for reasons of trepidation (another form of the competence problem) or because their resources are better spent elsewhere (a fiscal problem);
- The process takes too long, such that prosecutions are not timely and the rights of the accused to speedy justice are denied (also a fiscal problem) or
- The criminals are not adequately punished, a sentencing problem.
Sentencing is wholly disconnected from the conviction rate; whether punishments are too light or fail to fit the crime is an issue that only arises after a conviction is obtained. It is arguable that light sentences are a factor of the fiscal problem – they discourage prosecutors from devoting resources to corporate criminal cases. I doubt this is a major concern, however. Even with the introduction of mandatory minimums for certain offences, sentencing is often a separate legal battle with its own nuances and niceties. Prosecutors are more likely to have the attitude of most trial lawyers that "a win is a win", and to proceed if the evidence is strong, even if the punishment seems lenient.
Fiscal issues are an easy culprit for Canada's perceived white collar crime free-for-all. More resources would always be of benefit to the criminal justice system (and the system as a whole, for that matter), but the consequence of insufficient funds is likely not a large number of half-hearted prosecutions, but rather a small number of focused, high-likelihood-of-return ones. The danger with spending cuts is that the organs of the justice system simply do less, rather than spread themselves thinly to the point of irrelevance.
Problems of competence have attracted particular attention in response to the Nortel decision, as accounting principles, the testimony of financially literate witnesses, and several years' worth of financial statements were key pieces of evidence in that case. Again, an assumption that convictions equal competence is false, as the interests of the Bench and the Crown diverge if either is hypothetically uncertain, or falsely confident, of its own intellectual reach.
If a Judge has doubts about a case being tried before her, the law provides an answer: not guilty. In this sense, convictions and competence might seem to correlate. However, the Judge is not in the court room to provide expertise on accounting or business practices; even if she happens to be proficient in those areas of knowledge (and such judges certainly do exist). The Judge hears the evidence before her and makes a determination. If the evidence is confusing, inarticulate, or inexplicable to an intelligent layperson, the Crown (who is presenting the case) is responsible. And if the Crown cannot appreciate, for want of expertise, the quality of its case against a corporate criminal defendant, aside from all the means it has of overcoming such a deficit, the probable result will be no prosecution, not a shot-in-the-dark trial led by doubting advocates.
Doubt is not the only manifestation of incompetence – false confidence could be the expression of the Crown and Bench's hypothetical lack of sophistication in business matters. When viewed in this way, the suggested link between competence and convictions really breaks down. If the Bench is falsely confident, more convictions (presumably some unjust ones) could be expected to result. If the Crown is falsely confident, a low conviction rate would vindicate our system, as the Bench is providing a suitable check on the Crown's ineptitude. Once an element of uncertainty is introduced in the mind of any actor in the system, uncertain outcomes result. Convictions, acquittals, and sentences would be totally unpredictable if the prosecutors and judges simply didn't know what they were doing.
For the record, I believe the Crown and the Bench are more than capable of tackling any matter of business crime. Underestimations of the individual skills of judges and lawyers are made at defence counsel's peril.
Returning to my checklist, the statutory problem and the evidentiary problem rarely appear at trial. Again, they discourage the prosecution of white collar criminal matters altogether. A high evidentiary burden is a feature of criminal justice generally; and although some prosecutions founder on account of complex evidentiary matters, such events are rare.
Finally, it is important to remember that the justice process has many stages with varying interests at play -- acquittals at trial may be a sign that the best cases are settled by guilty pleas. Plea deals can give rise to just and informative results. This has certainly been the experience of lawyers familiar with the Corruption of Foreign Public Officials Act, as demonstrated last week.
To focus on the conviction rate as a gauge for the ruggedness of the criminal justice system in the face of white collar crime is to misunderstand how the process works. A prosecution is a complicated thing, and no two accounting frauds or bribe scandals are alike. The suitability of our system to tackle large prosecutions of financial and business crime matters is a worthwhile concern for Canadian voters and taxpayers, but not out of proportion with vigilance for the health of the system on the whole.
1. Full disclosure: I used to practice with Michael O'Kane at Peters & Peters in London, UK, quoted in the article at the link.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.