A Canadian Perspective On Global Investigations Around The World

Law FirmBennett Jones LLP
Subject MatterCorporate/Commercial Law, Antitrust/Competition Law, Government, Public Sector, Corporate and Company Law, Antitrust, EU Competition , Money Laundering, Securities, Privilege
AuthorMs Sabrina Bandali, Emrys Davis, Alan Gardner, Laura Inglis, Amanda McLachlan, Ruth Promislow and Nathan Shaheen
Published date06 February 2023

General context, key principles and hot topics

1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

Unifor, Canada's largest private sector union, conducted an independent investigation in response to its recent kickback scandal. In March 2022, Unifor's president, Jerry Dias, resigned after it was revealed that he accepted a C$50,000 payment from a COVID-19 test kit supplier for encouraging union members to purchase its products. The investigation found that the undisclosed supplier made at least C$1.2 million in revenues from Dias' marketing test kit sales.

It has been alleged that Dias tried to cover up the affair by attempting to pay off his assistant and putting pressure on his fellow bureaucrats to maintain their silence.

According to Unifor, Dias refused to be interviewed as part of the investigation because of health problems and, as a result, the independent investigator's findings were made without the benefit of his evidence.

Later in March 2022, the Unifor National Executive Board determined that the former president breached the Code of Ethics and Democratic Practices of the Unifor Constitution. This decision was based on the independent investigation report that determined on a balance of probabilities that Dias had breached his obligations. The next step for Unifor will be a hearing before the National Executive Board, where Dias will have the opportunity to present arguments in his defence. Dias' lawyer has questioned the integrity of the independent investigation and expressed concerns about the circulation of confidential material.

The Toronto Police Service's financial crimes unit has started its own investigation. This is still in its preliminary stages and it is unclear when and whether any findings regarding Dias and Unifor will be made.

2 Outline the legal framework for corporate liability in your country.

Organisations, including corporations and partnerships, can be found liable for negligence-based offences and for offences that require the prosecution to prove fault other than negligence. For organisations, the physical act that constitutes the offence may be committed by a 'representative' (defined as 'a director, partner, employee, member, agent, or contractor of the organization'). However, the required mental state, or fault element (whether based on negligence or otherwise), is based on the conduct or intentions of a senior officer of the organisation. A 'senior officer' is defined in the Criminal Code of Canada as 'a representative who plays an important role in the establishment of an organization's policies or is responsible for managing an important aspect of the organization's activities and, in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer'.

For negligence-based criminal offences, the senior officer must be one who is responsible for the relevant aspect of the organisation's activities, and the senior officers must have departed markedly from the standard of care reasonably expected in the circumstances to prevent a representative from being a party to the offence.

For other fault-based criminal offences, the organisation will be liable if, with the intent at least in part to benefit the organisation, one of its senior officers (1) acted within the scope of their authority and was a party to the offence, (2) had the required mental state and acted within the scope of their authority to direct another representative of the organisation to engage in the wrongful conduct, or (3) knowing that a representative is, or is about to be, a party to the offence, fails to take all reasonable measures to stop that representative from doing so.

For other forms of liability, including under common law, Canadian courts generally apply the identification doctrine, which creates an identity between the corporation and its 'directing mind'. The analysis of who is a directing mind is very fact-dependent, but is generally understood as the person who is the corporation's alter ego in the sense that they have the ability to set policy rather than only having authority to manage. If the wrongdoer is the directing mind and acts within the scope of their authority, by design or as a means of benefiting the company, then that conduct will be attributable to the company, but for certain narrow exceptions (e.g., if the conduct was in fraud of the organisation).

There are also a number of strict and absolute liability offences, governed by federal and provincial laws, in respect of which a corporation can be prosecuted, but which do not require proof of intent.

3 Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

The law enforcement authorities that most often engage with corporations in Canada include: the Competition Bureau, which enforces the Competition Act; the Royal Canadian Mounted Police (RCMP), which investigates a variety of criminal activities, including domestic and transnational corruption, multi-jurisdictional terrorist financing and money laundering offences under the Canadian Criminal Code, and conducts other sensitive or international investigations; provincial securities regulators; and other federal and provincial regulatory authorities.

4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

There is no specific suspicion threshold that must be met. To take certain steps in an investigation (e.g., compelling the disclosure of documents belonging to the target of the investigation or a third party), authorities must generally have a reasonable basis for believing that a criminal offence has been committed.

Securities regulators are an exception to this requirement because there is no statutory or legal threshold that a regulator is required to meet before issuing summonses, which have the power of a court order, compelling documents, information or testimony from corporations (and individuals).

5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

An appearance notice or subpoena are tools used under the Criminal Code to compel an individual to answer a criminal charge or to compel an individual to attend and give evidence at trial, respectively. Law enforcement authorities may obtain search warrants, subject to having reasonable and probable grounds to believe a crime has been committed and that evidence relevant to that crime is at the location to be searched.

Provincial securities regulators have the authority to issue a summons to compel the production of documents or to require an individual's attendance at interviews to compel testimony. The most common challenges to such summons are premised on jurisdictional grounds through an application to a court to quash the summons.

6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

Canadian courts, legislatures, government agencies and regulators (including at the provincial level) have recognised that co-operating with authorities can be rewarded with leniency when it comes to sentencing and requests for immunity.

The Director of Public Prosecutions (DPP) has the authority to grant immunity from prosecution. In determining whether to do so, Crown counsel consider a number of factors, including the seriousness of the offence, the reliability of the person, the reliability of the anticipated evidence, whether the person has fully and candidly disclosed their involvement in criminal activity, the importance of the person's co-operation, the nature and extent of the person's involvement in the offence, whether a reduced sentence would serve the public interest better than immunity, the person's history of co-operation, and whether the public interest would be better served by prosecution.

The Canadian Competition Bureau (in co-operation with the DPP) offers immunity for the first to report cartel activity and co-operate with any investigation.

7 What are the top priorities for your country's law enforcement authorities?

The authority exercised by law enforcement agencies varies by jurisdiction, subject matter and, in some instances, level of government. In 2021, the RCMP, Canada's federal law enforcement agency, announced the following operational priorities: (1) serious and organised crime; (2) national security; (3) reducing youth involvement in crime; (4) contributing to safer and healthier indigenous communities; and (5) fostering economic integrity. Provincial securities regulators are increasingly focusing on cryptocurrency assets and firms as fintech and other market innovations expand.

8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?

Canadian law enforcement authorities generally encourage corporations to have effective compliance programmes and, in some circumstances, will evaluate a corporation's compliance programme when determining whether to grant leniency. In 2018, Canada introduced a remediation agreements regime with the stated goal of 'contribut[ing] to respect for the law by imposing an obligation on the organization to put in place corrective measures and promote a compliance culture' (Criminal Code, section 715.31(c)). In determining whether a remediation agreement is in the public interest, prosecutors will consider, among other factors, whether the organisation has taken measures to prevent the commission of similar offences. Remediation agreements may require...

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