Canada to enhance its toolkit to address corporate wrongdoing
March 27, 2018 - Gatineau, Quebec - Public Services and Procurement Canada
Corporate wrongdoing imposes significant economic and social costs on Canadians. The Government of Canada has in place a number of tools to detect, prevent and address this type of misconduct, protecting Canadians and the Canadian economy.
To build on these tools and fulfill a commitment made in Budget 2018, the Government of Canada today announced it will be enhancing the government-wide Integrity Regime and has introduced legislative amendments to create a made-in-Canada version of a deferred prosecution agreement (DPA) regime, to be known as a Remediation Agreement Regime.
Remediation agreements would be subject to prosecutorial discretion and judicial approval and oversight. They would help to advance compliance measures, hold eligible organizations accountable for misconduct, while protecting innocent parties such as employees and shareholders from the negative consequences of a criminal conviction of the organization.
The government-wide Integrity Regime will be enhanced to:
- introduce greater flexibility in debarment decisions (rendering companies ineligible from receiving federal contracts or real property agreements)
- increase the number of triggers that can lead to debarment
- explore alternative measures to further mitigate the risk of doing business with organized crime
- expand the scope of business ethics covered under the regime into key areas such as combatting human trafficking and the protection of labour rights and the environment
Effectively addressing corporate wrongdoing protects the integrity of markets, addresses barriers to economic growth and promotes fair competition to ensure job creation for Canadians. The introduction of enhancements to the Integrity Regime and the creation of a Remediation Agreement Regime adds new incentives for corporations to self-report and encourages stronger corporate compliance in a continually evolving marketplace. The enhanced Integrity Regime will be reflected in a revised Ineligibility and Suspension Policy, which will be released on November 15, 2018, and will come into effect on January 1, 2019. Subject to Parliamentary approval, the Remediation Agreement Regime will come into effect 90 days after the Budget Implementation Act receives Royal Assent.
The Government of Canada spends approximately $20 billion per year on procurement contracts, real property agreements, the management of Crown-owned properties and rental payments on 1,690 lease contracts across Canada.
The government-wide Integrity Regime is designed to ensure that the government conducts business with ethical suppliers, promotes further efforts to put in place strong compliance frameworks, and holds suppliers accountable for misconduct.
The United States and the United Kingdom have DPA regimes in place. In 2017, the Minister of Justice of Australia introduced legislation to establish a federal DPA regime.
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Enhancing Canada’s Integrity Regime
Corporate wrongdoing imposes significant economic and social costs. The Government of Canada has a framework of laws, regulations, policies and programs in place to detect, prevent and address improper, unethical and illegal business practices. One such tool is the government-wide Integrity Regime which seeks to ensure that the government conducts business with ethical suppliers, incents further efforts to put in place strong corporate compliance frameworks, and holds suppliers accountable for their misconduct.
In the fall of 2017, a public consultation was launched to determine if the Integrity Regime continues to achieve its objectives and is efficient in doing so in an evolving marketplace. During the consultation, over 70 submissions were received and more than 370 Canadians, industry associations, businesses, non-governmental organizations and others participated. On February 22, 2018, the Government released the results of the consultation.
Within the context of ongoing efforts to modernize procurement processes as outlined in the mandate letter for the Minister of Public Services and Procurement and as set out in Budget 2018, the Government announced upcoming enhancements to the Integrity Regime on March 27, 2018. The changes are expected to strengthen the Integrity Regime by making it more robust, while at the same time introducing greater flexibility and consideration of proportionality in debarment decisions. These changes will also help to ensure that suppliers that do business with the Government of Canada better understand their obligations in protecting the integrity of federal procurement, while at the same time promote behavioural changes within the marketplace with an increased emphasis on corporate compliance and corporate responsibility.
The key features of the enhanced Regime are:
Under the enhanced Regime, a supplier may be ineligible for contracts or real property agreements for up to 10 years, depending on a variety of mitigating and aggravating factors (such as the role of the supplier in committing the offence, early self-disclosure and prior behaviour). Greater flexibility will enable the government to better mitigate the risks associated with doing business with unethical suppliers, while encouraging suppliers to self-disclose wrongdoing and cooperate with law enforcement. This ensures that debarment decisions are proportionate, reasonable and consistent with practices in other jurisdictions.
Additional triggers for debarment
To create a more robust Integrity Regime, additional triggers for potential debarment will incorporate both further criminal offences and consideration of conduct as well as criminal convictions that undermine the public procurement system, including:
the following federal criminal offences:
fraud under the Criminal Code; conspiracy or collusion to defraud Her Majesty under the Financial Administration Act; offering or accepting bribes under the Financial Administration Act; corruption-related offences regarding municipal corruption under the Criminal Code; and political financing under the Canada Elections Act;
in addition, offences under the Criminal Code related to attempts to commit or being an accessory to an offence listed in the Ineligibility and Suspension Policy, counselling an offence in the Policy that is not committed, and conspiracy to commit a listed offence would also be added (see Annex for list of offences)
provincial offences that are similar to those listed in the Ineligibility and Suspension Policy under the Lobbying Act, the Income Tax Act, the Excise Tax Act and the Financial Administration Act, as well as provincial securities offences
foreign civil judgments for misconduct that would have been prosecuted criminally in Canada and is captured under the Integrity Regime
debarment decisions of provinces, foreign jurisdictions and international organizations
poor contract performance and violations of the Code of Conduct for Procurement
Broader approach to business ethics
The Government of Canada has committed to modernizing procurement to include practices that support economic policy goals, including social procurement. In addition, Canadians increasingly expect that human and labour rights, environmental sustainability, and the promotion of corporate social responsibility should be recognized as key components of business ethics. As such, a modest expansion of the scope of business ethics within the Integrity Regime will introduce new triggers for possible debarment, including:
committing criminal offences related to human trafficking under the Criminal Code and the Immigration and Refugee Protection Act or a similar foreign offence; suppliers would also be required to certify that they have taken reasonable steps to guard against the use of forced labour within their supply chain
committing offences under Part II (occupational health and safety) or III (standard hours, wages, vacations and holidays) of the Canada Labour Code
being named to the Environmental Offenders Registry as a result of a conviction in the last three years under specified federal environmental laws for intentionally or recklessly causing an environmental accident, unlawfully disposing of or abandoning a substance and/or where the supplier is a repeat offender within a specified time period
Addressing organized crime
To build on existing safeguards within the Integrity Regime, the government will, in collaboration with law enforcement, examine alternative measures to further mitigate the risk of conducting business with organized crime.
In cooperation with the Canada Revenue Agency, Public Services and Procurement Canada will examine additional measures to further promote tax compliance of suppliers within the federal procurement system.
The enhanced Integrity Regime will be implemented through a revised Ineligibility and Suspension Policy, to be released first on November 15, 2018, and effective January 1, 2019. This allows time for the Government of Canada to communicate changes to suppliers, implement necessary administrative processes, and ensure that procurement staff are well trained.
Annex: Additional federal offences
- the Criminal Code: sections 83.02, 83.03, 83.04 (financing of terrorism); section 123 (municipal corruption); section 380 (fraud); section 463 (attempts, accessories) related to any of the listed offences; section 464 (counselling offence that is not committed) related to any of the listed offences; section 465 (conspiracy) related to any of the listed offences
- the Financial Administration Act: subsection 80(1)(b) (offences and punishment); section 81 (idem, where bribes offered or accepted)
- under the Canada Elections Act: (specific sections to be determined)
- under the Canada Labour Code Part II (occupational health and safety) and Part III (labour standards)
Federal offences linked to human trafficking:
- Criminal Code: section 279.01 (trafficking in persons); section 279.011 (trafficking of person under 18 years); subsection 279.02(1) (material benefit ‒ trafficking); subsection 279.02(2) (material benefit ‒ trafficking of person under 18 years); subsection 279.03(1) (withholding or destroying documents ‒ trafficking); subsection 279.03(2) (withholding or destroying documents ‒ trafficking of person under 18 years)
- Immigration and Refugee Protection Act: section 118 (trafficking in persons); section 117 (organizing entry into Canada)
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