about timeOttawa introduces corporate fraud bill
Thursday, June 12, 2003
Ottawa — The federal government introduced sweeping corporate-fraud legislation Thursday in an attempt to bolster investor confidence following a barrage of international corporate scandals.
The legislation would toughen rules on insider trading, making it an offence under the Criminal Code punishable by up to 10 years in prison.
It would also raise maximum sentences for existing white-collar crimes, and make it illegal for companies to punish whistle-blowers who expose corporate wrongdoings.
"Capital-markets fraud hurts everyone," said Justice Minister Martin Cauchon.
"It can have a devastating impact on the investments and the retirement savings of all Canadians and it can even threaten the security of our financial markets.
"Today we are sending a strong message that the government of Canada will not tolerate capital-markets fraud."
The move comes after allegations of fraud, insider trading and improper accounting practices over the past two years shook financial markets around the world, among them at U.S.-based Enron and WorldCom.
Also, the government announced creation of six special investigation teams dedicated to financial-markets fraud cases.
Made up of RCMP investigators, federal lawyers and other experts, the Integrated Market Enforcement Teams (IMETs) will be introduced in 2004-05.
The teams will be based in the financial districts of Toronto, Vancouver, Montreal and Calgary, but will investigate white-collar crime across the country.
The measures announced Thursday are aimed not only at white-collar criminals, but also at deterring others from committing such crimes, said Solicitor General Wayne Easter.
"The government of Canada takes corporate fraud seriously and we are committed to deterring criminal activity in Canada's capital markets," said Mr. Easter, who made the announcement with Mr. Cauchon.
The key measures of the new bill include:
- Creating a new Criminal Code offence of improper inside trading that would target employees of corporations and others who use privileged information to benefit themselves.
- Protecting employees who report unlawful conduct within their corporation. Punishing or threatening such whistle-blowers would carry a maximum sentence of five years in prison.
- Raising maximum sentences for fraud offences and establishing aggravating factors to assist the courts in determining appropriate sentences.
Meanwhile Thursday, the government promised tougher penalties for companies found negligent in the injury or death of an employee.
Mr. Cauchon introduced legislation to "modernize" corporate liability rules in his long-awaited reaction to the Westray disaster, where 26 miners died in a 1992 explosion.
The so-called Westray bill could lead to criminal-negligence charges against companies that fail to protect the safety of workers.
The bill would also extend legal responsibility for employee safety to lower-level supervisors.
Some current liability laws date back to the 19th century, when top management often oversaw all of a company's day-to-day operations.
Mr. Cauchon said the new legislation takes into account the complex structure of modern companies, where middle- and lower-level management often oversee daily operations.
There is no set limit on fines against companies convicted of serious offences under the Criminal Code.
© The Globe and Mail
Should be rectoactive!!!