Page 30 - CCCA Magazine Summer 2015

{ Feature }

anisms. Many believe these improvements in corporate behav- more effcient Litigation
iour are more benefcial to society than the simple punishment DPAs provide the prosecution with the fexibility to decide how
a company would receive from a conviction or guilty plea. to proceed. From the company’s perspective, the prosecution has
In addition, through a DPA, collateral damage to innocent more discretion in determining the severity of the penalty depend-
employees and shareholders who may be blameless for the ing on the crime and taking into account any mitigating factors.
wrongdoing can be limited. From the prosecution’s perspective, litigation is both time
consuming and extremely costly. Prosecutors must spend time
no criminal conviction investigating, gathering evidence and preparing submissions,
From the corporate perspective, the attractiveness of DPAs and the ensuing litigation is a large strain on public fnances.
stems from avoiding a criminal conviction, which, under the Under a DPA, prosecutors can set internal investigation as one
CFPOA, may mean imprisonment of up to 14 years for direc- of the conditions to be met, essentially transferring the cost
tors, offcers or employees. If convicted, the company’s fnances burden of the investigation to the company and deterring fu-
and reputation would be dealt a hard blow. For smaller entities, ture wrongdoing.
a conviction or guilty plea may spell their demise.
A conviction under the CFPOA may also result in a com- imbalance of Power
pany being barred from bidding on government contracts. At DPAs tilt the advantage in negotiating power to the prosecu-
the time of writing, Public Works and Government Services tion. A corporation must satisfy all the conditions of a DPA be-
of Canada’s Integrity Framework bans any company that has fore charges are dismissed. If any condition is not met, the pros-
a criminal conviction anywhere in the world from bidding on ecution has the authority to lay charges. From the corporate
federal contracts for a period of 10 years. The threat of debar- perspective, the unequal bargaining power can be troublesome.
ment is of serious concern to companies that depend upon Prosecutors can exploit a company’s desire to remain convic-
public procurement. tion free. For example, in 2014, Alstom SA paid a fne of $778
“ While the public must be this exploitation, as all DPAs must receive judicial approval.
million as part of their requirements under a DPA in the U.S.
Unlike the U.S, however, the U.K. system may be able to avoid

From a policy standpoint, one of the main arguments against

DPAs is that they give the government the power to impose cor-
porate governance reforms—something that many believe it is
satisfed that companies are not too-
not qualifed to do. Detractors state that this can lead to the
big-for-jail, a DPA enables a company
pointment of improperly qualifed board members.
to demonstrate any rehabilitation implementation of unproven compliance programs and the ap-
Potential misuse
efforts it may have undertaken since Finally, a simple, yet often forgotten argument against DPAs
is that they may allow large, deep-pocketed companies to pay
” hard to imagine even the largest and wealthiest of corporations
the discovery of wrongdoing and their way out of a bribery conviction. Though seemingly far-
fetched, it is possible that large corporations could calculate the
make voluntary disclosures. cost of bribery as part of business and plan for a large payment
as part of a DPA. However, given the size of these fnes, it is

willingly paying billions of dollars to avoid a conviction. In
addition, fnes are only one component of a DPA; companies
must also fulfll corporate governance requirements, institute
or strengthen compliance programs, and more.

Given the recent changes in Canadian anti-corruption law,
Canada should also consider providing investigators and pros-
ecutors with new tools. DPAs have the potential to increase
corporate compliance and promote ethical governance while
minimizing litigation costs. Though there still remain some po-
tential drawbacks, it is time we had an open discussion about
their usefulness in Canada to allow more fexibility in resolving
corruption cases. ❚

Noah Arshinoff is a lawyer in the Canadian Bar Association’s Legislation and
Law Reform Department.

30 CCCA MAGAzinE | SuMMEr 2015 été