Canada too soft on white-collar crime: RCMP

When John Sliter assumed the helm of the RCMP’s Integrated Market Enforcement Team, he had grand expectations. Initially IMET said it would load up 10 investigators per file in the hope of completing investigations within a year. It was known as the 10-to-one rule. Now the superintendent and director of the RCMP IMET says he regrets that claim.

Sliter now thinks a more reasonable time frame for some investigations is closer to five years. The problem, he says, is that IMET is running up against tight-lipped firms, a dearth of whistle-blowers and the painfully slow processes and procedures that IMET has to follow. “We’ve reached that stage of process constipation,” he says.

The numbers speak for themselves. According to Sliter, IMET “kicked into high gear” in June 2003, but in the years since then, no one has been charged in the major corporate cases under investigation.

That’s not to say IMET isn’t busy. The team has completed more than 600 profiles a year for the past two years. But with few conclusive results from those cases, the threat of being investigated and caught isn’t acting as a deterrent.

“If moral suasion will not work and we need that risk of incarceration, then we need some more tools,” Sliter says. The tools he refers to include legislative changes that steer Canada more toward the U.S. approach. Specifically, Canada needs to be able to compel third-party witnesses to testify. The U.S. has the Grand Jury, while the U.K. has its Serious Fraud Office, he says.

“Key people have no intention to speak to us,” says Sliter, adding that lawyers are advising their clients that they don’t need to talk to police. “We have to move away from that environment.”

To make his point, Sliter told the audience at the Canadian Institute’s Securities Superconference in Toronto last week that Canada is the only country in the western world that cannot compel evidence in court.

Unfair advantage

While the RCMP is seeking greater influence, Steven Sofer, a partner with Gowling Lafleur Henderson, thinks the regulators have too much. At issue is the cost to the firm being investigated. “It’s expensive to fight, even if you win,” he says.

As a result, Sofer says, people have caved in because it’s too expensive to fight. “People are settling for the wrong reasons,” he says, also speaking at last week’s Superconference. “It’s just not fair.”

MORE CONFERENCE COVERAGE

• Canadian regulation needs fixing: Oliver • Compliance is the easiest option: OSC chair • Demise of trusts overstated

Over the years, the regulators have moved away from specific deterrents to more general ones, similar to those doled out in a criminal court. The trouble, Sofer says, is that these fines are paid back to the regulators — the same people who are conducting the investigation and hearing the case.

While Sofer is careful not to insinuate any undue action on the part of the regulators, he says there is an appearance of unfairness. He adds that unlike a criminal court case, the standard of proof in a regulatory hearing isn’t as stringent and the defendants have no way of recouping their costs if they are exonerated.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(02/26/07)