Remediation Agreements and Orders to Address Corporate Crime

Economic crime committed by corporations is a complex problem that can have a serious impact on the economy and on innocent third parties, such as employees. In the fall of 2017, a public consultation was launched to determine if Canada should expand the toolkit available to prosecutors to address corporate wrongdoing, including through a made-in-Canada version of a deferred prosecution agreement regime. 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.

As part of a multi-faceted approach to addressing corporate wrongdoing, the Government of Canada introduced Criminal Code amendments to create a new tool called a remediation agreement. Prosecutors would be able to use this tool at their discretion to address specified economic crimes if they consider it to be in the public interest and appropriate in the circumstances.

Remediation agreements and orders

A remediation agreement would be a voluntary agreement between a prosecutor and an organization accused of committing an offence. Agreements would set out an end date and would need to be presented to a judge for approval. Before approving a remediation agreement, the judge would need to be satisfied that:

• The agreement is in the public interest; and
• The terms of the agreement are fair, reasonable and proportionate.

When the criteria are met, the judge would issue a judicial order approving the remediation agreement. While an agreement is in force, any criminal prosecution for conduct that is covered by the agreement would be put on hold. If the accused organization complies with terms and conditions set out in the agreement, the prosecutor would apply to a judge for an order of successful completion when the agreement expires. The charges would then be stayed and no criminal conviction would result. If the accused did not comply, the charges could be revived and the accused could be prosecuted and potentially convicted.

Purposes of a remediation agreement

The main purposes of a remediation agreement would be:

• To denounce an organization’s wrongdoing and the harms that such wrongdoing has caused to victims or to the community;
• To hold the organization accountable for the wrongdoing;
• To require the organization to put measures in place to correct the problem and prevent similar problems in the future;
• To reduce harm that a criminal conviction of an organization could have for employees, shareholders and other third parties who did not take part in the offence; and
• To help repair harm done to victims or to the community, including through reparations and restitution.

Potential benefits of a remediation agreement

A remediation agreement would hold organizations accountable for their wrongdoing and would provide an incentive to rectify their wrongdoing, while avoiding some of the negative consequences of a criminal conviction. It could help result in faster compensation to victims and protect jobs of innocent employees and investments of innocent shareholders. The possibility of being able to negotiate a remediation agreement may also encourage corporations to disclose wrongdoing and cooperate more readily with investigators.

Eligibility requirements

To be eligible for a remediation agreement, the accused would have to be an organization other than a public body (e.g., a government department), a trade union or a municipality.

A remediation agreement could only be used for economic crime offences, such as fraud or bribery. It could not be used for offences that have caused death or serious bodily harm or that have injured national defence or national security. Similarly, a remediation agreement could not be used for an offence committed on the direction of, or on behalf of, a criminal organization or terrorist group.

Prosecutors would have to consider a number of factors when deciding whether they should negotiate a remediation agreement with an organization, such as whether the organization has previous convictions, sanctions or settlements for similar offences in Canada or elsewhere.

Terms and conditions of remediation agreements

Terms of a remediation agreement could vary, depending on the particular circumstances, but to ensure accountability and promote compliance, certain terms would be mandatory. For example, each agreement would include an agreed statement of facts.

As well, the corporation would need to

• accept responsibility for, and stop, their wrongdoing;
• pay a financial penalty;
• relinquish any benefit gained from the wrongdoing;
• put in place or enhance compliance measures; and
• make reparation to victims, including overseas victims, as appropriate;

Optional conditions would include a requirement to appoint an independent monitor to verify that the organization has complied with the terms of the agreement.

Coming into force

Subject to Parliamentary approval, the Remediation Agreement Regime will come into effect 90 days after the Budget Implementation Act (which contains the proposed legislative amendments) receives Royal Assent.