Ottawa Law Professor Jennifer Quaid on Corporate Crime in Canada

Canadian Prime Minister Justin Trudeau is in deep trouble.


Jennifer Quaid
Faculty of Law
University of Ottawa
Ottawa, Ontario

Corporate crime and deferred prosecutions.

In 2018, Canada imported deferred prosecutions from the United States. Big corporations don’t want to be criminally prosecuted for their crimes. That’s why they love deferred prosecutions.

The company at the center of the scandal north of the border is SNC-Lavalin, the giant Montreal based construction firm. They are under investigation for paying bribes to public officials in Libya from 2001 to 2011. Federal prosecutors are intent on prosecuting the company. But the Prime Minister’s office decided to intervene.

When the Toronto Globe and Mail broke the story earlier this month, all hell broke loose. The Justice Minister, who had been shuffled off to Veterans Affairs, resigned.

Trudeau’s chief of staff and right hand man, resigned.

Now Trudeau is in it deep.

Jennifer Quaid is a law professor at the University of Ottawa and expert on corporate crime in Canada.

Quaid favors corporate criminal liability. She favors just deserts for corporation criminals. She leans against deterrence as a justification for corporate criminal liability. And she leans against deferred prosecution agreements.

(The Corporate Crime Reporter interview with Professor Quaid took place just days before the former Attorney General of Canada, Jody Wilson-Raybould, gave explosive testimony detailing a campaign of “veiled threats” by the Prime Minister’s Office to get her to deliver a deferred prosecution agreement in the SNC-Lavalin case.)

Your first two major writings – at Cambridge and Columbia – were about just deserts versus deterrence as justifications for the corporate criminal law. What’s the real world impact if you come at it from a just deserts as opposed to a deterrence theory?

“The small caveat is – of course, you are never going to be able to assert that there is a single unique purpose of criminal law,” Quaid told Corporate Crime Reporter in an interview last week. “Even people who say just deserts or deterrence accept that there are other justifications.”

“The question is – which one is the primary one? The classic debate in criminal law is – are you more backward looking – just deserts – or more forward looking – deterrence? Deterrence is an umbrella of utilitarian theories – prevention, specific general deterrence – and some people even throw in rehabilitation. I would keep rehabilitation separate.”

“There is a very strong influence of economic analysis of law, which is drawn from economic rationalism, and it fits super well into a utilitarian vision of the world. Costs versus benefits. I took a fairly strong position that that was undermining the effectiveness of corporate criminal liability.”

“In the early work by V.S. Khanna and others, they would say – what is the point of corporate criminal liability? If we are really just talking about changing the cost-benefit analysis, we could do civil fines, we could do this and that. It’s all about money. It’s about modulating behavior.”

“I was like – wait a minute. We are talking about anti-social behavior here. What I didn’t like about the emphasis on deterrence in corporate criminal liability was the implicit suggestion that this is morally neutral behavior. We already discount the seriousness of corporate crime because the people who commit it tend to look like nice people we don’t consider to be criminals. It’s hard to get those crimes to be taken seriously. You are constantly defending why you are using these harsh penalties when this isn’t that serious. It’s mere regulatory non-compliance. These are victimless crimes.”

The Chamber of Commerce obviously prefers the deterrence justification. And it’s not just because of atmospherics. What’s the real difference in policy? Why do the big business lobbies prefer deterrence?

“There is less stigma. At the end of the day, corporate criminal liability tends to stick to individuals associated with helping the corporate crime happen. If we start thinking of it as bad conduct, not just illegal conduct or conduct that happens to be prohibited by the law, that changes the narrative.”

“And the reality is that deterrence theory doesn’t work in practice the way it says it works. And I’m sure the business lobbies are happy that’s the case. We should be multiplying the base fine by the detection rate and the probability of conviction. In general, it’s hard to detect economic crime. You need a high multiplier. What I found in Canada, and to some extent in the United States, is that judges balk at the idea of imposing those heavy fines.”

“The argument is that – we are going to make sure the fine is reflective of the liability. We offer this comfort that it can all be converted into numbers. But at the end of the day, it all gets discounted. Why are we even pretending that we are trying to make some sort of equivalence — that it was this bad multiplied by a million. And therefore the fine should be x million, when at the end of the day the fine is much less than that.”

“That may be why they like it. It focuses on the numbers. Whereas as you start labeling actions as bad, it’s harder to negotiate out of that. And you can’t bound it as easily. You earned this much in illegal profits. And there was this much market effect. Just plain cheating or dishonesty or fraud on the market is much harder to quantify. That means you can’t control or predict what the outcome is going to be.”

“Business people want to eliminate, to the extent possible, uncertainty. Using a deterrence model gives you a way to pretty accurately gauge what you are in for. Desert throws that out the window.”

As for deferred prosecutions, she’s not a big fan.

“I have always taken the position that deferred prosecution agreements are being put forward on the basis of things that are not true for the Canadian system. These agreements work if the prosecutors are confident they have a reasonable prospect of conviction. That is what gives them leverage. You have a system of liability that requires not just proof of any person within the company violating the law, but only certain people. And the track record of success in the first fifteen years does not inspire confidence that that is an easy job. I’m not sure prosecutors are sitting in such a strong position.”

“And second, the idea is – if the company screws up, then prosecute them. Every prosecutor I’ve talked to says – you have to be kidding me. If you had a good case when you negotiated the agreement, you go much beyond a year, your evidence is not going to be as good and the chances you have a reasonable prospect of conviction is going to be much lower. You can’t just start the prosecution again. It would be ethically wrong to do that for the purpose of just showing them we are tough.”

“If you don’t have a reasonable prospect of conviction, you should not be continuing the prosecution, however egregious the breach of the agreement. Our regime did not include a breach of the agreement offense.”

Where does this go for the Prime Minister and for the case?

“The Prime Minister is wily. I would say he’s helped by the fact that his political opponents were not doing particularly well before. Andrew Sheer, the conservative leader of the opposition – I’m not sure he’s going to come down against deferred prosecution agreements. He is just making hay with the political situation. But I can’t imagine that the Conservative Party, which is pro-business, would actually say – we are against these types of arrangements. That’s not going to happen.”

“As for SNC, I wonder. So much has been said now, if they get a deal, it’s going to look bad. It’s going to look like they got it because of pressure, they got it because they screamed and yelled and not on the merits. There were two determinations made by the prosecution service against a deal with SNC. And there is no reason to believe that they did a poor job. Nothing to suggest that.”

Does a criminal prosecution help Trudeau?

“SNC wants to bring an end to things. They have been under a cloud for a while and they fear they are a takeover target. I would say that a plea deal is certainly possible. But a plea deal means you have a conviction. The key thing with a remediation agreement is that they don’t have to plead guilty. But I am not sure whether they are going to succeed now.”

“One of the mandatory requirements in a deferred prosecution agreement is that they must admit responsibility. There is an open question as to what does that do to them in other jurisdictions and what does that do in terms of civil liability. If SNC wasn’t willing to admit responsibility, then obviously the prosecutors have a reason to say no. But we just don’t know.”

[For the complete Interview with Jennifer Quaid, see 33 Corporate Crime Reporter 9(11), Monday March 4, 2019, print edition only.]

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