PWGSC Integrity Framework

April 9 2015

e e e , ,

Th eHonourabl e,Dian eFinley , PC MP Minister of Public Works and Government Services Plac du ,Portag Phas III Room 18A1 11 Laurier Street Gatineau QC K1A 0S5

Re:Dear MinisterPWGSCFinle Integrityy: Framework

e e alf f e m t e f W writ on. behe o th Canadian e Bar Association’s Anti -Corruption Tea (CBA -ACT) eto commen onouth department o o Public Works and Government h Services Canada’s (PWGSC) Integrity Framework W understand th Integrity Framework is currently under review and w ask that y take isint considerational our concerns f wit the current policy. , , a e e e e f e. a The CBAe f a nation association e ea of 36,000 lawyers, QuébecTnotaries s students and law teachers with mandats tompromot improvementsal, in th, law and th administration o justic Building on over decad o CBA’s work in th ar o anti - corruption, CBAell- AC ei a joint committee comprisede el of member fro o tthe Intern ation Business Charities & Not-for-Profit, Competition, Criminal Justice and Construction and Infrastructure law sections as w as th Canadian Corporat Couns Association f he CBA. n s . e e We support the government’s e objectives i seeking and promoting the integrity of it suppliers t as well as providing a estrong deterrente to corrupt practices le W encourag e lepublic f consultation e on any proposed changes to th Integrity Framework and offer some recommendations to ensure tha its operation and scope meet thos important goalsc whi respecting th ru o law and du processss . e e s s A debarment regims should balances the publi interest of preventing a corruption with fairne to thos whoe are subject to debarment e a well a maintaining a competitivet e supplier base for thef provision of good and service to ethe government e . In addition,y government policy . intended to influenc th behaviour of privat entities should take into accoun th leniency programs o other governmente e departments e to ensur objectives ar aeffectivel mete government wide.

W hav examined th Integrity Framework with focus on thes particular areas

Rule of Law, Due Process and Transparency

y e e e f al e le f s s The Integrit Frame worke must align withe the rule of law ande due process. Thes values ar th cornerstones o Canada’s e leg system. Th ru o law establishey the principle that law should govern societye and thos subject to th law should not fac arbitrary decisionss by government entities.al Currently, t.th Integrity Framework applies onl to suppliers of PWGSC and departments that hav signed an MOU. Debarment should apply to either all or no supplier contracting with the feder governmen f a n ny n y a a e The consequence s o violateio of a debarment offence identified. e i the Integrit Framework is the same for person convicted with lower sentenc as for someone e convicted with a much higher sentence. Both receiv an automatic 10-year debarment Th Integrityf Framework applies similar treatment, to epotentially e very differing circumstances. e Th afactors that determined e sentencing Competitionshould also Actapply awhen eldetermining e the length or, terms a o debarment. We question, for example whether th sam debarment period is appropriat for misleading advertising offenc undere the as cart offenc under thatmAct or government s bribery offence.s y y n y Thlea,Integrity e Framework does not contain a mechanis allow ing e supplier to. appeal it outcomes, which ma violate due process. Although debarment is onl imposed after a convictio or guilt p th Integrity Framework doess not offer an opportunity to b reinstated A penalty as serious as automatic 10-year debarment should consider whether a supplier has implemented appropriate mitigatione or acompliance measure to avoid future violations. e a e o Ther is also need forn greatern transparency with adoption and implementation c of the Integrity Framework. e Th process for f creatinge fair f debarment regim thate responds t the goal of e, eradicating corruptio e e i governmente f procurement should include publi consultation to help avoid th arbitrary nature o th length o debarment. To promot education and deterrenc the publicle should b mad a awarl o lany investigati on. , e le

Whi debarment is usefu too to combat corruption it should b used in an equitab manner Policytaking intovs. Statutoryaccount the Instrumentseverity of the conviction or guilty plea and any mitigating circumstances. y e f e The Integrits Framework is currently a PWGSC policy.c The process e for adopting or modifying a departmental e policy lack s th transparency f and safeguards o th regulatoryy and statutory icprocess and doe not necessarily take into account the publi interest.tW recommend th at supplierp o debarment b enshrined e eitherle f as ,an act o parliament, or a sstatutor instrument ss with publ consultational . As an act of parliament or a statutory instrumen the regime would hel to respond t our concerns about th ru o law transparency an appeal and review proce and respecting f r t e e y gener sentencing principles. e e . An act o parliament o a statutory instrumen would ensur is that amendments to thy Integritny Framework ar mad through open parliamentary debates and public consultation A legislative foundation would ensure that such an important regime subject to parliamentar scruti and f t e the views of all stakeholders, including those of the general public, could be heard and recorded. a le f l An act oe parliament ore statutorye instrumen, t t also has th advantage, of bringing all federal contractsy under sing. set o integrity measures rather than various departmenta policies. All suppliers would b subject to th sam rules no jus suppliers of PWGSC as with the current Integrit Framework 3

Debarment s is s s ss is m PWGSC’ statedle purpose, fore thef Integrity Framework e “protecting e the integrity of it procurement”. To ensure that thee government’ f e procurement proce protected fro disreputab business som o our members believ that th following factors should be considered when determining a th elength a o th debarment term: o a) whether it is first offenc or repeat offence; e b) the seniority of the individuals responsible for the offence or wh authorized or acquiesced e, e f e in th offence; e el f e e c) the natur severity and magnitud o th offence; e ; d) th lev o procedures and controls th company already had in plac to address anti- e corruption or th relevant offence e e e e) whether th company self-reported;

f) the extent to which th company cooperated with authorities after th offenc had been al e discovered; and g) remedi measures taken by th company. n e , s s The inf lexibility of the 10-year ba differs from th approach taken by most other countries and organizationss including the World Bank, which use discretionarys and criteria -guided policie when determining debarment lengths. Since the Integritye Framework does not consider mitigatinge . factor it does not provide much incenti ve for companie to self-report. This is contrary to the approach taken by many regulators (including th Ontario Securities Commission and th U.S Departmente f of Justice) in formalizing credit for cooperation policies. t t e Som o our members, in addition to the consideration of the criteria listed above, sugges tha a debarment• regims should provide: s • e e f e a proces and discretion to determine whether debarment i justified in the circumstances; • a e e e flexibility regarding th natur and length o th debarment; • , e e a procedure e to challengy th debarment terms; and under certain circumstances th ability to hav the debarment lifted following period wher th entit has demonstrated rehabilitation and a strong record of compliance. e , a e

To protect the integrity of PWGSC’s procurement process debarments regim must provides strong disincentive to corrupte behaviour while ensuring the public interesty is properlyy served. A proportionat debarment regime would advance the objective of encouraging companie to implement effectiv anti-corruption policies and deal promptl and openl with instances of Retrospectivitycorruption, including cooperating with authorities. s s s e e e f, e . The Integrity Framework retrospectively attache additional penaltie to conviction and guilty please that predatle th alcoming into forc o or amendments to, th Integrity Framework . e e l e e e Th princip, that pen laws should generally operate only prospectively is a fundamental e aspecte of thee rule of law People should not b punished for acts which wer lawfu e at th tim they wer committed and punishment for unlawful acts should not exceed that provided for at th tim they wer committed. Debarring a supplier for conduct that occurred before th Integrity Framework 4

r o e a , e a (o amendments) came int force should only b justified following determination pursuant to th criteri nlisted above, that it is necessary to protect PWGSC procurement.s s ss s Applyinga a automatic, non-discretionary debarment to past conviction denie due proce to those companie who may have responded differently had they known a guilty plea would result in mandatory 10 -year debarment. e e e al , y The concept of y“similar foreign offences” under eth Integrity e Frameworka requirese clarification. a Ther ar s important differences ” between judici systems and though lawss ma be similar, convictions ma be politically influenced. Ther should b criteri to determin whether foreign Ioffencempact ionsufficiently government“similar leniencyand programswhether a conviction or guilty plea wa validly obtained. ms y . le, e If cooperation Competitionis not Acta mitigating factor, other governmenty progray aimed at achieving cooperation ll ma be undermined. Fore examp yth Competitionl e Bureau encourages firms t to self-e report offences through its immunit and tlenienc programs. Only a the first to self- report wi. obtaine immunity Becaus that entit n wil not b charged with an offence, o i will escap, debarment under the Integrity Framework (even though i admits to committing debarment offence) Th Integrity Framework preserves a additional incentive for firms t seek immunity provided, theye are the first to do so. e a e e le isHowever t h Integrity Frameworky may hav negativ effect on th Competition , eB ureau’s leniencyy program. Leniency, not immunity, ise availab e to firms that self-report after the immunityn position y takena byalthe firsteentit to selfe Competition-report. The Actfirst n-in leniency applicant (that is th secondn n entit to self-report) is expected to cooperate , with th Competition Bureau’s investigatio e and plead guilt to crimin offenc undere th e . I return, it obtains a 50% reductio i the fine the government would otherwis seek and its officers, directors and employees ar completely spared, providedl they cooperat , and otherwis qualify for immunity . y e e Unti November 2012 n the Integrity Framework was not applied to debar lenienc recipients a . This exemption created nya strong incentive to self-report and cooperate withe th Competition Bureau. for firms that depend o government procurement. The policy change in 2012 has created strong disincentive for ma companiess to self -reports or cooperats with th Competition Bureau t e e e a Lawyers must advise cliente about the risk and benefit of applying for leniency, including e the fact tha if they n participat in th leniency programs they fac 10 -year debarment from supplying PWGSC. Asy a result, som companies may decide not to self-report or cooperate and tak the risk involved i resisting the Competition Bureau’ inquiry and defending criminal charges to potentialle avoid debarment. e e f e

Th immunitye e and leniency programs yar som o. the Competition Bureau’s most important tools forf discoveringe , investigating and prosecuting criminal conspiracies., The Integritye Frame work may reduc th effectiveness of the lenienc program Th government should be mindful of the impact o th Integrity Framework on other government programs particularly thos similarly designed to Unintendedcombat crime. Consequences in Combatting Corruption le al e Criminal Code Corruption of Foreign Public Officials Act, e Whin no form leniency programs ar available for fraud and bribery offences n under they or the self-reportings an offenc and pleading guilty n ca be a mitigatings factor in sentencing. An additional automatic penalty i the Integrit Framework that does not consider self-reporting provide a disincentive for firms dependent o PWGSC contract to self-report. 5

is m s s n y ee e e s Th disincentive could impede theyinvestigation of bribery offences.s A fir that discover it e involvement i briber may e not s th advantag f to self-report. Cooperation ywith einvestigation e e should be encouraged. The Integrit Framework currently create a disincentive to cooperat which may not promote th public interest o eradicating corruption, and ma hav th opposit Conclusioneffect. e n t e f e , W support the government’s effort i countering the, negative effects of bribery and rooting out corruption . A debarments program e should take einto eaccoun f th factse o each. cas as outlined above how it may interact with other government programs and whether the program will provide the positivee e outcome it seeks whil respecting the rul eo law and due process e y e e y W urg PWGSC to consider whether cit may b mor appropriat s to formaliz the Integrit C A i w Framework into statut or regulation to promot transparency. . A government polic should be carefully crafted to promote the publi interest while pursuing it stated objective. The B s ell- positioned to assist in the development of policy or legislation e e e e le e e We hope our comments will help in your review of the Integrity Framework and w encourag you to involv our organization in th process given our availab expertis in th area of anti- corruption.

(originalSincerely, letter signed by Noah Arshinoff for W. Michael G. Osborne)

. ael . , A An W Mich G Osborne Member CB ti-Corruption Team . , f ,

cc: Hon. Peter MacKay Minister o Justicef e [email protected] , Hon.. James Moore,, Minister of Industry,l [email protected], Hon Tony Clement, President o th Treasury Board [email protected] Hon Ed Fast Minister for Internationa Trad [email protected]