Money seized by police during a bust in Surrey, B.C., in December, 2022. Mark Carney must show that combatting financial crime is a priority for his government, writes David Hutton.JONATHAN HAYWARD/The Canadian Press
David Hutton is a senior fellow at the Centre for Free Expression at Toronto Metropolitan University.
Ottawa recently announced the creation of a Financial Crimes Agency, or FCA. This announcement belies Canada’s ongoing failure to tackle white-collar crime of all sorts: a history of failed prosecutions against transnational organized crime, including narcotics, money laundering and other financial violations.
Canada’s ineffective anti-corruption efforts have made our country a favoured base for criminals whose activities harm not just us but our peers and allies around the world. We urgently need to fix this problem.
The federal government has the responsibility to take the lead on this issue, yet successive administrations have shown that they prefer to avoid the embarrassment and reputational damage that inevitably results when law enforcement reveals serious wrongdoing. The SNC Lavalin scandal in 2019 is just one example.
Similarly, the RCMP has for decades lacked the skills, resources or political will to tackle such crimes. And successive governments have for decades blocked the protection of the most valuable witnesses to crime – whistleblowers.
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More than 20 years of statistics from the Association of Certified Fraud Examiners have consistently shown that tips from whistleblowers are the single most effective method for detecting wrongdoing. Every anti-corruption law and agency should include whistleblower protection because without it they are hamstrung.
Sadly, Bill C-29, which establishes the FCA, contains no whistleblower protection provisions, and neither does FINTRAC, Canada’s main mechanism for combatting money laundering and terrorist financing.
Perhaps most worrisome, the federal agency responsible for protecting whistleblowers and investigating suspected wrongdoing within government – the Office of the Public Sector Integrity Commissioner, or PSIC – has been sabotaged since its creation.
Sabotage is a strong word, but in this case it is appropriate. Created in 2006 by the Public Servants Disclosure Protection Act, or PSDPA, the PSIC has been a failure. The problems begin with serious weaknesses in the Act itself. They were made worse by successive federal governments appointing three successive ineffective integrity commissioners, and by providing the PSIC an inadequate budget throughout its existence.
In 2021, the PSDPA was found by the International Bar Association to be one of the worst whistleblower protection laws in the world. During 19 years of operation, almost 6,800 reports have been received of suspected government wrongdoing, yet few have been properly investigated and only a handful (22) of mostly minor cases found proven, according to an assessment by the Centre for Free Expression.
During this time, more than 700 witnesses (whistleblowers) have formally reported reprisals for speaking up, yet not a single one has received compensation by the tribunal set up solely for this purpose. And for the past 20 years, every effort to improve the PSDPA has been stymied by government action or inaction.
Last month, a federal government task force, set up to recommend how to fix the PSDPA, released its report. This calls for sweeping changes that, if implemented, would finally make the PSDPA into an effective instrument. But there are few reasons to be optimistic the government will act on the report.
Meantime, the PSIC’s workload is exploding because of more reports of wrongdoing, yet the government continues to ignore the integrity commissioner’s urgent requests for adequate funding. PSIC’s current $8-million budget amounts to a rounding error in the federal budget, although the potential payback is enormous. Preventing the Phoenix payroll scandal alone – which PSIC should have done – would have saved taxpayers more than $5-billion.
Then there is the almost $60-million ArriveCan procurement mess, the Sustainable Development Technology Canada scandal where the former chair contravened conflict-of-interest rules and failed to recuse herself from funding decisions, the Lac Megantic disaster that killed 47 and was estimated to cost the town $2-billion to rebuild, and many others that could have been prevented if whistleblowers had been heard and protected.
Shortchanging PSIC is not fiscal prudence – it is the strangulation of an essential anti-corruption agency. At a time when the government plans to spend billions more on military procurement – always a risky, conflict-prone undertaking – undermining a watchdog like this is nonsensical. It’s akin to saving a few dollars by dispensing with the locks on a bank vault.
If Prime Minister Mark Carney wants to make real progress against the widespread financial crime in Canada and give the new Financial Crimes Agency a chance to make a difference, he needs to add whistleblower protections to the Financial Crimes Act (Bill C-29) and to FINTRAC; fully implement the recommendations of the PSDPA review task force; and adequately fund the PSIC. Anything less suggests combatting financial crime is not a priority for his government.