Monday, May 22, 2006
Former Ontario finance minister Greg Sorbara says his faith in the justice system has been restored after his vindication in a recent court action against the RCMP. Now if only someone could restore our faith in the RCMP, whose record on many of Canada’s most prominent white-collar crime cases is looking increasingly dismal.
In a decision last week, Mr. Justice Ian Nordheimer of Ontario Superior Court accepted Mr. Sorbara’s request to have his name removed from an RCMP search warrant in connection with an investigation involving Royal Group Technologies and two property deals with the Sorbara family’s private company. Judge Nordheimer said the warrant should not have been granted because the RCMP had not done enough investigation and had no evidence to prove the deals were unusual. Indeed, his ruling could scarcely have been more critical of the RCMP’s work, saying the evidence was “meagre at best” and the RCMP offered only “possibilities and suggestions,” which did not justify issuing a warrant.
The decision is a new blow to the RCMP’s elite and well-funded securities fraud investigation unit, known as the Integrated Market Enforcement Teams (IMET). IMET was created with fanfare three years ago to improve Canada’s poor record on investigating white-collar crimes, with top officials optimistically pledging that investigations would be wrapped up within a year. The unit has taken on responsibility for the biggest securities investigations in the country, including the Royal Group probe, which became even more prominent last year after IMET staged a dramatic raid on the head office of Bank of Nova Scotia. IMET is also probing the financial scandal at Nortel Networks, as well as dramatic hedge-fund failures at companies such as Portus, Norbourg and Norshield. The team is also responsible for investigating the politically charged allegations of leaked information about federal income-tax changes for income trusts — a major issue that dogged the Liberals in the last federal election campaign.
But three years after its creation, IMET has not yet laid charges in any of its prominent cases. IMET teams in Vancouver, Calgary and Montreal have laid no charges at all. The Toronto team has announced charges in two minor cases, one involving an individual accused of stealing stock certificates from a client’s account. And while IMET has pledged that more charges are in the pipeline, the glimpse we’ve seen so far of the work on one major case is discouraging. Only a tiny element of the Royal Group case has hit the courts — Mr. Sorbara’s warrant application — but the judge dismissed the work as highly inadequate.
Police investigations are, of course, confidential, so it’s not easy to know what is going on inside IMET. But clues are emerging. The unit has been hit with several high-profile staff departures, which can only delay the pace of investigations. There is also distressing evidence of bad blood between some of the partners involved in IMET. While the program is led by the RCMP, it was created as a joint project with Canada’s securities regulators and the Justice Department. Mr. Sorbara’s lawyers have revealed their frustrating efforts to offer Mr. Sorbara’s co-operation with the IMET investigation, and the inability of Justice Department officials to co-ordinate with the RCMP. There havealso been public reports about tension between IMET and Quebec’s securities regulator over the Norbourg investigation.
For its part, IMET says it is still working on cases and results should emerge soon. A top official recently blamed the slow pace so far on “growing pains” and the fact that IMET really hasn’t been operating all that long, considering the time it took to set up the teams. Even so, time is moving on and three years is a fair time to begin shaking off growing pains. If IMET can’t live up to its promise, it should be fixed or replaced. It’s a sad fact that criminals appear to have nothing to fear from Canada’s big crackdown on securities crime.
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