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kind imposed on an auto company. The four-year criminal investigation focused on whether Toyota promptly reported the problems related to unintended acceleration, according to the Daily Record. “The company admitted to misleading consumers and regu-


lators by assuring them that it had adequately addressed an acceleration problem stemming from ill-fitting floor mats — which attracted widespread publicity in 2009 following a car crash in San Diego that killed a family of four — through a limited safety recall of certain models,” the Record said. “Toyota knew at the time that it had not recalled other models suscepti- ble to the same problem and also took steps to conceal from regulators a separate acceleration problem related to a faulty pedal, according to the DOJ.” “In other words, Toyota confronted a public safety emergency as if it were a simple public relations problem,” Holder said at a


“Lavalin should be grateful that Canadian authorities will have to prove the facts”


news conference. “According to a statement of facts filed in the case, an exasperated Toyota employee was said to have remarked at one point, ‘Idiots! Someone will go to jail if lies are repeatedly told. I can’t support this,’ ” the newspaper said. As in the GM case, a DPA was negotiated that could allow company executives to avoid prosecution. Criminal charges were laid in the case but prosecutors said they’d dismiss the charges in three years if Toyota complied with the terms of the settlement. An independent monitor was established to review policies, practices and procedures at the company. As Canada continues to grapple with judicial initiatives to


deal with fraud and white-collar crime, there is an impetus, in some quarters, to allow regulators to enter into DPAs with cor- porations that are found to have committed fraud, corruption and other related transgressions. One of the strongest proponents of DPAs is SNC-Lavalin


Group Inc., which is embroiled in fraud and corruption charges. In February, the company issued a news release that not only confirmed its intent to defend itself against the charges but also chastised the Canadian government for not being willing to enter into a DPA. It claimed that companies facing corruption allegations in


the US and Britain “benefit from a different approach that has been effectively used in the public interest to resolve similar matters while balancing accountability and securing the employment, economic and other benefits of businesses.”


“These deals, often announced with the fanfare of a full-


blown conviction, allow prosecutors to extract multimillion- dollar fines from companies facing bribery allegations,” the Globe reported. “But they spare the firms a further reputation- damaging trial or an actual guilty plea that could see them fall afoul of policies that ban convicted firms from bidding on government contracts. Essentially, prosecutors agree not to pursue charges against the company, provided the firm has co- operated and brought in new measures to stop any future corruption.” The newspaper cited France’s giant Alstom SA, which pleaded guilty in 2014 to resolve charges related to a wide- spread scheme involving tens of millions of dollars in bribes in countries around the world, including Indonesia, Saudi Arabia, Egypt and the Bahamas. It agreed to pay US$772 million aſter two of its US-based subsidiaries, Alstom Power Inc. and Alstom Grid Inc., were able to make DPAs with the DOJ. The rationale behind DPAs is that while the company accepts


a financial penalty, oſten harsh, it is able to continue function- ing, which means that employees and shareholders, likely innocent of any wrongdoing, are not punished for the trans- gressions of the firm. On the other hand, it exonerates senior executives or other transgressors from serving jail time for their malfeasance. One of the strongest opponents of DPAs is Mike Koehler, a


law professor at Southern Illinois University. He writes a blog on anticorruption issues and questions the practice of extracting huge fines without ever having to prove a case in court. He told the Globe that Lavalin’s statement about US and British prac- tices was surprising: “It’s basically like a child being punished and the child saying ‘Well, gee, Johnny’s parents do things a little bit differently, why can’t I benefit from that?’ ” Canada, he says, is right to reject DPAs. “Lavalin should be


grateful, and not pout, that Canadian authorities will have to prove the facts and legal theories alleged in the enforcement action. In the US, the [Foreign Corrupt Practices Act] enforce- ment agencies are rarely put in the position of having to prove anything in a corporate FCPA enforcement action. Rather, the DOJ [or SEC] occupy the position of prosecutor, judge and jury all at the same time and use resolution vehicles such as non- prosecution and deferred prosecution agreements or adminis- trative settlements — all of which are not subjected to any mean- ingful judicial scrutiny.” It’s unclear at the moment whether Canada will adopt the


DPA option, but there is no doubt that if corporations commit serious fraud the consequences will come crashing down on them, one way or another.


DAVID MALAMED, CPA, CA•IFA, CPA (ILL.), CCF, CFE, CFI, is a partner in forensic accounting at Grant Thornton LLP in Toronto


DECEMBER 2015 | CPA MAGAZINE | 53


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