Thursday, June 19, 2008

Canada's double standard for securities fraud

By: Louis M.

Below is the copy of the RCMP statement against the Nortel executives. For the Globe story, see "RCMP charge former Nortel executives"

Notice that in the Nortel statement, the RCMP says so and so "...circulated or published a statement or an account whether or not it was written or oral, knowing that it was false in a material particular, with the intent to deceive or defraud..." This statement causes me great intellectual angst. On what reasonable basis can the Department of Finance September 2005 Consultation Paper or the 2007 presentations by the Department of Finance to the FINA Committee be distinguished from the Nortel case?

The claim "Income trusts cause tax leakage" was circulated and published by written and oral presentation, when the claim was known to be false, and was made with the intent to deceive. How is that different? It is not different in substance. It is different only in the fact that the Nortel executives do not have Parliamentary immunity but those who provided testimony to Parliament do. There is, of course, the issue of "Why hasn't Parliament not sought to punish the officials and intervenors who made false presentation to Parliament?" Perhaps they will some day.

As we know, the Auditor-General has granted the income trust tax decision a free pass by reason of it being a "policy decision." The proponents of the tax may have a probable case (with a probability of less than 5%) that income trusts will cause Canada to become economically inefficient. But that is not the case that was made to Parliament. The case to Parliament "was known to be false, and was made with the intent to deceive." In any case, the role of the A-G is to ensure that the information considered by Parliament is materially true and correct.

Do that in the US and cause $1 billion of losses, you'll be charged; your personal net worth will be wasted on legal fees; and you'll go to jail. Do that in Canada to Parliament and cause losses of $35 billion, you'll be named "Newsfaker of the Year."

1 comment:

Anonymous said...

Louis: Correct me if I am wrong. Isn't Flaherty the same person who is always preaching about the need for transparency and disclosure in matters financial?

For example that's his recipe for solving future Asset Backed Commercial Paper meltdowns. double standard.....just blatant hypocrisy of the highest order.

Time to lose the CON nation.

Brent Fullard