The RCMP must make fighting stock market fraud a priority and overhaul the way it investigates these complex cases if it hopes to improve its track record on catching white-collar criminals, according to a report released yesterday.
The much-anticipated report comes from Nick Le Pan, a special adviser appointed by the federal government to get to the bottom of the troubles at the force's Integrated Market Enforcement Teams. The teams, created in Vancouver, Calgary, Montreal and Toronto in 2003, were meant to crack down on high-profile stock market frauds and accounting scandals.
But, as Le Pan noted, the elite teams became bogged down by bureaucracy, staff turnover, lack of leadership and low morale.
"Legitimate criticisms centre on the lack of results and questioning whether the program and its partners have the sense of urgency needed to succeed. Nor has IMET demonstrated the leadership, tone from the top, results focus, nimbleness or consistent cohesion of action or communication among the players that is necessary to succeed," Le Pan wrote.
"Those being investigated or charged will understandably bring substantial high-quality resources to bear to defend themselves. The program is `playing in the big leagues' and needs to act that way."
Many observers have criticized Canadian enforcement as weak, especially when compared to jail sentences handed to those convicted of white-collar crimes in the U.S.
"While expectations of U.S.-style results are unrealistic, given Canada's legal and enforcement environment, the (enforcement teams) should be producing more results, more quickly," Le Pan wrote. "Without enhanced credibility, the existence of the program in its current form in the RCMP will be questioned more than it is today."
In Edmonton yesterday, Federal Finance Minister Jim Flaherty told reporters that he plans to raise the issue when provincial finance ministers meet next week in Ottawa, and adds the report reinforces the need for Canada to have a unified national securities regulator.
In Ottawa, Liberal finance critic John McCallum said stepped-up oversight of securities markets in Canada is a must. "I certainly agree that we should beef up our capacity to fight white-collar crime because I think that's an area where Canada is embarrassingly weak."
Several times in his report, Le Pan addressed the notion that white-collar crimes are not as serious as others. "How can we say that an elderly or unsuspecting person, who is criminally swindled out of their life savings, and lives in penury with lasting, disastrous consequences on their health or lifestyle, is less important than other victims of crime?"
Since 2003, enforcement teams have started 13 large-scale investigations, but have laid only one charge to date. On average, it takes teams 2.8 years to investigate a case. Four cases have been passed on to prosecutors, who are considering laying charges.
Le Pan also wrote that team investigations need to be more focused. "It is better to focus on charging a few key perpetrators with a few offences, reasonably quickly, than going after everyone involved, and ending up with an unmanageable investigation that drags on and may never be finished."
All the officers who started off in charge of team units have left in the past four years, and in three locations the unit will soon be on its third officer in charge, Le Pan found.
He also called for the RCMP, prosecutors and the federal government to develop a simple, formal plan to manage its caseload, and to take on more smaller, less-complex cases.
Accepting more big investigations should not be a priority until the enforcement group has improved its practices, the report said.
Le Pan said that he plans to stay on as special adviser until next October to help implement the recommendations.