No way to “assess facts” in deals between corrupt companies and prosecutors, says a Quebec judge
When Filipino businessman Rizalino Espino was named as a participant in a Canadian company bribery scandal, he assumed his day in court meant a judge would hear him and weigh his version of the facts.
Instead, it didn’t matter what evidence his attorney presented.
A Quebec judge wrote in May that there was “no opportunity to evaluate facts” in the case, in which the court approved a reorganization agreement between federal prosecutors and a Quebec forensic technology company that had been doing business in the Philippines for years.
Reorganization agreements – the Canadian version of deferred prosecution agreements – are a new part of the legal landscape that should make it easier to bring corrupt companies to justice while allowing them to avoid prosecution.
However, Espino’s experience highlights a possible flaw in the process: the judges who rule on approving the deals are unable to verify whether the agreed facts underlying the agreements are true. Only the accused company and the prosecutors decide on these agreed facts.
Jennifer Quaid, a law professor at the University of Ottawa, said Canada’s system of remediation agreements relies on the voluntary disclosure of individuals involved in wrongdoing who likely “form the best possible picture of one’s involvement,” she said.
“Even when you acknowledge responsibility, most of the time you’re striving to shoot as positively as possible.”
In the case involving Espino, the remediation agreement was entered into by Quebec-based Ultra Electronics Forensic Technology. The company admitted years of wrongdoing and agreed to pay a $10 million fine for a bribery scheme to sell its flagship ballistic identification system to the Philippine National Police.
Espino was not charged with any crime. But he and his company, Concept Dynamics Enterprises, went to court in Canada to clear their names after discovering they had been named as participants in the bribery scheme in the “agreed statement of facts” of the reorganization agreement.
The statement portrayed Espino as a key player in the scheme, which Ultra said had “earmarked and promised” bribes to top officials, including then-Philippines Interior Minister Ronaldo Puno and his brother. The company admitted using the corruption scheme to secure $17 million worth of contracts with the Philippine Police Force.
But Espino said he was a victim and a whistleblower who put an end to Ultra’s corrupt plan and did not pay bribes to the Puno brothers or anyone else.
In a series of emails to The Canadian Press, Espino said he wanted to “save his reputation” after being “pulled through the mud” during the court hearing to approve the reorganization agreement.
“The court has no authority to consider any other information, no matter how persuasive,” Espino wrote. “As this is only the second reorganization agreement to be approved in Canada, there is still much to learn.”
Espino said he wanted “a chance to defend my name and reputation.”
Quebec Superior Court Judge Marc David denied Espino’s request to remove the allegations against him from the statement of agreed facts and ruled to approve Ultra’s reorganization agreement.
“When presented with a reorganization agreement, a court must accept the facts presented by the prosecutor and the accused organization,” David wrote.
“The process is two-part. There is no way to judge facts. In principle, an agreed statement of facts cannot be called into question by the possible existence of contradictory evidence.”
Third parties like Espino and Concept Dynamics have no immediate way to prevent a reorganization agreement, even if they present what David called “alternative facts.”
Espino’s attorney, Philip Aspler, told the judge that the agreed statement of facts was defamatory and “full of inaccuracies, errors and outright lies.”
“You can’t help but wonder if the prosecutor ever bothered to check the facts or just swallowed everything the defendant did,” Aspler told the judge. “One of the questions is whether the Crown actually bothered to learn all sides of the story, and I respectfully claim it hasn’t.”
David, who called Espino’s claims “curve ball” at the December 2022 hearing, is only the second judge charged with authorizing a reorganization agreement since they were written into the Criminal Code in 2018.
The first involved SNC-Lavalin, which last year admitted to corruption over the redevelopment of Montreal’s Jacques Cartier Bridge.
However, the remediation process was brought into the public eye in 2019 in a separate case involving SNC-Lavalin. Former Attorney General Jody Wilson-Raybould claimed Prime Minister Justin Trudeau unduly pressured her to strike a deal with SNC-Lavalin over its corrupt dealings in Libya. She refused, and instead of remedying the situation, the company eventually pleaded guilty to fraud.
With Canada’s system of deferred prosecution still in its infancy, David noted that his ruling in the Ultra case would likely impact future reorganization agreements.
Stéphane Hould, the coordinator of the prosecutor’s reorganization agreement, declined to comment on the case, citing submissions from the Crown depicting Espino as an authorized “participant” in the bribery scheme that ran from 2006 to 2018.
In court, the Crown prosecutors stood behind the agreed statement of facts. Fraud and offenses under the Foreign Officials Corruption Act, prosecutors at the court said, did not require that “bribes were actually paid.”
“The fraud scheme aimed to inflate contract prices and was facilitated by receiving (Espinos) commissions,” the Crown filings read.
They warned David that considering Espino’s allegations could derail the process, as he would be forced to rule on facts that the system of reorganization agreement does not allow.
Judge David eventually agreed, noting that he could not deny the agreement because Concept Dynamics could not show that prosecutors or Ultra Electronics had “willfully” misled the court.
“When a court is presented with a reorganization agreement, it must accept the facts presented by the prosecutor and the accused organization,” David said. “There is no way to judge facts. In principle, an agreed statement of facts cannot be called into question by the possible existence of contradictory evidence.”
He added that Concept Dynamics “can seek redress in the civil court system” if it feels harmed.
In an emailed statement, Ultra Electronics said Espino’s claims are “factually unfounded.”
“This matter has been thoroughly and extensively investigated by the Royal Canadian Mounted Police with our full cooperation,” the company said. “Ultra Forensic Technology no longer uses intermediaries in the Philippines. This includes Mr. Espino, who is an accomplice in the historic wrongdoing as detailed in the factual statement agreed between PPSC and the company.”
Quaid, a law professor at the University of Ottawa, said the Concept Dynamics case is strange and “difficult” because the case dates back many years and bribery schemes typically involve many parties with varying degrees of guilt.
“I objectively don’t know where the truth is,” she said. “No one but the people who conducted the investigation and the parties involved themselves actually know the full extent.”
However, she said it was very likely that a scenario like this simply had not been considered when the recovery agreement was being drafted.
Quaid said it’s possible that true victims are being overlooked, which is a “void” in a regime committed to putting victims first.
“It seems like an accident,” she said.
Quaid said there is a risk that investigations will miss things and that it is difficult to catch people in a lie when independent verification is not possible.
“So you need someone inside you to say, ‘Oh, I know what happened and I’m going to tell you,'” she said. “But then there’s still a level of trust there.”
As part of the reorganization agreement, Ultra Electronics was ultimately fined $10 million and charges of foreign bribery and fraud remain pending against former employees Robert Walsh, Timothy Heaney, René Bélanger and Michael McLean.
No way to “assess facts” in deals between corrupt companies and prosecutors, says a Quebec judge
by , 2023-07-10 13:57:25
