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No way of ‘adjudicating facts’ in Crown deals with corrupt firms: judge

In remediation, agreed-upon facts decided solely by the accused company and prosecutors

When Philippines businessman Rizalino Espino was named as a participant in a bribery scandal involving a Canadian company, he assumed his day in court meant that a judge would hear him out and weigh his version of the facts.

Instead, it didn’t matter what evidence his lawyer presented.

A judge in Quebec wrote in May that there was “no possibility of adjudicating facts” in the case, in which the court approved a remediation agreement between federal prosecutors and a Quebec forensic technology firm that did business for years in the Philippines.

Remediation agreements — the Canadian version of deferred prosecution deals — are a new part of the legal landscape, that were supposed to make it easier to bring corrupt companies to justice, while allowing them to avoid prosecution.

But Espino’s experience highlights a potential flaw in the process: the judges who decide whether to approve the deals are unable to consider whether the agreed facts that underpin the agreements are true. Those agreed facts are decided upon solely by the accused company and prosecutors.

University of Ottawa law professor Jennifer Quaid said the remediation agreement regime in Canada relies on voluntary disclosure by people involved in wrongdoing, who are likely “to paint the best possible picture of one’s involvement,” she said.

“Even if one acknowledges responsibility, usually there is an effort to spin as positively as possible.”

In the case that entangled Espino, the remediation agreement was struck by Quebec-based Ultra Electronics Forensic Technology. It admitted years of wrongdoing and agreed to pay a $10 million fine for a bribery scheme to sell its flagship ballistics identification system to the Philippines National Police.

Espino was not charged with a 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 remediation deal’s “agreed statement of facts.”

The statement depicts Espino as a key player in the scheme that Ultra said “earmarked and promised” bribes for top officials including then Philippines interior secretary Ronaldo Puno and his brother. The company admitted using the corrupt scheme to help it secure $17 million in contracts with Philippines police.

But Espino said he was a victim and a whistleblower who put an end to Ultra’s corrupt scheme, and didn’t provide bribes to the Puno brothers or anyone else.

In a series of emails to The Canadian Press, Espino said he wanted to “salvage” his reputation after being “dragged through the muck” during the court process of approving the remediation agreement.

“The court is not empowered to take any other information into consideration, no matter how compelling it may be,” Espino wrote. “This being just the second remediation 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 rejected Espino’s bid to have the accusations against him removed from the statement of agreed facts, in his decision to approve Ultra’s remediation agreement.

“When presented with a remediation agreement, a court must accept the facts as exposed by the prosecutor and the accused organization,” David wrote.

“The procedure is bipartite. There is no possibility of adjudicating facts. In principle, an agreed statement of facts cannot be unsettled based on the possible existence of contradictory evidence.”

Third parties like Espino and Concept Dynamics are left with no immediate recourse to head off a remediation agreement even if they present what David called “alternative facts.”

Espino’s lawyer, Philip Aspler, told the judge that the agreed statement of facts was defamatory and “full of inaccuracies, mistakes and outright lies.”

“One cannot help wonder if the prosecutor ever even bothered to check the facts or just swallowed, hook, line and sinker, everything that the defendant did,” Aspler told the judge. “One of the issues is, did the Crown actually bother to get all sides of the story, and I respectfully submit that it did not.”

David, who called Espino’s claims a “curveball” in the December 2022 hearing, is only the second judge tasked with approving a remediation agreement since they were added to the Criminal Code in 2018.

The first involved SNC-Lavalin, which last year admitted corruption related to the refurbishment of the Jacques Cartier Bridge in Montreal.

But the remediation process had been put in the public eye in 2019, in a separate case involving SNC-Lavalin. Former attorney general Jody Wilson-Raybould claimed Prime Minister Justin Trudeau inappropriately pushed her to cut a deal with SNC-Lavalin over its corrupt dealings in Libya. She refused, and instead of remediation, the company ended up pleading guilty to fraud.

With Canada’s deferred prosecution regime still in its infancy, David remarked that his ruling in the Ultra case would likely impact future remediation agreements.

Stéphane Hould, the prosecution service’s remediation agreement coordinator, declined to comment on the case but pointed to Crown submissions depicting Espino as an admitted “participant” in the bribery scheme, which ran from 2006 to 2018.

In court, Crown prosecutors stood behind the agreed statement of facts. Fraud and offences under the Corruption of Foreign Public Officials Act, prosecutors told the court, don’t require that “bribes were actually paid.”

“The fraud scheme was designed to inflate the price of the contracts and was facilitated through the receipt of (Espino’s) commissions,” the Crown’s submissions said.

They warned David that entertaining Espino’s claims could derail the process by requiring him to adjudicate facts, which the remediation agreement regime doesn’t allow.

Judge David ultimately agreed, finding he couldn’t reject the agreement because Concept Dynamics failed to demonstrate that the prosecutors or Ultra Electronics had “wilfully” misled the court.

“When presented with a remediation agreement, a court must accept the facts as exposed by the prosecutor and the accused organization,” David ruled. “There is no possibility of adjudicating facts. In principle, an agreed statement of facts cannot be unsettled based on the possible existence of contradictory evidence.”

He added that Concept Dynamics “can seek redress in the civil court system” if it felt aggrieved.

In an emailed statement, Ultra Electronics said Espino’s claims have “no basis in fact.”

“This matter has been thoroughly investigated at length by the Royal Canadian Mounted Police, with our full co-operation,” the company said. “Ultra Forensic Technology no longer uses any intermediaries in the Philippines. This includes Mr. Espino, who is implicated as an accomplice, in the historical misconduct as described by the agreed statement of facts executed by the PPSC and the company.”

University of Ottawa law professor Quaid said the case involving Concept Dynamics is odd and “tricky” because the case dates back many years, and bribery schemes usually involve many parties with varying degrees of blameworthiness.

“I don’t objectively know where the truth is,” she said. “No one outside of the people who did the investigation and the parties themselves who were involved actually know the full extent of it.”

But she said it’s highly likely that when the remediation agreement regime was devised, a scenario like this simply wasn’t contemplated.

Quaid said it’s possible that true victims could be overlooked, representing a “gap” in a regime that is mandated to be victim-centric.

“It seems like that’s an oversight,” she said.

Quaid said there’s a danger that investigations might miss things and it’s difficult to catch people in a lie if independent verification isn’t possible.

“So you need someone on the inside that says, ‘oh, I know what happened and I’m gonna tell you,’” she said. “But then there is a certain amount of faith afterwards.”

Ultra Electronics was ultimately penalized $10 million under its remediation agreement, and foreign bribery and fraud charges are still pending against former employees Robert Walsh, Timothy Heaney, René Bélanger and Michael McLean.

READ ALSO: PMO tried to persuade Wilson-Raybould on SNC-Lavalin, not pressure her