Proposed Best Practices for Prosecuting Fraud Against Governments (Updated January 2015)

Background

The mandate, duties, and functions of the Director of Public Prosecutions (DPP) are set out in section 3 of the Director of Public Prosecutions Act (DPP Act). They include the initiation and conduct of prosecutions on behalf of the Crown and the provision of advice to law enforcement agencies and investigative bodies in respect of prosecutions generally or in respect of a particular investigation that may lead to a prosecution. The DPP Act also provides the DPP with the power to make binding and final decisions as to whether to prosecute, unless the Attorney General of Canada directs otherwise, and that such directives must be in writing and published in the Canada Gazette.

The PPSC has jurisdiction to prosecute indictable offences under the Financial Administration Act. These offences deal specifically with acts of fraud against the government committed by those who have access to funds or other valuable public assets by virtue of their employment with a federal agency, or of a contractual relationship with a federal agency for the provision of required goods or services. Under subsection 80(2) of the Financial Administration Act, it is an offence of fraud for public servants employed in the collection, management or disbursement of public money to, by deceit, falsehood, or other fraudulent means, defraud Her Majesty of any money, securities, property or service. The offence is punishable by a maximum of five years imprisonment and a fine of $5,000 for a fraud of $5,000 or less, or by fourteen years imprisonment and a fine equal to the amount of the fraud for a fraud of more than $5,000.

Under section 154.01 of the Financial Administration Act, it is an indictable offence for directors or employees of Crown corporations to defraud the corporation. The maximum penalty set out in section 154.01 is a five-year term of imprisonment and a fine of $5,000 for a fraud of $5,000 or less, and a fourteen-year term of imprisonment and a fine equal to the amount of the fraud for a fraud over $5,000.

It is important to point out that section 380 of the Criminal Code enacts a general prohibition against fraudulent activities that also applies in the context of fraud against the government. Fraud is an indictable offence punishable by a term of imprisonment not exceeding fourteen years if the value of the fraud exceeds $5000. If the value of the fraud is less than $5000, it is either an indictable offence punishable by imprisonment for a term not exceeding two years or a summary conviction offence punishable by a maximum fine of $5000 or a maximum jail term of 6 months or both. A minimum sentence of two years of imprisonment was adopted in 2011 for frauds exceeding one million dollars. Under section 2 of the Criminal Code, both the Attorney General of Canada and the Attorney General of a province have jurisdiction to carry out the prosecution of an offence under section 380.

This document was initially published in 2009 in response to an assignment issued by the Attorney General of Canada to the DPP, as follows:

I hereby assign to the Director of Public Prosecutions the responsibility of developing a set of best practices for prosecuting fraud involving governments.Footnote 1

Following the publication of the 2009 Best Practices, the Treasury Board Secretariat Policy on Losses of Money and Offences and Other Illegal Acts Against the Crown was replaced by the Directive on Losses of Money and Property. The PPSC Deskbook replaced the FPS Deskbook on September 2, 2014. Consequently, the best practices have been updated to reflect these changes.

Proposed Best Practices

The following items have been identified as proposed best practices for prosecuting fraud against government in Canada.

A. Detection, Prevention, and Education in the Area of Fraud Against Government

Best Practice Rationale
In cooperation with federal partners, the PPSC will develop training material and offer awareness sessions to federal officials on the various offences of fraud against government and guiding principles concerning parallel administrative and criminal investigations.

The enactment of amendments to the Financial Administration Act and the introduction of the Treasury Board Secretariat Directive on Losses of Money or Property provide an opportunity to inform and sensitize federal employees and managers, not only to the existence of the offences under the Financial Administration Act, but also to the offences under the Criminal Code and other federal statutes that would apply to fraudulent conduct in a governmental workplace.

Government officials need also to understand the interplay between parallel internal inquiries into potential frauds committed by employees and criminal police investigations.

B. Prosecutorial Involvement at the Criminal Investigative Stage

Best Practice Rationale
The PPSC will provide pre-charge and post-charge advice to investigators during criminal investigations.

Some fraud-against-government cases may be complex in nature, and could warrant the early involvement of Crown prosecutors. The law is clear that the police have complete autonomy in deciding who to investigate and for what suspected offences. The PPSC Deskbook guideline “2.7 Relationship between Crown Counsel and Investigative Agencies” provides useful guidelines concerning how productive collaboration between police officers and prosecutors can be achieved at the investigative stage.

PPSC will assign Crown counsel to provide advice on an ongoing basis in cases requiring provision of advisory services during the criminal investigation stage. For example, pre-charge advice may assist investigators in the collection of the required evidence in a manner that ensures its admissibility at trial.

C. Approaches to Dealing with Complex Cases of Fraud Against Government

Best Practice Rationale

When required, the PPSC will apply established policies and procedures for handling high-complexity cases to investigations and prosecutions of fraud against government. More specifically, this includes, but is not limited to:

  • providing assistance in reviewing the information used to obtain judicial authorizations;
  • providing strategic advice to investigators to protect the integrity of the criminal investigation when parallel civil, disciplinary, and/or administrative investigations are underway;
  • assisting in the processing of outgoing mutual legal assistance requests and in the enforcement of orders on behalf of foreign governments;
  • providing strategic advice to investigators concerning the operational plan, target(s), and prospective charge(s), in order to keep the investigation focussed; and
  • providing guidance and support in the drafting of the Report to Crown Counsel.
The PPSC Deskbook guideline “3.1 Major Case Management” addresses the efficient conduct of high-complexity cases. It deals with the legal, financial and strategic risks associated with major cases and ensures a consistent approach in managing such cases. Investigators may wish to consult with Crown counsel for advice and guidance as to how the investigation should be structured to ensure a sustainable prosecution.

D. Performance Measures in Prosecuting Fraud Against Government

Best Practice Rationale

The PPSC will compile data on prosecutions it handles in the area of fraud against government. This information would include:

  • the number of fraud-against-government-related cases examined by the PPSC for pre–charge screening;
  • the number of charges laid pursuant to the Financial Administration Act;
  • the number of convictions; and
  • the nature of any sentences imposed.
The PPSC has an interest in ensuring that data on such prosecutions be collected for its own reporting, monitoring, and evaluation purposes, and in tracking the number of these prosecutions.
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