LexSage

Compliance Incentive: Canada to
appoint a Canadian Ombudsman for
Responsible Enterprise

January 17, 2018
Written by Cyndee Todgham Cherniak

On January 17, 2018, the Government of Canada furthered its “progressive trade agenda” and responded to calls from human rights groups by announcing that it is going to take an interest in the activities of Canadian businesses operating in overseas markets.  The Government of Canada will create an Office of the Canadian Ombudsperson for Responsible Enterprise (CORE) to be within Global Affairs Canada (referred to herein as the "Corporate Resposibility Ombudsman"). The Governor in Council (Canada's federal cabinet) will, in the future, select the Corporate Responsibility Ombudsman.  Who will receive this political appoitment will shape the office of the Corporate Responsibility Ombudsman.

This will be a different type of Ombudsman.  The person appointed to this office will be charged with investigating Canadian companies operating in foreign markets rather than investigating the activities of Canadian government officials.  The Corporate Responsibility Ombudsman will receive complaints about Canadian companies from Canadians, competitors, foreign governments, foreign citizens, not-for-profit organizations, activists and others. These complaints will be investigated.  This may be the first Corporate Responsibility Ombudsman anywhere in the world.

The initial scope of the Corporate Responsibility Ombudsman will be on the mining, oil and gas, and garment sectors. However, there is an expectation that the scope will expand within a year of the Corporate Responsibility Ombudsman taking office to other business sectors. This means that other business sectors should also get ready.  The Government of Canada will also create a multi-stakeholder Advisory Body to provide advice to the Corporate Responsibility Ombudsman about what is "corporate responsibility" what rules and guidelines should be established for Canadian companies operating overseas to follow.  They will set the standard for behaviour.

This new Corporate Responsibility Ombudsman will incentivize Canadian companies to implement compliance programs to ensure that they are complying with Canadian laws and the laws of foreign jurisdictions. In addition, the new Corporate Responsibility Ombudsman will incentivize compliance with human rights laws and Canadian values on human rights and corporate responsibility. Further, the new Ombudsman will incentivize Canadian companies operating overseas to implement compliance policies to limit risk exposure for potential complaints to the Corporate Responsibility Ombudsman of any kind (those who wish to complain may not restrict themselves to issues of corporate responsibility).  This would cover not only the strict wording of laws, but complying with the object and spirit of laws and value propositions and taking a wider interpretation of the laws than a court might.

The Corporate Responsibility Ombudsman will be empowered to independently investigate, report, recommend remedy and monitor its implementation.  The reports may be made public - another incentive to implement a complaicne program and behave above any standards that are set. It is expected that if Canadian companies do not comply with a request by the Corporate Responsibility Ombudsman to provide documents and engage in meetings, that the government may take steps to compel the production of the information or attendance.

The Corporate Responsibility Ombudsman will be given the powers to recommend a “punishment” for “bad behaviour”.  If a Canadian company has broken export controls, economic sanctions, anti-bribery or other laws, the Corporate Responsibility Ombudsman file should be handed to the Royal Canadian Mounted Police for prosecution so that a court can decide if an offence has been committed.  If the “bad behaviour” of the Canadian company falls short of the to-be-established "corporate responsibility standards", the Corporate Responsibility Ombudsman will have the power to impose trade sanctions, such as recommending the withdrawal of consular services or cutting access to Export Development Canada trade financing or insurance products and services.  The Corporate Responsibility Ombudsman may also make non-binding recommendations concerning payment of compensation, which cannot be ordered by Canadian courts under Canada’s export controls, economic sanctions, anti-bribery and other international laws.

We have written a number of articles on developing a compliance programs such as, How to Start A Trade Compliance Program?  Who, What, When, Where, How Questions to Ask

If you would like to know more about implementing a compliance program, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

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