No way to ‘assess facts’ in deals between corrupt companies and prosecutors: judge
When Filipino businessman Rizalino Espino was named as a participant in a bribery scandal involving a Canadian company, 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 lawyer presented.
A Quebec judge wrote in May that there was “no ability to review facts” in the case, in which the court approved a redress agreement between federal prosecutors and a Quebec forensics technology company that had done business in the Philippines for years.
Restoration agreements – Canada’s version of deferred prosecution agreements – are a new part of the legal landscape, which were supposed to make it easier to bring corrupt companies to justice while helping to avoid prosecution.
But Espino’s experience points to a possible flaw in the process: the judges who decide whether to approve the deals cannot judge whether the agreed-upon facts underlying the agreements are true. These agreed facts are decided solely by the accused company and the prosecutors.
Jennifer Quaid, a law professor at the University of Ottawa, said Canada’s reparations regime relies on voluntary disclosure by people involved in misconduct, which probably “paints the best possible picture of someone’s involvement,” she said.
“Even when one acknowledges responsibility, there is usually an effort to run as positively as possible.”
In the event Espino got caught up, the recovery deal was made by Ultra Electronics Forensic Technology of Quebec. It 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 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 “agreed statement of facts” of the recovery deal.
The statement portrays Espino as a key player in the plan that Ultra said “earmarked and promised” bribes to top officials, including then-Philippine Interior Secretary Ronaldo Puno and his brother. The company admitted to using the corrupt scheme to win $17 million in contracts with the Philippine police.
But Espino said he was a victim and a whistleblower who ended Ultra’s corrupt plan and did not bribe 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 “dragged through the mud” during the process of approving the reparations deal.
“The court has no jurisdiction to consider any other information, no matter how compelling it may be,” Espino wrote. “Because this is only the second remediation deal to be approved in Canada, there is still a lot to learn.”
Espino said he wanted “a chance to defend my name and reputation”.
Quebec Supreme Court Judge Marc David rejected Espino’s bid to have the allegations against him removed from the statement of agreed facts, in his decision to approve Ultra’s reparations deal.
“When a court is offered a redress agreement, it must accept the facts as revealed by the prosecution and the accused organization,” David wrote.
“The procedure is two-part. There is no possibility to judge facts. In principle, an agreed statement of facts cannot be dissolved on the basis of the possible existence of contradictory evidence.”
Third parties like Espino and Concept Dynamics have no immediate option to negotiate a recovery deal, even if they present what David called “alternative facts.”
Espino’s lawyer, Philip Aspler, told the judge that the agreed statement of facts was libelous and “full of inaccuracies, errors and outright lies”.
“You can’t wonder if the prosecution ever bothered to check the facts or just swallowed everything the defendant did,” Aspler told the judge. “One of the problems is, has the Crown really bothered to get all sides of the story, and I respectfully state that’s not the case.”
David, who called Espino’s claims a “curveball” at the December 2022 hearing, is only the second judge to approve a redress agreement since they were added to the Penal Code in 2018.
The first involved SNC-Lavalin, which admitted corruption last year in connection with the renovation of Montreal’s Jacques Cartier Bridge.
But the recovery process was made public in 2019, in a separate case involving SNC-Lavalin. Former Attorney General Jody Wilson-Raybould alleged that Prime Minister Justin Trudeau improperly pressured her to make a deal with SNC-Lavalin over his corrupt dealings in Libya. She refused, and instead of reinstatement, the company ultimately pleaded guilty to fraud.
With Canada’s deferred prosecution regime still in its infancy, David noted that his ruling in the Ultra case was likely to have implications for future reparations deals.
Stéphane Hould, the prosecution’s recovery deal 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, the attorneys general stood by the agreed account of facts. Fraud and violations under the Corruption of Foreign Public Officials Act, prosecutors told the court, do not require “an actual bribe to be paid.”
“The fraud scheme was designed to drive up the price of the contracts and was made possible by the receipt of (Espino’s) commissions,” the Crown’s submissions said.
They warned David that accepting Espino’s claims could derail the trial by requiring him to review facts, which the reparations regime does not allow.
Judge David eventually agreed, ruling that he could not overturn the agreement because Concept Dynamics could not prove that the plaintiffs or Ultra Electronics had “deliberately” misled the court.
“When a court is offered a redress agreement, it must accept the facts as revealed by the prosecution and the accused organization,” David said. “There is no way to judge facts. In principle, an agreed statement of facts cannot be dissolved on the basis of the possible existence of contradictory evidence.”
He added that Concept Dynamics can “seek redress in the civil justice system” if it feels aggrieved.
In an emailed statement, Ultra Electronics said Espino’s claims have “no basis in fact.”
“This matter has been thoroughly 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 implicated as an accomplice in the historic misconduct as described by the agreed statement of facts conducted by the PPSC and the company.
Quaid, a law professor at the University of Ottawa, said the case involving Concept Dynamics is strange and “troublesome” because the case is many years old and bribery schemes usually involve many parties with varying degrees of culpability.
“I don’t objectively know where the truth is,” she said. “No one outside of the people who did the research and the parties themselves who were involved know the full extent of it.”
But she said it is very likely that such a scenario was simply not considered when the restructuring agreement was drafted.
Quaid said it’s possible that real victims are being overlooked, representing a “gap” in a regime mandated to be victim-oriented.
“Looks like that’s a mistake,” she said.
Quaid said there is a danger that investigations will overlook things and that it is difficult to catch people lying if independent verification is not possible.
“So you need someone on the inside who’s like, ‘oh, I know what happened and I’m going to tell you,'” she said. “But then there’s a certain amount of belief afterwards.”
Ultra Electronics was eventually fined $10 million under its recovery deal, and foreign bribery and fraud charges are still pending against former employees Robert Walsh, Timothy Heaney, René Bélanger and Michael McLean.
This report from The Canadian Press was first published on July 10, 2023.
