Having more than $1.1 trillion in foreign investment in Canada can be considered both a good thing and a bad thing.
The good thing is it's always nice to see foreigners contribute to our economic growth and well-being in such a tangible way.
However, if these investors were to come to see Canada as the Nigeria of the North - a hospitable haven for white-collar criminals - a good thing could quickly turn into a really bad thing.
Statistics Canada figures show that in 2003, foreign direct investment in Canada totalled $357.5 billion.
(Direct investment is a level of investment sufficient to give the investor a significant voice in the management of the business.)
In addition, foreign investors hold $405.3 billion in Canadian bonds, $84.7 billion in Canadian stocks, $21.4 billion in Canadian money- market investments and $258 billion in other forms of investment such as loans and deposits.
It is not difficult to imagine the immense havoc that would be wreaked upon our economy if any significant portion of this $1.1 trillion in foreign investment were to be suddenly withdrawn.
Canada's powers-that-be now appear to be getting the message that white collar- crime law enforcement and sentencing must be taken seriously.
In a 2002 Speech from the Throne, the federal government revealed that it would change some of Canada's laws and strengthen enforcement.
The government followed through with Bill C-13, a capital markets fraud and evidence-gathering law, which allows the courts to issue orders to obtain data and documents from parties not under investigation.
Bill C-13, adopted last year, also creates a new Criminal Code of Canada offence of insider trading, increases the maximum sentences for existing fraud offences and establishes a list of aggravating factors to assist the courts in sentencing. Too often, the courts have given white-collar wrongdoers little more than a stern talking-to.
Meanwhile, Canada's Department of Justice, Treasury Board and RCMP worked together to design integrated market enforcement teams (IMETs). Administered by the RCMP, IMETs are interdisciplinary squads of corporate super-sleuths modelled on a multi-agency approach used in recent years in complex transnational fraud cases.
The teams - backed by $30 million a year in federal funding - include highly skilled and experienced RCMP officers, all of whom have university degrees in such fields as business, finance, accounting and law. They also include public servants and computer support personnel.
The IMET mandate is simple: They investigate fraud or theft where the behaviour involves a publicly traded company. The bigger the company's presence on the markets and the more outrageous the fraud, the more likely it will find itself on IMET's radar.
IMET was launched in Toronto in November 2003. Since then, IMETs have opened offices in Vancouver, Calgary and Montreal. Toronto, host to the country's biggest capital market, now has three teams. The other cities have two teams each.
In addition, a "quick-start" IMET is stationed in Ottawa, ready for action in any part of the country where local police need a hand in designing and launching a major case.
"IMETs will help catch corporate criminals who may have previously evaded the law," then-solicitor general Wayne Easter said at the Toronto launch. "They will also be a serious deterrent to those even thinking about such criminal acts in the first place."
Insp. Bruce Fillier, head of the Calgary-based IMET, emphasized in an interview that IMETs are a multi-agency enterprise. "We are building bridges with our partners," he said.
IMETs have a simple message for Canada's corporate sociopaths.
"We're here," Fillier said. "We're ready to do business. If there are people out there who are interested in delving into the dark side and cheating investors, we're planning on rising to the challenge."
The sparkle in this 20-year RCMP veteran's eyes suggests that he's not kidding - that he'd love to see the resourcefulness and professional mettle of his teams tested by any capital market challenge.
Canada's overworked law enforcement and regulatory agencies have had no problem embracing the IMET concept.
"Our joint venture with the RCMP ... to combat securities fraud is starting to yield results," the Ontario Securities Commission says in its 2004 annual report. "A number of cases are in development which neither organization would likely have been able to pursue on its own."
As if to let the big boys on Bay Street and Howe Street know that police also have power, an IMET staged what appeared to be a deliberately high-profile raid Feb. 1 at the Toronto head office of the Bank of Nova Scotia.
It seems that Scotiabank's pinstripes were less than forthcoming with documentation related to one of the bank's major clients, Royal Group Technologies, an Ontario-based company under investigation by IMET and other agencies.
Solicitor-client privilege, the bankers intoned.
So, at morning rush hour, the IMET parked its huge command-centre van - IMET name and logo emblazoned on its side - in front of the Scotiabank tower and descended, 25 strong, with a 60-day search warrant, on the bank's stunned inhabitants.
In the rarified world of high finance, it was like a walrus breaking wind in a Rosedale parlour.
Fillier declined to comment on any of his investigations, though he did allow that it did not take long in Alberta to find big cases.
"If you have someone high up that's cooking the books just to make the company look good and the company is publicly traded, then the investors are relying on false financial statements," Fillier said. "It can be complicated, believe me."
It's good to see government giving police the support they so desperately need.
Who knows? If the baser instincts of some of Canada's corporate leaders can be kept at bay, those foreign investors may continue blessing us with their munificence.
(Brock Ketcham is a writer who specializes in consumer and public policy issues.)
