Killing the Criminal Investigation

October 30th, 2017

Ponder a question;  What is the Canadian Standards Association (CSA)?

Do you live in China?  No?  Well, in that case, the CSA is definitely not an Agency of the Canadian Government.  Perhaps you live in Taiwan?  Alright, that means CSA is an American corporation.  Oh, you’re not from there?  Ok, then CSA isn’t American at all, it’s Canadian.  Unless you’re a US citizen, in which case CSA is an international standards organization without nationality.

This is the frustration of trying to nail a slippery subject.  Sometimes CSA claims to be a private company, and sometimes a government Agency; sometimes Canadian, sometimes foreign.  The CSA’s answers change depending on who asks the question, what their nationality is and, of course, what’s to be gained by the one claim or the other.

Their contradicting answers mean, in practice, that Industry Canada’s Competition Bureau and the RCMP Commercial Crimes Unit cannot investigate CSA because CSA claims to be a government entity, and outside the jurisdiction of these bodies.  Likewise, Industry Canada itself cannot investigate because CSA claims to be a private company and outside their direct jurisdiction.  In practice then, every authority to investigate CSA claims to have no jurisdiction to do so.  We’ve covered this before.

Today, we’re covering this problem from the perspective, and from the files, of the RCMP.

The RCMP doesn’t bother too much with political niceties, at least not in private.  They deal according to the legal status of their subject unless ordered otherwise.

In an RCMP file dealing with CSA “occurrences” of “fraudulent use [or] possession of counterfeit stamps,” the CSA file is classified as “assistance to Canadian Federal Dept / Agency.” 

In a different RCMP file, a General Report from April of 2014, the CSA is again designated a “Canadian Federal Dept [or] Agency.”  Not really ambiguous, is it?

Another RCMP file, this time an internal summary of submitted evidence (called a Supplementary Report) describes CSA thusly;  “The CSA is founded as a government agency and retains a Federal Charter which mandates direct influence of, and oversight by, the Minister of Industry in the Government of Canada.” 

The CSA however, has claimed the opposite, at least in Canada, and repeatedly, and often under oath.

Knowing this, the RCMP tried to give themselves wiggle room, stating that even accounting for CSA’s veneer of ambiguity they can’t duck legal consequences.  Why?  “Under US FCPA [Foreign Corrupt Practices Act] legislation, quasi-government organizations and their employees fall within the definition of government officials.”  In other words, even if CSA keeps up the private status schtick, they’re still public at law due to the legislative nature of their operations.

Reading through the RCMP files, the sense of frustration is palpable.  They know that CSA’s practice of slipping from one legal status to another takes CSA out of RCMP jurisdiction.  An investigator’s handwritten notes on one RCMP file are telling;  “verification fraud”, “sell it illegally,” “Ministry Canada Industry,” and “botte de travail.”  That last note means “work boot.”  They knew that nailing an Agency would be difficult.

Difficult indeed, RestoreCSA’s criminal filing of 2014 eventually grew to include eighteen RCMP officers across six divisions.

Why so many divisions?  Well, the Commercial Crimes division for instance, has no jurisdiction internationally, yet CSA is selling influence over Canadian law to foreigners.  Likewise, the International Anti-Corruption division has no jurisdiction to investigate domestic government corruption cases.  And when CSA changes its legal status claim, then every investigative angle has to be reallocated elsewhere.  To hold the case with a slippery subject, they needed every angle covered.

Yet the RCMP knew that the evidence against CSA -in this instance, some 600 pages of it- was solid.  Crimes took place, and RCMP acknowledgement of them, and the litany of references to them, are found throughout the RCMP’s internal correspondence.

For instance, an RCMP Occurrence Details file describes CSA conduct like this;

“Upon completion of the interview [with an informant] a meeting was held to review the substantive complaint / offences [including] FCPA [Foreign Corrupt Practices Act] offences in relation to payments in order to buy influence / votes on CSA boards / committees setting standards for Canadian legislation.  Possible offences in relation to the issuance of fraudulent testing / fraudulent certificates on American soil.  [In Canada,] secret commissions [and] the receipt of payments in order for companies to buy influence in relation to the setting of Canadian Safety standards with the CSA.  Fraud and related offences:  The issuance of fraudulent CSA certificates for substandard products by the CSA and the issuance of falsified test results for products.  Fraud on the Government [in] exercising influence over standards which will be enacted into law.  Sec 125 C.C. [Criminal Code] Influencing or negotiating appointments or dealing in offices”

That’s quite a list, and nowhere in the file is any doubt cast upon the allegations.  What would doubt be based on?  After all, the CSA’s admitted its conduct, even publishing their admissions, bragging them.  It’s hard to take CSA denials seriously in that context.

So what happened?  Well, in 2014 the RCMP and the FBI both opened criminal investigations into CSA conduct.  That’s when things got sticky.

First, the RCMP ran into the ambiguity problem, they weren’t at all sure who had jurisdiction to investigate because CSA kept claiming to the RCMP that they weren’t part of government while claiming to government their status as an Agency of Industry Canada.  In September 2014, the RCMP decided that Toronto Division West - Financial Crime “will take over the file and all materials” from the Commercial Crimes division in Alberta. 

Next, about a month after transferring the file to Toronto, “some eight members of GTA Financial Crime, based at Milton, have been assigned to INSET.”  The “INSET” reference means Integrated National Security Enforcement Teams.  Most people don’t know this, but the RCMP’s white collar crime investigators can be reallocated by Ottawa for diplomatic and related security duties.  That’s what happened with the CSA investigation, the file was transferred and almost immediately thereafter the RCMP recipient was reallocated by Ottawa to INSET duties.  “Of note,” reads the file, “one of the persons assigned [to INSET] was Cst. A. Vickery.  It was intended to have her investigate this matter.”

Later that year, the FBI flew staff to Toronto for briefings on the CSA criminal investigation.  This was the second time that the Washington DC office of the FBI flew staff into Canada on the CSA file.  This meeting was preparatory for a more significant teleconference in December, 2014 between RCMP and FBI investigators.  Among the points discussed at that teleconference was the “transfer of exhibits,” the “lack of [sufficient] resources to investigate, and….”  And the remaining notes from the teleconference were redacted by the RCMP.

In the spring of 2015, the RCMP held a planning session for the CSA investigation.  On the agenda was CSA’s sale of influence over legislation and related damning evidence (testimony and screen shots of CSA advertising influence sales).  Then the agenda turned slightly, to a subject that was to dominate the balance of the meeting.

There was no doubt of CSA’s activities and, given the breaches of law evident in those activities, there was no doubt that the RCMP should be investigating.  What they doubted was whether they had jurisdiction to go after CSA, and that topic monopolized the conversation, as the minutes testify.

“History of the CSA, i.e. their standing… who are they.”  That’s a telling line.  Then, immediately after; “Need for legal opinion.”

Next, they questioned the integrity of CSA’s reporting; “Who does CSA’s audit, PWC?”  And then; “What is Industry Canada’s involvement with CSA?”  We recently did a big story on the scale of Industry Canada involvement.  Back to CSA’s dodgy tax filings, the RCMP wanted to “ask CRA to advise on tax status of CSA.”  They also wanted to “liaise with Competition Bureau.”  Then the line; “CSA has an exemption from the Federal Accountability Act.”  They wondered about that, why that is so.

It seemed that CSA had surprising pull in Ottawa.  The civil service, having spent decades being transferrred into and out of CSA, were working to discourage, if not assertively prevent, any investigations into what CSA staff had been up to. 

For example, the RCMP called Industry Canada to inquire of their knowledge of CSA’s counterfeiting operation.  According to the resulting RCMP report, they “contacted industry Canada in Vancouver with an expert within the Agency and Industry Canada is not aware of any CSA complaint or any CSA counterfeit certification stickers.” 

By the date of that RCMP inquiry, Industry Canada had already faced a CBC story on CSA counterfeiting in 2010, a multi-billion dollar lawsuit over CSA counterfeiting, formal warnings from trade associations over CSA counterfeiting, and admissions by the Standards Council of Canada that CSA had been counterfeiting for nearly a decade.  Yet they had no awareness?  Consider further that by this date, RestoreCSA had sent thirteen letters to the PMO, plus another five letters to the Minister of Industry, all on this subject, and all were forwarded by the Minister and the PMO to Industry Canada for their awareness.  The civil service, it seemed, was as keen on preventing the investigation as the RCMP was keen on pursuing it.

With the RCMP now hot on the trail of CSA, Ottawa decided on another reallocation of RCMP staff.  According to a note from February 2015; “Resources are scarce and are being diverted [from this case] to National Security Matters.”

Not quite one month later, on May 1st, a long note was written to the case file.  We have no idea what it says, the whole note has been redacted by RCMP censors.  It must have been significant however, because on May 7th, with the designated officers reallocated by Ottawa, the file was again transferred, this time to Toronto North Detachment.

On May 27th, something else happened.  We don’t know what happened, but it took a whole page to describe.  That page has been redacted.

We do know that the RCMP was now trying to close the investigation.  The reality that CSA has for years claimed to be a private company, and that Ottawa has so consistently declined to correct them, means that verifying RCMP jurisdiction to investigate CSA would likely take more than the legal opinion they had requested.  It would probably mean a court case just to start an investigation.  Further, Ottawa’s relentless reallocation of any RCMP staff assigned to the case meant that nothing was getting done, and it seemed a clear message that Ottawa wanted no progress whatsoever on the file.  As early as August of 2014, the RCMP was aware of CSA’s relationship within the civil service, labelling the file particularly “sensitive.”

For all that, they couldn’t close a criminal investigation without an excuse.  And so, they “arranged an interview with CSA.”

Immediately after that interview, the RCMP closed its criminal investigation of CSA.  They’d found an excuse.  What was it?

“The CSA is a not-for-profit organization regulated by the Standards Council of Canada.  As the CSA is not a government body, RCMP ODIV Financial Crime will not investigate the CSA.”  Ironically, this line is found on an RCMP document entitled; “Supplementary Report - Assistance to Canadian Federal Dept / Agency.”  Anyway, carrying on, the RCMP restated that “the mandate of the [Standards] Council is to promote efficient and effective voluntary standardization in Canada….”  This line is found, verbatim, on the Standards Council of Canada’s website.  The RCMP just copied and pasted it; they were looking for an excuse, and CSA spoon-fed them one. 

Their excuse was a problem, because by closing a criminal investigation the RCMP is on record stating that CSA’s conduct is not criminal in nature.  Yet it is criminal in nature, the RCMP had already admitted that.  Indeed, in their email correspondence they refer to CSA conduct as “the ongoing scam with the CSA”.  Naturally then, their excuse relied heavily on the ambiguity of CSA’s legal status, as;  “The review of this file will not be proceeding. […] There are proper reporting procedures with the SCC if there is a complaint.”

Of course, the Standards Council of Canada (SCC) has no jurisdiction at all in criminal matters.  They couldn’t run a criminal investigation if they wanted to.  And they don’t want to.  After all, the CEO of the SCC is the former President of Standards at CSA.  He’d be investigating himself.  And that’s also a no-no, by the way, it’s a massive conflict of interests.

The RCMP is well aware that the SCC has no jurisdiction to investigate, but it was a convenient excuse.  As excuses go however, it was awfully weak, and they seemed to be worried about that.  The three pages that followed the closure notice and buck-passing are completely redacted.

On July 7, 2015, the RCMP wrote to RestoreCSA to confirm that they had closed the criminal investigation.  “In this matter,” they said, “the appropriate entity to handle your complaint would be the Standards Council of Canada.”  In that same month, an internal Briefing Note was sent to The Commanding Officer, “O” Division, warning of the optics of closing an investigation into clearly evidenced activities.  The Note also warned that “Gordon Knight will likely not be satisfied that the RCMP is not investigating his complaint and [he] has contacted the media in the past.”

Indeed, the optics are terrible.  Apparently CTV’s current affairs program, W5, had also contacted them about the CSA that year but, the Note reassured the Commander, “however no information was provided” to them.  The RCMP’s Note then recommended that a media relations officer be “advised of the potential for media interest [and] be prepared with a media strategy.”

And so it stopped. 

What you would be arrested for, the CSA is paid for.  What you would be investigated for, the CSA is covered for.  That’s the problem with government corruption; its the government that’s mandated to fight it.

Is the CEO of the Standards Council really going to investigate himself?  Is France Pegeot, the CSA”s sometime board member and concurrent Assistant Deputy Minister of Justice, going to prosecute herself and her colleagues?  Is Industry Canada going to indict itself?  Is Ottawa going to constrain itself?  Not likely; not willingly.

We are working to restore the CSA to its government mandate in the public service.  Though it may not seem it, we are making progress.  Yes, it’s slow progress.  After all, Adscam took years to topple a government.