Securities Regulation

Many alternatives regarding the way forward for troubled Bombardier Inc. have been proposed. The Quebec government has already committed $1.3 billion in aid and now some type of moral argument is being levelled at Ottawa to throw money into Bombardier’s cap also. This is a very bad idea from a governance perspective, as well as a taxpayer perspective.

Let’s be clear about Bombardier’s governance reality: The Bombardier/Beaudoin families hold almost 60 per cent of voting power in the corporation, despite holding an economic interest of just one-quarter of that figure. This is a dual-class-share firm that just isn’t flying.

A federal bailout would place a billion or more taxpayer dollars in the hands of family that is insulated from governance accountability because of the corporate structure that it has chosen. This insulation and lack of accountability have not been good for the company. Over the past five years, Bombardier’s stock price has declined more than 75 per cent. Why should Canadian taxpayers be on the hook for Bombardier’s poor corporate governance?

Kenneth Jull is an adjunct faculty member at the Faculty of Law.

In the anti-corruption field in Canada, the two leading cases are Niko and Griffiths Energy, which involved fines in the $10 million range following pleas of guilty.  The newest Canadian case is Nordion Canada Inc., but this case sends a different message.  Early self-reporting in this case was explicitly acknowledged in a settlement with the U.S. Securities and Exchange Commission (“SEC”) and may have been a factor in a decision by the RCMP to not proceed with any charges under the Canadian Corruption of Foreign Public Officials Act.[1]

The SEC Order, released on March 3, 2016, states that the Commission considered remedial acts promptly undertaken by Nordion, Nordion’s self-reporting, and their cooperation afforded  the Commission staff.  “Nordion self-reported the conduct to authorities in both the U.S. and Canada, conducted a thorough internal review, identified the illegal conduct, voluntarily produced witnesses from Canada for interviews in the U.S. and translated documents, and implemented substantial remedial measures to prevent future violations.”[2]