Corporate directors should take up the battle to fight white-collar crime and add their powerful voices to pressure for greater funding for regulators and police investigating fraud, a senior corporate director urged a blue-chip crowd of Canada's business elite on Thursday.
Spencer Lanthier, a director on the boards of TMX Group Inc. and other companies, said Canada in general -- and Ontario specifically -- have a reputation for being the best place to carry out a stock fraud in the industrialized world. He said no one has served time in jail in Canada for activities related to a number of the country's most notorious frauds, including Bre-X Minerals Ltd. and YBM Magnex International Inc.
"Canada has become the destination of choice for the world's most persistent con artists," Mr. Lanthier said.
He was speaking in Toronto at an awards ceremony of the Institute of Corporate Directors (ICD), where he was accepting one of the institute's annual awards recognizing directors for career excellence. The black-tie dinner attracted about 700 senior members of Canada's business community, including many of the country's most prominent corporate directors.
Mr. Lanthier said numerous reforms have occurred in Canada to improve governance over the past decade -- although board diversity remains an exception -- but said the critical element of tough enforcement of fraud cases remains unimproved.
Regulators have feeble powers, police lack funding to tackle fraud cases and the courts continue to impose weak sentences on people running securities scams, he said. "We have the weakest standards of enforcement in the G8."
Improving the system requires political will, he said, but the pressure doesn't have to come solely from politicians. Mr. Lanthier challenged corporate directors through the 4,000-member ICD to use their clout to lobby for reform and put the issue on the political agenda.
"If there was ever an issue of governance that needs to be acted on, it's this," he said.
Mr. Lanthier, 70, was a career accountant who was CEO of KPMG Canada before his retirement in 1999 and has served on numerous boards during his career, including The Bank of Canada, Torstar Corp., Biovail Corp., Rona Inc., Gerdau AmeriSteel Inc., Bruce Power, Canada Life Assurance Co. and Emergis Inc.
He currently sits on the boards of EllisDon Corp., Zarlink Semiconductor Inc. and TMX Group.
He recounted Thursday that he had learned of a fraud in London, Ont., in the early 1980s during his work at KPMG, involving District Trust Co., a financially troubled local trust company.
He said he knew of two people in his firm's client group who committed suicide and many others who lost their savings when the case came to light. Years later, he discovered one of the perpetrators had gone on to become involved in at least four other frauds, leaving "a path of destruction" in his wake.
"Some people think it's a victimless crime," he said. "I think it creates more victims than virtually everything other category of crime."