A powerful coalition of business groups wants Ottawa to suspend its new anti-corruption rules amid complaints the regime is too harsh and risks disqualifying many top suppliers from selling to the government.
The massive lobbying push comes after Ottawa threatened to ban companies such as Hewlett-Packard and Siemens AG for up to a decade because of corruption convictions in other countries.
The groups include the Canadian Manufacturers & Exporters, the Canadian Council of Chief Executives and the Information Technology Association of Canada. Several other organizations are expressing similar concerns about the tougher federal rules, introduced in March, including Canada's Research-Based Pharmaceutical Companies and the Canadian Chamber of Commerce.
Together, these associations represent roughly 250,000 Canadian businesses, including most of the largest employers in the country.
Ottawa should suspend the rules while the government works out a new anti-corruption regime in consultation with industry, argued John Manley, president of the Canadian Council of Chief Executives.
"This really needs to be given some serious thought," Mr. Manley said. "I don't think the best policy is one that says 'we're out to punish companies who've had one bad actor.' The purpose ought to be to ensure that companies take the measures that are necessary to prevent these things from happening."
Under the new regime, companies looking to sell products or services to Ottawa must certify that neither they nor their affiliates have been charged with any of a long list of criminal offences anywhere in the world, including bribery and fraud, in the past 10 years. Unlike the U.S. and the European Union, Canada doesn't offer convicted companies a way to get reinstated, such as dismissing employees involved or introducing new anti-corruption policies.
The industry groups say they agree with Ottawa on the need for tough anti-corruption rules. But they argue the Canadian regime may actually discourage companies from coming clean and doing the right thing.
"Some companies will just pull out of the market and you're not going to fix this issue," warned Martin Lavoie, director of policy for the Canadian Manufacturers and Exporters.
The rules, introduced by Public Works and Government Services Canada, are causing widespread uncertainty throughout the vast network of government suppliers, complained Karna Gupta, president and chief executive of the Information Technology Association of Canada, which speaks for 33,300 high tech companies.
"There is no criteria on how an organization is implicated, nor is there a mechanism to take into account the corrective action a corporation may take," Mr. Gupta said.
He said his members want a "strong, practical and predictable process."
Ottawa risks causing a chain of unintended consequences, including losing access to the best available technology, paying inflated prices and harming hundreds of unwitting subcontractors swept up in the crackdown, Mr. Manley pointed out. "If you put big companies out of the running, you also affect small businesses that rely on them," said Mr. Manley, who like other association presidents has been meeting with officials in various departments on the file.
Federal officials have argued the current purchasing rules already allow ample flexibility, including the power to wave the ban in the "national interest," on a case-by-case basis. Ottawa has said it has no plans to allow debarred companies to win reinstatement for good behaviour, as many other countries do.
Public Works insisted it has an obligation to not do business with suppliers that break the law. But spokesman Annie Trepanier said the department will continue to "engage and listen" to suppliers. she said Public Works "will continue to strike the balance between the interests of Canadian taxpayers and those of suppliers and industry."
"I haven't seen any suggestion of movement," Mr. Manley said. "But clearly there is a willingness to listen. That's a start."