Evaluation of the Integrated Market Enforcement Teams Reserve Fund

2. Description of the Integrated Market Enforcement Teams Reserve Fund

The IMET Reserve Fund is designed to support prosecutions by Provincial Attorneys General of IMET-generated cases of serious Criminal Code market fraud offences that pose a genuine threat to investor confidence and economic stability in Canada’s capital markets, by defraying exceptional costs associated with these prosecutions.

The Fund is part of the horizontal IMET Initiative. The Initiative was created in 2003 as a horizontal program that includes the participation of five federal partner organizations: the Department of Justice Canada, Finance Canada, Public Prosecution Service of Canada (PPSC), Public Safety Canada, and the Royal Canadian Mounted Police (RCMP). The Department of Public Safety leads the IMET Horizontal Initiative.

In 2003, the IMET was established as the federal government’s response to corporate fraud that arose internationally that weakened investor confidence in capital markets around the world. The Criminal Code was amended to strengthen measures to investigate and prosecute CMF and concurrent jurisdiction to prosecute these offences. In order to conduct these prosecutions most effectively, the PPSC and the Provincial Attorneys General in British Columbia, Ontario and Alberta have signed coordinating prosecution protocols which provide provinces a right of first refusal for prosecuting IMET cases. Footnote 1

There is concurrent jurisdiction for IMET-type cases, meaning PPSC and/or a province can prosecute an IMET-generated case as a team, or each separately. A province has right of first refusal. Therefore, before the Reserve Fund can fund an IMET-generated case, there has to be a determination made as to who will prosecute (i.e. the province, PPSC, or a combination of both).

2.1. Key Funding Activities

The IMET Reserve Fund uses the federal spending power to encourage Provincial Attorneys General to participate in the IMET strategy by assisting the provinces to enhance their prosecutorial capacity for IMET-generated cases. Terms and Conditions require the IMET Reserve Fund to be available to help defray exceptional costs associated with the prosecution of CMF cases, generated by the IMET program. For a contribution to be made, actual or anticipated expenses must fall within the categories of disclosure costs, specialized contracts, or technical or equipment expenses.

2.2. Management Structure and Financial Resources

The IMET Reserve Fund budget by fiscal year was $2.25 million for 2010-11, 2011-12 and 2012-13. Measures introduced in the federal government’s Economic Action Plan 2012 reduced the level of federal funding available for IMET prosecution cases to $550,000 annually. The reduced allocation was for the 2013-14 and 2014-15 fiscal years.

The Reserve Fund is managed and administered by the Policy Implementation Directorate (PID) of the Department of Justice Programs Branch. The overall accountability for the Fund rests with the Director General of the Programs Branch.

2.3. Program Logic

The successful implementation of the Fund’s activities is expected to contribute to the following outcomes:

Ultimately, the Reserve Fund has been established to support the IMET Initiative Component of the Strategy for Enhanced Protection of Canada’s Capital Markets by assisting Provincial and Territorial Attorneys General to conduct prosecutions in cases that present exceptional challenges in terms of expenses. The Fund is intended to encourage Provincial and Territorial Attorneys General to participate in the Strategy and to play a role in the prosecution of IMET–generated cases, subject to federal/ provincial/territorial prosecution agreements or coordinating protocols.