In its April 29 opinion in World Bank Group v. Wallace the Canadian Supreme Court upheld the use of a growing practice in the fight against transnational corruption, ruling that World Bank investigators can provide information to the Royal Canadian Mounted Police about corruption in Bank projects and that it can do so without becoming subject to Canadian law.  The investigators had provided material suggesting executives of a Canadian company had paid bribes to win a Bank-financed contract in Bangladesh.  After being charged, the executives sought to depose the investigators and inspect Bank files in Washington.  Had the Court ruled for defendants, the World Bank and other development banks would almost certainly have halted further information sharing with national law enforcement agencies.  In ruling for the Bank, the Court not only endorsed information sharing arrangements but explained why it was essential that national authorities have unimpeded access to information from the Bank and other development finance institutions: “multilateral banks . . . are particularly well placed to investigate corruption and to serve at the frontlines of international anticorruption efforts” (¶94).

In Wallace the Court had to decide two questions:  1) Did the Bank’s immunity from Canadian law apply when it cooperated with the RCMP?  2) Would defendants be denied a right to a fair trial if they were not allowed to depose the investigators and search Bank records?  The Court’s reasoning in answering both questions in the Bank’s favor  offers valuable guidance that development banks will want to consider when entering into sharing arrangements with national law enforcement agencies in the future.   

Immunity from Canadian Law

Like the other 187 countries that belong to the World Bank Group, Canada agreed as a condition of joining the group that the Bank and its staff would be immune from its laws.  As with other international organizations, the reason the Bank insists that it and its staff not be subject to national laws is to ensure it can operate independently of national governments.  Defendants in Wallace argued that whatever immunity the World Bank Group enjoyed when conducting business in Canada, it should not apply here because:

* The Bank’s investigators were part of the Bank’s Integrity Vice Presidency, a unit that reported directly to the World  Bank’s President, was thus not a formal part of the World Bank Group and hence did not have the immunity afforded the Group.

* The Bank’s immunity was not absolute.  It could be sued for claims arising from its borrowing and lending activities.

* The Bank’s immunities were meant to reach only actions necessary for it to conduct its operations and discharge its responsibilities.

* The immunity provision covered only the Bank’s “archives,” which meant its historical records not current documents.

* By voluntarily providing information to the RCMP, the Bank had waived its immunity.

The Court rejected all five arguments.  To the contention that the Bank’s investigative unit was not a part of the Bank, it found “common sense” sufficed to dismiss it.  With the others it relied on a combination of interpretations of Canadian law, decisions of other courts, both Canadian and foreign, and international law scholarship.

The most appealing of the five, at least to this common law lawyer, was the fifth.  Defendants argued that the Bank could not selectively waive its immunity to gain an advantage, here their prosecution, while asserting it as to all other matters in the case.  But as the Court noted in dispatching this contention, “the World Bank Group has in no relevant sense ‘benefitted’ from the Crown’s prosecution of the respondents. Prosecutions are, by their very nature, in the interest of the public and not the complainant or any other private party” (¶98).

Two things helped the Court so readily dispose of defendants’ immunity arguments. One, on each occasion that the Bank provided the RCMP with information, “it reiterated that it did so without prejudice to its immunity” (¶95).  Two, it furnished the Court documents showing that the Integrity Vice-Presidency was an integral part of the World Bank Group.

The Court’s opinion suggests that in future information sharing arrangements it would be useful if development bank investigators had a formal, written agreement or memorandum of understanding in place with the agency to which it will supply the information making it clear that:

1. their unit is an integral part of the development bank and affirming that it thus enjoys the same immunities as the rest of the organization, and
2. in cooperating with the agency the investigators are not in any way waiving or prejudicing those immunities.

Investigators might also follow the World Bank’s practice in Wallace and append to each separate transmission of information a statement that no immunity is being waived.  Staff of the agency receiving the information will likely think of additional ways to strengthen the immunity claim.  What’s important is to analyze the arguments a defendant might use to attack the bank’s immunity and develop a protocol that addresses them.

Fair Trial Claims

With the information the Bank provided, and other information developed independently, the RCMP obtained a court order to search the defendants’ offices and tap their phones.  Canadian law requires that search warrants and wiretap authorizations issue only (i) where “there are reasonable and probable grounds” to believe an offense has been committed and (ii) when the warrant or authorization “will afford evidence of that offense.”  If a defendant can demonstrate that either condition was not met, the evidence gathered from the warrant or wiretap is not admissible at trial.  Wallace defendants claimed that, were they allowed to take discovery from the Bank and its investigators, they could show that the order authorizing the search warrant and wiretaps was not properly issued and hence the evidence of guilt the warrant and the taps had revealed could not be used against them at trial.

When attacking the validity of a search warrant or wiretap authorization, however, defendants in Canada are not allowed to go on a fishing expedition.  Here, where the order for both was based an affidavit prepared by an RCMP officer, the Court held defendants had to first show that the officer had not acted reasonably in accepting as true the information the Bank supplied.  But this, the Court said, defendants had not done.  In explaining why they failed, it pointed to several factors:

* The Bank was not the only source of information the officer drew upon in preparing his affidavit.  He had reviewed e-mails that whistleblowers had sent the Bank, interviewed one himself, and consulted with other RCMP personnel.

* The Bank was a reputable international organization.  It did not try to hide “bad facts” from the RCMP and shared what it knew about the whistleblowers and their reasons for wanting to remain anonymous.

* The interests of the Bank and the RCMP were congruent: both sought to determine exactly who had done what on the Bank project.

* The Bank’s principal liaison with the RCMP was a seasoned investigator with 20 years of law enforcement experience who carefully reviewed the first, and most critical, affidavit the officer drafted for completeness and accuracy.

* Finally, all reports and documents the Bank had provided the RCMP were turned over to defendants, and defendants could find nothing in the several hundred pages of material that called into question the reasonableness of the officer’s affidavit.

It seems clear the Bank and the RCMP were careful to take account of the rights afforded criminal defendants in Canadian before the Bank provided the RCMP with any information.  Realizing that defendants are entitled to copies of documents the RCMP relied on its investigation, the Bank took care to ensure that in the material it gave the RCMP informants’ names had been deleted and other information that could compromise its investigation had been deleted.   Aware that his affidavit was subject to challenge, the RCMP officer took steps to demonstrate he acted reasonably in relying on Bank-provided information, interviewing one of the whistleblowers himself, personally reviewing e-mails (with the names blacked out) from whistleblowers, and checking the veracity of what he learned from the Bank in other ways.

National laws in other nations differ of course from those in Canada, granting criminal defendants different rights at different stages of the proceeding.  Before entering into any sharing agreement, development bank staff and their counterparts will want to be sure they have, as the Bank’s investigators and the RCMP apparently did, carefully reviewed the applicable law and planned accordingly.

In the course of rejecting defendants’ effort to take discovery from the World Bank, the Court issued an important reminder about the trial of cases, like those involving corruption allegations, that lend themselves to stalling tactics by the defense.  It is a reminder courts everywhere would do well to bear in mind when confronted by requests of the kind the Wallace defendants made:

“[B]road third party production requests can derail pre-trial proceedings. The production order in this case could involve hundreds or even thousands of pages. Sweeping disclosure requests are a common cause of delays. . . .  A narrow relevance threshold is therefore needed to prevent speculative, fanciful, disruptive, unmeritorious, obstructive and time-consuming production requests” (internal citations and quotation marks omitted) ¶130.

 As readers of this blog know, had the Canadian Supreme Court ruled against the Bank, it would have dealt a major blow to the fight against transnational corruption.  It has instead done the opposite. By permitting multilateral development banks to share information with national law enforcement agencies — without waiving their immunity — the Court has given the struggle against international corruption a major boost. That’s a decision, and a victory, worth savoring.