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Montreal tax lawyer fights federal whistleblower watchdog

Yacine Agnaou is one of a handful of Canadian lawyers who took on Quebec tax authorities and plead a case so successfully that now others are trying to follow suit. Last year Agnaou won a precedent-setting ruling that condemned Revenue Quebec to pay nearly $4 million, including a staggering $2 million in punitive damages, to a businessman who was forced to shut down his business after it mishandled his case. Lawyers from different firms, evidently emboldened, are now working together to plead a case before the Quebec Court of Appeal to stop Revenue Quebec’s controversial policy of holding companies liable for the tax delinquencies of its suppliers.

Now Agnaou is immersed in another legal battle against another government department, and once again the odds of winning are stacked against him. Agnaou, a former Crown prosecutor, has filed a motion for leave to appeal before the Federal Court of Appeal in a bid to force the federal whistleblower watchdog to investigate his allegations of wrongdoing against the Public Prosecution Service of Canada.

Agnaou, the second former federal lawyer to go public in the past year with serious allegations against the federal government, claims that while he worked as a federal Crown prosecutor in the economic crime team he was thwarted in 2008 by his supervisors at the Quebec regional office from prosecuting a Canadian subsidiary of a multinational company. Agnaou, now working for the boutique law firm Groupe Dupuis Paquin in Laval, felt he had a strong case to file charges under s.238 of the Income Tax Act against the Canadian company for failing to provide information to the Canada Revenue Agency.

But Agnaou’s supervisors disagreed, even though Agnaou maintained that the facts submitted in support of his recommendation to prosecute were more than sufficient to satisfy anyone that there was a reasonable likelihood of conviction and that it was in the public interest to prosecute. Agnaou, alleging that the file was mismanaged and that managers at both the Quebec regional office and the national headquarters failed to comply with several laws, brought up the matter before the head of the Public Prosecution Service of Canada. “That began the move that lead to my expulsion at work,” said Agnaou. He asserts that he was then subjected to harassment and reprisals, including missing out on a promotion and being forced to take a medical exam by management allegedly under the guise that they had to take prescribed steps to prevent and protect against violence in the workplace as per the Canada Labour Code.

“If it was a divergence of opinion, do you really think I would have proceeded with a disclosure that exposed me the way it did,” asked rhetorically Agnaou. “I have many elements that establishes the position taken by the hierarchy to create a category of taxpayers who were immunized from prosecutions under s.238 of the Income Tax Act.”

On October 2011, Agnaou decided to disclose the alleged wrongdoing to the Office of the Public Sector Integrity Commissioner, an independent organization created in 2007 under the Public Servants Disclosure Protection Act (PSDPA) to establish a safe and confidential way for public servants to disclose wrongdoing in federal organizations. Agnaou also filed a complaint of reprisals with the Office. An analyst from the Office analyzed Agnaou’s disclosure and recommended not to deal with the disclosure, a position upheld by a case analysis manager, its legal service department, and the Deputy Commissioner. The Deputy Commissioner, in a letter dated September 2012, said the Office refused to deal with disclosure because there was no information to suggest that any wrongdoing had been committed. It also declined to look into his complaint of reprisal

Agnaou did not back down. He then turned to the Federal Court of Canada, seeking judicial review. “The fact that one of the applicant’s superiors, an expert in the field of question, did not agree with the applicant on the file in question does not mean that wrongdoing was committed,” wrote Federal Court Justice Peter Annis in a 17-page ruling issued this past January in Agnaou and Attorney General of Canada 2014 FC 86. “It is entirely normal for there to be disagreements between counsel, such as the applicant and his superiors, but this does not mean that a wrongdoing was committed or that the Office of the PSIC is obliged to investigate.”

Despite the setbacks, Agnaou is not acquiescing. He recently filed a motion for leave to appeal before the Federal Court of Appeal to overturn Justice Annis’ ruling. He is also seeking an order that will compel the Office of the PSIC to investigate his wrongful disclosure and reprisal complaint. “My loyalty is to the public interest, to society – there is no personal interest that is driving me,” said Agnaou. He believes that Crown prosecutors should have a forum to file voice their concerns if they believe that a case they have been overseeing has been mishandled by management. “The power of Crown prosecutors to prosecute is essentially discretionary,” pointed out Agnaou. “But my point is that the decision can be exercised in an irregular fashion, be it in bad faith or against the public interest, and that should be controlled. One must allow Crown prosecutors the power to contest any interference by management in a decision. One must allow Crown prosecutors to complain if this interference runs contrary to public interest.”

Agnaou is also hopeful that the Federal Court of Appeal will provide guidance over the decision-making powers of the Integrity Commissioner and the criteria he should apply to determine whether a wrongful disclosure warrants an investigation. Critics contend that at present the Integrity Commissioner has too much discretionary power to decide the fate of disclosures and complaints of reprisals. The Integrity Commission can refuse to deal with any disclosure on the grounds that he believes that a whistleblower is not acting in good faith, is not in the public interest, or any other “valid reason,” noted David Hutton, the former head of the non-profit whistleblower advocacy group Federal Accountability Initiative for Reform (FAIR). “These vague and subjective provisions give the Commissioner far too much discretion to ultimately do nothing,” said Hutton, who along with three other advocacy groups, recently called for the resignation of Integrity Commissioner Mario Dion following a scathing report by the Auditor General of Canada.

In a report published last April Auditor General Michael Ferguson found Dion, his deputy and an investigator guilty of “gross mismanagement” and wrongdoing in the handling of two whistleblowers’ complaints made against the whistleblower’s watchdog office. Dion is the second integrity commissioner in a row accused of incompetence and mismanagement by the auditor general. In December 2010, the auditor general criticized Dion’s predecessor, Christiane Ouimet, who was found to have retaliated against employees and generally acted inappropriately while in office.

“This says that there is a need for a broader audit of the Integrity Commissioner’s Office, and not just looking at individual files,” said Hutton. “Important cases are not being looked into. Cases that are looked into are frequently mishandled. Whistleblowers are not being taken seriously or treated with respect. It’s ugly.”

Integrity Commissioner Dion acknowledged that there were “unacceptable procedural delays” in dealing with the cases. A spokesperson of the Office of the PSIC said that improved oversight measures to ensure complaints would be processed quicker and reviewed by senior managers was put in place before the Auditor General began his investigations.

But the latest Auditor General report reveals that there are serious problems with the way that the Integrity Commissioner’s Office conducts its investigations, said David Yazbeck, an Ottawa lawyer who is working on a number of high-profile whistleblower cases, including Edgar Schmidt, a former senior lawyer with federal Department of Justice who filed a suit against the Attorney General of Canada accusing it of circumventing a legal requirement to properly review the constitutionality of draft legislation. Schmidt’s case is now scheduled to be heard by the Federal Court this October. “It’s an important piece of legislation and it ought to be applied in the most effective way possible, otherwise you have situations where people might disclose wrongdoing and there is not a proper investigation of it,” said Yazbeck.

Agnaou, like the vast majority of whistleblowers, has paid a price for disclosing an alleged wrongdoing. “It’s very painful for whistleblowers,” said Agnaou. “They know they will come out losing. They lose because their employers will sanction them. And they lose because they become radioactive elements. Even friends, your entourage, are afraid to be with you for fear of being associated with a whistleblower. What is unfortunate in all of this is that when you turn to the Integrity Commissioner, you come to realize how difficult it is for them to investigate disclosures and complaints of reprisals.”

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