Angry in the Great White North

From the National Post:

Meantime, the commission is up in court on another challenge to its authority: a battle with former Nortel CEO Frank Dunn. That case went badly awry for the OSC earlier this year when another Ontario court found the commission's treatment of Mr. Dunn threatens his rights under the Charter of Rights.

To fight the case, the OSC has hired big-name legal help: former Liberal Cabinet minister Allan Rock. In a court filing, Mr. Rock warned an appeal court judge that if the case were to go against the OSC, it would "effectively end an important investigation that has been underway for more than two years."

What the OSC is really trying to do here is maintain its legal power and uphold its corporate motto -- The OSC has the right to be wrong -- and it wants to make sure it keeps that right.

The wrong in Frank Dunn's case, as found by Ontario Superior Court Justice Colin Campbell earlier this year, is that the OSC's proposed compulsory interrogation of Mr. Dunn puts at risk his right to protection against having his testimony used against him in another proceeding in the United States.

I've written an extensive post on the Frank Dunn case, and came to the same conclusion as Corcoran -- this isn't about Frank Dunn, but about the OSC pulling out all the stops to make sure its power over securities is not undercut by the courts worrying about such niceties as Charter rights.

In response to this, the OSC has thrown a legal tantrum. In its appeal against Justice Campbell's decision, it shakes every legal tree it can find, painting the loss of the case as a major blow to the future of the investigation into Nortel, protection of investors and the sanctity of the OSC's power to act as police force, investigator, prosecutor and judge in securities issues.

The Dunn case clearly looms as a precedent, one that could strike at the heart of the OSC's claims to be above the normal law of the land -- in this case, the law that protects Mr. Dunn's right not be forced to incriminate himself. If it is illegal for SEC investigators to force Mr. Dunn to testify in the United States, how can those same investigators be allowed to join a compulsory questioning of him in Canada?

Justice Campbell seemed puzzled by the OSC's lack of interest in transparency. "I had thought, in error as it now appears, that there was a recognition by the OSC and its counsel that a statutory body that is regulatory, investigative and adjudicative and which can and does operate (quite properly) with a high degree of confidentiality and secrecy, would have an interest in transparently and efficiently dealing with a recognized risk."

As the Ontario Court of Appeal takes up this case, it would be useful if it took a fresh look at the totality of the OSC claims to immunity from judicial review, and at the laws and precedents that seem to give it rights no other Canadians enjoy.

The real solution, of course, is for the provincial government under Premier Dalton McGuinty, to review the Securities Act and break up the OSC so that it reverts to a purely regulatory and investigatory body, while the power to set those regulations returns to the elected legislature, and the power to pass judgment on the results of those investigations goes to the courts.