Is Widespread Corruption Harming Innovation in Canada?

Posted by Dan Verhaeghe

Canada was adored by the world after the Vancouver Olympics and a strong 2011. Forbes would rank Canada as the number one place in the world to do business.

But in 2012, the true North, strong and free, received constant criticism from abroad. We slipped to fifth, losing a lot of ground in technology and innovation. Technology is changing so quickly, and is producing nonstop revolutions in our media, marketing, entertainment, digital, and mobile worlds. It requires worldwide collaboration, which the Internet can provide, to stay ahead of the curve. Canada is slower than most leading nations in getting their act together, and certainly behind the United States on policy making.

We saw this especially as the mobile world whizzed by the once world-leading Research in Motion. I am happy to say it does look like Canada could improve in 2013. While the acceleration of digital in the creative clusters is by the narrowest of margins, the wheels finally look like they are turning forward.

Why has Canada been slow to innovate? We are a very conservative country. Canadians are too complacent with the way their lives and businesses currently are. Canadian CEOs compare themselves to the company down the road rather than benchmarking globally, according to IDC.

As a result, Canadians find it very difficult to understand how things are now. But we have to change our thought processes, in order to remain one of the leading places to do business in the world.

In order to fully realize our potential, we must rethink and revisit what we have been taught about our country. There is a lot of reverse spin in the media these days. The Harvard Business Review said recently that corruption was harming innovation in the US. A couple weeks later, CTV News revealed Canada is dealing with a scandal much larger than anticipated, centered in Quebec.

You could compare anti-corruption commissioner Robert Lafreniere to lieutenant Jim Gordon from the Batman movie series. So few white collar criminals have been prosecuted in Canada's history.

There are 20 ongoing investigations by Quebec’s anti-corruption squad. It includes the Charbonneau Commission, which is on hiatus until later in the winter. This was after it exposed billions in fraud from innovative engineering firm SNC-Lavalin and a myriad of other construction companies. More shocking revelations are to come in the new year.

“Corruption does not simply affect the construction industry and our field of intervention is vast,” said Lafreniere. “Our investigations are leading us to areas as diverse as computer technology, the hospital sector, the Plan Nord and infrastructure ... acts of collusion and corruption exist everywhere in Quebec, in every region. Our investigations are proving this to us.”

The massive corruption scandal affects not only Canada, but international nations as well. Lafreniere says the Canadian technology sector is involved.

One situation we know about is that privacy commissioner Jennifer Stoddart feels powerless in dealing with breaches. The Toronto Star criticized Stoddart for not releasing the company names in late September. Now, Toronto’s 680 News reported Stoddart wanted the company names to be released via an unidentified journalist.

The idea was shot down. Given declining salaries in the media world, many journalists have turned freelance to keep their standard of living. The government fears if the information were given to an unidentified journalist, they would continue to help the bad guys. It's all in wake of world-leading tough anti-spam laws being implemented some time next year against marketers.

Moreover, it's a bit of a game between the privacy commissioner and the implicated companies. Google, for one, says that if the privacy commissioner gained new powers, the company would be less willing to work with the department. The software giant says currently it’s willing to have "open discussions" with the commissioner because the system is not "heavily focused on enforcement.”

As many multinational corporations are oftentimes in the middle of lawsuits, this serves as an example of how difficult power struggles are. New York venture capitalist Fred Wilson recently mentioned on his blog—that the big guys are suing the little guys more.

It is likely corruption is harming innovation. The government will have to play their cards correctly. And they will have to turn to corporate leadership.

Deloitte Canada’s vice-chair Bill Currie and Omers Ventures CEO John Ruffolo highlighted the key obstacles in the way of Canada’s improved productivity. At Toronto's Canadian Club they recently mentioned the federal government created a $400-million venture capital fund to jointly invest with the private sector.

Ruffolo and Currie outlined roadblocks such as a culture of complacency, a lack of Canadian investment capital, a disconnect between entrepreneurs and global markets, and more. You can read more here, but should they be jointly investing so much?

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Dan Verhaeghe

Dan Verhaeghe

Dan Verhaeghe focuses on marketing, mobile, major technology players, entertainment, and new media. Dan has a dozen years of online experience that dates back to the turn of the millennium where he dominated a now non-existent online RPG game for a couple of years at the age of 15. He would eventually become a Toronto Blue Jays blogger who earned his way into Toronto's CP24 studios six years... more



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