May 2007 ISSUE
professional practice
APEGGA Discipline Committee Order
In the matter of the Engineering, Geological and Geophysical
Professions Act
— and —
In the matter of the conduct of
(Two APEGGA Members)
The Investigative Committee of the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA) has conducted an investigation into the conduct of [two APEGGA members] in relation to the formation of an engineering services company, [Company B], in Calgary, Alberta.
Agreed Statement of Facts
As a result of the investigation, it is agreed by and between the Investigative Committee [and the two members] that:
[1] At
all material times [the members] were professional members of APEGGA in good
standing.
[2] In
1993 [the members], both P.Eng.s,
started [Company A] with two of their colleagues, neither of whom was a member
of APEGGA.
[3] Initial
working capital for [Company A] consisted of shareholder’s loans to [Company
A] from each of the individuals. The loan amounts were substantial, in the hundreds
of thousands of dollars. This equity was used to generate a capital base for
[Company A] so that an equivalent amount could be borrowed from financial institutions.
[4] After
some time the four principals wished to have their loans to [Company A] repaid.
[5] In
May, 1993, the trade name [Company B] was registered. No company with this name
was ever formed, but a bank account in this name was opened.
[6] Hundreds
of thousands of dollars were transferred from [Company A] into the [Company B]
bank account. The process of transferring money from [Company A] to [Company
B], and then to the four principals, was the course of action devised by the
principals to recoup their shareholder loans.
[8] The
transfer of large sums of money from [Company A to Company B] had the effect
of reducing the taxable income reported by [Company A], and in turn reduced the
amount of income tax paid by [Company A]. Audits performed by the Canada Customs
and Revenue Agency (CCRA) in 1997 regarding these transactions ultimately resulted
in criminal charges against [the two members].
[9] After
several years of continued negotiations with CCRA, the principals agreed to settle
the matter by pleading guilty to certain charges involving conspiracy to evade
taxes. One result of the guilty pleas was publication of an article [in a major
daily newspaper]. In the article [the two members] were identified as “engineers.”
Conduct
[The two members] freely and voluntarily admit that their conduct constitutes
unprofessional conduct in the following respects:
[1] [The
two members], by acting in a deceitful manner and wrongfully conspiring to evade
payment of income taxes, engaged in conduct detrimental to the best interests
of the public, in contravention of Section 44(1)(a) of the Engineering, Geological
and Geophysical Professions Act;
[2] [The
two members] engaged in conduct that harmed or tended to harm the general
standing of the profession, in contravention of Section 44(1)(c) of the Engineering,
Geological and Geophysical Professions Act.
Orders
On the recommendation of the Investigative Committee, and by agreement of [the
two members] with that recommendation following a discussion with the Discipline
Committee case manager, the Discipline Committee orders that:
[1] [Each
of the two members] be reprimanded for unprofessional conduct;
[2] [Each
of the two members] pay a fine of $1,000 to APEGGA within six months of the date
of this Order;
[3] [Each
of the two members] pass the Professional Practice Examination within six months
of the date of this Order;
[4] The
professional registrations of [the two members] each be suspended should each
not comply with Orders 2 and 3 above and remain suspended until the Orders are
complied with;
[5] A
summary of this Order be published in The PEGG, without names.
Approved this 22nd day of March, 2007.
NOTE
This decision appears in accordance with an APEGGA Council policy that requires
its publication in a
The PEGG.