On January 15, 2013, Calgary-based Griffiths Energy International Inc. ("Griffiths") announced that it has been charged under Section 3(1)(b) of Canada's Corruption of Foreign Public Officials Act ("CFPOA"). That provision prohibits bribing foreign public officials to influence acts or decisions of the foreign state for which the official performs duties or functions. The charge was laid following the company's voluntary disclosure to the Canadian authorities.
Potential violations of CFPOA were discovered in 2011, after Griffiths replaced its existing management team and Board and formed a special committee to investigate three consulting contracts with entities that had relationships with foreign public officials in Chad. Griffiths reported that it had paid signing bonuses of $40 million for the first two contracts and $13 million for the third.
Griffiths says that it anticipates a near-term negotiated resolution of the charge.
The prosecution is of interest for several reasons.
First, the compliance community will be watching to see the extent to which Griffiths' decision to make a voluntary disclosure will mitigate any penalty imposed on the company. In 2011, Niko Resources, another Calgary company, pleaded guilty to a single bribery charge and was fined $9.5 million. However, while Niko Resources cooperated with in the investigation, it had not made a voluntary disclosure of the violation. They say that confession is good for the soul – the Griffiths prosecution will show if it it's also good for the pocket-book.
In addition, Griffiths has implemented a robust Business Integrity Policy and a Whistleblower Policy, both of which address bribery questions policies. It will be interesting to see if those compliance efforts will mitigate any penalty. Of course, if those policies existed at the time of the alleged offence, and were ignored, their value will be considerably less.
Finally, many will be watching the results of the prosecution to see whether any consideration is given to the fact that the incidents happened under the watch of the prior management team and Board. Post-acquisition liability for prior offences is a major issue in any acquisition and it will be informative to see if the new management and Board receive any consideration for their lack of involvement in the alleged offence.
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their lack of involvement in the alleged offence.
