Niko Resources Ltd. (Niko) will pay a $9.5 million in fine after pleading guilty to one count of providing goods or services to a Bangladeshi public official to induce that official to influence the acts or decisions of a foreign state, contrary to Section 3 of Canada's Corruption of Foreign Public Officials Act (CFPOA). The Alberta Court of Queen's Bench issued the negotiated fine against on June 24, 2011.
Niko is a Canadian-based oil and gas company that conducts oil and natural gas exploration and production in India, Bangladesh, Indonesia, Kurdistan, Iraq, Madagascar, Pakistan and Trinidad.
The charges stem from a 2005 explosion that occurred on one of the company's natural gas fields. Niko paid $525,000 (U.S.) in compensation to local residents, who complained of contaminated drinking water and devastated agriculture. The government of Bangladesh, however called for an investigation of whether further compensation was due.
In its plea agreement, Niko admitted to purchasing a vehicle worth $190,984.00, and providing a $5000.00 trip to North America for the Bangladeshi official responsible for assessing what compensation Niko should pay to the villagers affected by the explosion.
Niko Chairman and CEO issued a statement indicating that "What happened was wrong. We acknowledge this. We accept responsibility, and we appreciate the seriousness of the actions. As a result of these events we have taken extensive steps in all aspects of our organization. One such step is the creation of the position of Chief Compliance Officer who reports directly to our Board, to ensure that something like this doesn't happen again."
The plea agreement calls for Niko to pay a fine of $8.26 million, plus a 15 percent victim surcharge for a total of $9,499,000.00. Niko will also be on court supervised probation for three years during which time it must implement compliance measures.
The prosecution confirmed that the company co-operated with the investigation carried out by the Royal Canadian Mounted Police (RCMP). "Had the company not been co-operative," the assistant Crown attorney warned, "it's entirely possible that the punishment would have been much more punitive."
News of the conviction comes as Canada is under increasing international pressure to enforce its anti-corruption and bribery laws. In May, the Organization for Economic Cooperation and Development (OECD) released a report which was sharply critical of Canada's "problematic" track record of ignoring bribery offences by its citizens and corporations abroad. Similarly, the anti-corruption group Transparency International Canada Inc. identified Canada as the worst-ranked G-7 nation when enforcing anti-corruption and bribery legislation.
All that appears to be changing. The fine against Niko sends a strong signal that Canada intends to impose significant penalties for CFPOA offences. In addition there are also over 20 other CFPOA investigations being conducted by the RCMP.
Increased CFPOA enforcement means that Canadian companies that conduct business outside Canada should conduct a risk assessment and implement a compliance program.
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