Canadian companies face many dilemmas working abroad. Canadian
domestic ethical standards can be challenged by foreign regulatory
impediments, "local customs" and expectations of foreign
officials. The temptation to improperly facilitate a transaction
can lead to a path of bribery, multi-jurisdictional criminal and
civil proceedings, fines, forfeiture of assets, reputational damage
and, potentially even, imprisonment.
INDICTED AND GUILTY PLEA
Indicted for bribery on June 23, 2011 under Canada's
Corruption of Foreign Public Officials Act (the Foreign
Corruption Act ), Niko Resources Ltd.
(Niko), a Calgary-based oil and natural gas
company, pleaded guilty to the bribery charge in an agreed
statement of facts filed with the Alberta Court of Queen's
Bench on June 24, 2011.
In the Spring of 2005, a few months after a blowout of one of
the company's natural gas wells in Bangladesh, Niko provided
Bangladesh's state minister for energy and mineral resources,
AKM Mosharraf Hossain, with a gift of a luxury vehicle. In
addition, Niko paid for Mr. Hossain's trip to Calgary for the
2005 Gas and Oil Expo event, and for his trip to New York in the
same year to visit family.
The agreed statement of facts included a recommendation on
sentencing for the bribery, which the Court accepted. The
Court's sentence includes a fine of $8,260,000, plus an
additional 15% Victim Fine Surcharge for a total fine of
$9,499,000. Additionally, the sentence includes a Probation Order,
which places Niko under the Court's supervision for the next
three years to ensure audits are done to guarantee Niko's
compliance with the Foreign Corruption Act. Niko will bear the
costs of such compliance.
Canada's Royal Canadian Mounted Police
(RCMP) recently launched an initiative to pursue
charges and fines for foreign bribery under the Foreign Corruption
Act. The Niko sentence is the most severe penalty that has yet been
handed out to date under the Act, but others may follow.
The RCMP are currently conducting over 20 investigations into
other Canadian public companies for alleged corruption involving
foreign public officials. The message to Canadian companies with
cross-border business is clear: Canada is pursuing enforcement of
the Foreign Corruption Act and companies must review their
practices and procedures before conducting business in foreign
jurisdictions. Companies with cross-border dealings should conduct
an internal risk assessment, and obtain advice to develop a
compliance policy and program that fits their needs, dealing with
bribery concerns, extortion issues, a whistleblower policy and
training. The bottom line is that your company, its assets and your
liberty and reputation are at stake.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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