Canada: A Deeper Dive Into Canada’s First Significant Foreign Bribery Case: "Niko Resources Ltd."*

The guilty plea of Calgary-based Niko Resources Ltd. (Niko) represents the most significant development in Canada's efforts to fight foreign bribery since the 1999 implementation of Canada's Corruption of Foreign Public Officials Act (CFPOA).

Along with investigations initiated by the RCMP in 2011 against Blackfire Exploration and SNC-Lavalin and the continued prosecution of Nazir Karigar for alleged bribery of officials in India, the Niko case appears to signal a new era of aggressive enforcement of foreign anti-bribery rules in Canada. Additional prosecutions or settlements are expected in the near future as it is understood that the RCMP has approximately 30 other foreign corruption investigations ongoing.

The general facts surrounding the Niko case are now well known1, but a closer examination of the Alberta Court of Queen's Bench sentencing proceedings2 and the Agreed Statement of Facts3 provides helpful insights into the approach Canadian authorities are taking to the investigation and prosecution of foreign bribery and the steps companies should be taking to minimize risk of CFPOA violations.


On June 24, 2011, Niko pled guilty to a single charge of bribery under the CFPOA related to two incidents that occurred in 2005 following an explosion at its Bangladesh natural gas field. At that time, Niko was also engaged in negotiations of a gas pricing contract with the Bangladesh government. Niko's Bangladesh subsidiary provided a $190,984 vehicle to the Energy Minister in Bangladesh and paid his travel costs of $5,000 to attend an Energy Expo in Calgary and for a trip to New York and Chicago to visit family.

The Court accepted the sentencing recommendation which included a fine and victim surcharge totalling $9,499,000 and a Probation Order under which Niko will be subject to Court supervision and regular independent audits to confirm its compliance with the CFPOA. Costs of compliance with the Probation Order will be borne by Niko.

In accepting the sentence, the Court noted that the foreign bribery "tarnishes the reputation of Alberta and of Canada [and] ... is an embarrassment to all Canadians." The Court went on to state that "the fact that a Calgary-headquartered oil and gas company has bribed a foreign government official is a dark stain on Calgary's proud reputation as the energy capital of Canada."

Key Points and Observations

A number of instructive compliance points and observations can be gleaned from Niko's sentencing.

Complexity of the Investigation

It is trite to observe that corporate criminal investigations can be particularly resource-intensive, and Niko's case was no exception. This extensive multi-country investigation spanned six years and was complex and costly.

The RCMP alone incurred expenses of $870,000 and worked in cooperation with the Bangladesh Anti-Corruption Commission, the U.S. Department of Justice Fraud Section, the U.S. FBI International Corruption Unit, and law enforcement in Japan, the United Kingdom, Switzerland and Barbados. It also involved reviewing 10 terabytes of data obtained from Niko, conducting witness interviews in several countries as well as obtaining numerous judicial authorizations.

In addition to demonstrating Canada's willingness to commit significant resources to CFPOA enforcement, this also reflects how costly it is for target companies. In order to effectively respond to these investigations, they must devote considerable internal resources, including the time and effort of company executives and board members, as well as retain external counsel and other advisors.

Influence of U.S. FCPA Enforcement

In the investigation and prosecution, Canadian authorities worked very closely with U.S. officials — so much so, that the Crown characterized the prosecution as a "joint effort" by the Alberta prosecution service and the U.S. Department of Justice (DOJ).

The Probation Order, believed to be the first of its kind in Canada, was drafted in consultation with the U.S. DOJ and described by the Crown as "a Canadianized version of similar enforcement actions in the United States" — notably, it requires Niko to assist not just Canadian authorities, but also U.S. law enforcement agencies with respect to any investigation or prosecution arising out of the matter. The terms of the Probation Order closely follow those found in recent U.S. DOJ deferred prosecution agreements under the Foreign Corrupt Practices Act (FCPA). Further, in approving the fine, the Court also considered examples provided by the Crown of U.S. penalties imposed under the FCPA.

There are some important differences between the Canadian and U.S. anti-bribery regimes, including lack of civil enforcement mechanism in the CFPOA and the absence of books and records obligations (which comprise a significant portion of U.S. enforcement action). However, the Niko plea and sentencing suggest that Canadian prosecutors and courts will be significantly influenced by U.S. precedent and practice in this area.

Sentencing Factors Before the Court

On sentencing, the Court observed that "any sentence imposed by this Court must have, as its priority, the objectives of demonstrating the Court's strong denunciation of such conduct and providing a meaningful deterrence for others who might be tempted to commit the same offence." The Crown put before the Court and the Court considered a number of important mitigating and aggravating factors supporting the amount of the fine and the Probation Order.

Although Niko had not come forward to voluntarily disclose these issues prior to the RCMP's initiation of the investigation, there were other mitigating factors before the Court. These included Niko's guilty plea which avoided expending further Crown resources, its cooperation with authorities once it knew it was being investigated, its agreement to take remedial steps and cooperate on a go-forward basis, its lack of a prior criminal record, and the absence of evidence that any benefit actually accrued to Niko as a result of the bribes.

Aggravating factors considered to support the large size of fine included Niko's position as a large and globally successful company, the seniority of the bribed Bangladeshi official, the existence of two separate incidents of bribery, and the significant resources expended on the RCMP investigation.

"Real and Substantial" Link

Under Canadian common law, the commission of an offence under the CFPOA requires a "real and substantial" connection to the territory of Canada. This territorial test for jurisdiction requires that a "significant portion of the activities constituting the offence took place in Canada4." In the past, some have pointed to this test as limiting the ability of Canadian authorities to pursue CFPOA prosecutions and convictions. Although amendments to the CFPOA were proposed in the past to provide for nationality rather than territorial jurisdiction, the bill died on the Order Paper when Parliament was prorogued in 2009 and has not since been reintroduced.

In the Niko case, the parties agreed that there was a "real and substantial link between Canada and the offence." Niko conceded that (i) it funded its subsidiary's acquisition of the vehicle and knew that the subsidiary had delivered it to the Bangladeshi Minister and (ii) it had paid the travel and accommodation expenses of the Minister.

Notably, the Court has before it a number of factors connecting Niko to the impugned activity, including the following: Niko's Chief Executive Officer was a director of the subsidiary "ensuring Niko Canada's knowledge of Niko Bangladesh's activities", the subsidiary was solely funded by Niko, the president of the subsidiary reported up chain to Niko, Niko "closely monitored" all of its foreign subsidiaries, most of the subsidiary's transactions were monitored from Canada, and the subsidiary's accounting was managed from an Indian subsidiary which reported to Niko.

Guidance on Anti-bribery Compliance Measures

Niko's Probation Order contains a number of continuing obligations imposed on Niko regarding disclosure and reporting to the RCMP, assistance to Canadian and U.S. law enforcement authorities, strengthening internal compliance controls, and conducting independent compliance audits to be paid for by Niko.

The internal controls and policies specified in the Order are particularly instructive as a list of CFPOA compliance measures expected to be implemented by Canadian companies, and include:

  1. internal accounting controls for maintaining fair and accurate books and records;
  2. a rigorous anti-corruption compliance code designed to detect and deter violations of CFPOA and other anti-corruption laws, which includes:

    1. a clearly articulated written policy against violations of the CFPOA and other anti-bribery laws;
    2. strong, explicit and visible support from senior management;
    3. compliance standards and procedures that apply to all directors, officers, employees, and outside parties acting on behalf of the company; and
    4. policies governing gifts, hospitality, entertainment and expenses, customer travel, political contributions, charitable donations and sponsorships, facilitation payments and solicitation and extortion.

  3. conducting risk assessment in order to develop these standards and procedures based on specific bribery risks facing the company and taking into account a number of specified factors, including the company's geographical organization, interactions with various types and levels of government officials, industrial sectors of operation, and involvement in joint venture agreements;
  4. reviewing and updating anti-corruption compliance measures at least annually;
  5. assigning anti-corruption compliance responsibility to senior corporate executive(s) with direct reporting to independent monitoring bodies, such as internal audit or the Board of Directors;
  6. a system of financial and accounting procedures designed to ensure fair and accurate books and records and that they cannot be used to effect or conceal bribery;
  7. periodic training and annual certification of directors, offices employees, agents and business partners;
  8. systems for providing anti-corruption guidance and advice within the company and to business partners, confidential reporting of possible contraventions, protection against retaliation, and responding to reports and taking appropriate action;
  9. disciplinary procedures for violations of anti-corruption laws and policies;
  10. due diligence and compliance requirements for the retention and oversight of agents and business partners, including the documentation of such due diligence, ensuring they are aware of the company's commitment to anti-corruption compliance, and seeking reciprocal commitments;
  11. standard provisions in agreements with agents and business partners to prevent anti-corruption violations – representations and undertakings, the right to audit books and records of agents and business partners, and termination rights in the event of any breach of anti-corruption law or policy; and
  12. periodic review and testing of anti-corruption compliance systems.

Continuing Developments

2011 has been a watershed year for Canadian enforcement of anti-corruption rules. In addition, Canadian companies should be carefully monitoring their exposure to developments in other jurisdictions, including the implementation of the UK Bribery Act 2010, the continuing extraterritorial reach of the U.S. FCPA, and new U.S. Securities and Exchange Commission whistleblower rules that provide significant financial incentives for employees and others to report potential FCPA violations.

If they haven't already, companies should be ensuring that they have developed, implemented and are following robust anti-bribery compliance measures.


* To be published in the upcoming issue of the Ontario Bar Association International Law Section's Globetrotter publication.

1 For a general background of the case, see " $9.5 Million Fine is First Significant Action Under Canada's Foreign Corruption Law," June 27, 2011.

2 Transcript of Proceedings Taken in the Court of Queen's Bench of Alberta, Calgary Courts Centre, Calgary Alberta, Her Majesty the Queen v. Niko Resources Ltd., E-File No.: CCQ11NIKORESOURCES, June 24, 2011.

3 Agreed Statement of Facts, Court of Queen's Bench of Alberta, Judicial District of Calgary, Her Majesty the Queen and Niko Resources Ltd., June 23, 2011.

4 R. v. Libman, [1985] 2 S.C.R. 178 (Supreme Court of Canada).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions