The twelfth annual report on Canada's fight against foreign bribery (the Report) was tabled before Parliament in the fall of 2011. The Report demonstrates a trend towards increased enforcement and legislative change that could affect the obligations of Canadian companies operating abroad.
Trend towards increased enforcement
Canada ratified the OECD's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions on December 17, 1998. This convention sets an international standard for the criminalization of bribery of foreign public officials and aims to eliminate corruption as a non-tariff barrier to international trade. The shortcomings of domestic statutes implementing these international standards are examined through a system of peer review by the OECD's Anti-Bribery Working Group.
The Report recognizes that Canada has recently come under international pressure to step up its anti-corruption efforts. Transparency International publicly accused Canada in 2010 of being the sole G7 country to provide little or no enforcement of its anti-corruption laws.
Since this accusation was made, there has been a noticeable increase in the number of RCMP investigations into cases of corruption. The Report details the activities of the RCMP's new anti-corruption unit and notes there were 22 ongoing investigations in the past year.
The Report also makes clear that Canada's anti-corruption initiative is a concerted effort among many different governmental agencies and organizations besides the RCMP.
As of November 2011, there have been two convictions under Canada's anti-bribery statute, the Corruption of Foreign Public Officials Act (CFPOA). The RCMP's new zeal was exemplified in the case against Niko Resources Ltd., which recently plead guilty and paid a fine of approximately $9.5 million and placed on three years' probation pursuant to the CFPOA. Even more recently, charges have been laid in relation to suspected bribery of an Indian official by a Canadian businessman in order to secure a multi-million dollar contract for the supply of security systems.
The RCMP's recent attention to enforcing anti-corruption laws demands that Canadian companies institute appropriate policies and internal controls to ensure their compliance with the CFPOA.
Evolving legal standards
The Report also signals some potential new developments in the evolution of anti-corruption law in Canada that could affect the obligations of Canadian businesses abroad.
The CFPOA and the US Foreign Corrupt Practices Act allow for "facilitation payments," which are made by companies to expedite or secure the performance by a foreign public official of any routine act that is part of the foreign public official's duties.
The UK Bribery Act (the UKBA) entered into force on July 1, 2011, with significant extra-territorial reach and more restrictive provisions than its US and Canadian counterparts. It raises the bar for anti-corruption legislation. Unlike the American and Canadian statutes, the UKBA prohibits facilitation payments and private bribery and applies to any company if a person "associated" with the company bribes another person intending to obtain or retain business or an advantage in the conduct of business for that company. The concept of "associated person" appears broad enough to include a wide range of individuals. The director of the UK's Serious Fraud Office (SFO) has indicated on a number of occasions that the SFO intends to take a wide view of the extra-territorial jurisdiction of the UKBA.
In 2009, the OECD emphasized the corrosive effect of facilitation payments and strongly discouraged allowing such payments. This OECD recommendation and the introduction of the UKBA suggest a trend towards outright prohibition of such payments. These developments likely foreshadow similar prohibitions in Canada and the US.
In light of increased enforcement and evolving anti-bribery standards, Canadian companies are well advised to review their anti-corruption practices to ensure compliance. While policies are good starting points, it is clear that compliance requires more than a policy – with proper training, communication, monitoring and follow-up critical to avoiding the legal and reputation risks associated with corrupt practices.
Norton Rose Group
Norton Rose Group is a leading international legal practice. We offer a full business law service to many of the world's pre-eminent financial institutions and corporations from offices in Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia.
Knowing how our clients' businesses work and understanding what drives their industries is fundamental to us. Our lawyers share industry knowledge and sector expertise across borders, enabling us to support our clients anywhere in the world. We are strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences.
We have more than 2900 lawyers operating from 43 offices in Abu Dhabi, Almaty, Amsterdam, Athens, Bahrain, Bangkok, Beijing, Bogotá, Brisbane, Brussels, Calgary, Canberra, Cape Town, Caracas, Casablanca, Dubai, Durban, Frankfurt, Hamburg, Hong Kong, Johannesburg, London, Melbourne, Milan, Montréal, Moscow, Munich, Ottawa, Paris, Perth, Piraeus, Prague, Québec, Rome, Shanghai, Singapore, Sydney, Tokyo, Toronto and Warsaw; and from associate offices in Dar es Salaam, Ho Chi Minh City and Jakarta.
Norton Rose Group comprises Norton Rose LLP, Norton Rose Australia, Norton Rose Canada LLP, Norton Rose South Africa (incorporated as Deneys Reitz Inc), and their respective affiliates.
On January 1, 2012, Macleod Dixon joined Norton Rose Group adding strength and depth in Canada, Latin America and around the world. For more information please visit nortonrose.com.
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.