Canada: Steering Clear Of Corruption Charges: 5 Lessons For Canadian Businesses

Last Updated: February 8 2012
Article by Paul Sharp

Most Read Contributor in Canada, November 2017

Bribery and corruption enforcement is on the rise around the world. In this climate, all businesses, even the best corporate citizens, need to examine their exposure to potential corruption allegations. Pleading ignorance of the corrupt practice – or the laws that govern them – isn't a "get out of jail free" card. Nor is being innocent: an accusation, as far as a company's reputation goes, can be just as bad for a business as a conviction.

Fortunately, mitigating this risk, while requiring effort on part of the business, is to a large extent a matter of common sense. To effectively protect itself and its reputation, a Canadian business operating abroad should keep the following five points in mind.


  1. Get a corporate compliance policy – now
  2. Know the law – in every jurisdiction
  3. Know the penalties – they can be severe
  4. Know who you're working with – you can be responsible for their actions
  5. Don't skimp on due diligence – it can save you millions



Start with an internal compliance policy that ensures management and employees know what they can and cannot do when conducting business in foreign jurisdictions. The document can be as simple or as complex as your business (tips on what it must contain follow below). The very process of creating such a policy can be helpful to your business and your employees in understanding the behaviour expected of them in dicey situations, as well as educating them about the difficult issues they may encounter. A strong compliance policy also sends a message, internally and externally, that your organization takes compliance seriously, and can be your first line of defence should your organization face charges or allegations.


International anti-corruption legislation is just that – international. That means complying with the Canadian Corruption of Foreign Public Officials Act is not enough. You might think of it as the beginning of your legal obligations in this area, as international anti-corruption legislation often involves overlapping jurisdiction. The United Kingdom's Bribery Act 2010 applies to any individual or organization that carries on business, or part of a business, in any part of the United Kingdom. The United States' Foreign Corrupt Practices Act applies to foreign nationals and businesses operating in the United States. Many other jurisdictions have similar reach and legislation.

Knowing the law is necessary to staying within its bounds; it's also necessary for crafting an adequate compliance policy – which, in turn, is necessary in just about any corruption-related defence, as proof that the defendant business has had procedures in place intended to prevent misconduct.


For those who need punitive motivation, the recent Canadian case involving Niko Resources Ltd. underscores that the penalties for non-compliance can be high. Niko Resources was fined $9.5 million, and put under court supervision for three years to ensure its compliance with the Canadian Corruption of Foreign Public Officials Act. Niko's crime? Providing, through its subsidiary company in Bangladesh, a luxury SUV valued at approximately $190,000 to the then-Bangladeshi State Minister for Energy and Mineral Resources. Niko's settlement with the Canadian government dominated business and mainstream headlines, both at home and abroad, layering negative press and reputational loss for Niko on top of the court decision.

Penalties in other jurisdictions can be even tougher. In the United States, settlements of several hundred million dollars are common, and individuals in every jurisdiction can face jail time if convicted for bribery or corrupt practices.


Your subsidiaries, partners, agents or third parties in foreign jurisdictions can get you in trouble – and you will be held responsible for their actions. A business can be prosecuted for the acts of third parties under both the United Kingdom's Bribery Act 2010 and the United States' Corrupt Foreign Practices Act, and "we didn't know what they were doing" is not an acceptable excuse. That means you need to know exactly who you are dealing with, and what their record is. Just as importantly, you need to ensure that these agents know that bribery and corruption are not accepted as a business practice within your organization and that your global corporate compliance policy applies to them too.

What you don't know will hurt you. In the United Kingdom, a business can face liability for failing to prevent bribery conducted by an associated person with or without that business's knowledge. In the United States, a business can be liable for the corrupt practices of a third party. If the industry or jurisdiction has a reputation for off-side practice, tread extra-carefully: if there was high probability of corruption occurring, the US legislation assumes knowledge.


Due diligence is a critical component of keeping a business on-side with anti-corruption laws in all of its practices and business relationships. But it requires extra attention in a merger/acquisition situation, where you may acquire potential successor liability if you don't do your homework. Has the target or merger partner been compliant with applicable anti-corruption laws? Can it prove it? Such due diligence requires an investment of resources and a timeline generous enough that if the review unearths something troubling, you're able to bring in the appropriate authorities, address the issue – and, if necessary, walk from the deal without a reputational smear.

Sorting things out post-deal should not be an option. Transparency International underscores that a failure to detect bribery or corrupt practices before the deal closes can have catastrophic results in terms of legal and reputational risks post-close.


If you don't have a corporate compliance policy in place, get working on it now – and keep mind it must comply with the law in all jurisdictions in which you operate. For an extra motivational kick, review the penalties for non-compliance – you don't want to risk them. Make sure you know who you're working with, domestically and abroad, and that all your subsidiaries, partners, and agents know your compliance policy. And, through it all, don't skimp on due diligence – it will save you.


Nobody wants their business to become the subject of corruption or bribery charges, and prevention starts with a corporate compliance policy. Transparency International, an anti-corruption NGO, suggests Canadian businesses consider the following steps in the creation of their anti-corruption compliance policies.

Internal Compliance Policies and Procedures

  • Appoint a "Compliance Officer" to ensure that all domestic and foreign legislation is addressed and complied with at all levels of operations.
  • Ensure that whatever policies or procedures are in place clearly indicate that the business has a zero tolerance policy with respect to bribery and corruption.
  • Ensure that the policy clearly defines bribery and corrupt practices, as well as provides examples of what does and does not constitute bribery or corrupt practices for each applicable piece of legislation.
  • Require management and employees to review internal compliance polices and procedures on an annual basis.
  • Ensure that due diligence is conducted on agents and third parties acting for the business in foreign jurisdictions, and that any agent or third party is aware of the business's internal policies and procedures regarding bribery and corrupt practices.
  • Ensure that the business maintains adequate and detailed records of compliance issues relating to bribery or corrupt practices, including audits.
  • Enforce the policy at all times, disciplining employees who do not comply and reporting any illegal activity to the proper authorities.

Due Diligence

  • Conduct due diligence aimed at addressing concerns related to bribery and corrupt practices for all deals.
  • Ensure that the due diligence is conducted early in the transaction, so that if any corrupt practices are found, they can be addressed.
  • Review the internal policies of the target or partner company to ensure that the business has an adequate anti-corruption policy in place.
  • Know the industries that the target or partner company has historically been involved in, and take note of whether those industries are historically associated with corrupt practices.
  • Ensure that sufficient resources are devoted to due diligence on corruption-based concerns, so that there are no surprises (and potential legal troubles) post-close.

For Transparency International's full Canadian-business focused Anti-Corruption Compliance Checklist, please click here.

About BLG

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