Canada: Anti-Foreign Corruption Legislation Has More Bite: Are You Ready?

Among OECD countries, Canada has historically had a reputation of being soft on fighting foreign corruption. In response, Canada ratified the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions on December 17, 1998. Shortly thereafter, on February 14, 1999, Canada passed the Corruption of Foreign Public Officials Act (the "Act"), thereby implementing Canada's treaty obligations with respect to foreign corruption. The centrepiece of the Act is section 3 which contains the prohibition against bribing foreign public officials.

There is a practical and very real difference between making law and enforcing it. Although Canada had a foreign corrupt practice law on its books, there was a perception for the decade following passage of the Act that there were no real efforts made to enforce it. In response to this criticism, in 2008 the RCMP opened a branch dedicated to prosecutions under the Act.

The recent increase in enforcement activity in Canada has garnered significant media attention. In addition to the recent charges laid against two former SNC Lavalin executives, 2011 saw the most significant prosecution to date under the Act in the case of Niko Resources. In that case, Niko Resources ultimately plea bargained for a $9.5 million fine for paying and delivering a Toyota Land Cruiser to the Minister for Energy and Mineral Resources of Bangladesh.

The law in Canada on foreign corrupt practices is bound to be clarified in the next few months as an Ottawa court is hearing the matter of R. v. Karigar, an Indian-born Canadian citizen who has pleaded not-guilty to charges that he violated the Act. The Crown alleges that Mr. Karigar funnelled a $250,000 bribe to Praful Patel, India's Minister of Heavy Industries and former Minister of Aviation. According to a Globe and Mail article, the charge relates to Mr. Karigar's work on behalf of a high-tech security company that was pursuing a $100 million contract with Air India for a facial recognition security system. The company went bankrupt shortly after Mr. Karigar was charged.

Recently, international foreign anti-corruption watch-dog Transparency International issued a report that Canada had improved its foreign anti-corruption enforcement and the Vancouver Sun published this headline: "Canada among 'most improved' in anti-bribery enforcement: Report" (September 5, 2012). But, the consensus still appears to be that Canada can and should do more to combat foreign corruption, as this Globe and Mail headline attests to: "Canada must do more to fight bribery" (September 12, 2012).

The risk of prosecution under the Act is more real than ever. According to Transparency International, there are currently about 40 ongoing investigations in Canada under the Act. Companies need to be aware of the Act and implement procedures to decrease the risk of investigation and prosecution, here and abroad.


There are a few particularly noteworthy elements to the Act:

  • there is no maximum fine under the Act;
  • there is no limitation period to a prosecution under Section 3 of the Act. (in the Niko Resources case, it took a six year investigation before the charges were brought);
  • authorities can obtain wire-tap warrants to investigate into a matter;
  • a bribe is defined broadly as obtaining or retaining an advantage in the course of business. This wording is intended to cover bribes to secure business or an improper advantage in the course of business;
  • the Act applies to both corporations and individuals;
  • when prosecuting a corporation, the general principles of corporate criminal liability including those in s. 22.1 and 22.2 of the Criminal Code
  • will likely apply, which means the activities of the senior officers of a company will become crucial to the prosecution and defence of charges under the Act;
  • the Act also refers to a situation where a person directly or indirectly gives, offers, or agrees to give or offer a loan, reward, advantage or benefit of any kind. This wording is critical, and in particular the use of the word: indirectly. Indeed, this means that bribes can be deemed to be made through an agent. It is quite common for corporations operating abroad to hire local agents to help them in acquiring business in that foreign country. It is extremely important that these agents be properly vetted before they are asked to intervene with foreign public officials on your behalf; and
  • the Act also contains built-in defences: Facilitation payments, which are small token payments to low level officials to secure performance of a routine administrative task, such as processing documents, mail pick-up, securing power or water, or police protection, are permitted under the Act. Such payments are not however permitted under the UK Bribery Act and caution should be used when making such payments since it can be difficult to distinguish a bribe under the Act from a facilitation payment. Proportionate and bona fide hospitality or "reasonable business expenses" for promotion, demonstration, explanation of a product are not bribes under the Act, and neither are payments which are lawful in the foreign jurisdiction. Proof of legality should be demanded in these cases.


A company might want to hire a local consultant to help prepare a bid on a public works project overseas. The arrangement with the consultant might consist of the consultant getting a percentage of the value of the contract. Such arrangements are rife for corruption. In these situations it is important that the consultant be made aware of the company's anti-corruption policy, that he or she sign a document acknowledging that he or she read and understood the policy and agrees to abide by it. In addition, reasonable steps should be taken to vet the consultant. The vetting process could reveal, for example, that the consultant has close ties with the Government or the ruling party.

These precautions are critical because they 1) can prevent corruption and 2) if a company is investigated or charged, a due diligence defence may be available to the company if it took the necessary steps to investigate the consultant prior and during the consultant's business relationship with the company. The UK Bribery Act has a unique offence of a commercial organization failing to prevent a bribe from occurring (i.e., essentially an offence of negligence). It is, however, a defence if a commercial organization can show that it had adequate procedures in place to prevent persons associated with it from bribing. Although the Canadian Act does not have an express due diligence defence built in, bribery under the Act requires the Crown to prove intent (mens rea) and so the due diligence of a company might be critical evidence to counter the Crown's contention that a company, through the actions of an agent or rogue employee, had the requisite intent to bribe a public official.


There is also an important multi-jurisdictional component to anti-foreign corruption laws.

Most countries in the world and every OECD country have enacted anti-foreign corruption legislation. For example, the US has the Foreign Corrupt Practices Act ("FCPA"), the UK has the Bribery Act, and France has Article 113.6 of the Penal Code. Whereas the Canadian Act has been criticized for having a narrow jurisdictional reach, the UK Bribery Act and the FCPA have comparably broad jurisdiction.

Generally speaking, Canada operates under the territoriality principle. This means that an offence must have a real and substantial connection to Canada before Canada will take jurisdiction. Note that in R. v. Karigar, the accused brought a motion to dismiss the charge for lack of jurisdiction on the basis that the matter does not have a "real and substantial connection with Canada". The motion was dismissed by the court on 4 May 2012, while preserving the right of the accused to bring this matter up again at a later date.

In addition, to the territoriality principle, the American and British legislation permit courts to take jurisdiction under the nationality principle. This means that regardless where the offence was committed, if the accused is American or British (or, if a corporation, incorporated in America or Britain or is a reporting issuer or carries on part of its business in these countries), then American or British courts, as the case may be, have jurisdiction. Under the FCPA, non-US companies may find themselves subject to the FCPA because some business activity that relates to the misconduct has a US connection, even though this connection is not otherwise substantial, for example, using US mail.

The extra-territorial reach of the FCPA is impressive. Many of the most high profile prosecutions under the FCPA have been against non-US companies. In 2011, 72% of the financial penalties in FCPA cases were assessed by US authorities against non-US companies ( Many of the largest penalties imposed by US authorities for alleged FCPA violations were levied against foreign companies. For example, US $800 million against Seimens, a German company (Seimens also paid an $800 million fine to German authorities), US $400 million against BAE, a British company, US $365 million against Snamprogetti, a Dutch/Italian company, US $218.8 million against Daimler, a German company, and $185 million US against Alcatel–Lucent, a French company.

Similarly, the UK Bribery Act also has broad extra-territorial reach. British citizens, citizens of British overseas territories, and bodies incorporated under the law of any part of the UK, are deemed to have a "close connection" with the UK, and they may be prosecuted whether the offence takes place outside of the UK. The UK Bribery Act also applies to foreign nationals who commit bribery offences abroad while domiciled or habitually resident in the UK.

The most novel part of the UK Bribery Act is its criminalization of a commercial organization's failure to prevent bribery. Once it is established that a commercial organization carries on a business or part of a business in the UK, regardless of where it is incorporated, if an employee, an agent or a subsidiary bribes another person or foreign public official for its benefit, the organization may be guilty of the offence unless it can demonstrate that it had adequate procedures in place to prevent such conduct. This means if an "associated person" of a Canadian that carries on only a part of its business in the UK pays a bribe to a third party, the parent Canadian company can be guilty of failing to prevent the bribe under the UK Bribery Act, unless it can show that it had adequate procedures (due diligence) in place to prevent the bribe.

The various anti-corruption laws around the world and various approaches to jurisdiction make concurrent jurisdiction a reality to be mindful of. For example, a French citizen working for a Canadian company incorporated in Delaware, listed on the London Stock Exchange who bribes a government official in Nigeria can potentially be prosecuted in France, Canada, the United States, Great Britain and Nigeria. In fact, the phenomenon of what is termed "carbon copy" prosecutions has recently been extensively commented on in the American context (see publications by Andrew Boutros and T. Markus Funk).


The concurrent jurisdictional issue is particularly important in relation to the different approaches countries take to international double jeopardy. The rule against double jeopardy means that an individual cannot be prosecuted and tried for the same crime twice. In Canada and the UK, the rule against double jeopardy also applies internationally so that if an individual is tried and convicted (or acquitted) of foreign corruption in one country, there is a general bar against re-prosecution in Canada or the UK.

However, this is not the case in other countries, most notably the United States and Germany. In the case of the United States v. Jeong, 624 F. 3d 706 (2010), a South Korean national was convicted in South Korea for paying bribes to American public officials. He was convicted and served 58 days in jail in addition to having to pay a fine of approximately $21,000. Pursuant to a mutual legal assistance treaty between the two countries, the United States sought evidence from South Korean officials in relation to Mr. Jeong. The Americans specifically noted in their request for information from the South Korean government that "the Government [US] understands that Jeong was convicted earlier this year of the offence of interference with foreign trade in the...Republic of Korea, and therefore, it is not seeking to further prosecute Jeong". Despite this "assurance", Mr. Jeong then travelled to the United States, was arrested, indicted for bribery and conspiracy and sentenced to five years imprisonment and to a $50,000 fine for the exact same conduct.

Therefore, any settlement must take into account all countries that enjoy potential concurrent jurisdiction over the same conduct. In global settlements for corruption and bribery charges, it is important that primary negotiations be conducted with the nation(s) that do not recognize international double jeopardy such as the United States and Germany.


As Canada's efforts to combat foreign corruption escalate, companies that operate internationally must take the necessary steps to prevent investigations and prosecutions in Canada, and abroad. This involves establishing robust compliance policies and procedures that will assist in establishing that a company acted in a duly diligent fashion, should a company ever find itself under investigation for a violation of foreign corrupt practices.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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