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

Last Updated: December 20 2012
Article by Tyler Hodgson and Casey L. Leggett

Most Read Contributor in Canada, September 2016

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.

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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.