On January 15, 2013, Calgary-based Griffiths Energy
International Inc. ("Griffiths")
announced that it has been charged under Section 3(1)(b) of
Canada's Corruption of Foreign Public Officials Act
("CFPOA"). That provision
prohibits bribing foreign public officials to influence acts or
decisions of the foreign state for which the official performs
duties or functions. The charge was laid following the
company's voluntary disclosure to the Canadian authorities.
Potential violations of CFPOA were discovered in 2011, after
Griffiths replaced its existing management team and Board and
formed a special committee to investigate three consulting
contracts with entities that had relationships with foreign public
officials in Chad. Griffiths reported that it had paid
signing bonuses of $40 million for the first two contracts and $13
million for the third.
Griffiths says that it anticipates a near-term negotiated
resolution of the charge.
The prosecution is of interest for several reasons.
First, the compliance community will be watching to see the
extent to which Griffiths' decision to make a voluntary
disclosure will mitigate any penalty imposed on the company.
In 2011, Niko Resources, another Calgary company, pleaded guilty to
a single bribery charge and was fined $9.5 million. However,
while Niko Resources cooperated with in the investigation, it had
not made a voluntary disclosure of the violation. They say that
confession is good for the soul – the Griffiths prosecution
will show if it it's also good for the pocket-book.
In addition, Griffiths has implemented a robust Business
Integrity Policy and a Whistleblower Policy, both of which address
bribery questions policies. It will be interesting to see if
those compliance efforts will mitigate any penalty. Of course, if
those policies existed at the time of the alleged offence, and were
ignored, their value will be considerably less.
Finally, many will be watching the results of the prosecution to
see whether any consideration is given to the fact that the
incidents happened under the watch of the prior management team and
Board. Post-acquisition liability for prior offences is a major
issue in any acquisition and it will be informative to see if the
new management and Board receive any consideration for their lack
of involvement in the alleged offence.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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