On February 5, 2013, the Government of Canada introduced Senate Bill S-14, An Act to amend the Corruption of Foreign Public Officials Act ("Bill S-14"). Although Bill S-14 is still early in the legislative process, it proposes to make significant amendments to the Corruption of Foreign Public Officials Act ("CFPOA"), which will impact Canadian companies operating overseas. Among the most critical amendments for companies to understand is the proposed expansion of the CFPOA's jurisdiction and the elimination of the facilitation payment exemption from the definition of a bribe.
These amendments and their implications are briefly discussed below, and include:
- Expanding jurisdiction for the prosecution of offences under
- Phasing out the facilitation payment exemption
- Creation of a books and records offence
- Broadening the definition of "business"
- Increasing the maximum length of imprisonment
- Granting the RCMP exclusive enforcement jurisdiction
Expanding jurisdiction for the prosecution of offences under the CFPOA
The proposed amendments under Bill S-14 extend the reach of the CFPOA to cover the activities of Canadian companies, citizens and permanent residents regardless of where the alleged bribery has taken place.
Currently, the jurisdiction of the CFPOA is limited to circumstances where the prohibited activity has a "a real and substantial connection to Canada". Accordingly, if a bribe and any acts in furtherance of the bribe have no connection to Canada, a Canadian company or resident would not be subject to the CFPOA.
To bring the CFPOA in line with its international equivalents, including the U.K. Bribery Act and the U.S. Foreign Corrupt Practices Act, Bill S-14 will eliminate the territorial connection requirement, by deeming any act in contravention of the CFPOA committed abroad by a Canadian company, citizen or permanent resident to have been committed in Canada. This will have the effect of greatly expanding the reach of the CFPOA to cover the activities of Canadian companies, citizens and permanent residents wherever they occur and without regard to the relationship those activities have to Canada.
Phasing out the facilitation payment exemption
Perhaps most notably in terms of a practical implication, Bill S-14 proposes the eventual elimination of facilitation payments. Currently, the CFPOA permits facilitation payments, which are payments made to foreign public officials to expedite or secure the performance of a routine act that is part of the official's ordinary duties, such as the issuance of a permit, the processing of documents such as visas and work permits, or the provision of services normally provided, such as police protection.
The Government intends to eliminate the facilitation payment exemption on a date to be determined by Cabinet after Bill S-14 is passed, in recognition of the need to allow Canadian companies a period of time to adjust their operations to the new requirements of the CFPOA. This aspect of Bill S-14 was discussed during its second reading in the Senate on February 12, 2013, where Senator Janis Johnson, the sponsor of Bill S-14, stated:
The third amendment proposed under Bill S-14 is the elimination of the so-called "facilitation payments" defence. Currently, the act states that payments made to expedite or secure the performance by a foreign public official of any act of a routine nature does not constitute bribes for the purposes of the CFPOA. To provide some context, a facilitation payment is a "grease payment" paid to a foreign public official to do something that he or she is already obligated to do, such as deliver one's mail on time. Conversely, payments that are made to receive a business advantage constitute bribes, which are illegal under the CFPOA, and, as a result, it is our belief that the elimination of the facilitation payments defence will not create a competitive disadvantage for Canadian companies in international markets. Unfortunately, legislation in a few other countries still contain a facilitation payments defence, and we hope that they soon will follow our lead.
In order not to place Canadian companies at a disadvantage and to allow sufficient time for them to adjust internal controls, this specific amendment will be implemented on a date to be determined by the Governor-in-Council. (Emphasis added.)
Creation of books and records offence
To bring the CFPOA in line with its U.K. and U.S. counterparts, Bill S-14 proposes to create a new books and records criminal offence of making, falsifying or concealing records and payments related to the bribery of a foreign public official. More specifically, the following conduct as it relates to making or hiding a bribe will be prohibited:
a. establishing or maintaining accounts which do not appear in any of the books and records of a business that are otherwise required by applicable accounting and auditing standards;
b. making transactions that are not properly recorded or identified in required books and records;
c. recording non-existent expenditures in required books and records;
d. recording incorrectly identified liabilities in required books and records;
e. knowingly using false documents; or
f. intentionally destroying accounting books and records earlier than permitted by law.
Broadening the definition of "business"
Bill S-14 also proposes to broaden the definition of business, by removing the previous reference to "for profit" under the definition. In its proposed form, the term "business" will include "any business, profession, trade, calling, manufacture or undertaking of any kind carried on in Canada or elsewhere".
This amendment will ensure that the CFPOA applies to all businesses, regardless of whether such enterprise is "for profit".
Increasing the maximum length of imprisonment
Additionally, Bill S-14 proposes to increase the maximum length of imprisonment for individuals under the CFPOA, including both the anti-bribery and the books and records provisions, to 14 years from the current five year maximum. This proposed amendment may be indicative of the Canadian government's increased focus on prosecuting individuals as well as companies.
Granting the RCMP exclusive enforcement jurisdiction
Currently any police officer in Canada has the authority to lay charges under the CFPOA. Bill S-14 proposes to give the RCMP exclusive authority to lay charges under the CFPOA. This will have the effect of eliminating the potential for any jurisdictional conflicts between federal and provincial law enforcement agencies.
Currently the RCMP has two specialized investigation teams, based in Ottawa and Calgary, responsible for the investigation of any potential breaches of the CFPOA.
Although it remains to be seen what final form Bill S-14 will take, the version currently before the Senate reflects the Government of Canada's commitment to combating bribery and corruption through increased enforcement under the CFPOA and highlights the critical importance of robust compliance measures for Canadian individuals and companies conducting business outside of Canada.
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.