On February 5, 2013, Bill S-14, the Fighting Foreign Corruption Act, an act to amend the Corruption of Foreign Public Officials Act (the "Act"), was introduced by the federal government and received its first reading in the Senate. The proposed amendments reinforce the federal government's commitment to combat corruption and bribery of foreign public officials. To date, there have only been three convictions under the Act, but there are currently thirty-five ongoing investigations.
Anti-corruption legislation should be of concern to all Canadian businesses and individuals conducting business abroad. Entirely apart from the proposed changes to Canada's bribery laws contained in Bill S-14, companies should review their internal compliance programs and codes of conduct regarding bribery and anti-corruption and should ensure that they are effective and up-to-date.
The Act, which came into force in 1999, is quite similar to the U.S. Foreign Corrupt Practices Act. The United States has been at the forefront of the anti-bribery movement and many other jurisdictions have been following its lead. In 2011, the U.K. enacted its own anti-bribery law which in many respects went well beyond the U.S. law, most notably by prohibiting "facilitation payments" and by extending the extra-territorial reach of the law. The most interesting aspect of the proposed amendments to Canada's anti-bribery laws is that they go beyond the U.S. by prohibiting "facilitation payments," but the proposed amendments do not go as far as the U.K. in extending the extra-territorial reach of the Canadian law. The interesting question is why Canada would want to impose restrictions in its law that are different from those imposed by U.S. law.
Bill S-14 contains five principal proposed amendments to the Act.
1. Facilitation payments are prohibited
The Act currently provides an exception for payments that are made to "expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the foreign public official's duties or functions" ("facilitation payments"). Some examples of facilitation payments include the issuance of a permit or licence, the processing of visas and work permits and the provision of services, such as police protection and loading and unloading cargo. Bill S-14 proposes to repeal this exception for facilitation payments. This amendment would bring the Act more in line with the U.K. Bribery Act, which prohibits facilitation payments, but would make it inconsistent with the U.S. Foreign Corrupt Practices Act, which permits such payments in certain circumstances. One can question whether the elimination of the facilitation payments exception is desirable or realistic. In the U.K., for example, the sensitivity of facilitation payments was recognized and it was acknowledged that the eradication of facilitation payments is a long-term objective requiring international co-operation and collaboration.
2. Establishes Nationality Jurisdiction
Bill S-14 would establish jurisdiction over all Canadian citizens, permanent residents and corporations incorporated in Canada, even if there is no real or substantial connection to Canada. The U.K. Bribery Act has a far broader extra-territorial reach in that it applies to organizations that carry on any part of their business in the U.K., regardless of their place of incorporation. This amendment will make it easier for Canada to exercise jurisdiction over Canadian persons and companies, regardless of where the alleged violation occurred.
3. Business no longer needs to be carried on "for profit"
Currently, the Act prohibits payments of bribes "in order to obtain or retain an advantage in the course of business". Business is defined as "any business, profession, trade, calling, manufacture or undertaking of any kind carried on in Canada or elsewhere for profit." Bill S-14 proposes to delete the words "for profit" from the definition. The effect of this amendment would be to broaden the application of the Act to include not-for profit organizations. When combined with the ban on facilitation payments, this would mean that a Canadian citizen working for a relief agency in Africa would be prohibited from making a small payment to a border guard in order to allow relief supplies to reach a refugee camp.
4. Increase Maximum Prison Sentence for Individuals
Bill S-14 would see the maximum prison sentence for a person who is convicted under the Act increased from 5 years to 14 years. (A contravention of the Act is also subject to unlimited fines.)
5. New Books and Records Offence
Bill S-14 also proposes to add a new offence for, among other things, establishing or maintaining accounts which do not appear in any of the books and records that the person is required to keep, or knowingly uses false documents, each for the purpose of bribing a foreign public official or for the purpose of hiding that bribery. This is one of the most significant changes to the law. This provision will bring the Act more into line with the U.S. Foreign Corrupt Practices Act. The addition of this provision will also arguably make it easier to achieve convictions under the Act.
Although it may appear that the proposed amendments are intended to bring Canada's anti-bribery law into conformity with other jurisdictions, which it does do in some respects, in other respects, it goes beyond what other jurisdictions have done. These inconsistencies make it very confusing for multinational organizations faced with a patchwork of legal restrictions. What is important to understand is that whatever may have been the attitude before, Canada is now giving anti-bribery enforcement real attention and is committing real resources to this initiative. If they have not already done so, Canadian companies operating in the international environment are going to have to start paying closer attention to anti-bribery compliance.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.