Canada has significantly strengthened its Corruption of
Foreign Public Officials Act (CFPOA) including by adding a new
offence that will expand the grounds for criminal liability for
corporations and their directors, officers and employees. As
a result of the amendments to the CFPOA:
Canadian companies and individuals who are involved in the
bribery of foreign public officials will be subject to Canadian law
regardless of where the acts constituting the offence took place,
and even if there is no connection with Canada other than their
The maximum penalty for individuals has been increased from
five years to 14 years imprisonment;
Companies and their directors, officers and employees now face
a separate criminal "books and records" offence for
misrepresenting or concealing the bribery of foreign public
officials in their record-keeping;
The RCMP now has exclusive authority to lay charges under the
The bribery offence has been clarified to apply to all business
activities, whether or not they are for profit;
The exception allowing "facilitation payments" (small
payments made to an official for the purpose of securing the
performance of routine administrative acts that are part of the
official's duties or functions) will be eliminated at a future
date to be determined by Cabinet order.
When the amendments were introduced in early February of this
year in Bill S-14, we issued an update describing the implications
of each of them (
Canada Moves to Strengthen Anti-Bribery Legislation). The
amendments as enacted are unchanged from those we described
From a corporate compliance standpoint the most significant of
the amendments are the creation of the books and records offence
and the phasing out of the facilitation payments exception.
New Books & Records Offence
The Canadian books and records offence relies on a criminal law
approach rather than the administrative and civil law approach
adopted under the U.S. Foreign Corrupt Practices Act
(FCPA). This will limit the flexibility of the Canadian enforcement
agencies, the RCMP and the Public Prosecutions Service of Canada
(PPSC), compared to the U.S. Securities and Exchange Commission,
which enforces the books and records provisions of the FCPA. More
specifically, Canadian investigators and prosecutors will need to
establish their case on the criminal "beyond a reasonable
doubt" evidentiary standard rather than a civil standard used
in the U.S. As a practical matter, however, this may not make much
of a difference for corporate boards and management. For the first
time, liability under the CFPOA will potentially flow from conduct
relating to the financial records of a corporation made
after an alleged corruption offence. CFOs
and corporate boards and executives will take little comfort in the
heavier criminal evidentiary burden under Canadian law from a
day-to-day compliance standpoint. Rather, they can be expected to
require the same level of diligence in the recording of
transactions, or in the face of red flags that give rise to
concerns about potential unlawful payments or efforts to conceal
them, as would be expected of corporate officials under the U.S.
In keeping with best practices, many companies already prohibit
facilitation payments in their anti-corruption policies. However,
since these payments are ubiquitous in large parts of the world and
are not currently prohibited under the CFPOA and FCPA, many other
companies do not expressly prohibit them. The Government has
indicated that the delay in declaring the prohibition of
facilitation payments in force is intended to give companies a
grace period to allow them to review and revise their
anti-corruption policies and implement procedures and training
programs to eradicate facilitation payments. Companies with
established business in parts of the world where facilitation
payments are commonly expected should promptly conduct an internal
audit to determine whether and to what extent such payments are
made by their personnel and foreign subsidiaries and take steps to
bring about their elimination.
The new books and records offence and the elimination of the
facilitation payments exception will have the most direct impact on
corporate compliance practices. However, the rest of the amendments
will make investigation and prosecution of CFPOA offences easier
and raise the stakes for corporate officers and directors. By
increasing the maximum penalty for individuals from five to 14
years, Parliament is sending a clear signal that it views foreign
bribery to be on a par with some of the most serious criminal
offences under Canadian law.
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.
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