Legislative amendments and increasingly rigorous enforcement practices under the Corruption of Foreign Public Officials Act ("CFPOA" or "the Act") mark the robust developments taking place in Canada's anti-corruption regime. Changes to the law and the enforcement thereof carry significant implications for companies and their corporate governance practices.
The CFPOA sets out as a criminal offence any payments made or other benefits provided to foreign public officials, which payments or benefits are made or provided with a view to obtaining or retaining a business advantage.
The accused may be a Canadian or foreign national in the form of a natural person, body corporate, partnership, association, joint venture, government body, crown corporation, or municipal corporation. A charge may be laid against more than one payer of the same bribe, or both the direct payer (the intermediary) and indirect payer (the business) of a bribe.
The prohibited activity is simply the agreement to payment of a bribe. Even in cases where the bribe is not accepted or does not result in the intended benefit, the CFPOA applies as long as there has been such an agreement. Furthermore, the CFPOA will apply even where the prosecution does not indicate the intended recipient.
Businesses should note that anti-corruption legislation and enforcement is also gaining momentum in the global sphere. The United Nations Convention Against Corruption entered into force in 2005, requiring state implementation of legislation criminalizing both the offering of a bribe to national and foreign public officials, as well as the solicitation of a bribe by a national official.
Failure to comply with the CFPOA can impact a company's share price, its inherent value, attractiveness in the market as a business partner or acquisition, and reputations of directors, executives and employees. In the greater economy, corrupt practices have been identified as imposing costs on doing business, distorting competition, misallocating resources, undermining market efficiency and negatively impacting economic growth.
Canadian companies with cross-border business activities would be well-served to review and update their corporate compliance initiatives, which may include:
- the development of internal policies for employees, agents, third-party contractors and subsidiaries, operating both domestically and abroad;
- top-level commitment stemming from the board and management with respect to ensuring transparency in business development and procurement processes;
- transparency and accountability in accounting protocols;
- the execution of comprehensive anti-corruption due diligence, particularly for firms involved in M&A transactions, as acquiring companies could inherit financial and reputational liabilities associated with foreign corrupt practices;
- the performance of country-specific risk assessments, particularly with respect to business dealings in countries identified with high levels of corruption (see, for example, Transparency International's Corruption Perceptions Index);
- the insertion of clear anti-corruption and anti-bribery language in codes of conduct;
- the provision of regular ethics training to all employees;
- the inclusion of clear anti-corruption and anti-bribery clauses in all agent, contractor, and distributor contracts;
- the monitoring of banking and accounting activity for suspicious transactions;
- the implementation of disciplinary procedures for non-compliance;
- the performance of audits on a regular basis; and
- the designation of compliance officers to oversee compliance measures.
It is expected that enforcement activity under the CFPOA will only rise as officials and courts continue to interpret and apply the provisions of this relatively new and evolving statute. Companies should proactively review their corporate governance programs to avoid contraventions of anti-corruption legislation both domestically and abroad.
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