Canada: International Procurement And Canadian Liability

Last Updated: March 13 2014
Article by James Kelsall

A growing number of Canadian companies are seeking to participate in projects in developing markets. As a result, it has never been more important for a business to ensure that it has in place the necessary controls to ensure it does not fall afoul of applicable international procurement and anti-corruption legislation.

Canadian public procurement procedures are perceived as commendable for their fairness and transparency. Carefully drafted rules and safeguards ensure that any organization seeking to bid on a government contract or project knows exactly what is expected of them, and how they must conduct themselves to be considered for the mandate. Clarity at all steps of the process allows participating organizations to set up their internal procedures and controls in a manner consistent with government and industry requirements.

Unfortunately, this standard of conduct is far from universal. Many international markets, particularly those which have undergone recent rapid economic growth, lack the regulatory framework and enforcement mechanisms necessary to ensure that public procurement is fair, transparent and insulated against corruption. The recent controversy surrounding the 2014 Sochi Olympic Games is one example. The vastly inflated expenditures associated with the construction of the infrastructure necessary for the games has been well documented, and evidence suggests that the reason for these increased costs is the poorly regulated and corrupt procurement framework currently in place there (the Russian law requiring state-owned companies to offer contracts through public tender only came into force in 2012 (see Joshua Yaffa, "Waste and Corruption of Vladimir Putin's 2014 Winter Olympics", Bloomberg Business Week, January 2, 2014).

Despite the poor regulation however, markets such as Russia can offer significant opportunities for development companies willing to play ball. Unfortunately it is often not understood that the consequences to Canadian companies for such conduct in international markets can result in criminal liability at home under the Corruption of Foreign Public Officials Act, or, less commonly, the Criminal Code.

The Criminal Code provisions governing bribery apply to any acts of bribery, as defined under the Act, where there is a "real and substantial link" between the offence and Canada (Legislative Summary of Bill S-14, s.1.1.1, citing Libman v. The Queen, [1985] 2 SCR 178). This relatively high standard is often difficult to meet, and as a result prosecutions under the Criminal Code for bribery outside of Canada are not common. The Corruption of Foreign Public Officials Act however is far more expansive in its scope. Bribery is dealt with in section 3(1):

3(1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official

(a) as consideration for an act or omission by the official in connection with the performance of the official's duties or functions; or

(b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.

Essentially this means that where an act of bribery, such as a kickback or other improper payment, is made to a foreign public official by a Canadian citizen or company, they can face criminal liability, regardless of the connection to Canada.

Avoiding Liability

There are two ways that Canadian companies bidding on public mandates in foreign jurisdictions can ensure that they remain onside the requirements of the Canadian Criminal Code and Corruption of Foreign Public Officials Act. First, they must ensure that effective controls are established within the company which prohibit improper behaviour of the type described above cannot occur. Second, they must complete the necessary due diligence required to ensure that they fully understand the risks associated of with procurement initiatives in the market into which they hope to expand.

Assessing Risk: Proper Due Diligence

The decision to participate in a government procurement process in a developing market is not one which should be made lightly. A company could find itself entangled in a process from which it is difficult (or expensive) to escape, and as a result could end up in violation of Canadian law . The most effective way prevent such an eventuality is by ensuring that the decision to participate in a given procurement process is made having made every effort to understand the risks associated with it. It could be that established process in a given country requires the relationship between private and government parties be one fueled by gratuities which, while legal (or ignored) in that country, could result in severe sanctions in Canada.

Engaging a consultant capable of creating a risk-profile for a given market would be a necessary first step to avoiding any such pitfalls. Any existing anti-corruption and compliance policy should also be reconsidered in light of any new risks or practices present in that new market. An old or generic policy designed to ensure compliance in one market, might be less effective in a country where the process is markedly different.

Internal Controls: Anti-Corruption Compliance Policy

It is essential that proper internal controls be established to ensure that there is no risk of improper action on behalf of the corporation at any level; liability can flow from the actions of any employee, regardless of seniority. As a necessary first step, any company engaging in international commercial activities, whether procurement related or not, should have a well-established and comprehensive anti-corruption and compliance policy. A policy of this nature should ensure that employees are well informed with respect to what conduct is permissible, and that proper reporting mechanisms are in place so that employees will know to whom they should turn in circumstances where the proper course of action is uncertain. It is equally important to ensure that the policy considers the actions of third parties, such as consultants or advisors. Under the provisions of the Criminal Code and Corruption of Foreign Officials Act, a company can be held liable for the actions of those it engages to conduct business on its behalf.

Along with the adoption of an anti-corruption and compliance policy, effective enforcement mechanisms must also be established. The policy alone, if not properly administered, is of limited value. Along with the reporting mechanisms described above, the policy should clearly set out who in the organization is responsible for compliance matters, who they are responsible to, and the means by which they are to enforce the requirements of the policy.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.