On May 23, 2014, the first criminal sentencing of an individual
under Canada's Corruption of Foreign Public Officials
Act ("CFPOA") was rendered. Mr. Justice
Hackland of the Ontario Superior Court of Justice sentenced Nazim
Karigar to three years in prison.
In August 2013, following a lengthy trial, Karigar was convicted on
a single count indictment of offering to bribe a foreign public
official contrary to section 3 of the CFPOA. Karigar was
found to have played a leading role in a conspiracy to bribe
officials of Air India, a corporation owned and controlled by the
Government of India, and the Indian Minister of Civil Aviation, for
the purpose of securing a multi-million dollar Air India contract
for a biometric security system on behalf of Ottawa-based
Cryptometrics Canada Limited.
The Karigar case is significant in that it represents the first
time that an individual has been prosecuted, tried and sentenced
under the CFPOA. During the sentencing hearing, Crown
counsel characterized Karigar's offence as an elaborate and
sophisticated fraud and argued that Karigar receive a sentence in
the range of three to five years. Karigar's counsel argued in
favour of a reformatory sentence, preferably served in the
community. Karigar faced a statutory maximum of five years
imprisonment as he was charged prior to the recent amendments to
the CFPOA, which increased the maximum length of
imprisonment to 14 years.
In its sentencing decision, the Court considered Canada's
international obligation to combat the bribery of foreign public
officials as a party to the OECD Convention on Combating Bribery in
International Business and noted, in respect of sanctions,
that:
The over-arching principle here is that bribery of foreign public officials should be subject to similar sanctions as would be applied to the bribery of Canadian public officials occurring in Canada.
In delivering the three year
sentence, the Court identified various aggravating and mitigating
factors. Among aggravating factors, the Court considered the
quantum of the contemplated bribe, which would have involved the
payment of millions of dollars in bribes and stock benefits over
time, as well has other circumstances of dishonesty, including
anti-competitive behaviour. In terms of mitigating factors, the
Court referred to Karigar's high-level of cooperation,
including that he self-reported the bribery scheme after a fall out
with his co-conspirators, his age (late 60s), lack of prior
criminal record and the fact that the bribery scheme was a complete
failure.
After a review of the limited Canadian CFPOA jurisprudence
(all guilty pleas by corporations), the Court concluded that the
"bribery of foreign public officials must be viewed as a
serious crime and the primary objectives of sentencing must be
denunciation and deterrence." The Court also concluded that a
substantial penalty must still be imposed despite cooperation with
authorities.
Given that Karigar is the first person to be sentenced under the
CFPOA, the Court reviewed the sentences imposed for
similar crimes such as fraud, domestic bribery and corruption. In
particular, the Court reviewed cases concerning the principles of
sentencing and considered the circumstances favouring the
imposition of a custodial or conditional sentence. It is noteworthy
that the Court declined to draw guidance from UK or US sentencing
guidelines stating that they are "simply inapplicable in
Canada."
The Court ultimately concluded that the three year prison sentence
was largely justified on the basis that Karigar played a leading
role in a sophisticated bribery scheme, having personally conceived
and orchestrated the bribery proposal. As a warning to future
accused persons the court stated that:
Any person who proposes to enter into a sophisticated scheme to bribe foreign public officials to promote the commercial or other interests of a Canadian business abroad must appreciate that they will face a significant sentence of incarceration in a federal penitentiary.
This first prosecution, conviction and sentencing of an individual, along with last year's amendments to the CFPOA, underscore the Government of Canada's commitment to combating bribery and corruption through a strengthened legislative regime and increased enforcement. These developments highlight the critical importance of robust compliance measures and effective risk mitigation strategies for Canadian companies and individuals conducting business abroad. An investigation or prosecution against a company, or a single individual within or associated with the company, can be very costly and cause significant business disruption and reputational damage.
For more detail on last year's amendments to the CFPOA, please see our previous e-LERTS, Proposed Amendments to the Corruption of Foreign Public Officials Act Will Have a Significant Impact on Canadian Companies Doing Business Abroad and Amendments to Canada's Foreign Corruption Laws have Arrived.
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