Canada: Navigating The Choppy Waters Of Foreign Anticorruption Enforcement

The first reported case of corporate foreign corruption dates back to the 16th century, when the British East India Company bribed Mogul rulers with "rare treasures, including paintings, carvings and costly objects made of copper, brass and stone" in consideration of a tax break on exports.1 Historically, these practices were seen as an essential aspect of doing business abroad, or "as a kind of grease to move economic machinery along when there were bureaucratic obstacles."2 Thus, foreign corruption became a well-entrenched profitable practice, which was even welcomed by shareholders of early multinationals.3

However, "a serious foreign policy problem"4 emerged for the United States in the wake of the Watergate scandal, when investigations by the Securities and Exchange Commission ("SEC") revealed "slush funds" that were used by US corporations to bribe foreign public officials in order to secure business.5 The ensuing adoption of the US Foreign Corrupt Practices Act ("FCPA") paved the way for US authorities to enforce a new set of business standards. Such enforcement has become more intrusive over time, as evidenced by the $4 billion in settlements under the FCPA collected from both US and foreign companies over the past five years.

By comparison, Canada's enforcement of its Corruption of Foreign Public Officials Act6 is still in its infancy. In fact, since the CFPOA came into force in 1998, its enforcement has led to only three corporate guilty pleas – those of Hydro Kleen Systems,7 Griffiths Energy International8 and Niko Resources9 – and to the conviction of one individual, Nazir Karigar.10 That being said, the tide is quickly turning, especially since the adoption of Bill S-14 in June 2013, which, among other things, expanded the foreign corruption offense to acts committed abroad by Canadian nationals and corporations, added a separate offense for certain deceptive bookkeeping practices for the purpose of bribing a foreign public official, and provided for the repeal of the facilitation payments exception. As investigations by the RCMP International Anti-Corruption Unit are mounting and high-profile cases are making their way through the courts, the expectations of former Minister of Foreign Affairs Lloyd Axworthy, one of the CFPOA's sponsors, that there would "be a large catalogue of prosecutions every year"11 may well come to fruition.

While the authorities are pulling out the heavy legislative artillery and cracking down on enforcement, little administrative guidance is provided on the CFPOA's implementation, especially with respect to its impact on corporations. Therefore, many queries remain as to the full scope of the CFPOA and its implications for Canadian businesses. This article seeks to shed light on some of the CFPOA's intricacies and legal puzzles that await the courts.

1. What Is Foreign Corruption?

Foreign corruption, as criminalized under the CFPOA, is

1. the giving, offering or agreement to give or offer

2. an advantage or benefit of any kind

3. directly or indirectly to a foreign public official

in order to obtain an advantage in the course of business, and

a) as consideration for an act or omission by the official in connection with the performance of his or her duties; or

b) to induce the official to use his or her position to influence the decisions of his or her state or public international organization.12

A closer look at the main components of the offense reveals its breadth. First, the CFPOA criminalizes the conduct of giving, offering or agreeing to give or offer a bribe, regardless of whether or not the bribe was actually received by the public official.13 In criminal law, such an offense is referred to as an inchoate offense or a conduct crime, as opposed to a result crime.14 It follows that if a person agrees to offer a benefit to a foreign public official, but later changes his or her mind, that person has nonetheless committed an offense under the CFPOA.

For instance, Nazir Karigar was convicted on the basis that he had agreed to bribe Air India officials and India's Minister of Civil Aviation, at the time, in order to secure a security contract. According to the court, the crime was consummated the minute Karigar agreed to bribe a foreign public official, even though Karigar's principal was not ultimately awarded the security contract and even though the Crown had failed to prove that money had actually changed hands.15

Second, the concept of an advantage or benefit of any kind leaves open the possibility of even relatively small benefits falling afoul of the CFPOA.16 The offense targets not only offshore wire payments and envelopes filled with cash. It can also encompass lavish gifts and less obvious benefits, such as payment of tuition, promises of future employment, support for business opportunities, provision of confidential information or access to an exclusive club.17 An exception is provided for benefits that are permitted or required under local laws or under a public international organization's governing laws.18

Providing travel, hospitality or entertainment to a public official can also amount to an unlawful benefit, unless the expenditures are reasonable and are directly related to a valid business purpose, such as the demonstration of products or the execution of a contract.19 However, this exception does not, for example, cover the expenditures of a public official's guest. "Late rewards" bestowed after a foreign public official has done or omitted to do something are not expressly covered by the offense. While such payments might not have influenced the public official to take any given course of action, they could still be viewed as evidence of a prior agreement.

Third, the offense covers both direct and indirect benefits. The notion of an indirect benefit covers an array of scenarios by which benefits can find their way to or benefit a foreign public official through intermediaries. On the one hand, it can refer to the funneling of the bribe through intermediaries, such as consultants and subsidiaries. For instance, in Niko Resources, Niko's Bangladeshi subsidiary had provided a Toyota Land Cruiser to the Bangladeshi State Minister for Energy and Mineral Resources in order to influence the Minister in his dealings with Niko Bangladesh. In its guilty plea, Niko Canada acknowledged having funded Niko Bangladesh's acquisition of the car, knowing that the company would deliver it to the foreign public official.20

On the other hand, an indirect benefit can also refer to providing a benefit to a third party who is affiliated with a foreign public official, including a child, a relative, a political party or a business. Prosecutors could take the position that an offense has been committed if the benefit given or offered to the affiliated third party ultimately benefits the foreign public official. For instance, Schering-Plough Corporation, a US- based pharmaceutical company, made a $76,000-donation to a bona fide charity founded by the director of a Polish regional government health authority. The SEC found, pursuant to the FCPA, that the payment was made to induce the director to purchase Schering-Plough's pharmaceutical products within the regional health authority.21 Accordingly, the SEC viewed Schering-Plough as having given something of value – perhaps "enhanced self-worth or prestige"22 – to a foreign public official. Schering-Plough paid a civil penalty of $500,000 and undertook to retain an independent consultant to review its anticorruption policies.

An additional issue, sometimes coined the "princeling problem," refers to the practice of hiring or doing business with public officials' children or relatives. In the United States, authorities have taken the position that such practice could constitute an offense if the official's duties relate to the hiring company's interests and something of value passes through the relative to the official.23 Corporations should be cautious about hiring the children of foreign public officials, unless there is a bona fide business reason that is unrelated to the child's lineage.


* The authors would like to thank Alexander Steinhouse, an associate in the White Collar Defence & Investigation practice group at Davies Ward Phillips & Vineberg LLP, and students-at-law Vanessa Pendenza and Dov Whitman for their assistance in the preparation of this article.The views and opinions expressed in this article are those of the authors and do not necessarily reflect those of Davies Ward Phillips & Vineberg LLP.

1. Milton S. Gwirtzman,"Is Bribery Defensible?"New York Times Magazine (5 October 1975) 19.

2. Statement of Wesley Cragg, President of Transparency International Canada, in the Debates of the Senate (Hansard), 1st Session of the 36th Parliament, vol. 137, issue 100 (December 3, 1998) at 1650 ("CFPOA Debates").

3. Gwirtzman, supra note 1.

4. Senator Frank Church's opening remarks to the Multinational Corporations and United States Foreign Policy: Hearings Before the Subcomm. on Multinational Corps. of the S. Comm. on Foreign Relations, 94th Cong. 1 (1975) at 2.

5. For a detailed study of the legislative history of US foreign anticorruption legislation, see Mike Koehler, "The Story of the Foreign Corrupt Practices Act" (2012) 73:5 Ohio State L.J. 929.

6. SC 1998, c 34 ("CFPOA").

7. R. v. Watts, [2005] AJ No. 568 (ABQB) (Quicklaw).

8. R. v. Griffiths Energy International, [2013] AJ No. 412 (ABQB) (Quicklaw) ("Griffiths").

9. R. v. Niko Resources Ltd., 2011 CarswellAlta 2521 (ABQB) (Westlaw) ("Niko").

10. R. v. Karigar, 2013 ONSC 5199 ("Karigar (conviction)").

11. CFPOA Debates, supra note 2 at 1630.

12. CFPOA, s 3.

13. Karigar (conviction), supra note 10, ¶¶28-29.

14. R. v. Greenwood, [1991] OJ No. 1616, ¶31 (ONCA) (Quicklaw).

15. Kargiar (conviction), supra note 10, ¶¶29 & 33. Another good illustration of the offense's inchoate nature is Griffiths, supra note 8, in which an initial agreement to bribe the Chadian Ambassador to Canada was terminated on the advice of the company's counsel and replaced by an agreement to pay the same bribe to the Ambassador's wife. Only the latter payment was completed. In the agreed statement of facts, however, criminal liability was acknowledged with respect to both agreements.

16. However, it may prove difficult to characterize a trivial benefit as being given as consideration for an act or omission.

17. Mark Pieth, Lucinda A. Low & Nicola Bonucci, eds., The OECD Convention on Bribery: A Commentary, 2nd ed. (New York: Cambridge University Press, 2014) at 128.

18. CFPOA, para. 3(3)(a).

19. CFPOA, para. 3(3)(b).

20. Niko, supra note 9, Agreed Statement of Facts, ¶4.

21. US SEC, admin proceeding file no. 3-11517 (June 9, 2004), online: < >.

22. Mike Koehler,"A Double Standard? Part III"(September 30, 2010), online: < >.

23. US DOJ, FCPA Opinion Releases, n° 82-01, 82-04 & 95-03, online: < >. See also CFPOA Debates, supra note 2 at 1540, in which former Minister of Foreign Affairs Axworthy mentions that the award of a benefit to the relative of a foreign public official could amount to an offense if "the public official gained some benefit along the way through this activity."

Reprinted with permission from  The 2015 Lexpert®/American Lawyer Guide to the Leading 500 Lawyers in Canada  © Thomson Reuters Canada Limited .

Download full article

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.