In which part of the world is the risk of anti-corruption
enforcement the highest? Law360 reported last week that, according
to a report by Freshfields Bruckhaus Deringer LLP, Asia appears to
be the focus of United States ("US") regulators'
Foreign Corrupt Practices Act crackdown.
The article reports that at least 115 pending
investigations are currently underway in Asia, followed by 44
ongoing investigations in Africa and 19 in the European Union.
These figures suggest that Canadian companies doing business in
Asia should be aware of the increased possibility that they could
be the subject of regulatory attention. As the report notes,
companies often struggle with compliance in Asia while manoeuvering
local laws, customs and business practices leading to behaviour
which falls outside the permitted scope of international
Regulation of Canadian Companies
Canadian companies listed on American exchanges are subject to
FCPA enforcement as foreign issuers under the Act. As such,
companies may be the subject of U.S. enforcement notwithstanding
their incorporation in Canada.
In addition, companies may be investigated under Canada's
Corruption of Foreign Public Officials Act
("CFPOA"), which creates substantially similar offences
as the US' FCPA – namely, bribing foreign public
officials or keeping inaccurate books and records for the purpose
of hiding bribes. One key difference between the two acts is the
upcoming elimination of the facilitation payments exception from
the CFPOA. This means that companies could be prosecuted under the
Canadian act for small payments made to secure the performance of
routine, non-discretionary acts by low-level officials, a common
risk for companies doing business in regions such as Asia or
Although the RCMP maintains criminal prosecutorial authority
under the CFPOA, similar to Department of Justice's criminal
jurisdiction over the FCPA, Canada does not have a body
responsible, as a matter of policy, for handling anti-corruption
matters from a civil/regulatory perspective, such as the Securities
and Exchange Commission in the U.S. One possibility would be
the Cooperative Capital Markets Regulatory Authority
("CCMRA"), once it is established (The CCMRA is intended
to be established in accordance with the memorandum of
understanding amongst the Government of Canada and several
provincial governments, including Ontario and British Columbia, as
discussed in a
Ensuring Anti-Corruption Compliance
Given the increasing risks inherent in doing business in regions
such as Asia and Africa, Canadian companies operating overseas have
another reason to ensure they have robust anti-compliance programs
in place. Best practices include, for example, building
anti-corruption clauses into agreements, ensuring facilitation
payments are not taking place, having adequate bookkeeping
practices, establishing whistleblower programs to report potential
wrongdoing, and ensuring all government payments are made to an
institution rather than an individual and governed under a properly
executed memorandum of understanding. Companies should also ensure
proper oversight following the Pétroles Global
decision establishing that wrongdoing by middle management can
constitute the directing mind of the company for the purpose of
corporate criminal responsibility.
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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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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