In recent years, there has been an increase in the number of investigations conducted1 and criminal proceedings brought under the Canadian Corruption of Foreign Public Officials Act2 ("CFPOA"). A conviction for an offence set out in the CFPOA can result in significant fines for organizations and both fines and imprisonment for their directors, officers and employees. With the globalization of the economy, an ever-increasing number of firms are expanding their activities abroad. In this context and given the hefty fines, negative reputational impact and collateral consequences that can result from a criminal conviction, it is critical for organizations conducting business in foreign states to be aware of the behaviour of their employees, agents and officers that may attract criminal liability in both their home country and abroad.
This bulletin discusses the foreign corrupt practices and bribery regimes under the CFPOA in light of recent developments, including the 2013 amendments, case law rendered in the past two years and recent criminal proceedings.
Amendments to the CFPOA and OECD Reports
In order to combat foreign bribery, Canada ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "OECD Convention") in 1998. The same year, the Canadian government enacted the CFPOA to meet its obligations under the OECD Convention. Since then, the CFPOA has been amended twice, first in 2001 and more recently in 2013.
Bill S-14, which came into effect on June 19, 2013, amended the provisions of the CFPOA to broaden its scope by expanding the jurisdiction of Canadian courts and toughen the penalties in an attempt to further deter the corruption of foreign public officials by Canadian individuals and legal entities. The Foreign Affairs Minister at the time, Minister John Baird, explained the rationale for the amendments by stating that they were intended to "further deter and prevent Canadian companies from bribing foreign public officials [...] and help ensure that Canadian companies continue to act in good faith in the pursuit of freer markets and expanded global trade."3 Among other changes, under the amended CFPOA, the RCMP is now the only competent authority to bring foreign bribery charges4 and non-profit organizations are now subject to the CFPOA. These amendments are dealt with in further detail in the sections below.
It is worth noting that Canadian courts have yet to apply the amended provisions of the CFPOA and considering that they are not retroactive, it will likely take some time. Only offences committed after June 19, 2013 will be captured by the amended CFPOA.
The 2013 amendments followed the publication in 2012 of Transparency International's eighth report on the implementation of the OECD Convention, which placed Canada in the "Moderate Enforcement Category".5 According to Transparency International, only states which fall within the next category, "Active Enforcement", can claim to be effectively deterring foreign bribery. Despite the amendments, Canada fell down to the "Limited Enforcement Category" in 2013, only to climb back to the moderate category in 2014. Transparency International has criticized the fact that the CFPOA lacks a non-criminal, civil enforcement alternative to cumbersome criminal proceedings, which are inappropriate in certain cases.6 As of today, Canada remains in the "Moderate Enforcement" category.7
A Conspiracy to Commit a CFPOA Offence is Sufficient
The CFPOA contains two criminal offences relating to the corruption of foreign officials: (i) the bribing of a foreign public official to obtain an advantage8 and (ii) the perpetration of accounting operations for that purpose or for purpose of hiding such bribery.9
In 2013, the Ontario Superior Court convicted and subsequently sentenced an individual for the corruption of a foreign public official under s. 3(1)(b) of the CFPOA. In R v. Karigar,10 Hackland J. rejected the defence's submission that the offence under s. 3(1) requires proof that the bribe was effectively offered or given to a foreign public official. This case involved the bribing of Air India officials and an Indian Cabinet Minister by Mr. Nazir Karigar, an agent acting for an Ottawa-based technology company in the context of an RFP issued by Air India, in a failed attempt to win a $100-million contract.
Hackland J. found that if such interpretation were to be accepted, the Crown would have to adduce evidence from the foreign jurisdiction, which would risk putting foreign nationals at risk and "make the legislation difficult if not impossible to enforce and possibly offend international comity."11 In other words, a conspiracy or an agreement to bribe foreign public officials is in itself a violation of the Act. It is worth nothing that the offence in this case was committed prior to the coming into effect of the 2013 amendments.
To view the full article please click here.
1 In 2013, the RCMP was conducting more than 35 investigations for offences under the CFPOA.
2 SC 1998, c 34 [CFPOA].
3 Government of Canada, Foreign Affairs, Trade and Development Canada, "Strengthening Canada's Fight Against Foreign Bribery", February 5, 2013.
4 In 2008, the RCMP established an International Anti-Corruption Unit dedicated to investigating foreign corruption cases.
5 Transparency International, "Exporting Corruption? Country Enforcement of the OECD Anti-Bribery Convention, Progress Report 2012", 2012.
6 Transparency International, "Exporting Corruption Progress Report 2013: Assessing Enforcement of the OECD Convention On Combating Foreign Bribery", 2013, at p 27.
7 Transparency International, "Exporting Corruption Progress Report 2015: Assessing Enforcement of the OECD Convention On Combating Foreign Bribery", 2015, at p 7. At page 10 of its 2015 report, Transparency International criticized the limited availability of background information regarding investigations in Canada.
8 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.
9 4. (1) Every person commits an offence who, for the purpose of bribing a foreign public official in order to obtain or retain an advantage in the course of business or for the purpose of hiding that bribery,
(a) establishes or maintains accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and auditing standards;
(b) makes transactions that are not recorded in those books and records or that are inadequately identified in them;
(c) records non-existent expenditures in those books and records;
(d) enters liabilities with incorrect identification of their object in those books and records;
(e) knowingly uses false documents; or
(f) intentionally destroys accounting books and records earlier than permitted by law.
10 2013 ONSC 5199 [Karigar].
11 Ibid, at para 29.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2015