Canada: World Bank v. Wallace: SCC Endorses Importance Of International Anti-Corruption Efforts

On April 29, 2016, the Supreme Court of Canada (SCC) upheld archival and personal immunities of an international organization (the World Bank Group) and its anti-corruption investigators. The SCC's decision in World Bank Group v. Wallace (World Bank) will allow state and non-state actors to continue cooperating in the increasingly active global fight against corruption. The decision indicates that Canada's top court is aware and concerned about global corruption.  

BACKGROUND AND INVESTIGATIVE POWERS

State actors and international organizations are both engaged in efforts to combat corruption worldwide and often cooperate in such initiatives. State actors are afforded certain immunities and privileges. The issue for consideration in World Bank was whether those immunities and privileges extend to international organizations such as the World Bank Group.

The case involved the anti-corruption/anti-fraud investigative unit of the World Bank Group, the Integrity Vice Presidency (INT). INT received whistleblower allegations asserting executives of an international corporation attempted to bribe Bangladesh officials in hopes of securing a multi-billion dollar construction contract. After completing its investigation, the INT provided copies of whistleblower emails, investigation reports and other related documents to the Royal Canadian Mounted Police (RCMP). Largely based on information provided by the INT, the RCMP made applications for, and obtained, wiretap authorizations and a search warrant against the former executives.

APPLICATION AND APPEAL

The accused brought an application in the Ontario Superior Court of Justice challenging the wiretap authorizations and seeking an order requiring the INT to produce applicable records and seeking to compel INT investigators to appear before the court. The trial judge granted the applications. The World Bank Group appealed.

On hearing the appeal, the SCC unanimously set aside the trial judge's decision, citing Canada's affirmation of the World Bank Group's immunities through its adoption of the Bretton Woods and Related Agreements Act (Canada) and two orders-in-council. But it is the tone of the decision that is notable. It begins by positing that "corruption is a significant obstacle to international development", observes that "corruption often transcends borders" and suggests that "in order to tackle this global problem, worldwide cooperation is needed". There is no mistaking the court's view on the importance of the issue.

IMPLICATIONS

In addition to demonstrating the court's attention to the issue of global corruption, the facts underlying the decision also provide a number of practical insights into the approach towards anti-corruption enforcement and compliance in Canada.

International Reach

The case primarily underscores the breadth and effectiveness of cooperation efforts between state and non-state actors in this context as well as the tools available to local law enforcement in Canada. Wire taps, search warrants, agents and informants are all part of the Canadian anti-corruption arsenal. In World Bank, the RCMP's wiretaps and search warrant allowed for the accumulation of sufficient evidence required to jointly charge the accuseds with bribing foreign public officials under the Corruption of Foreign Public Officials Act.

Cooperating Witnesses

Credit for cooperation is a highly nuanced area. In this case, the Crown granted immunity to one accused in exchange for cooperation and testimony. The effectiveness of this approach for the purposes of advancing the Crown's investigation is apparent. In recent media reports, the cooperating individual vowed to aid investigators and the Crown to "get to the bottom of things" and admitted that bribes or kickbacks were paid by the other executives in efforts to secure construction contracts.

With the recent focus on whistleblower bounties in both Canada and the U.S., including the recent introduction of the Ontario Securities Commission whistleblower policy (please see our October 2015 Blakes Bulletin: Proposed OSC Whistleblower Policy Provides Greater Incentive for Employees to Report Misconduct to Regulator, our July 2015 Blakes Bulletin: Issuers Apprehensive of OSC's Proposed Whistleblower Program and our April 2015 Blakes Bulletin: Whistleblowers to be Rewarded, Protected under OSC Proposal), the potential incentive for whistleblowers and co-operating witnesses will likely continue to have an increased impact on white collar crime investigations and prosecutions.

Compliance

The World Bank decision also underscores the importance of effective and targeted corporate compliance programs; especially for companies operating in high risk jurisdictions. The accused's conduct resulted in prohibitions from participating in World Bank Group-funded projects for 10 years, reputational harm and significant legal costs. These ramifications greatly outweigh the costs of implementing and maintaining a robust and effective compliance program tailored to detect and prevent improper conduct.

CONCLUSION

The World Bank decision serves as a reminder of the increased profile of anti-corruption initiatives around the world. This increased attention, combined with the demonstrated ability of state and non-state actors to cooperate in order to fight corruption, should underscore to corporations the necessity of an effective compliance program.

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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