Canada: Designing An Anti-Corruption Program: A Guide For Canadian Businesses

I. INTRODUCTION

"Jurisdiction" was once described by Felix Frankfurter, a former justice of the United States Supreme Court, as "a verbal coat of too many colors".1 In the realm of law enforcement, "jurisdiction" is indeed a broad concept, which generally refers to the power of an authority to do something, including: 2

  • the power to legislate, make rules, issue commands or grant authorizations that are binding upon persons and entities, which is sometimes referred to as prescriptive jurisdiction;
  • the power to use coercive means to give effect to laws and to police or investigate a matter, which is sometimes referred to as enforcement or investigative jurisdiction; and
  • the power to resolve disputes or interpret the law through decisions that carry binding force, which is also known as adjudicative jurisdiction.

This chapter serves to delineate the outer limits of the jurisdiction of Canadian authorities, including the jurisdiction of Canadian courts, to enforce Canada's Corruption of Foreign Public Officials Act (the "CFPOA") upon individuals and entities. In other words, in this chapter, we will attempt to identify the jurisdictional hooks that can bring a CFPOA offence under the jurisdiction of Canadian courts.

The first part of the present chapter gives a general overview of the scope of the CFPOA offences, which informs the authorities' jurisdiction under the CFPOA.

The second and third parts of the present chapter will address, respectively, jurisdiction over the offence and jurisdiction over the person accused of the offence. These are two separate notions, 3 but both are essential in enabling the courts to assert their jurisdiction. 4

The fourth part will address situations where courts can assert jurisdiction over persons and entities for the actions of third parties, such as subsidiaries, distributors and partners.

Finally, the fifth part will briefly outline the situations where a given offence can fall simultaneously under the jurisdictions of the Canadian CFPOA, the US Foreign Corrupt Practices Act (the "FCPA") and the UK Bribery Act.

II. OVERVIEW OF THE CFPOA OFFENCES

The CFPOA provides for two criminal offences: (a) Section 3 of the CFPOA criminalizes foreign bribery while (b) Section 4 of the CFPOA provides for a books and records offence.

A. Section 3 CFPOA: Foreign Bribery Offence Foreign corruption, as criminalized under Section 3 of the CFPOA, is:

i. the giving, offering or agreement to give or offer;

ii. an advantage or benefit of any kind;

iii. 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.

A closer look at the main components of the offence 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. 5 In criminal law, such an offence is referred to as an inchoate offence or a conduct crime, as opposed to a result crime. 6 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 offence under the CFPOA – even if there is no evidence that money has changed hands. 7

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. 8

The offence targets not only offshore wire payments and envelopes filled with cash. It can also encompass lavish gifts and less obvious benefits, such as payments of tuition, promises of future employment, support for business opportunities, provision of confidential information or access to an exclusive club. 9 It could also encompass the practice of hiring or doing business with a public official's children or relatives, an issue coined as the "princeling problem".

In the United States, authorities have taken the position that such practice could constitute an offence if the official's duties relate to the hiring company's interests and something of value passes through the relative to the official. 10

"Late rewards" bestowed after a foreign public official has done or omitted to do something are not expressly covered by the offence. While such payments might not influence the public official to take any given course of action, they could still be viewed as evidence of a prior agreement.

An exception is provided for benefits that are permitted or required under local laws or under a public international organization's governing laws. 11 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. 12 However, this exception does not, for example, cover the expenditures of a public official's guest.

An exception is also currently provided for certain "facilitation payments" made with the intent to induce a public official to perform or expedite the performance of a routine act that is part of the foreign public official's duties or functions. Such routine duties, which are usually non-discretionary, include the issue of permits, mail delivery, power and water supply, police protection or the loading and unloading of cargo. 13

However, legislation to repeal the facilitation payment exception has been passed by Parliament and will take effect if and when it is proclaimed in force, which could happen without advance notice. 14 The suspension of the repeal gives Canadian businesses time to adjust their foreign activity accordingly.

B. Section 4 CFPOA: Books and Records Offence

The books and records offence is a relative newcomer in Canadian foreign anti-corruption law. It was introduced in the June 2013 amendments to the CFPOA. Section 4 of the CFPOA provides a number of offences for concealing bribery in accounting records. Specifically, every person who:

i. for the purpose of bribing a foreign public official in order to obtain or retain an advantage in the course of business; or

ii. for the purpose of hiding that bribery commits one of the following acts:

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-existing 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

perpetrates an offence liable to imprisonment for a term of not more than 14 years.

Footnotes

1 United States v. L. A. Tucker Truck Lines, Inc., 344 US 33 at 39 (1952) [Tucker].

2 R v. Hape, 2007 SCC 26 at para 58 [Hape].

3 Chowdhury v. H.M.Q., 2014 ONSC 2635 at para 13 [Chowdhury]; Canada (Minister of Justice and Attorney General) v. Kavaratzis, 2006 CanLII 13237 at para 18 (ON CA) [Kavaratzis].

4 Chowdhury, supra note 3 at para 13.

5 R v. Karigar, 2013 ONSC 5199 at para 28-29 [Karigar].

6 R v. Greenwood, [1991] OJ No. 1616 at para 31 (ONCA) (Quicklaw) [Greenwood].

7 Karigar, supra note 5 at paras 29 and 33.

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

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

10 US DOJ, FCPA Opinion Releases, n° 82-01, 82-04 & 95-03, online: www.justice.gov/criminal/fraud/fcpa/.

11 Corruption of Foreign Public Officials Act, SC 1998, c 34, s 3(3)(a) [CFPOA].

12 Ibid, s 3(3)(b).

13 Ibid, s 3(4).

14 Fighting Foreign Corruption Act, SC 2013, c 26, s 5 [Bill S-14].

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