Companies who do business overseas should pay heed to the statements made in February 2014 by Kara Brockmeyer, the Chief of the U.S. Security and Exchange Commission's Foreign Corrupt Practices Act unit, that companies should act prudently by ensuring that they have robust anti-corruption compliance programs.
In light of the prosecution and enforcement efforts in 2013 by the SEC and the U.S. Department of Justice aimed at the oil, mining and gas sectors -- including significant penalties paid by Parker Drilling Company ($12 million), Total S.A. ($398 million), and Weatherford International Limited ($153 million) – Canadian companies in the resources sector with any connection to the U.S., particularly those listed on U.S. securities exchanges, should expect that sooner or later their overseas business practices could come under scrutiny of U.S. enforcement authorities.
2013 was a watershed year for the Corruption of Foreign Public Officials Act (CFPOA) which was significantly amended to make prosecutions easier for the Canadian enforcement authorities. In addition, Griffiths Energy International Inc. pled guilty in January 2013 to a criminal charge under the CFPOA and agreed to a C$10.35 million fine. In August of 2013, Nazir Karigar, an agent for Cryptometrics Canada, was convicted for agreeing to bribe a foreign official, in what was the first trial conducted under the CFPOA. The sentencing of Mr. Karigar is expected to take place in an Ottawa courtroom in April, 2014.
Griffiths Energy, the Karigar case, and previously Niko Resources, make it abundantly clear that we will continue to see vigorous enforcement by Canadian authorities of the provisions of the CFPOA in relation to overseas business activities. Directors, officers, general counsel, and outside legal and other advisors are under notice from the Canadian enforcement authorities that hefty fines imposed in the U.S. and other countries under anti-corruption laws will also be imposed in Canada for engaging in foreign corrupt activities.
An effective anti-corruption compliance program, including a whistleblower program, proper training for management, employees and agents, and a protocol for handling internal investigations and dealings with enforcement authorities, can no longer be considered on optional compliance regime, but one that is critical for any Canadian company doing business overseas in industries and countries prone to corruption in business dealings.
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