Canadian businesses and business leaders need to be aware of the recent changes in Canadian Anti-Corruption legislation, enforcement strategies, and recent court decisions to ensure compliance and mitigate risk. These recent developments in Canadian Anti‑Corruption law, the Corruption of Foreign Public Officials Act (CFPOA) and enforcement have three components that are critical for every business leader to know when working in foreign jurisdictions. These include the Bill S-14 amendments, the trends in fines against corporations and the first conviction of an individual under the CFPOA.
On February 5, 2013, the Government tabled Bill S-14, The Fighting Foreign Corruption Act. The legislation received all party approval and several minor changes in committee, and was passed into law in late June 2013. The most significant amendments to the CFPOA are as follows:
- The expanded jurisdiction allowing Canadian authorities to prosecute any offending conduct under the CFPOA that had a “real and substantial link” to Canada.
- A new “books and records offense” was added to the CFPOA; this makes it an offense to conceal, falsify, or destroy books and records for the purposes of bribing a foreign public official or for the purpose of hiding an act of bribery that would constitute an offence under the CFPOA.
- The amendment also provided for the eventual elimination of “facilitation payments”; these are small payment made to expedite or secure performance by a foreign public official that is part of the foreign public official’s duties or functions.
- The definition of a business under the CFPOA, was amended by removing the phrase “for profit”, the CFPOA now covers not-for-profit organizations, including NGOs, and charities that perform work outside of Canada and deal with foreign public officials.
- Penalties for an individual convicted of an offense of the CFPOA has been increased to fourteen years in prison, up from five years; further, since a charge under the CFPOA is a criminal offence and is classified as an indictable offense, there is no maximum penalty for an organization or corporation, if they are convicted under the CFPOA.
Secondly, the increased attention that international business anti-corruption law and enforcement have received, in both a political and a law enforcement level, had resulted in increased resources to the RCMP. Increase resources and attention have resulted in two high level investigations and convictions. The fine imposed on Niko Resources, just under $10 million dollars, followed by Griffiths Energy, just over $10 million dollars, with the net result that a plea agreement under the CFPOA will be in that range or higher. It remains to be seen whether a penalty imposed by a court, if an accused corporation under the CFPOA defends the charges and is convicted, would be substantially higher. Criminal law sentencing in theory suggests that an early plea is a sign of remorse, both by an individual and a corporation.
Third is the first conviction an individual Mr. Nazir Karigar (Karigar), under the CFPOA, a case involving a bid issued by Air India to provide the airline with a security system based on facial recognition. In an attempt to secure this contract, $450,000 was transferred to the account of Mr. Karigar for alleged illegal payments to the Indian Minister of Civil Aviation and to officials of Air India, which is owned and controlled by the Government of India. Section 3(1)(b) of the CFPOA makes it a criminal offence for a person to agree to give or offer an advantage or benefit of any kind to a foreign public official. Karigar was convicted and is awaiting sentencing and a possible jail term.
Fasken Martineau’s lawyers assist business clients to understand, comply with and respond to investigations under the CFPOA. Compliance starts with “top of the house” commitment, creating a Code of Business Conduct, and implementing an effective CFPOA compliance program. Ethical conduct is not just good business practise, it is now the law that governs the behaviour of all Canadian corporations that do international business.
For more information on any of the details outlined above, please refer to the newly released book “Canadian Anti-Corruption Law and Compliance” by Norm Keith, LL.M., CRSP.