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FCPA Flash – A Conversation With Milos Barutciski Regarding Canada’s Corruption Of Foreign Public Official’s Act

FCPA Flash

The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.

This FCPA Flash podcast is a conversation with Milos Barutciski (Bennett Jones – Toronto) regarding Canada’s FCPA-like law, the Corruption of Foreign Public Officials’ Act. (CFPOA). During the podcast, Barutciski discusses: some of the differences between the CFPOA and the FCPA; how enforcement of the CFPOA is different than enforcement of the FCPA; and whether Canadian companies subject to the FCPA are more concerned with CFPOA enforcement or FCPA enforcement.

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Canadian Court of Appeal Upholds Karigar Conviction For Bribery Of Foreign Public Official

Judicial Decision

Today’s post is from Milos Barutciski and Sabrina Bandali (lawyers in the Toronto office of Bennett Jones).

On July 6, 2017, the Ontario Court of Appeal upheld Nazir Karigar’s conviction and three-year prison sentence for agreeing to bribe a foreign public official contrary to the Corruption of Foreign Public Officials Act (CFPOA). Karigar had acted as an agent of Cryptometrics Canada, an Ottawa-area company, in pursuing a contract to supply security screening equipment to Air India. The trial judge determined that Karigar had agreed with other persons to bribe Indian public officials in order to win the contracts and sentenced Karigar to a three-year imprisonment for contravening section 3 of the CFPOA. The trial judge notably did not conclude that Karigar actually paid a bribe.

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Canada’s “Africa Sting” Moment

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As noted in various reports, three executives of SNC-Lavalin Group (former SNC vice-president of energy and infrastructure Kevin Wallace, former SNC vice-president of international development Ramesh Shah, and Bangladeshi-Canadian businessman Zulfiquar Ali Bhuiyan) were recently acquitted in connection with a Bangladesh bribery scheme “after an Ontario judge threw out wiretap evidence key to the case, saying the wiretap applications were based on gossip and rumour.”

The recent development follows charges being dropped against two other defendants charged in the same case.

While not a perfect parallel, the recent failed prosecution north of the border is similar in certain respects to the DOJ’s failed, manufactured Africa Sting case.

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Friday Roundup

Roundup

Checking in on the Hoskins appeal, checking in up north, checking in across the pond, for the younger generation, if that would happen in a company, and another one dismissed. It’s all here in the Friday roundup.

But first, if you got your FCPA from FCPA Professor in 2016, please consider a donation to help defray the yearly costs of running this free public website.

Checking In on the Hoskins Appeal

This previous post highlighted how U.S. District Court Judge Janet Bond Arterton (D.Conn) significantly trimmed the DOJ’s criminal FCPA enforcement action against Lawrence Hoskins. Unhappy with the decision, the DOJ filed a motion for reconsideration which Judge Arterton denied (see here).

The DOJ appealed to the Second Circuit and this previous post highlighted the DOJ’s opening brief. Recently Hoskins filed this response which states in pertinent part.

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Mid-Year Review Of Anti-Corruption Law North Of The 49th Parallel

Canada

A guest post  from Mark Morrison (Blake, Cassels & Graydon) the Canada Expert for FCPA Professor, and Blakes attorneys Michael Dixon and James Reid.

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This year, Canada has been actively implementing laws aimed at a holistic approach to the fight against corruption. This post discusses some of the new legislation effected by the Canadian Government to compliment Canada’s equivalent of the FCPA, the Corruption of Foreign Public Officials Act (CFPOA), as well as some of the recent enforcement proceedings taking place in Canada so far this year.

New Anti-Corruption Laws

The Integrity Regime – On July 3, 2015, the Government’s principal contracting arm, Public Works and Government Services Canada,  announced the implementation of a new government-wide Integrity Regime for all federal government procurement. The new Regime replaced the Integrity Framework, which was heavily criticized as being unfairly harsh for its lack of due process and failure to account for remedial actions taken by companies subject  to its application. The new Regime has provided some flexibility to ameliorate some of the harshest aspects of the Framework.

Under the Integrity Regime, a supplier is barred from doing business with the Government of Canada for 10 years if it or any board members have been convicted or discharged in the past three years for a range of integrity-related offences in Canada or abroad, including bribery, fraud, bid-rigging, tax evasion, insider trading and money laundering. However, the decade long ban can be cut in half if the supplier shows it has taken action to co-operate with authorities, takes remedial action and enters into an administrative agreement with the Government. While the new regime amounts to a retreat from the integrity rules enacted just last March, in which any prior conviction against a supplier or any of its international affiliates would have earned a 10-year ban with no chance of its reduction, the automatic debarment penalty remains–unlike the U.S. equivalent integrity provisions.

In addition, arguably the most significant improvement to the former Integrity Framework, is that the new Regime eliminates mandatory ineligibility of a supplier for the actions of an affiliate (including a parent company) unless there is evidence that the supplier/potential supplier had involvement in the wrongdoing that led to the conviction of its affiliate.

The Extractive Sector Transparency Measures Act (ESTMA) – ESTMA is Canada’s latest step in the global fight against corruption. The ESTMA, which came into force on June 1, 2015, is designed to complement Canada’s existing anti-corruption regime in the CFPOA by creating greater transparency over payments to a government by the extractive sector. ESTMA’s reporting requirements apply to companies engaged in the development of oil, gas or minerals that are either (a) listed on a Canadian stock exchange or (b) have a place of business in Canada, do business in Canada or have assets in Canada, and which meet certain size thresholds.

Companies subject to the ESTMA are required to report and publically disclose all payments, including taxes, royalties, fees and any other consideration for licenses, permits or concessions in excess of CAD$100,000. The Government has recently published draft guidelines and reporting specifications for public comment. The ESTMA will apply to payments to certain aboriginal governments, subject to a two-year transitional period. Non-compliance with the reporting requirements is an offence. Any director or officer who directed, authorized, assented to, acquiesced in or participated in the non-compliance can also be held personally liable. These offences are subject to a maximum fine of CAD$250,000 for each day that the non-compliance continues.

Recent Enforcement Proceedings

Canadian anti-corruption enforcement has increased from 2014, which did not see any penalties imposed on corporate defendants under the CFPOA. The lack of enforcement in 2014 may have been reflective of the considerable resources and attention that was dedicated by the Royal Canadian Mounted Police (RCMP) to the high profile investigation of Canada’s largest construction and engineering firm.

SNC Lavalin In February of this year, the RCMP laid corporate corruption and fraud charges against the Quebec based construction and engineering companies of the  SNC Lavalin Group, which stems from the Group’s dealings in Libya between 2001 and 2011. The RCMP investigation has also lead to criminal charges against several former SNC executives.

SNC maintains that any wrongdoing was the act of rogue individuals no longer employed by the company, and has entered a plea of not guilty. Unlike in the United States, Canada does not currently have deferred prosecution agreements, civil settlements, or other formal resolution procedures available outside of a criminal guilty plea. No preliminary hearing dates have been set in relation to the corruption charges against SNC.

In addition, to the Libya allegations, former SNC executives have also been charged in connection with an alleged bribery scandal related to a $1.3 billion hospital project in Montreal, where it has been alleged that former SNC executives funneled money to ex-McGill hospital officials in exchange for the contract. A three week preliminary hearing, which is protected by a publication ban, heard testimony from about 16 people this past March.  No decision on committal for trial has yet been issued.

MagIndustries – The RCMP has obtained a search warrant and is investigating allegations from a whistleblowing accountant at MagIndustries Corporation, that bribes were paid to officials in the Republic of Congo to win approvals tied to a potash mine development. The RCMP believe four top executives with the company, including the CEO, ignored warnings from Canadian financial advisers and signed off on a string of illegal payments to Congolese officials. None of the allegations contained in the search warrant have been tested in court, and the RCMP has not laid any charges to date.

Canadian Senate Expenses Scandal – dominating Canadian media headlines since the recent announcement of the October Federal Election, is the ongoing political scandal concerning the expense claims of certain Canadian senators which began in late 2012. Senators Patrick Brazeau, Mike Duffy, Mac Harb, and Pamela Wallin claimed travel and living allowance expenses which were ineligible. Brazeau, Duffy, and Harb were criminally charged with one count each of fraud and breach of trust. As a result, the Auditor General of Canada examined expense claims made by all the other 116 senators and former senators over a two-year period. In the June 2015 report of the Auditor General, the Auditor General identified thirty senators whose claims were ineligible, and of these, recommended that nine cases be referred for police investigation.

Conclusion

Canada continues to focus on anti-corruption compliance and enforcement by bolstering the legislative tools available to law enforcement and government agencies. Onlookers are intently watching what will come from the high profile cases against SNC and the Canadian senators. As things are looking now, the remainder of 2015 is shaping up to be one of the most active years in Canadian anti-corruption enforcement history.

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