Today’s post is from Riyaz Dattu (Partner at Osler, Hoskin & Harcourt LLP in Toronto) concerning yesterday’s development in Canada concerning proposed amendments (here) to Canada’s Corruption of Foreign Public Officials Act.
Canada Redoubles Efforts at Combating Foreign Corruption: Canadian Businesses Warned to “Play by the Rules”
Within days of successfully imposing a fine in the amount of $10.3 million against Griffiths Energy (see here) pursuant to the Canadian Corruption of Foreign Public Officials Act (“CFPOA”), Minister of Foreign Affairs, John Baird, announced on February 5, 2012, that the Canadian government intends to “redouble its fight against corruption” and expects “Canadian businesses to play by the rules.”
This is to be accomplished by the government implementing some of the most significant changes to the CFPOA since it first came into force in 1999.
The Minister’s announcement lists the following far-reaching amendments to the CFPOA:
Increasing the maximum term of imprisonment – The foreign bribery offence is currently punishable by a maximum of five years’ imprisonment, and unlimited monetary fines. The government is proposing to increase the maximum term of imprisonment to 14 years. As is the case now, it would appear that the amendments will not change the fact that as an indictable offence, no limitation period would apply.
Nationality jurisdiction – Currently, the Canadian government’s prosecutorial jurisdiction is restricted by the legal requirement that there exist “a real and substantial link between the offence and Canada” (e.g., that a significant portion of the activities constituting the offence of bribing a foreign public official take place in Canada). Canada has been criticized by the OECD for applying the “real and substantial link” test rather than a test based on nationality. In its announcement the government has indicated that this amendment will now permit prosecution under the CFPOA based on nationality, and therefore “will make it easier for Canada to prosecute Canadians or Canadian companies for bribery in other countries, insofar as it will allow the Government of Canada to exercise jurisdiction over all persons or companies that have Canadian nationality, regardless of where the alleged bribery has taken place.” The practical consequence of this amendment is that it will significantly expand the scope of Canadian prosecutorial jurisdiction to cover illegal activities by Canadian nationals (including officers and directors) and Canadian corporations in violation of the CFPOA, regardless of the level of connection of the illegal activity to Canada.
Books and records offence – This amendment adds an accounting books and records provision to the CFPOA. The offence will make it illegal to falsify the records or hide payments related to bribery of foreign public officials. Conviction under this offence can result in 14 years’ imprisonment, and monetary fines at the discretion of the Judge without regard to a prescribed maximum amount. Although this offence will be criminal in nature (and therefore will require proof of criminal intent) rather than an infraction subject to civil penalties, it nevertheless will substantially increase the exposure of Canadian corporations, officers and directors to prosecutions under the CFPOA.
Eventual elimination of facilitation payments – The CFPOA currently allows nominal payments made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the foreign public official’s duties or functions. This amendment, which is to come into effect at a later date to be set by Cabinet, will be consistent with the recommendation from the OECD that such payments be made illegal, eliminate the exception for facilitation payments. The additional time for the coming into effect of this provision is intended to allow Canadian corporations to phase out any such prevailing practices in their foreign business activities.
Clarifying the definition of “business” – This amendment removes the words “for profit” in the definition of business to ensure that the CFPOA applies to all business, regardless of whether profit is made. It eliminates the potential defence that an unprofitable business cannot be charged under the CFPOA, and pays heed to the OECD’s recommendation that Canada undertake the necessary changes to its implementing legislation such that it is consistent with the OECD Convention.
Exclusive ability to lay charges – The Royal Canadian Mounted Police (RCMP) will now be given exclusive authority to lay charges under the CFPOA. Previously the provincial government law enforcement authorities were permitted to lay charges pursuant to the CFPOA. According to the government’s announcement, since 2008 the RCMP has established the International Anti-Corruption Unit dedicated to “raising awareness and enforcing the CFPOA.” The RCMP currently has 34 ongoing investigations under the CFPOA, and as such this amendment will ensure specialization and centralized decision-making by the RCMP and the federal Public Prosecution Services Canada concerning enforcement under the CFPOA.
There can be no doubt left that the Canadian government has taken seriously the criticisms levied against it by the OECD for not actively enforcing the CFPOA, and now intends to improve its international reputation by actively combating foreign corrupt activities of Canadian nationals and corporations. The government has also indicated that it “expects that other countries [will] do the same,” by stepping up their own enforcement of anti-corruption laws consistent with their international obligations.
Within the last five years, in addition to delegating to the RCMP the enforcement function for the CFPOA, the Canadian government has successfully levied fines against Niko Resources (in 2011 — $9.5 million fine plus three years probation) and Griffith Energy (in 2013 — $10.5 million fine). With the large number of ongoing investigations now being handled by the RCMP, one can expect more prosecutions pursuant to the CFPOA in the coming months.
It can be expected that the legislation containing the amendments, to be first tabled in the Senate on February 6, 2013, will pass through the Canadian Parliament without opposition.