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Canada’s First Foreign Bribery Trial Results In First Conviction Of An Individual

A guest post today from Mark Morrison [1](Blake, Cassels & Graydon) the Canada Expert for FCPA Professor, and Blake attorneys Matthew Huys [2]and Michael Dixon [3].

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Introduction

On August 15, 2013, the Ontario Superior  Court of Justice convicted  Nazir Karigar [4] of offering bribes contrary to section 3(1)(b) of the Corruption of Foreign Public Officials Act (CFPOA). This is the first trial decision of a charge under the CFPOA, and the  first conviction against an individual. In the course of convicting Mr.  Karigar, the Court affirmed a number of interesting and potentially important points that are discussed further below.

Facts

This case concerns an agreement to pay  approximately US$450,000 in cash, as well as certain shares, to Air India officials and the Indian Minister of Civil Aviation to secure a contract for  the provision of facial recognition software and related equipment. At the material time, Mr. Karigar was acting as a paid agent for Cryptometrics Canada (Cryptometrics), a Kanata-based technology company.

The evidence at trial disclosed that in 2005 Mr. Karigar contacted an executive of Cryptometrics. Mr. Karigar held out that he had contacts at Air India, and that he could assist Cryptometrics in obtaining work from Air India for its biometric facial recognition technology. An agreement was subsequently entered into whereby Mr. Karigar and others would help the company obtain work from Air India in exchange for 30% of the expected revenue stream from the work generated.

On February 24, 2006, Air India released an official Request for Proposal and shortly after, under the direction of Mr. Karigar, the company submitted a bid. A separate bid was also submitted by another company controlled by Mr. Karigar, to create the appearance of a competitive tendering process. In conjunction with submitting the bid, US$200,000  was transferred from Cryptometrics U.S.A. to Mr. Karigar, purportedly for the purpose of bribing Air India officials, though the Court noted there was no evidence that the money was actually paid to Indian officials. This first payment was to make sure only two companies would be deemed to have submitted  technically qualified bids in response to the Request for Proposal.

As the process continued, further funds in the amount of US$250,000 were transferred from the company to Mr. Karigar that were purportedly destined to be paid to the Indian Minister of Civil Aviation. The evidence indicated that the purpose of this payment was for the Minister to  support Cryptometrics’ bid and have the contract awarded, though ultimately the company was never successful in obtaining the award of the contract.

Based on these circumstances, the Court found that Mr. Karigar had agreed with others to offer bribes to foreign government officials contrary to s. 3(1)(b) of the CFPOA, and convicted him accordingly. Mr.  Karigar has not yet been sentenced for this offence.

Key Points

In the course of its decision, the Court made a number of points that are worth noting:

Conclusion

Nazir Karigar’s conviction demonstrates the continued dedication of Canadian enforcement authorities to pursue charges under the CFPOA. It also demonstrates the ability of Canadian authorities to secure convictions, not only by guilty plea, but through the more rigorous trial process. This case underscores the need for a robust compliance program, including conducting a risk assessment, implementing appropriate policies,  training employees and agents, implementing a governance structure aimed at preventing anti-corruption violations, using protective contractual terms,  engaging in due diligence, and engaging in ongoing monitoring to guard against  these types of matters.