March 4th, 2014
Canada’s foreign anti-bribery law, the Corruption of Foreign Public Officials Act (CFPOA), makes it a serious criminal offence for Canadians and Canadian companies to bribe foreign government officials. Canadian companies that operate abroad and foreign companies that employ Canadians need to be aware of this law.
|Bribing a foreign public official||Unlawful – per se criminal||14 years prisonFine in the discretion of the courtDebarment|
|Falsifying books and records for the purpose of bribing a foreign public official|
|Facilitation payments||Allowed (but exemption to be repealed)|
|Hospitality, token gifts, charitable contributions||Allowed if reasonable and not given to affect a public official’s conduct|
The OECD Anti-Bribery Convention
The CFPOA implements the Organization for Economic Cooperation and Development’s Convention on Combatting Bribery of Foreign Public Officials in International Business Transaction (OECD Anti-Bribery Convention) in Canada. The OECD Anti-Bribery Convention requires signatories to make it a criminal offence to pay bribes to officials of other states.
Most of Canada’s key trading partners have anti-bribery legislation similar to the CFPOA, including, notably, the United States (Foreign Corrupt Practices Act) and the United Kingdom (Bribery Act 2010).
The offence of bribing a foreign public official
The CFPOA makes it a criminal offence to bribe foreign public officials in order to obtain an advantage in the course of business.
This prohibition is drafted broadly:
- The offence extends beyond actual bribes, to offering to bribe, as well as conspiracy to give or offer a bribe.
- The giving or offering of anything of value, whether it is a “loan, reward, advantage or benefit of any kind” is considered to be a bribe.
- Both direct and indirect bribery constitute an offence. Using a third party to pay bribes thus constitutes an offence.
“Foreign public official” is defined broadly to include legislators, judges, government officials, and anyone who performs public duties or functions on behalf of the state. This includes officials of state owned enterprises when they perform public duties. Officials of public international organizations are also considered foreign public officials.
Not all payments to foreign public officials offend the CFPOA. For an offence to be committed, two conditions must be satisfied:
- The bribe must be a payment for the foreign official to act, refrain from acting, or to influence an act or decision of the foreign state or public international organization, and
- The purpose of the person paying the bribe must be to obtain or retain an advantage in the course of business. Business is broadly defined as “any business, profession, trade, calling, manufacture or undertaking of any kind carried on in Canada or elsewhere”.
Books and records offence
The CFPOA makes it a criminal offence to falsify books and records for the purpose of bribing a foreign government official or of hiding bribery. The provision lists a series of specific prohibitions, including:
- Maintaining off-books accounts
- Not recording or inadequately recording transactions
- Recording non-existent expenditures
- Inaccurately identifying liabilities
- Knowingly using false documents
- Destroying accounting books and records
The bribery and books and records offences in the CFPOA apply to Canadian corporations, citizens, and permanent residents, even outside of Canada. If a Canadian corporation, citizen, or individual commits a bribery or books and records offence outside of Canada, the CFPOA deems the offence to have been committed inside Canada.
An international double jeopardy provision provides that a person who has been tried for a bribery offence in another country cannot be tried in Canada for the same offence.
The addition of nationality jurisdiction means that every Canadian citizen brings the CFPOA in his or her baggage when working abroad, even when working for foreign companies.
Both the bribery and books and records offences are full mens rea offences. That is, the Crown must prove that the accused intentionally committed the acts constituting the offence. Wilful blindness will satisfy the intention element, however. This means that companies dealing with agents cannot overlook suspicions that the agent might be paying bribes, and, ideally, should perform due diligence on agents.
A corporation will be guilty of an offence under the CFPOA if one of its senior officers, acting within the scope of his or her authority commits the offence or, knowing that a representative of the corporation is about to commit the offence, fails to take all reasonable measures to stop the representative from committing the offence. “Senior officer” is defined to include anyone who plays an important role in the establishment of the corporation’s policies or who manages an important aspect of the corporation’s activities.
Both the offence of bribing a foreign government official and the books and records offence are punishable by up to 14 years in jail. Corporations are liable to a fine in the discretion of the court. To date, the largest fine imposed on a corporation under the CFPOA is $10.3 million. In that case, the corporation self -reported.
In addition to criminal penalties, companies that breach the CFPOA may be liable to debarment from bidding on public sector contracts in Canada, and potentially, abroad.
Facilitation payments are small payments made to induce government officials to secure or expedite the performance of functions that the payer is entitled to, such as issuing visas, licences, or permits. Currently the CFPOA contains an exception for facilitation payments. This exception is slated to be repealed soon, however.
Facilitation payments are allowed in cases of duress involving threats to life or bodily harm, since the Criminal Code provides for a defence where a person is threatened with immediate death or bodily harm. Economic threats will not, however, raise the duress defence.
While it is unclear whether the repeal of the facilitation payments exception will make facilitation payments an offence in Canada, these payments are nearly always unlawful in the country in which they are made. Canadian businesses should revise their internal policies to prohibit facilitation payments, except in cases of duress.
The CFPOA contains two exemptions for payments to foreign public officials:
- Payments that are permitted or required by the laws of the foreign state.
- Payments of expenses of foreign public officials which are directly related either to the promotion of the persons products or services, or the performance of a contract with the foreign state.
Corporate hospitality and small gifts
Neither CFPOA nor the Canadian government provides guidance on when routine corporate hospitality (such as meals), or small gifts that are routinely exchanged in some cultures as part of business meetings are acceptable.
The question will be whether the hospitality gift was provided to obtain a business advantage, and in the expectation of a quid pro quo. Typically the answer will turn on the value of the hospitality or gift. Refreshments and token gifts at meetings likely would not be considered to be a payment for the official to take some action, and thus, not an offence. However, if the value of the gift or hospitality could affect, or reasonably be perceived to affect, the official’s conduct, it likely will be unlawful.
The Royal Canadian Mounted Police has exclusive authority to lay charges under the CFPOA. The RCMP has established two seven person International Anti-Corruption Units, based in Ottawa and Calgary, and has partnered with the Australian Federal Police, the Federal Bureau of Investigation, and the City of London Police’s Overseas Anti-Corruption Unit to establish the International Foreign Bribery Taskforce.
The Public Prosecution Service of Canada has carriage, under the direction of the Director of Public Prosecutions, of prosecutions of CFPOA offences.
Foreign bribery offences are extraditable offences under the Extradition Act. Canadians can be extradited to other countries to face bribery charges there, and Canada can seek extradition of Canadians from other countries.
Canadian businesses operating abroad, and international businesses with a presence in Canada or that employ Canadians, need to ensure that they comply with Canadian anti-corruption laws. Indeed, businesses need to be aware of the precise requirements of the anti-corruption laws in all countries in which they operate. This is best done through a compliance program that is based on an assessment of the risks faced by the company and that has support from the company’s leadership.
|RCMP International Anti-Corruption Units||DPP||Courts|
AGM’s Anti-Corruption Law Team
AGM’s anti-corruption law team is one of Canada’s leading white collar crime practices. We advise and defend businesses facing investigation and prosecution under the Corruption of Foreign Public Officials Act, the Competition Act, and other white collar crime and regulatory statutes. We defend class actions alleging breaches of these Acts. We also help businesses develop compliance programs and provide practical advice on proposed business practices.