After years of neglect, Canada getting serious about corruption of foreign public officials
Posted on March 18, 2013
In 1998, the federal government enacted the Corruption of Foreign Public Officials Act (Consolidation current to March 4, 2013; PDF) to create a legal framework to prohibit the payment of bribes to foreign officials.
In order to root out foreign corruption, the RCMP has two teams that spend most of their time enforcing the Act. One is located in Calgary, the other in Ottawa.
So, how many convictions under the Act have there been in Canada since 1998?
This record is ridiculed by our partners at the OECD and the U.S.
But things are rapidly changing .
We are in an age of increasing transparency and rising ethical standards. The federal government and its provincial counterparts are moving to go after corruption like never before to help ensure the integrity of the bidding process for public contracts.
This means the risks to employees and others, including company directors, associated with paying bribes to foreign public officials will rise considerably over the near term.
At the federal level, the RCMP has approximately 30 investigations in progress and prosecutions will greatly increase over the next two years.
Additionally, on February 5, 2013 Foreign Affairs Minister John Baird tabled legislation to amend the Act. These amendments expand the scope of what can be enforced under the act, increase the punishments, and enable the RCMP to go after Canadian companies and persons engaged in this form of corruption, regardless of where the bribe was paid.
It is also expected that prosecutorial efforts will increasingly target individuals. The consequences of corruption will now go beyond fines and involve incarceration.
Foreign corruption is also expected to have consequence beyond the Act. In the recent Griffiths Energy International Inc. case involving payments of cash and the issuance of shares to a Chadian official and his spouse, the prosecutors are trying to recoup shares that have greatly increased in value. This should be taken as a willingness to go after “proceeds of crime”.
There are six key amendments to the Act worth noting:
- Facilitation payments will eventually be prohibited.
- The Act will apply to Canadian persons and companies irrespective of where the bribe was made. In other words, the Act has extraterritorial application over Canadian nationals.
- The RCMP will have exclusive jurisdiction to lay charges.
- Application of the Act will be expanded to NGOs and other not-for-profit organizations.
- The Act will create a “books and records” offence to combat the concealment and non-reporting of bribes.
- The maximum penalty will be increased from five to 14 years with fines being unlimited.
These are necessary amendments. But Canada is not leading here. It is merely catching up to the OECD standard. All of the above mirror to a large extent what is provided in the U.S. Foreign Corrupt Practices Act (PDF) or the more recent U.K. Bribery Act (PDF).
In this country, leadership on anti-corruption at the provincial level is, by necessity, coming from Quebec.
For businesses and individuals operating in Quebec, the recently enacted Integrity in Public Contracts Act disqualifies bidders found guilty under the Act in the previous five years. A corporate bidder will similarly be disqualified if in the previous five years one of its directors or officers has been convicted under the Act, or if it has been convicted of corruption by a foreign court.
Will other authorities in Canada follow Quebec’s lead by enacting similar legislation or simply inserting ethical requirements in bid documents?