Canada Continues Its Aggressive Push In Anti-Corruption Enforcement

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canada abc3Several years ago, Canada was regularly cited for its lack of commitment to anti-corruption enforcement.  Canada got the message and it ramped up its anti-corruption program.

The Royal Canadian Mounted Police dedicated additional resources to enforcement, and they have been busy.  They are conducting a major anti-corruption investigation against SNC-Lavilin, which appears to be the largest anti-corruption case brought by the Canadians.  SNC-Lavilin has suffered a series of setbacks due to a corruption scandal which led to the departure of several senior executives and has been a drag on company growth.

SNC-Lavilin made headlines when it recently announced an internal amnesty program for three months during which employees can come forward and report instances of bribery.   Months before this announcement, SNC-Lavilin retained Michael Hershman, a compliance expert, to overhaul their internal compliance and controls program as an important step to remediate what appears to be a systemic breakdown in corruption compliance and controls.

Earlier this year, Griffiths Energy International Inc. entered a guilty plea to a criminal charge under Canada’s Corruption of Foreign Public Officials Act (CFPOA), and agreed to a fine in the amount of $10.35 million. The criminal charge related to using the cover of sham consulting agreements to pay $2 million to two entities owned and controlled by Chad’s ambassador to Canada and his spouse.canada abc2

In a major action, Canada enacted important legislative changes to the CFPOA to address major problems with the statute, as originally enacted.  The changes include:

  1. Elimination of the facilitation payment exception;
  2. Increased the maximum sentence of imprisonment from 5 to 14 years.
  3. A new books and records offense, which is punishable by up to 14 years’ imprisonment.
  4. Expansion of jurisdiction based on nationality.
  5. Application of CFPOA to not-for-profit organizations.

Prior to these amendments, a CFPOA violation had to have a “real and substantial” connection to Canada.  In practice, this requirement means that some part of the formulation or commission of the offense occurred in Canada.  The new law closes this significant loophole by applying adopting nationality jurisdiction in line with other global anti-corruption legislation.  The new law deems acts of Canadian citizens, permanent residents, corporations, societies, firms or partnerships on a worldwide basis to be acts within Canada for the purposes of the CFPOA. This provision essentially subjects all Canadian citizens and companies to global regulation by Canadian authorities.

The new books and records offense prohibits a company from keeping inaccurate books and records for the purpose of concealing bribery of a public official.  The new books and records provisions carry a maximum sentence of 14 years’ imprisonment.  While this new offence shares some similarity with the books and records provisions of the FCPA, it is a criminal offense and does not include civil penalties.

canada abcThe amendments also eliminate the facilitation payment exception.  The CFPOA now joins the UK Bribery Act in prohibiting all facilitation payments.

Finally, the CFPOA was amended to provide double jeopardy protection from prosecution for the same conduct in different jurisdictions.  The new provision clarifies that Canadian companies and individuals tried in another jurisdiction cannot be convicted for the same conduct in Canada.

Topics:  Anti-Corruption, Books & Records, Canada, CFPOA, Compliance, Corruption, Enforcement, Royal Canadian Mounted Police

Published In: Business Organization Updates, General Business Updates, Criminal Law Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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