Canada Strengthens Its Laws Against Bribery Of Foreign Public Officials

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Amendments to the Corruption of Foreign Public Officials Act (CFPOA) that were proposed in Bill S-14 earlier this year were passed into law on June 19, 2013. 

The amendments are aimed at addressing international criticism of Canada’s efforts to implement the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention). Specifically, the amendments address certain criticisms from the Organisation for Economic Co-operation and Development (OECD), an international organization of 34 countries of which Canada is a member. The OECD’s Working Group on Bribery had criticized the CFPOA as deficient in certain respects in a report issued in March 2011, but endorsed Bill S-14 in its follow up report issued in May 2013 on Canada’s progress in implementing its obligations under the Convention. 

The CFPOA makes it a crime to bribe a foreign public official in order to obtain or retain an advantage in the course of business. To date, three companies have pleaded guilty and been convicted of offences under the CFPOA, the latter two resulting in fines of approximately $10 million each. There are approximately 35 active investigations currently underway by the Royal Canadian Mounted Police (RCMP). 

As a result of the passage of Bill S-14 into law, the CFPOA has been amended as follows:

  • the offence of bribing a foreign public official has been expanded beyond business carried on “for a profit” to include activities not carried on for profit. As a result, the CFPOA will apply to charities and other not-for-profit organizations in addition to for-profit corporations;
  • the maximum period of imprisonment for bribing a foreign public official has been increased from 5 years to 14 years;
  • instead of requiring a “real and substantial connection” between Canada and the location where acts of bribery occur as was previously the case, the CFPOA now applies to acts of bribery anywhere in the world where such acts are conducted by Canadian citizens, permanent residents present in Canada, Canadian corporations or other entities created under the laws of Canada or a province;
  • “facilitation payments” (generally, payments to a public official to expedite a routine governmental act that is part of the official’s duties, and not to obtain or retain business or any other undue advantage), will be eliminated as an exception to the offence of bribing a foreign public official and will therefore become illegal at a future date to be set by the Governor in Council;
  • a new offence of manipulation or falsification of accounting records to conceal bribery has been created, which attracts a maximum sentence of 14 years in prison; and
  • the RCMP have been given exclusive jurisdiction to charge persons for offences under the CFPOA. 

It is important for companies operating internationally, especially in developing nations, to have appropriate policies and procedures in place to ensure compliance with the CFPOA and other applicable anti-bribery legislation throughout the world. When entering into transactions with companies that also operate internationally, it is important to ensure appropriate due diligence is conducted and appropriate language is contained in contracts relating to the transaction to minimize the possibility that your corporation will attract liability through under the CFPOA and other applicable anti-bribery legislation through its association with proposed business partners or other counterparties. 

Dentons’ team of seasoned professionals throughout Canada, the US, Europe, Russia and the CIS, Africa, Asia Pacific and the Middle East represents corporate clients, boards of directors, board committees, hedge funds, partnerships and joint ventures, audit firms and individuals in connection with all aspects of anti-corruption compliance, enforcement and defense.

Please contact a member of our Global Anti-Corruption Group for more information.

- See more at: http://www.securitiesmininglaw.com/canada-strengthens-its-laws-against-bribery-of-foreign-public-officials#sthash.6oRbGQGQ.dpuf

 

Amendments to the Corruption of Foreign Public Officials Act (CFPOA) that were proposed in Bill S-14 earlier this year were passed into law on June 19, 2013. 

The amendments are aimed at addressing international criticism of Canada’s efforts to implement the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention). Specifically, the amendments address certain criticisms from the Organisation for Economic Co-operation and Development (OECD), an international organization of 34 countries of which Canada is a member. The OECD’s Working Group on Bribery had criticized the CFPOA as deficient in certain respects in a report issued in March 2011, but endorsed Bill S-14 in its follow up report issued in May 2013 on Canada’s progress in implementing its obligations under the Convention. 

The CFPOA makes it a crime to bribe a foreign public official in order to obtain or retain an advantage in the course of business. To date, three companies have pleaded guilty and been convicted of offences under the CFPOA, the latter two resulting in fines of approximately $10 million each. There are approximately 35 active investigations currently underway by the Royal Canadian Mounted Police (RCMP). 

As a result of the passage of Bill S-14 into law, the CFPOA has been amended as follows:

  • the offence of bribing a foreign public official has been expanded beyond business carried on “for a profit” to include activities not carried on for profit. As a result, the CFPOA will apply to charities and other not-for-profit organizations in addition to for-profit corporations;
  • the maximum period of imprisonment for bribing a foreign public official has been increased from 5 years to 14 years;
  • instead of requiring a “real and substantial connection” between Canada and the location where acts of bribery occur as was previously the case, the CFPOA now applies to acts of bribery anywhere in the world where such acts are conducted by Canadian citizens, permanent residents present in Canada, Canadian corporations or other entities created under the laws of Canada or a province;
  • “facilitation payments” (generally, payments to a public official to expedite a routine governmental act that is part of the official’s duties, and not to obtain or retain business or any other undue advantage), will be eliminated as an exception to the offence of bribing a foreign public official and will therefore become illegal at a future date to be set by the Governor in Council;
  • a new offence of manipulation or falsification of accounting records to conceal bribery has been created, which attracts a maximum sentence of 14 years in prison; and
  • the RCMP have been given exclusive jurisdiction to charge persons for offences under the CFPOA. 

It is important for companies operating internationally, especially in developing nations, to have appropriate policies and procedures in place to ensure compliance with the CFPOA and other applicable anti-bribery legislation throughout the world. When entering into transactions with companies that also operate internationally, it is important to ensure appropriate due diligence is conducted and appropriate language is contained in contracts relating to the transaction to minimize the possibility that your corporation will attract liability through under the CFPOA and other applicable anti-bribery legislation through its association with proposed business partners or other counterparties. 

Topics:  Bribery, Canada, CFPOA, Compliance

Published In: Business Organization Updates, General Business Updates, Criminal Law Updates, International Trade Updates, Securities 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.

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