Griffiths Energy International Inc. (GEI) pleaded guilty on January 22, 2013, to one charge of bribing a foreign official contrary to the Canadian Corruption of Foreign Public Officials Act (CFPOA). This is the third conviction under the CFPOA, and the first such conviction where a party has self-disclosed a contravention following an internal investigation.
GEI has admitted to making an unlawful payment of US$2 million in relation to the negotiation of an oil production sharing contract with the Republic of Chad. The payment was made as a success fee pursuant to a consulting agreement with Chad Oil Consulting LLC (COCL), a company controlled by the wife of the Chadian Ambassador to Canada. GEI had initially entered into a substantially similar consulting agreement with a company controlled by the Ambassador, but subsequently terminated that Agreement as a result of counsel's advice. The Ambassador's wife and two other individuals nominated by her also subscribed to acquire founders' shares of GEI.
The company was sentenced by the Alberta Court of Queen's Bench to pay a fine in the amount of C$9 million, plus a 15-percent victim surcharge, for a total penalty of C$10,350,000. The fine takes into consideration the "full and extensive cooperation" shown by Griffiths in bringing the matter to the attention of the authorities and disclosing the detailed findings of its internal investigation. In recognition of this cooperation, and unlike the 2011 conviction of Niko Resources Ltd. (Niko) for a bribe paid to the Bangladeshi Energy Minister, Griffiths will not be subjected to a three-year period of probation whereby the court would supervise its compliance with the CFPOA through third-party audits and reports.
The fine represents a Canadian record in a matter under the CFPOA, exceeding the combined C$9,499,000 fine in the Niko case. The conviction and fine in this case reinforce the need for Canadian companies that do business internationally to implement robust anti-corruption compliance programs and other measures to detect and prevent potential violations of the CFPOA. An effective compliance program will require heightened screening where employees or third parties acting on behalf of the company interact with foreign public officials. Compliance programs should be customized to the needs of each company, but will generally include the following elements:
senior management and board commitment to compliance;
clearly articulated rules and procedures based on a thorough risk assessment of the company’s business;
a dedicated compliance officer with adequate resources;
adequate due diligence with regard to third parties and business partners;
ongoing compliance training for employees and third-party agents and representatives; and
periodic audits and monitoring.
This year promises to be a watershed for Canadian enforcement of anti-corruption rules. The GEI conviction is likely only the first of many enforcement actions taken in 2013 by Canadian authorities, who have close to 40 active investigations ongoing.