Ed. Note - recently it was announced that Canada had made its first Canadian anti-corruption law, the Corruptions of Public Officials Act. I ask John Boscariol, a partner at McCarthy Tétrault LLP if he could explain the case in a blog post he graciously agreed to do in this guest post.
On May 23, 2014, Mr. Justice Charles Hackland of the Ontario Superior Court in Ottawa sentenced business executive Nazir Karigar to three years in prison for conspiracy to bribe foreign public officials. This is the first jail sentence handed down under Canada’s Corruption of Foreign Public Officials Act (CFPOA) since it came into force in 1999. All previous prosecutions have been against corporations and were disposed of with guilty pleas and fines.
Karigar was convicted on August 15, 2013 for his leading role in a conspiracy to offer bribes to officials of Air India and an Indian Cabinet Minister. The scheme was intended to make Cryptometrics Canada the successful bidder in a multi-million dollar contract to supply facial recognition software to Air India. Our previous analysis of this significant conviction can be found in First Trial Under Canada’s Corruption of Foreign Public Officials Act Results in Conviction.
This is an important sentencing decision as it provides a first glimpse of how courts will determine sentencing under the CFPOA. It also indicates that Canadian courts are closely aligned with efforts of the RCMP and Canadian prosecutors to punish international bribery more stringently than in the past. Businesses and individuals should take careful notice of the decision and ensure that they are acting in compliance with CFPOA in all of their dealings abroad.
Reasons for the Sentence
The CFPOA was enacted by Parliament in 1998 reflecting Canada’s obligations under the Convention on Combating Bribery in International Business Transactions of the Organization for Economic Co-operation and Development. In his sentencing decision, Justice Hackland made reference to Article 3 of the Convention which outlines that bribery of foreign officials should be punishable to the same extent as bribery of domestic officials.
In his decision, Justice Hackland outlined four aggravating factors and three mitigating factors in support of Karigar’s three year sentence.
The sophistication and planning involved in the bribery scheme.
Other acts of dishonesty by Mr. Karigar, including entering fake competitive bids to create the illusion of a competitive process and the use of confidential insider information in preparing his bid.
Mr. Karigar’s attitude of entitlement throughout the bidding process, including his admission to the Canadian trade commissioner regarding bribery.
The fact that Mr. Karigar personally conceived of and orchestrated the bribery.
Karigar confessed to authorities and co-operated throughout the proceedings which helped save trial time.
Karigar has no prior convictions, his respectable business past and his older age and health issues.
The bribery scheme failed and any harm was restricted to the promotion of corruption among a limited group of foreign public officials.
Based on these factors, Justice Hackland sentenced Karigar to three years in prison. The maximum penalty for a CFPOA violation was five years. The maximum penalty period was increased to fourteen years in Bill S-14, Fighting Foreign Corruption Act (received Royal Assent on June 19, 2013), however the offence in Karigar’s case occurred before that amendment came into force. This increased maximum penalty reflects the current trend towards punishing the bribery of foreign officials more stringently in Canada.
Focus on Stiff Sentencing
Prevailing throughout Justice Hackland’s sentencing decision was his emphasis on the seriousness of the crime that Karigar committed. He noted that “…a substantial penalty is to be imposed by the courts even in circumstances where a guilty plea was entered and the accused has cooperated with authorities”.
Justice Hackland relied on cases of fraud under the Criminal Code in order to determine what a reasonable sentence should be for bribing foreign officials. Based on this jurisprudence, he concluded that cases of serious fraud require penitentiary sentences in the range of three to five years, and that usual mitigating factors, such as prior good character, health problems, contributions to the community and the absence of criminal records should not be used to depart from this range.
Justice Hackland also referenced domestic bribery and corruption cases under the Criminal Code. Most importantly, he noted that an overriding consideration in sentencing for bribery should be the deterrence and denunciation of bribery. He concluded his decision by stating that “any person who proposes to enter into a sophisticated scheme to bribe foreign public officials to promote the commercial or other interests of a Canadian business abroad must appreciate that they will face a significant sentence of incarceration in a federal penitentiary.”
With this sentence, Canadian authorities are sending a strong message to companies and executives doing business abroad that individuals, not just entities, will be held responsible and pay a significant price for their involvement in the bribery of foreign officials. The development and documented implementation of a comprehensive compliance program for the detection and prevention of bribery is a critical tool to ensure that a company and its executives stay on the right side of Canadian law.
John W. Boscariol is head of the firm’s International Trade & Investment Law Group and a partner in the Litigation Group. He can be reached via email at firstname.lastname@example.org.