LexSage

Top Ten Anti-Bribery/Anti-Corruption

Developments in Canada in 2017

Written By: Cyndee Todgham Cherniak

Date: December 28, 2017

Histroically, Canada has not been known for developments in anti-bribery and anti-corruption laws.  However, 2017 has been a busy year and there are a number of advancements and developments in Canada.  Looking back on 2017, persons with a real and substantial link to Canada should be more concerned about compliance with Canada's anti-bribery laws. If you have not done so already, it is time to implement a Canadian compliance program that includes anti-bribery policies and procedures or add Canada's anti-bribery laws to your multi-national compliance program.

The top 10 Canadian anti-bribery/anti-corruption developments in 2017 (in chronological order) are:

1.  On February 10, 2017, Corruption of Foreign Public Officials Act (Canada) (“CFPOA”) charges were withdrawn in the Ontario Superior Court against three former executives of SNC-Lavalin Group Inc.. This was Canada’s most significant and high profile anti-bribery prosecution against corporate executives. Former SNC vice-president of energy and infrastructure Kevin Wallace, former SNC vice-president of international development Ramesh Shah, and Bangladeshi-Canadian businessman Zulfiquar Ali Bhuiyana were charged with bribing an official in Bangladesh. The charges related to a bid to win a $50 million contract to supervise the Padma Bridge construction.  The Crown’s case had been based on evidence obtained from a Royal Canadian Mounted Police (“RCMP”) wire tap. Justice Ian Nordheimer ruled that the wire tap evidence had to be excluded because of problems with three applications the RCMP filed in 2011 to get court approval to use wiretaps. Without the wire tap evidence, the prosecution concluded there was not a prospect of conviction.
2. May 30, 2017 was the date Canadian extractive industries were required to file their first reports under the Extractive Sector Transparency Act ("ESTMA), which entered into force on June 1, 2015. As at November 14, 2017, Natural Resources Canada (which is the government department responsible for administering ESTMA) showed that 729 companies had filed reports.  The ESTMA reporting is an important tool in the battle against corruption.  Canada's mineral exploration and extractive industries must report certain payments to foreign governments related to the commercial development of oil, gas or minerals.  Canada's transparency and reporting under ESTMA is also important because President Trump has withdrawn from similar reporting and, therefore, Canadian companies are held to a higher standard than U.S. companies.  Also, it is important to note that Quebec  mining and oil and gas industries must also comply with the Regulation respecting the application of the Act respecting transparency measures in the mining, oil and gas industries, which came into force on August 2, 2017.
3. Canada (the RCMP) is a participant in the International Anti-Corruption Coordination Centre.  The IACC was launched in July 2017.  It is important for Canada to be part of this group and Canada's participation demonstrates the commitment of the RCMP to anti-corruption.  This group of law enforcement agencies will be sharing information about corruption activities and names of Canadian companies (and individuals) will undoubtedly be shared.
4. On July 6, 2017, the Ontario Court of Appeal issued a decision in R.  v. Karigar, which takes enforcement of foreign bribery to another level in Canada. In 2013, Mr. Karigar was convicted of offering to bribe a foreign public official contrary to the Corruption of Foreign Public Officials Act (“CFPOA”). The Ontario Court of Appeal’s decision is very important because four precedents are established:
   • Canada has territorial jurisdiction over foreign bribery;
   • The appropriate test that comes out of this case is whether there is a real and substantial link between the offense and Canada;
   • Canadian courts will look for facts establishing a connection to Canada; and
   • Canadian courts will interpret the scope of the CFPOA broadly - The bribery offense includes both a direct and an indirect agreement to give or offer an advantage (including a conspiracy to bribe).
5. In September 2017, the Government of Canada launched consultations regarding deferred prosecution agreements. Deferred prosecution agreements are voluntarily negotiated agreements between a person under investigation and the prosecutor/Crown that involve a deferral of prosecution if a robust compliance program is implemented.  This is important in the context of Canada’s anti-bribery laws because Canada currently does not currently have a legal framework for deferred prosecution agreements.  CFPOA offences are investigated by the RCMP and, only after charges are laid, are prosecuted by the Department of Justice.  The RCMP decide whether to lay charges are not – they do not negotiate whether to lay charges. Many parties have provided submissions to the Government of Canada.  The Canadian Bar Association filed a detailed submission that covers other topics in addition to the CFPOA.  It is hoped that a policy regarding deferred prosecution agreements will be released in 2018 and this will encourage voluntary disclosures by Canadian companies.
6. On October 6, 2017, the Ontario Court of Justice issued a decision in The Queen v. Barra and Govindia (2017 ONSC 6008) (charges connected with Karigar case) and held that a stay of proceedings should not be granted where there would be a 44 month delay from the date charges are laid to the end of the trial. The Applicants were charged under the CFPOA with bribing Air India officials to award a biometric recognition contract. Importantly, Barra is an American citizen and Govindia is a UK citizen.  Canada will prosecute foreign nationals under the CFPOA when the alleged bribery has a connection to Canada.
7. In October 2017, the Global Affairs Canada tabled the "Canada's Fight Against Foreign Bribery: Eigtheenth Annual Report to Parliament" (September 2016-August 2017).  This Report highlights that there are 4 ongoing cases under the CFPOA.  The Report updates Parliament on the status and resolution of CFPOA cases in Canada.
8. On October 18, 2017, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) received Royal Assent. Canada’s Governor in Council (that is, the federal Cabinet) may make orders and regulations (that do not need Parliamentary approval) to restrict or prohibit activities of foreign nationals who are responsible for, or complicit in, extrajudicial killings, torture or other gross violations of internationally recognized human rights.  Prohibitions and restrictions may be imposed, such as travel bans, asset freezes, restrictions in dealings with property, the provision of financial services, etc.  The Governor in Council may make lists of individuals and persons against whom the restrictions are imposed. Further, various financial institutions in Canada have an ongoing obligation to determine if they are in possession or control of property of listed persons and make reports about such property on a monthly basis. On November 3, 2017, Canada announced sanctions and published a list of names under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) imposing sanctions against 30 individuals from Russia.  The restrictions include asset freezes and the 30 individuals are inadmissible to Canada. Canada also announced sanctions and published a list of names under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) imposing sanctions against 19 individuals from Venezuela.The restrictions include asset freezes and the 19 individuals are inadmissible to Canada.  Canada also announced sanctions and published a list of names under the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) imposing sanctions against 3 individuals from South Sudan. The restrictions include asset freezes and the 3 individuals are inadmissible to Canada.  Canada's lists are not the same as the U.S. Global Magnitsky Act lists released in December 2017.
9. On October 31, 2017, Canada officially repealed the facilitation payments exemption contained in the CFPOA. Under the 1998 version of the Corruption of Foreign Public Officials Act (also known as Canada’s FCPA) facilitation payments were exempt bribes.  Bill S-14 “An Act to amend the Corruption of Foreign Public Officials Act” received Royal Assent on June 19, 2013 and included in subsection 3(2) the repeal of the facilitation payments exemption.  However, the repeal of the facilitation payments exemption would enter into force on a day to be fixed by order of the Governor in Council (that is, the Federal Cabinet).  Nothing happened for 4+ years until October 26, 2017 when the Governor in Council fixed the day to be October 31, 2017.  On October 30, 2017, Global Affairs Canada issued news release “Canada repeals facilitation payments exception in Corruption of Foreign Public Officials Act” and announced the removal of the facilitation payment exemption would take place the next day. The “Order Fixing October 31, 2017 as the Day on which subsection 3(2) of the Act Comes into Effect” was published in the Canada Gazette on November 15, 2017.  It is important to note that the U.S. Foreign Corrupt Practices Act continues to include a facilitation payment exception. As a result, Canadian rules are more strict than U.S. rules at this time.  However, the United States has significantly larger number of prosecutions.
10. In December 2017, the Crown stayed proceedings against Mr. Kushniruk who had been accused of conspiracy to bribe foreign public officials in Thailand to secure the sale of commercial passenger jet from Thai Airways. Canadian law enforcement was informed of the alleged bribery scheme by the FBI in 2013 and charges were laid in November 2016.  What this case shows is that the Crown will not proceed with cases when they do not have sufficient evidence.  2017 ended with a questions about whether the RCMP resources could secure convictions.

If you would like to know more about Canada’s anti-bribery laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.