On February 5, 2013, Canada took a leap forward by tabling in the Senate amendments to the Corruption of Foreign Public Officials Act (CFPOA). Bill S-14 "An Act to Amend the Corruption of Foreign Public Officials Act" was introduced in the Senate. For a copy of the Senate Bill, please refer to www.parl.gc.ca/HousePublications/Publication.aspx
These amendments are long awaited and strengthen the teeth of the CFPOA. These amendments must pass the Senate and then the House of Commons in order to become law.
The CFPOA makes it a criminal offence in Canada for persons or companies to bribe a foreign public official in order to obtain or retain an advantage in the course of international business. The CFPOA has been law in Canada since 1998.
When the amendments to the CFPOA are passed, Canadian businesses will be subject to many of the rules in place in the United States and the UK.
The amendments contain a provision to entrench the nationality principle. The Canadian Government will be able be able to prosecute Canadians and Canadian businesses for bribery undertaken on foreign soil. The Government of Canada will exercise jurisdiction over Canadians and Canadian companies on the basis of nationality regardless of where the offending activity transpired.
The amendments contain a provision to phase out the facilitation payment exception. The CFPOA currently contains an exception that allows payments that are made to facilitate acts of a routine nature by foreign public officials. An example of a facilitation payment is a payment to a customs official to clear goods more quickly. Cabinet will fix a date in the future when such facilitation payments can no longer be made. In other words, there will be one less basis to excuse payments made to a foreign public official.
The amendments clarify that all businesses are subject to the provisions of the CFPOA. The words 'for profit" in the definition of "business" are being removed. This amendment removes an argument that NGOs could use. The amendment also removes an argument that business could attempt that the bribery does not count (is not punishable) if it was not taken in the context of a business venture.
The amendments adds a new books and records offence similar to the U.S. Foreign Corrupt Practices Act. New Section 4 of the CFPOA provides that every person commits an offense who for the purpose of bribing a foreign public official in order to obtain or retain an advantage in the course of a business or for the purpose of hiding that bribery either:
(a) establishes or maintains accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and audit standards;
(b) make transactions that are not recorded in those books and records or that are inadequately identified in them;
(c) records non-existent expenditures in those books and records;
(d) enters liabilities with incorrect identification of their object in those books and records;
(e) knowingly uses false documents; or
(f) intentionally destroys accounting books and records earlier than permitted by law.
This offence will now be punishable by a maximum jail term of 14 years and is unlimited in terms of the amount of a fine.
The amendments also increase the maximum penalty under the CFPOA. The current maximum jail term is 5 years. The new maximum jail term is 14 years.
For more information, please refer to the documents released by the Government of Canada - http://www.international.gc.ca/media/aff/news-communiques/2013/02/05b.aspx?view=d
To date, there have been three convictions under the CFPOA:
- Griffiths Energy International Inc. – On January 22, 2013, Griffiths Energy International Inc.pleaded guilty to a charge under the CFPOA related to securing an oil and gas contract in Chad. Griffiths acknowledged having committed to paying $2 million in cash and millions in shares in exchange for exclusive access to resources in two regions. After providing the Chad government with a $40 million signing bonus, Griffiths was awarded the resources rights. Griffiths will pay a total penalty of $10.35 million.
- Niko Resources Ltd. – On June 24, 2011, Niko Resources Ltd. pleaded guilty to one count of bribery. Niko admitted that, through its subsidiary Niko Bangladesh, it provided the use of a vehicle (valued at $190,984) in May 2005 to AKM Mosharraf Hossain, then the Bangladeshi State Minister for Energy and Mineral Resources, in order to influence the minister in his dealings with Niko Bangladesh. In June 2005, Niko Resources Ltd. paid travel and accommodation expenses for the same minister to travel from Bangladesh to Calgary to attend the GO EXPO oil and gas exposition, and paid approximately $5,000 for the minister to travel to New York and Chicago to visit his family. Niko Resources Ltd. was fined $9.5 million and placed under a probation order, which puts the company under the court’s supervision for three years to ensure that audits are completed to examine the company’s compliance with the CFPOA. The Canadian Trade Commissioner Service has placed a hold on providing services to Niko during the period of court supervision.
- Hydro-Kleen Group Inc. – On January 10, 2005, Hydro-Kleen Group Inc., pleaded guilty to one count of bribery of a U.S. immigration official who worked at the Calgary International Airport. Hydro-Kleen was ordered to pay a fine of $25,000. The U.S. immigration officer pleaded guilty in July 2002 to accepting secret commissions. He received a six-month sentence and was subsequently deported to the United States.