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Corporate Social Responsibility - Bribery and Corruption

Corporate Social Responsibility - Bribery and Corruption

Tenth Report to Parliament (October 1, 2009)

Implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the Enforcement of the Corruption of Foreign Public Officials Act

Table of Contents

• Background
• Enforcement of the Corruption of Foreign Public Officials Act (the "CFPOA")
• Monitoring Implementation of the OECD Convention
• Annex A: OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions - RATIFICATION STATUS

Background 

Canada signed the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "OECD Convention") on December 17, 1997 and deposited the instrument of ratification with the OECD on December 17, 1998. On December 7, 1998, it adopted implementing legislation in the form of the Corruption of Foreign Public Officials Act (CFPOA), which received Royal Assent on December 10, 1998. The law came into force on February 14, 1999. The CFPOA is the main vehicle for implementation of the OECD Convention and is intended to give tangible expression to commitments made in the OECD and to represent Canada's legislative contribution to the international effort to fight corruption of foreign public officials. Section 12 of the CFPOA states that the Minister of Foreign Affairs shall cause an annual report on the implementation of the OECD Convention and the enforcement of the CFPOA to be laid before each House of Parliament. This is the Tenth Report to Parliament under the CFPOA 

For previous reports, please see the Foreign Affairs and International Trade Canada web site.

• The Corruption of Foreign Public Officials Act. 

To date, 38 states have ratified the OECD Convention, including all original members of the OECD Working Group on Bribery in International Business Transactions ("the Working Group"). The Working Group comprises the 30 member states of the OECD and eight non-members of the OECD: Argentina, Brazil, Bulgaria, Chile, Slovenia, Estonia, South Africa, and since December 2008, Israel

Annex A to this report contains information on the ratification status of the OECD Convention. All current members of the Working Group (including Canada) have had their implementing legislation evaluated as part of the peer review process. Thirty six members have also had their enforcement mechanisms evaluated as part of the Phase 2 review.

• All Phase I and Phase II country reports. 

The United Nations Convention Against Corruption (UNCAC) entered into force on December 14, 2005. Not only does this Convention adapt some language from the OECD Convention, but by providing global norms for the criminalization of bribery and for transnational cooperation in related investigations, it is expected to complement enforcement of the CFPOA. Canada signed UNCAC on May 21, 2004. Parliament passed legislation in May 2007 making Canadian law consistent with the provisions of this UN Convention. Canada ratified the UNCAC on October 2, 2007. 

On May 15, 2009, the Minister of Justice introduced Bill C-31 (An Act to amend the Criminal Code, the Corruption of Foreign Public Officials Act and the Identification of Criminals Act and to make a consequential amendment to another Act). The bill proposes to amend the Corruption of Foreign Public Officials Act to allow Canada to be able to prosecute an offence under section 3 of the Act (bribing a foreign public official) – or a conspiracy to commit, an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence under that section – if the person who is alleged to have committed the offence outside Canada is a Canadian citizen, a permanent resident who after the commission of the act or omission is present in Canada, or is a legal person created under the laws of Canada or a province. If this proposed amendment is adopted by Parliament, such prosecutions could proceed without having to provide evidence of a link between Canada and the offence. Thus, this proposed amendment would facilitate Canadian prosecutions of foreign bribery cases.

Most of the time, these offences are committed in a foreign country. Currently, Canada exercises territorial jurisdiction. This allows Canada to prosecute an offence committed in a foreign country when there is a “real and substantial link” between the offence committed in the foreign country and Canada.

International organizations, such as the OECD and Transparency International, have strongly encouraged Canada to take this step. Almost all OECD countries exercise nationality jurisdiction over the bribery of foreign public officials. This amendment would also respond to a recommendation that came out of the discussions at the National Roundtables on Corporate Social Responsibility (discussed below). 

• A copy of the Bill C-31.

Enforcement of the Corruption of Foreign Public Officials Act (the "CFPOA")

Enforcement

In February 2005, the Royal Canadian Mounted Police (RCMP) appointed a commissioned officer to provide functional oversight of its anti-corruption programs. The corruption of foreign public officials is now specifically referenced in the RCMP Commercial Crime Program’s mandate. Current RCMP policy specifically identifies the CFPOA as a Commercial Crime Branch responsibility. The RCMP has the capability to track CFPOA cases being handled by the Force and is confident that credible allegations reported to other law enforcement agencies or Canadian foreign missions will be reported through to the RCMP.

The RCMP have established two seven person International Anti-corruption Units, based in Ottawa and Calgary. These units are charged with investigating allegations that a Canadian person/business has bribed a foreign public official, allegations that a foreign person has bribed a Canadian public official that may have international repercussions, allegations that a foreign public official has secreted or laundered money in, or through, Canada. They also deal with requests for international assistance. The RCMP provides functional oversight of the International Anti-Corruption Teams and anti-corruption enforcement activities through a commissioned officer at National Headquarters. The International Anti-corruption Teams’ law enforcement mandate is aligned with Canada’s obligations under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as well as the United Nations Convention Against Corruption. 

The Department of Foreign Affairs and International Trade (DFAIT) has developed instructions to Canadian missions abroad, including embassy personnel, concerning the steps that should be taken where allegations arise that a Canadian company or individual has bribed a foreign public official or other bribery-related offences. Pursuant to this policy, information in the possession of DFAIT officials is sent to Headquarters and passed on to law enforcement.

In order to clarify its policy on bribery, in 2004 Export Development Canada (EDC) introduced its Anti-Corruption Policy Guidelines (a public document) which outlines the measures EDC will apply to combat corruption, including a section on debarring companies convicted of bribery as well as a section on disclosure to law enforcement authorities. Furthermore, EDC developed a detailed internal procedural document which outlines the process for disclosure to law enforcement where there is credible evidence of bribery. EDC also developed a detailed internal procedural document relating to the debarment of convicted companies, and such process essentially provides that any party who has been convicted of bribery will be debarred from support until EDC is satisfied that they have taken appropriate measures to deter further bribery. Such measures include replacing individuals who have been involved in bribery; adopting an effective anti-corruption program; submitting to audit and making the results of such audit available. In 2006, under the auspices of the OECD Export Credit and Credit Guarantees Group, EDC worked with export credit agencies to enhance the OECD Action Statement on Bribery. Revisions to the Action Statement necessitated a number of changes to EDC’s anti-corruption practices. In addition to providing a no-bribery declaration, exporters seeking export credit agency EDC-backed support will now be required to indicate whether they have been previously convicted of bribery, and whether they have been debarred by the World Bank, the Asian Development Bank, the European Development Bank or the African Development Bank, for which the ECAs agreed to undertake enhanced due diligence. Furthermore, EDC will ask for details about agents and commissions should they deem it necessary as part of their due diligence process. ECAs also agreed to do their part to raise awareness among their exporting communities about the consequences of engaging in bribery as well as to encourage them to develop, apply and document appropriate management control systems that combat bribery.

The Canadian International Development Agency (CIDA) has a Protocol for Dealing with Allegations of Corruption associated with funding by CIDA. The Protocol includes specific internal procedures for a thorough assessment of the allegations so that senior management can ascertain whether corrupt practices have occurred and decide on corrective measures. 

CIDA’s Office of the Chief Audit Executive has drafted, for management approval, principles and guidelines for investigations intended to be used as guidance in the conduct of investigations of fraud, corruption and wrongdoings, including disclosures of wrongdoings made by public servants. The principles and guidelines will require CIDA employees to report to the Chief Audit Executive allegations or evidence of fraudulent and corrupt practices, including violations of the CFPOA, related to CIDA-financed activity. The principles and guidelines also state that all losses of money and suspected cases of fraud, defalcation or any other offence or illegal act against Her Majesty must be reported to law-enforcement authorities.

CIDA also has in place a policy that requires entities wishing to take part in CIDA development projects to declare previous corruption-related offences (see Contracting).

The Canadian Commercial Corporation (CCC) has included in all its domestic contracts with Canadian suppliers a clause prohibiting the bribery and corruption of government officials. As such, should a Canadian supplier be convicted of bribing a government official while under a contract with CCC, the Corporation will apply various sanctions which could include the termination of the contract with the supplier.

The Public Servants Disclosure Protection Act (PSDPA), as amended by the Federal Accountability Act, came into force on April 15, 2007. The Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat (formerly known as the Canada Public Services Agency) is responsible for leadership and support to organizations in the implementation of the PSDPA. The purpose of the PSDPA is to encourage employees in the public sector to come forward if they have reason to believe that serious wrongdoing has taken place, and to prohibit reprisal against them if they do so. It also provides a fair and objective process for those against whom allegations are made. In addition, the PSDPA establishes the Public Sector Integrity Commissioner as an agent of Parliament. It gives the Commissioner a mandate to conduct independent reviews of disclosures of wrongdoing, issue reports of findings to enable organizations to take appropriate remedial action, and submit annual and special reports to Parliament. Although there is nothing in the PSDPA that specifically addresses bribery of foreign public officials, the Act nevertheless provides a means by which a public servant could report the bribery and be protected from reprisal. Public servants may make disclosures within their organization or to the Commissioner, and members of the public may provide information concerning wrongdoing in the federal public sector to the Commissioner.

Prosecution

There has been one prosecution under the Corruption of Foreign Public Officials Act. Hydro Kleen Group Inc (a company based in Red Deer, Alberta), its president and an employee, were charged under the CFPOA with, among other things, two counts of bribing Hector Ramirez Garcia, a U.S. immigration officer who worked at the Calgary International Airport. Hydro-Kleen entered a plea of guilty in the Court of Queen's Bench in Red Deer, Alberta on January 10, 2005. The company admitted to one count under s. 3(1)(a) of the CFPOA and were ordered to pay a fine of $25,000. Two other charges against a director and an officer of the company were stayed. Mr. Garcia pleaded guilty in July 2002 to accepting bribes. He received a 6 month sentence and was subsequently deported to the United States. 

No other prosecution under the CFPOA was reported to the Department of Justice by provincial Heads of Prosecution. Further there are no federally-conducted prosecutions at this time

Awareness Raising

As illustrated in previous annual reports, considerable efforts have been made to make persons aware of the CFPOA. Officials continue to make presentations at conferences and at various meetings in Canada and consultations continue to take place with the provinces and territories. More specific instances include:

a) Foreign Affairs and International Trade Canada (DFAIT) - In the Spring 2005, the Deputy Minister of Foreign Affairs announced the intention to build a 21st century Foreign Ministry. Targets were established to achieve this goal and one of the priority items was to create a Values and Ethics Division, within the Office of the Inspector General. The Values and Ethics Division is the centre of expertise for DFAIT to assist employees in developing a professional culture based on the Values and Ethics Code for the Public Service. It aims to promote a solid culture of values and ethics that inspires confidence in the services provided by the Department to Canadians and in the relationships with foreign interlocutors and governments with whom we interact.

The departmental website features material on bribery and corruption as it relates to corporate social responsibility, including all previous Annual Reports to Parliament. DFAIT has been providing instructions and information to all staff (local and abroad) on both the OECD Convention and the CFPOA. The Tenth Annual Report will also be made available on the departmental web site.  The following link contains more information on the issue of corruption.

The Department continues to provide information and training for its trade commissioners and trade commissioner assistants on the CFPOA and the OECD Convention. The Trade Commissioner Service (TCS) has added the promotion of corporate social responsibility (CSR) to its list of roles and activities. The TCS addresses issues of bribery and corruption within the general framework of CSR:

• The TCS intranet site, Horizons, provides information to Trade Commissioners on how to advise clients on the CFPOA and the risks of bribery.

• On a case-by-case basis, the TCS Support Division provides supplementary advice and guidance to missions abroad on how to counsel Canadian businesses abroad on CSR, including issues of corruption and bribery.

• Canadian missions have been participating in CSR seminars in various regions and promote the CFPOA during their face-to-face briefings with Canadian clients.

• In May and June 2008, Trade Commissioners and headquarter staff participated in a half day information session on CSR, which included the promotion of the CFPOA.

• The Trade Commissioner Service Renewal Division has developed a mandatory comprehensive five-day training course entitled "The Global Learning Initiative" (GLI) which seeks to strengthen the capacity of trade program managers in their overall management competencies and skills. At the time of this report, all trade program managers in missions abroad and all directors and deputy directors at regional offices in Canada have participated in this course, which features a number of case studies with broad management issues dealing with CSR.

• Based on the success of the GLI, a similar course for all trade staff in Canada and abroad was developed. As a result, "The Global Learning Initiative for International Business Development Staff Abroad" course (GLI-2) aims to reinforce Canadian policies vis-à-vis CFPOA. Moreover, as part of this training, trade commissioners participate in exercises where they apply TCS core values. Since 2005, 1207 Commercial/Economic staff abroad have participated in the GLI-2 course which excludes employees recently hired who will take the course by the end of fiscal year 2008/09. Since September 2007, a module on CSR has been added to the course.

• The Department also gave a presentation on the CFPOA and Canada’s OECD obligations to a training session for all officers in the RCMP’s new International Anti-Corruption Units.

b) Department of Justice - in 1999 issued a publication: The Corruption of Foreign Public Officials Act: A Guide. The Guide has been updated to reflect amendments to the Act and has been distributed and posted on the Department of Justice web site.  Department of Justice officials also give presentations on the Act and on international anti-corruption initiatives, including on the work of the OECD. For example, in October 2008, a Department of Justice official gave a presentation at the Annual Conference of the Canadian Council on International Law on “Ethical Considerations in International Law: International Anti-Corruption Conventions and the Follow-Up of their Implementation by States Parties”.

c) The Canadian International Development Agency (CIDA) has been engaged in raising the awareness of anti-corruption issues both within the Agency and externally:

• In June 2000, CIDA published two anti-corruption documents: an "Anti-Corruption Primer", which articulates the parameters of corruption, its impact on development, and reviews donor strategies, and an "Anti-Corruption Questions and Strategies" document, which focuses more on developing bilateral programming approaches and lessons learned

• In October 2003, CIDA included mention of the CFPOA and international anti-corruption conventions in the Governance Orientation Program for New Development Officers (NDOs) and Locally Engaged Professionals (LEPs);

• In December 2003 a paper entitled "Corruption and the Development Challenge" was drafted which examines the effects of corruption on the success of poverty reduction and sustainable development strategies and highlights the importance of donor harmonization;

• In June 2004, CIDA circulated an "Anti-Corruption Scoping Study" within the Agency which provides an overview of anti-corruption policy and programming activity in the Agency;

• On February 11, 2005, CIDA hosted a seminar on Corruption and Development Effectiveness at its headquarters;

• CIDA co-chairs the OECD DAC/World Bank Joint Venture for Procurement, supporting procurement related commitments of the Paris Declaration. In 2006, the JV for Procurement developed a benchmarking tool, the Methodology for Assessment of National Procurement Systems, to establish reliable baseline data on the quality of country procurement systems including specific anti-corruption measures. This tool is currently being field-tested in 22 pilot countries; as results become available, they are being posted on the JV for Procurement website.  For CIDA, assessments will be used as part of fiduciary risk due diligence when considering programming approaches that rely on the use of country systems. The Methodology and links to key complementary resources on anti-corruption in public procurement, such as the OECD Checklist for Enhancing Integrity in Public Procurement, have been integrated into the newly revised Guide for Procurement Risk Assessment and Mitigation under Program-based Approaches.

• Since 2006, CIDA staff started participating actively in the U4 Anti-Corruption Resource Centre’s (U4RC) training opportunities, including the online courses and in-country workshops. In April 2007, facilitated by U4RC, CIDA also held two anti-corruption workshops for CIDA headquarter staff.

• In December 2007, a first-level analysis of CIDA programming in anti-corruption was concluded with a view to establishing greater clarity in CIDA’s anti-corruption programming in order to inform future programming directions.

• The Office of the Chief Audit Executive has provided training on fraud and corruption to Financial Management Advisors and to staff of the Chief Financial Officer branch.

• CIDA has also helped to raise awareness globally by supporting audit, transparency and anti-corruption work in partner countries and regions, including providing direct and indirect support to the implementation of the United Nations Convention Against Corruption (UNCAC). CIDA’s support also extends to awareness-raising work of international bodies such as the OECD DAC GOVNET and the Utstein Group, as well as of international non-governmental organizations such as Transparency International and its country chapters, and the Global Organization of Parliamentarians Against Corruption (GOPAC).

• CIDA's Corporate RRMAF, approved in July 2007, explicitly described corruption risk and selected it as a key corporate risk.

• In June 2008, CIDA approved its Corporate Risk Profile. Corruption risks are included under Fiduciary Risk (Financial Risk 2), Human Resources Risk (Operational Risk 1) and Socio-Political Risk (Development Risk 2). The Corporate Risk Profile establishes methods to analyse and mitigate these risks, and harmonizes them with Internal Audit and the Financial Risk Management Unit procedures. CIDA’s Policy on Fiduciary Risk Assessment (2007) is currently being updated. Part 1 of this policy focuses on funding modalities based on the use of public financial management systems of financial countries. Part 2 will cover funding modalities based on the use of international organizations and other donors’ financial management systems, and Part 3 will cover the project mode implemented by executing agencies from the private sector or NGOs.
  
  CIDA is hosting a two-day Workshop on Corruption Challenges and Anti-corruption efforts in Fragile and Conflict-affected States on September 24-25, 2009 to introduce emerging thinking on how to pursue anti-corruption programming in fragile states, as well as to asses the training and applied research needs of donor agencies on the pressing issue of corruption challenges.

d) Export Development Canada (EDC) - has been engaged in awareness-raising of the OECD Convention and the CFPOA. Its activities include:

• EDC has devoted an entire page on its website to corruption and bribery, including links to the CFPOA, the OECD Convention and the OECD Recommendation on Bribery and Officially Supported Export Credits;

• EDC has developed an anti-corruption brochure that is systematically distributed to its new customers to inform them of the potential risks they face if exposed to corrupt business practices, and to encourage the development of corporate best practices in this area. In 2007, EDC updated its brochure to reflect the enhancements agreed in the OECD Recommendation on Bribery and Officially Supported Export Credits. The brochure encourages Canadian exporters to develop, apply and document appropriate management control systems that combat bribery.

• At various times in the last several years, EDC has written to its customers to inform them about the OECD Convention and the CFPOA. Another writing campaign to all its current customers to inform them about the enhancements agreed in the OECD Recommendation on Bribery and Officially Supported Export Credits was undertaken in the first half of 2007 with a cover letter from an EDC executive; EDC will continue to write to all of its new customers and send them a copy of the brochure to advise them about the CFPOA and the dangers of engaging in bribery and corruption in international business transactions; and

• In addition to the distribution of its brochure, EDC will continue to exploit other opportunities to communicate to customers and will do so, for example, via articles in its quarterly magazine, ExportWise, and/or through industry association trade publications.

• In 2008, the results of an internal audit into CSR practices indicated that while EDC has many controls and procedures in place to mitigate the risks related to potential corruption, it recommended a review of the controls related to staff training. Anti-corruption training will continue and be enhanced in 2009.

e) Canada Revenue Agency (CRA) - has developed a section in its Audit Manual to deal with the application of section 67.5 of the Income Tax Act as it relates to outlays and expenses incurred as a result of bribery of foreign public officials. This provision prohibits the deduction of outlays and expenses involved in the bribery of foreign public officials. The Investigations Manual, which previously referred to bribery offences under the Criminal Code, has been revised to include a reference to the CFPOA and a link to the section of the Audit Manual that deals with the application of section 67.5 of the Income Tax Act. The new section in the Audit Manual "Hot Off the Presses" which is a weekly listing of new or revised material updating the CRA Electronic Library changes.

f) Royal Canadian Mounted Police (RCMP) - since March 2005 the Force has included the issue of foreign bribery generally and the CFPOA in particular to its training of all RCMP liaison officers before they depart for their assignments overseas. While the RCMP has had responsibility for CFPOA enforcement as a federal statute, specific reference to the corruption of foreign public officials in the Commercial Crime Program mandate is intended to raise awareness of this responsibility among investigators.

The RCMP, together with the Department of Justice and the International Centre for Criminal Law Reform and Criminal Justice Policy, provided subject matter expertise to the Canada-China Procuratorate Reform Cooperation Project’s Symposium on the Reform of Criminal Justice.

The RCMP officer who is the Director of the Commercial Crime Branch is a recognized subject matter expert. As a subject matter expert this officer attends and speaks at Anti-Corruption Conferences and seminars. During the reporting period, subject matter expert presentations were made to senior anti-corruption investigators from the United Kingdom and the 2nd Canadian Forum on Bribery and Foreign Corruption. The RCMP has also included information on the Anti-Corruption Units and their Anti-Corruption mandate on the RCMP’s internal and external websites. The Commercial Crime Branch has also worked with representatives of the Mexican Government to develop a course to train Mexican officials on combating corruption

The two new RCMP International Anti-Corruption Units have participated in anti-corruption training and awareness workshops and have given a series of presentations in 2009 on their units, their activities and the CFPOA to such organizations as provincial law enforcement, private sector-organized seminars, and national energy security professionals.

g) The Canadian Commercial Corporation (CCC), Canada’s international contracting and procurement agency, is committed to ensuring legal and ethical conduct in its business dealings and addresses issues of bribery and corruption within the general framework of Corporate Social Responsibility (CSR). As part of its CSR initiatives, CCC has finalized a Code of Conduct and a Code of Business Ethics, which seek to provide specific guidance and direction both to the Corporation’s employees and clients, with regards to ethical behaviour. All employees and clients have access to a copy of the Code of Conduct and the Code of Business Ethics on the internal portal and are required to sign an acknowledgment and agreement confirming their understanding of the Codes and their responsibility to comply with the Codes. The Code of Conduct and the Code of Business Ethics are also available to CCC clients on the external CCC website

Contracting

In December 2003, CIDA introduced a policy requiring entities wishing to enter into a contract or contribution agreement with CIDA to declare previous corruption-related convictions and sanctions and that entities must confirm that, in the three years prior to signing a contract or contribution agreement, they have not been convicted of, and are not under sanction for, any corruption-related offence. If an entity has been convicted or is under sanction, it will have the opportunity to make representations to CIDA, to show that steps have been taken to counter the problem. However, CIDA reserves the right to accept, to accept conditionally, or simply refuse to do business with an entity convicted of, or sanctioned for, a corruption-related offence. In addition, CMD developed a subsequent Protocol for entities found guilty of corruption, to be implemented if/when an entity declares a previous corruption-related offence involving activities funded by an organization other than CIDA. 

At Export Development Canada, exporters are required to sign anti-corruption declarations. The wording in the declarations may be different depending on the product in question, but generally states: “We have not been and will not knowingly be party to any action which is prohibited by Canada's Corruption of Foreign Public Officials Act which makes it illegal for persons to, directly or indirectly, give, offer, or agree to offer a loan, reward, advantage or benefit of any kind to a foreign public official in order to obtain or retain an advantage in the course of business.” Further, EDC’s insurance policies and loan documents include clauses / representations and warrants against bribery

Tax Deductibility

The Government of Canada and all provinces deny the tax deductibility of outlays made or expenses incurred in the bribery of foreign public officials.

Canadian Multi-stakeholder Consultations

The 2006 “National Roundtables on CSR and the Canadian Extractive Sector in Developing Countries” provided a forum for the sharing of knowledge and experience between companies and stakeholders on challenges faced abroad. Following the Roundtables process, the Advisory Group developed a set of recommendations for the government’s consideration, including a recommendation to amend the Corruption of Foreign Public Officials Act to clarify that it applies extraterritorially to Canadian nationals. As mentioned previously, the Minister of Justice has introduced Bill C-31, which would provide for nationality jurisdiction for offences under the Corruption of Foreign Public Officials Act.

Based on these consultations, and building on its long-standing commitment to the OECD Guidelines for Multinational Enterprises, the Government of Canada announced a new CSR policy on March 26, 2009 entitled, Building the Canadian Advantage: a CSR Strategy for the Canadian International Extractive Sector. This policy will help enhance the ability of Canadian extractive sector companies operating abroad to manage social and environmental risks. The four pillars of the policy are: 1) continuing support for host country capacity-building initiatives related to resource governance; 2) promotion of widely-recognized international CSR performance guidelines; 3) creation of an Extractive Sector CSR Counsellor to assist in the resolution of issues pertaining to the activities of Canadian companies abroad; and, 4) support for the development of a CSR Centre of Excellence to develop and disseminate high-quality CSR tools and training to stakeholders.

Monitoring Implementation of the OECD Convention

The OECD Convention aims to stop the flow of bribes and to remove bribery as a non-tariff barrier to trade. The Convention and the 1997 Revised Recommendation of the OECD Council on Combating Bribery in International Business Transactions provide for self and mutual evaluation by members of the OECD Working Group on Bribery in International Business Transactions (the "Working Group"). The aim of the review exercise is to ensure the effectiveness of national instruments to combat bribery and that all members enjoy a level playing field.

Evaluation Process

The evaluation takes place in two phases. Phase 1 is designed to evaluate whether the legal texts through which participants implement the Convention meet the standards set by it, as well as initial actions to implement the 1997 Revised Recommendation. Phase 2 studies and assess the structures put into place to enforce national laws and determine their practical application.

Phase 1 involves the review of each member country's implementing legislation to determine if it meets the requirements of the OECD Convention. All members of the Working Group have undergone Phase 1 reviews, most recently Israel in March 2008.

Where a country's implementing legislation has been found not to meet the standards of the OECD Convention, a Phase 1bis examination is conducted to determine if legislation implemented in response to the initial Phase 1 review meets OECD Convention standards. To date, only Hungary and the United Kingdom have received Phase 1bis examinations. All Phase 1 reviews are available on the OECD's website. 

During the Phase 2 examination, the Working Group evaluates, among other things, member countries' enforcement and implementation of their foreign bribery legislation. Phase 2 examinations involve the completion of a questionnaire by the reviewed country followed by an on-site visit by members of the OECD Secretariat and lead examiners from two other OECD countries. These on-site visits constitute a major aspect of the evaluation process, and include meetings with government representatives as well as informal exchanges of views with representatives of the private sector and civil society. (Each examined country is consulted on the best manner of obtaining input from the private sector and civil society.)

Following an on-site visit, the Secretariat, in consultation with the lead examiners, drafts a preliminary report. The Working Group, meeting in plenary, then reviews and adopts the report which is later transmitted to the OECD Council.

Finland was the first country to be evaluated under Phase 2 in 2002. Since then, the Working Group has also reviewed, and approved, Phase 2 reports for 36 countries, including Canada. All Phase 2 examinations of current members were completed in 2008.

The Working Group is currently negotiating a review of the instruments associated with the Convention in part to facilitate current discussions on a planned Phase 3 of review. Phase 3 will be a focussed review of certain cross-cutting issues along with issues specific to individual countries that have been identified in the Phase 2 process. The first Phase 3 reviews are expected to begin in early 2010. 

Canada's Phase 1 Evaluation

The Working Group reviewed Canada's implementing legislation, July 8-9, 1999 and concluded that the CFPOA met the requirements set by the Convention. The Working Group also noted that some issues may benefit from further examination during the Phase 2 evaluation. These include the exemption of reasonable expenses incurred in good faith, Canada's choice not to establish nationality jurisdiction with respect to bribery of foreign public officials, payments to secure performance of any act of a routine nature from the purview of the offence, and sentencing courts’ discretion in imposing fines.

• The Phase 1 Report on Canada (PDF^*, 125 KB) 

Canada's Phase 2 Evaluation

At its June 17-19, 2003 meeting, the OECD Working Group on Bribery approved the report on the evaluation of Canada's enforcement of its laws against foreign bribery. Overall, the report is positive in its evaluation of Canada's fight against corruption. However, the report makes recommendations which, in the opinion of the Working Group, would further improve Canada's capacity to fight corruption. These recommendations deal with the measures to prevent and detect foreign bribery and measures to prosecute and sanction it. The Report also identifies issues requiring follow-up by the Working Group because of insufficient practice at the time the evaluation was conducted to assess Canada's performance.

• The Phase 2 Report on Canada (PDF^*, 398 KB).

The OECD post-Phase 2 follow-up procedure required Canada to provide information on its follow-up actions at a meeting of the Working Group in March 2005, one year after the publication of the Phase 2 Report on Canada in March 2004, and a more detailed report after two years. Canada provided an oral update at a Working Group meeting on March 17, 2005 and provided a detailed written report at the meeting of March 2006.

Canada’s Phase 2 Follow-Up Report

In March, 2006, Canada presented its Written Follow-Up to the Phase 2 Report and the Working Group issued its response on June 21, 2006. The Working Group found that Canada had made important steps in a number of areas to implement the recommendations adopted by the Working Group, including further raising awareness of the foreign bribery offence and the
OECD Convention, efforts in the area of co-ordination among law enforcement authorities, strengthening accounting and auditing legislation, and developments in the area of reporting and detecting foreign bribery offences, as well as statistics gathering for sanctions for the offence.

The Working Group expressed concern over the grounds for which Canada can choose not to prosecute the foreign bribery offence “in the public interest” and over the lack of nationality jurisdiction for the offence, and encouraged Canada to adopt a policy of debarment for applicants convicted of foreign bribery in the context of public tenders. The Working Group also expressed surprise at the paucity of prosecutions under the CFPOA.

• The Working Group’s Phase 2 Follow-up Report (PDF^*, 294 KB)

Canada's Activities as Lead Examiner

Canada and Italy were lead examiners in the Phase 2 review of France and Canadian officials participated in the on-site visit of France from June 23 to 27, 2003. The report on France (PDF^*, 589 KB) was adopted at the Working Group's October 2003 meeting.

Canada and France were lead examiners in the Phase 2 review of the United Kingdom and Canadian officials participated in the on-site visit of the UK from July 19 to 23, 2004. The report on UK (PDF^*, 675 KB) was adopted at the Working Group's March 2005 meeting.

In response to concerns expressed by the Working Group on the UK’s failure to remedy certain key deficiencies identified in their Phase 2 review, in addition to and potentially linked to concerns raised by the interruption of the investigation of an important foreign bribery case, the Working Group decided in March 2007 to conduct a supplementary Phase 2 bis of the UK. Canada and France were lead examiners in this evaluation and participated in the on-site visit from March 31st to April 3, 2008. The Phase 2 bis report was adopted by the Working Group on Bribery in October 2008. 

Most recently, Canada with Switzerland participated in the Phase 1 examination of Israel, the newest State Party to the Convention. Israel ratified the Convention on 11 March 2008 and became a member of the Working Group on Bribery on December 19, 2008. Israel’s Phase 1 Report was adopted by the Working Group on March 19, 2009.

Annex A - OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions RATIFICATION STATUS

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Date Modified:

2013-01-10