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Corporate Social Responsibility - Bribery and Corruption

Eleventh Report to Parliament (October 7, 2010)

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 (OECD Convention) on December 17, 1997 and deposited the instrument of ratification with the OECD on December 17, 1998. Parliament adopted implementing legislation, in the form of the Corruption of Foreign Public Officials Act (CFPOA), which received Royal Assent on December 10, 1998 and 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 Eleventh Report to Parliament under the CFPOA. 

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

• Bribery and Corruption

The Corruption of Foreign Public Officials Act may be viewed at:

• 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 34 member states of the OECD and four non-members of the OECD: Argentina, Brazil, Bulgaria, and South Africa.

Annex A to this report contains information on the ratification status of the OECD Convention.  All current members of the Working Group (including Canada) had their implementing legislation evaluated in Phase 1 of the peer review process.  All current members of the Working Group had their enforcement mechanisms evaluated as part of the Phase 2 review, and the first of the Phase 3 reviews (involving on-site review visits) will begin in October 2010. 

• All Phase 1 and Phase 2 country reports

The OECD Convention is supplemented by the Recommendation of the Council for
Further Combating Bribery of Foreign Public Officials in International Business Transactions, which was adopted by the OECD Council on November 26, 2009 and released on December 9, 2009 on the tenth anniversary of the OECD Convention.  The new recommendation replaces the 1997 Revised Recommendation of the Council on Combating Bribery in International Business Transactions, and calls on states parties to, inter alia, periodically review their processes and approaches regarding small facilitation payments, improve cooperation in terms of sharing of information and evidence in foreign bribery investigations and prosecutions and in the seizure, confiscation and recovery of proceeds of transnational bribery, provide effective channels for public officials to report suspected foreign bribery internally within the public service and externally to law enforcement authorities, and protect whistleblowers from retaliation. The Recommendation also contains an annex which provides good practice guidance to companies on internal controls, ethics and compliance.

The United Nations Convention against Corruption (UNCAC) entered into force on December 14, 2005. Not only does this Convention adopt 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 the 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.  

Enforcement of the Corruption of Foreign Public Officials Act (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 expects that credible allegations reported to other law enforcement agencies or Canadian foreign missions will continue to be reported through to the RCMP.

The RCMP has 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, and 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, as well as the UNCAC. 

Foreign Affairs and International Trade Canada (DFAIT) has developed instructions to Canadian missions abroad, including High Commission and 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. Under this policy, information in the possession of DFAIT officials is sent to Headquarters and passed on to law enforcement in accordance with established procedures.

Export Development Canada’s (EDC) policy statement with respect to bribery is set out in EDC’s Code of Business Ethics which states in part that “Under no circumstances will EDC, directly or indirectly, knowingly offer or give a bribe.  Further, EDC will not support a transaction that involves the offer or giving of a bribe, and will exercise reasonable diligence and care not to support unknowingly such a transaction.”  EDC also has in place Anti-Corruption Policy Guidelines (a document available on the EDC web-site) which outlines measures EDC will apply to combat corruption, including (i) possible notification of law enforcement authorities, and (ii) refusal to provide support where, in EDC’s opinion, there is credible evidence that bribery was involved in a transaction.

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. 

In December 2009, CIDA's President approved 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 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 the CCC determine that a Canadian supplier has contravened the CFPOA while under a contract with the 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 is responsible for leadership in values and ethics, promotion and ethical practices.  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 reprisals 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 the bribery of foreign public officials, the Act nevertheless provides a means by which a public servant could report the bribery and be protected from reprisals.  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

To date, there has been one conviction under the CFPOA. 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 paragraph 3(1)(a) of the CFPOA and was 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 secret commissions under subparagraph 426(1)(a)(ii) of the Criminal Code. He received a six-month sentence and was subsequently deported to the United States. 

On May 28, 2010, the second set of charges under the CFPOA were laid by the RCMP under section 3(1)(b) against Mr. Nazir Karigar for allegedly making a payment to an Indian government official to facilitate the execution of a multi-million dollar contract for the supply of security system for the Canadian high-tech firm, Crypotometrics.  This matter is currently before a Canadian court.

No other prosecutions under the CFPOA have been reported to the Department of Justice by provincial Heads of Prosecution or by federal prosecutors.

Under the CFPOA, Canada exercises territorial jurisdiction, which allows Canada to prosecute the foreign bribery offence when it is committed in whole or in part in Canada. There must be a “real and substantial link” between the offence and Canada. In addition, unlike some other countries, Canada can extradite its nationals to face criminal prosecution in other countries.

However, the fact that Canada does not exercise nationality jurisdiction to prosecute a Canadian for bribing a foreign public official on the basis of Canadian nationality without needing to provide evidence of a link to Canada has been strongly criticized by international organizations. The OECD and Transparency International have said that they would like to see Canada prosecute more foreign bribery cases and have encouraged Canada to amend its laws to exercise nationality jurisdiction.  These recommendations coincide with a recommendation that came out of the discussions at the National Roundtables on Corporate Social Responsibility (detailed later in this report)

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), which, if passed, would have amended the CFPOA to allow Canada to prosecute Canadian companies, or Canadian citizens or permanent residents for offences under section 3 of the Act(bribing a foreign public official) without having to provide evidence of a link between Canada and the offence. The Bill had passed second reading and was at the Committee Stage when the House was prorogued in December 2009.   

• A copy of the bill is available

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 of 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 DFAIT to Canadians and in the relationships with foreign interlocutors and governments with whom we interact. The Values and Ethics Division representatives address the issue of corruption in each awareness session made at Headquarters, Regional Offices and in Missions abroad and make reference to the CFPOA and DFAIT’s Policy and Procedure for Reporting Allegations of Bribery.

DFAIT’s Policy and Procedure for Reporting Allegations of Bribery abroad by Canadians or Canadian companies was adopted in March 2010.  Under this policy, information that officers receive regarding suspected bribery of foreign public officials, or related offences, by Canadian individuals or companies will be forwarded to the RCMP in accordance with established procedures.  Related offences include: conspiracy to bribe, attempting to bribe, aiding and abetting, counselling, an intention in common to bribe and possession of property or proceeds of property obtained or derived from bribery or laundering that property or those proceeds.

Because the policy and its related procedures provide DFAIT officers with a process for reporting suspected cases of bribery for investigation, its adoption as an official department policy raises awareness about the CFPOA within the Department and provides a streamlined process that officers can use to report allegations for investigation under the CFPOA. 

In addition, the departmental websites feature material on bribery and corruption as they relate to corporate social responsibility, and instructions and information are provided to all staff at Canadian missions abroad on the OECD Convention and the CFPOA.  These sites, which include the Annual Reports to Parliament, can be found at:

• Bribery andCorruption
• Corruption Overview

Beyond the newly-adopted policy for reporting allegations of bribery, the Department continues to provide general information and training for its trade commissioners and trade commissioner assistants on the CFPOA and Canada’s international legal obligations to prevent and combat corruption. In this respect, 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 make their clients aware of 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 June 2010, Trade Commissioners and headquarters 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 four-day training course entitled "The Global Learning Initiative for Commercial/Economic Staff Abroad” (GLI-2) in which participants are informed of their responsibilities vis-à-vis the CFPOA.  Moreover, as part of this training, trade commissioners participate in exercises where they apply TCS core values.  Since 2005, over 1,400 Commercial/Economic staff abroad have participated in the GLI-2 course. The course continues to be delivered many times a year to recently hired employees.

b)  Department of Justice

In 1999, the Department issued a publication called The Corruption of Foreign Public Officials Act: A Guide, which is posted on the Department of Justice website.

The Guide is being updated and will be posted on the Department’s website.

The Department has also recently updated a paper entitled “Canadian Public Integrity and Anti-Corruption Measures” to be made available for the public in both official languages. 

Department of Justice officials continue to give presentations on the CFPOA as well as on international anti-corruption initiatives, including 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”.
• In January 2010, a Department of Justice official made a presentation to the Department’s International Law Practice Group on the topic of international law and corruption.  The official spoke to the various international anti-corruption conventions and review mechanisms.

c) The Canadian International Development Agency (CIDA)

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 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 actively participates in the OECD-DAC Task Force on Procurement (formerly the Joint Venture for Procurement), supporting procurement-related commitments of the Paris Declaration and Accra Agenda for Action. The Task Force on Procurement is continuing the work related to the Methodology for Assessment of Procurement Systems (MAPS), a common tool being used to establish reliable baseline data on the quality of country procurement systems including specific anti-corruption measures. Since 2007, this tool has been field-tested in 22 pilot developing countries and also applied in many other countries. Information is available on the Task Force on 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. Links to MAPS and other key complementary resources on anti-corruption in public procurement, such as the OECD Checklist for Enhancing Integrity in Public Procurement, are integrated into CIDA's Operational Guide to 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 headquarters 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 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  hosted 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 assess the training and applied research needs of donor agencies on the pressing issue of corruption challenges.
• CIDA is currently pilot testing a Fiduciary Risk Evaluation Tool that includes corruption risks. The tool uses a methodology that is harmonized to other donor and IFI methodologies, as well as being consistent with Canadian Treasury Board standards for assessing risk for grants and contributions. CIDA looks to have this tool and assessment applied at the recipient and project level to all of its funding in the future.

d) Export Development Canada (EDC)

EDC has been engaged in awareness-raising of the OECD Convention and the CFPOA.  Its activities include:

• EDC continues to seek opportunities to educate customers about corruption.  A recent example of such an opportunity presented itself in 2009 when EDC developed a short online quiz for customers to test their knowledge in the area of anti-corruption.  The quiz, designed to raise awareness of the CFPOA, was launched on EDC’s web-site to coincide with the United Nations’ International Anti-Corruption Day (December 9th).
• 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.  The brochure encourages Canadian exporters to develop, apply and document appropriate management control systems that combat bribery.  The brochure is sent to all new customers with a cover letter from EDC’s President and CEO.
• In the course of its due diligence in connection with allegations of corruption, EDC has discussed directly with some customers on the risks of bribery and corruption and best practices to protect themselves against such risks.  As a result, EDC has encouraged a number of firms to put in place anti-corruption mechanisms such as a Code of Conduct and training for their staff.

e) Canada Revenue Agency (CRA)

The 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, was previously 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 67F.5 of the Income Tax Act. The new section in the Audit Manual "Hot Off the Presses" is a bi-monthly listing of new or revised material updating the CRA Electronic Library changes.

In addition, the CRA is currently under reviewing its course TD1000-00B Income and Expenses - Basic Rules and in September 2010 is planning to do a pilot training session. The CRA expects that the new course will be available by March 31, 2011 in both official languages.

In this new course, there will be an entire unit regarding the following:

• ITA 18(1)(t) Payments under different acts
• ITA 67.5 Non-deductibility of illegal payments (which addresses bribes to foreign officials)
• ITA 67.6 Non-deductibility of fines and penalties.

f) Royal Canadian Mounted Police (RCMP) 

Since March 2005, the RCMP 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. To this end, the two RCMP International Anti-Corruption Units have participated in anti-corruption training and awareness workshops.  In addition, orientation manuals have been completed for the teams covering the legislation and the various contacts and their roles.  The recent establishment of a logic model and measurements for the two investigative teams will complement these training efforts and promote the teams’ work.

In addition to these activities, the RCMP’s anti-corruption teams established contacts within the Department of Justice’s International Assistance Group to ensure that priority is given to requests for mutual legal assistance in corruption matters. Similarly, the RCMP continues to prioritize the establishment of procedures and mechanisms for information sharing within Government about suspected cases of corruption. 

As a recognized subject matter expert, the RCMP officer who is the Director of the Commercial Crime Branch attends and speaks at Anti-Corruption Conferences and seminars. During the reporting period, subject matter expert presentations were given to both government and business.  In this respect, the RCMP Ottawa A Division anti-corruption unit gave 10 presentations, the Calgary K Division unit gave 13 presentations and Ottawa HQ gave six presentations.  The Ottawa presentations were made to Transparency International Board, representatives from Scotland Yard and the United Kingdom Serious Fraud Office, a Chinese study tour from Shanghai, the Australian Police Force, and representatives from Kazakhstan.   The Commercial Crime Branch has also worked with representatives of the Mexican Government to develop a course to train Mexican officials on combating corruption. 

Owing to the specialized nature its work, the RCMP complements its training by developing additional educative resources.  In this respect, it is working to develop information pamphlets describing the RCMP’s work and the negative effects of corruption that can be distributed at future presentations.  Further, the RCMP also includes information on the Anti-Corruption Units and their Anti-Corruption mandate on the RCMP’s internal and external websites.  Notably, the RCMP headlined Anti-Corruption Day on its websites.  The RCMP has also reached out to the media to discuss of the Force’s work, which has led to a well-received article published in the Calgary Herald.

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, the CCC has finalized a Code of Conduct and a Code of Business Ethics, which seeks 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 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, CIDA’s Contracting Management Division (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.  The Local Contracting and Contribution Agreement Guide that was published at the end of 2008 includes additional provisions relating to anti-corruption and provides a certification form that must be completed by contractors and beneficiaries. 

At EDC, exporters are required, with few exceptions, to sign anti-corruption declarations.  There may be small variation in the wording of the declaration depending on the product in question, but it generally requires exporters to state that, with respect to the transaction being supported by EDC, the exporter has not been and will not knowingly be party to any action which is prohibited by any applicable criminal law dealing with the bribery of foreign public officials including the CFPOA. Exporters are also required to declare whether they are currently under charge in a court, or within the last five years, have been convicted for violation of laws against the bribery of foreign public officials.  Further, many EDC products include exclusions, representations and warranties and covenants, as applicable, dealing with bribery of foreign public officials.

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 CFPOA to clarify that it applies extraterritorially to Canadian nationals.  

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 2009 Recommendation of the OECD Council for Further Combating Bribery of Foreign Public Officials 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 peer evaluation process is being carried out, thus far, in three phases. Phase 1 is designed to evaluate whether the legal frameworks through which participants implement the Convention meet the standards set by it. Phase 2 studies and assesses the structures put into place to enforce national laws and determine their practical application. Phase 3 is intended to update the assessments of the structures put in place by the parties to enforce the laws and rules implementing the Convention and the 2009 Recommendations.

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, or a country significantly amends its legal framework, a Phase 1 bis examination is conducted to determine if legislation meets OECD Convention standards.  To date, only Hungary, the United Kingdom and Chile have received Phase 1 bis examinations.

• All Phase 1 reviews are available on the OECD's web site. 

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 38 countries, including Canada.

Phase 3 Evaluations of all of the parties to the OECD Convention will begin in 2010 with the completions of the examinations in October 2010 of Finland and the United States.  Phase 3 is intended to be shorter and more focused than the Phase 2 evaluation, concentrating on progress made by the parties on the recommendations made during Phase 2, on issues raised by changes in the domestic legislation or institutional frameworks of the parties, and on enforcement efforts, results, and other horizontal issues.  The Phase 3 examinations will involve the completion of two questionnaires (general and country-specific), a three- or four-day on-site visit by members of the OECD Secretariat and lead examiners from two other OECD countries, and a review and adoption by the Working Group of the evaluation report.     

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 may be consulted.

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. 

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.

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.

Canada’s Phase 3 Evaluation

Canada’s Phase 3 Evaluation process is currently underway.  The on-site visit to Canada by the OECD Secretariat and the lead examiners from the United States and Austria will take place in October 2010.  The evaluation report, which will be drafted following the on-site visit, is scheduled to be reviewed and adopted by the Working Group during its plenary meeting in March 2011.

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 was adopted at the Working Group's October 2003 meeting.

• The report on France

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 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 31 to April 3, 2008.  The Phase 2 bis report was adopted by the Working Group in October 2008. 

Most recently, Canada participated with Switzerland in the Phase 1 examination of Israel, the newest State Party to the OECD Convention.  Israel’s Phase 1 Report was adopted by the Working Group on March 19, 2009. 

Canada is scheduled to participate as lead examiner in the Phase 1 bis evaluation of the United Kingdom’s new Bribery Act, which will be completed in December 2010.  Canada will also act as a lead examinerin the Phase 3 Evaluations of Japan in 2011 and of Australia in 2012.

Annex A

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

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Date Modified:

2013-01-07