Canada’s Fight against Foreign Bribery
The Thirteenth Annual Report to Parliament
Implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the Enforcement of theCorruption of Foreign Public Officials Act (September 2011 – August 2012)
- Highlights - September 2011 to August 2012
- The OECD Anti-Bribery
- ConventionThe Corruption of Foreign Public Officials Act (CFPOA)
- Canada and the Fight against Foreign Bribery
Highlights – September 2011 to August 2012
- In relation to the awarding of a contract for the supervision and consultancy services for the construction of the PADMA multipurpose Bridge in Bangladesh, on February 29, 2012, the RCMP arrested on February 29, 2012 and charged jointly on April 11, 2012 two former employees of SNC Lavalin, Ramesh SHAH of Oakville, Ontario, and Mohammad ISMAIL of Mississauga, Ontario, with one count of bribery under the Corruption of Foreign Public Officials Act (CFPOA).
- Effective July 11 2012, Public Works and Government Services Canada (PWGSC) has extended the list of offences which render companies and individuals ineligible to bid on contracts, to include the bribing of a foreign public official under the CFPOA.
On December 17, 1997, Canada signed the Convention on Combating Bribery in International Business Transactions of the Organisation for Economic Co-operation and Development (OECD Convention). Parliament passed the Corruption of Foreign Public Officials Act (CFPOA) to implement Canada’s obligations under the OECD Convention into Canadian law.Footnote i With the adoption of the CFPOA, which received Royal Assent on December 10, 1998, the Government of Canada deposited its instrument of ratification with the OECD on December 17, 1998, thereby becoming a party to the Convention.Footnote ii
The OECD Anti-Bribery Convention
The OECD Convention aims to stop the flow of bribes and to remove bribery as a non-tariff barrier to trade, producing a level playing field in international business. The OECD Convention came into force on February 15, 1999, following Canada’s ratification.
To date, 39 states have ratified the OECD Convention, including the 34 member states of the OECD and five non-member states: Argentina, Brazil, Bulgaria, Russia and South Africa.Footnote iii
- Companion Instruments
The OECD Convention is supplemented by a number of companion instruments:
The 2009 Recommendation – The OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (2009 Recommendation)Footnote iv was adopted by the OECD Council on November 26, 2009 and released on December 9, 2009 on the tenth anniversary of the OECD Convention.Footnote v
Guidelines for Multinational Enterprises – Section VII of the OECD Guidelines for Multinational Enterprises contains recommendations regarding Corporate Social Responsibility (CSR) aimed at multinational enterprises investing abroad. The Guidelines were updated in May 2011.
Other companion instruments include the OECD Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions;Footnote vi the OECD Recommendation on Bribery and Officially Supported Export Credits;Footnote vii and the Recommendation on Anti-Corruption Proposals for Bilateral Aid and Procurement.Footnote viii
- The Peer Review Process
The OECD Convention provides for mutual evaluation by members of the OECD Working Group on Bribery (Working Group), comprised of representatives from the states parties to the Convention as well as representatives from states which have been invited to become a full participant in anticipation of their ratification of the Convention,Footnote iv on their enforcement and implementation of the OECD Convention and companion instruments. The peer review monitoring system has, thus far, been carried out 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.Footnote x Phase 2 studies and assesses the structures put into place to enforce national laws and determine their practical application.Footnote xi 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 domestic legislation or institutional frameworks of the parties, and on enforcement efforts, results and other horizontal issues.
The Phase 3 cycle of evaluations began in 2010 and is scheduled for completion in 2014.
- Canada and the Peer Review Process
As a state party to the OECD Convention, Canada is committed to and actively participates in the peer review mechanism, as a peer reviewer, evaluated country, and Working Group member. Between September 2011 and August 2012, Canada’s participation included the following:
Canada as Lead Examiner – Canada and Norway acted as the lead examiners for the Phase 3 Evaluation of Japan. The resulting evaluation report was adopted by the Working Group in December 2011. Canada was also selected, along with Japan, to act as lead examiners for the Phase 3 Evaluation of Australia. The on-site visit by Canadian and Japanese experts took place in Canberra and Sydney, Australia in late May 2012. The Phase 3 Evaluation report for Australia is scheduled to be discussed and adopted by the Working Group during its plenary meetings in October 2012.
Canada’s Phase 3 Evaluation – As part of the Working Group’s Phase 3 Evaluation follow-up procedure, Canada was called upon to provide two follow-up reports to the Working Group between September 2011 and August 2012. First, in October 2011, Canada presented a brief oral update on progress made to implement a number of the recommendations made by the Working Group to Canada in the Phase 3 Evaluation Report on Canada’s implementation of the OECD Anti-Bribery Convention.Footnote xii Second, Canada provided a written report during the Working Group’s plenary meetings in March 2012.
Canada will be presenting its final written report in the Phase 3 follow-up procedure to the Working Group in March 2013.
The Corruption of Foreign Public Officials Act (CFPOA)
The CFPOA criminalizes the bribery of a foreign public official. The CFPOA also makes it possible to prosecute, for example, a conspiracy or attempt to commit such bribery, as well as aiding and abetting in committing bribery, an intention in common to commit bribery, and counselling others to commit bribery. Laundering property and proceeds of such bribery, as well as possession of property and proceeds, are offences under the Criminal Code.
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. Recommendations have been made by Transparency International and in Canada’s Phase 3 Evaluation Report that Canada amend its laws to exercise nationality jurisdiction over the foreign bribery offence to promote prosecution of cases under the CFPOA. Such a recommendation also came out of discussions at the National Roundtables on Corporate Social Responsibility.Footnote xiii
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 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.Footnote xiv
- Investigations and Prosecutions
There are currently 34 ongoing investigations under the CFPOA, and there have been two convictions under the CFPOA to date. There are two cases in which charges have been laid but not yet concluded.Footnote xv
Mr. Nazir Karigar – On May 28, 2010, the RCMP laid charges against Mr. Nazir Karigar under paragraph 3(1)(b) of the CFPOA for allegedly making a payment to an Indian government official to facilitate the execution of a multi-million dollar contract for the supply of a security system by Cryptometrics, a Canadian high-tech firm. This matter is currently before a Canadian court.
SNC Lavalin – In relation to the awarding of a contract for the supervision and consultancy services for the construction of the PADMA multipurpose Bridge in Bangladesh, on February 29, 2012, the RCMP’s “A” Division International Anti-corruption Unit arrested two former SNC Lavalin employees. Both were later released on the condition that they remain in Canada and promise to appear in court. On April 11, 2012, the RCMP laid charges at the Downtown Toronto Courthouse (Ontario) against two former employees of SNC Lavalin. Ramesh SHAH of Oakville, Ontario, and Mohammad ISMAIL of Mississauga, Ontario, have been charged jointly with one count under paragraph 3(1) b) of the Corruption of Foreign Public Officials Act.
The charge reads as follows:
Between December 1st 2009 and September 1st 2011, in Oakville and elsewhere in the Province of Ontario, and in Bangladesh, did, in order to obtain or retain an advantage in the course of business of SNC International Inc, directly or indirectly offer, or agree to give or offer a reward, advantage or benefit of any kind to foreign public officials of the Republic of Bangladesh or to any person for the benefit of foreign public officials of the Republic of Bangladesh to induce the officials to use their position to influence acts or decisions of the Republic of Bangladesh for which the officials perform duties or functions in particular the awarding of a contract for the supervision and consultancy services for the construction of the PADMA multipurpose Bridge and did thereby commit an indictable offence contrary to paragraph 3 (1) b) of the Corruption of Foreign Public Officials Act.
The investigation is on-going and the matter is currently before a Canadian court.
Niko Resources Ltd. – Niko Resources Ltd. is a publicly traded company based in Calgary, Alberta.On June 24, 2011, the company entered a guilty plea in the Court of Queen’s Bench in Calgary for one count of bribery under paragraph 3(1)(b) of the CFPOA, covering the period of February 1, 2005 to June 30, 2005. The company admitted that, through its subsidiary Niko Bangladesh, it provided the use of a vehicle (which cost $190,984 CDN) 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 improperly paid approximately $5,000 CDN for the Minister to travel to New York and Chicago to visit his family.
As a result of the conviction, Niko Resources Ltd. was fined $9,499,000 CDN 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.
Hydro-Kleen Group Inc. – Hydro-Kleen Group Inc., based out of Red Deer, Alberta, entered a guilty plea in the Court of Queen’s Bench in Red Deer on January 10, 2005 to one count of bribery under paragraph 3(1)(a) of the CFPOA and was ordered to pay a fine of $25,000 CDN. Along with its president and an employee, the company had been charged under the CFPOA with, among other things, two counts of bribing a U.S. immigration officer who worked at the Calgary International Airport. The charges against the director and the officer of the company were stayed. The U.S. immigration officer pleaded guilty in July 2002 to accepting secret commissions under subparagraph 426(1)(a)(ii) of Canada’s Criminal Code. He received a six-month sentence and was subsequently deported to the United States.
Canada and the Fight against Foreign Bribery
A number of federal departments, agencies and Crown corporations play key roles in Canada’s fight against foreign bribery. They work in close cooperation in Canada’s two-pronged approach to foreign bribery – enforcement and prevention.
New Ideas for Canada’s Fight against Foreign Bribery
On January 24 and 25, 2012, the Government of Canada hosted the Canadian Workshop: New Ideas for Canada’s Fight against Foreign Bribery, a consultation with experts from Canadian businesses, law firms, academic institutions and non-governmental organizations on the issue of foreign bribery. The Workshop was held in Ottawa and provided an opportunity for discussions between government officials and key stakeholders on concrete steps that could be taken to improve the enforcement of the CFPOA, and to further encourage Canadian companies to prevent bribery before it happens and to detect it if it occurs. Over thirty participants attended the event.
Participants engaged in discussions on a number of foreign bribery-related themes, including possible amendments to the CFPOA, recognizing and resisting bribery solicitations, discouraging facilitation payments, voluntary disclosure, books and records offences, focusing awareness raising, messaging to small and medium-sized enterprises (SMEs), sectoral initiatives, and education and training.
The Government of Canada continues to consider the views and ideas that were presented the Workshop, which is intended to be the first step towards increasing engagement and cooperation with key stakeholders on foreign bribery and corruption in the months and years to come.
- The Royal Canadian Mounted Police (RCMP)
Enforcement – The corruption of foreign public officials is specifically referenced in the mandate of the RCMP Commercial Crime Program. Current RCMP policy specifically identifies the CFPOA as a responsibility of the Commercial Crime Branch. 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 other Canadian officials, including those in foreign missions, will continue to be reported through to the RCMP.
In 2008, the RCMP established the International Anti-Corruption Unit, comprised of two seven-person teams based in Ottawa and Calgary, respectively. The unit is charged with investigating allegations that a Canadian person or business has bribed, offered or agreed to bribe 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. The unit also deals with requests for international assistance. The RCMP provides functional oversight of the unit and anti-corruption enforcement activities through a commissioned officer at RCMP National Headquarters.
Training and Cooperation – The RCMP includes the issue of foreign bribery generally and the CFPOA, in particular, in its training of all RCMP liaison officers before they depart for overseas assignments. While the RCMP is an enforcement body, 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 International Anti-Corruption Unit has participated in numerous anti-corruption awareness programs and training. In addition, orientation manuals have been completed for the unit covering the CFPOA and the various contacts and their roles. The establishment in 2010 of a logic model and measurements for the unit complements these training efforts and promotes the unit’s work.
The unit has also 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.
Outreach – Due to the specialized nature of its work, the RCMP complements its training by developing educational resources for external partners. In this respect, the RCMP has developed information pamphlets and posters describing the RCMP’s work and the negative effects of corruption for distribution and presentation to Canadian missions abroad. The RCMP includes information on the International Anti-Corruption Unit and its mandate on the RCMP’s internal and external websites. Notably, the RCMP headlines International Anti-Corruption Day on its website. The RCMP also reaches out to the media to discuss the Force’s work, which has promoted awareness of RCMP activities to prevent and combat corruption.
During the reporting period, the RCMP made a number of presentations to external stakeholders, including: twelve presentations by representatives from RCMP National Headquarters to local universities, non-governmental organizations, banks, Trade Commissioners, the Canadian Institute of Mining, and numerous international associations of experts and professionals; and forty-two presentations by the investigative teams in Calgary and Ottawa to targeted companies conducting business in other countries, law firms, government partners, Canadian professional associations and local universities and colleges.
- Public Prosecution Service Canada (PPSC)
Prosecutions – The PPSC prosecutes criminal offences under federal statutes, including the CFPOA, on behalf of the Attorney General of Canada. To ensure a standard approach to the prosecution of offences under the CFPOA, the PPSC has established a subject-matter expert position located in Ottawa for international corruption cases. The subject-matter expert has developed linkages with the RCMP International Anti-Corruption Unit and with other key government interlocutors involved with the enforcement and development of the CFPOA.
Training and Outreach – Internally, training in relation of the CFPOA has been provided to designated contacts in each of the PPSC’s regional offices. These contacts, who are generally senior prosecutors, will act as local points of contact and coordinators in relation to CFPOA matters as they arise for prosecution. In addition, presentations have been made to the PPSC’s Regional Directors in order to increase awareness of the OECD Convention, the CFPOA and the current activities of the RCMP and the PPSC in this area.
- Department of Foreign Affairs and International Trade (DFAIT)
In Canada and Beyond – DFAIT’s Trade Commissioners and other personnel at Canadian missions work closely with Canadian companies doing business abroad through the provision of a wide range of services and support.Footnote xvi In this respect, Trade Commissioners play a key role in the prevention of foreign bribery through making Canadian clients aware of their obligations under the CFPOA, and through the active promotion of Corporate Social Responsibility (CSR). DFAIT also plays a lead role in representing Canada in outreach efforts with emerging economies regarding corruption and at international anti-corruption forums, such as the Working Group on Bribery, and in coordinating Canada’s whole-of-government approach to meeting its international anti-corruption obligations.
Information Sharing – In March 2010, DFAIT adopted the Policy and Procedure for Reporting Allegations of Bribery abroad by Canadians or Canadian Companies, which instructs Canadian missions, including High Commissions and embassy personnel, on the steps that must 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 DFAIT Headquarters and passed on to law enforcement in accordance with the established procedures.
Training – DFAIT continues to provide information and training for its Heads of Mission, Trade Commissioners, and Political Officers on the CFPOA and Canada’s international obligations to prevent and combat corruption. During the reporting period, DFAIT has continued to deliver the mandatory, comprehensive four-day training course called “The Global Learning Initiative for Commercial/Economic Staff Abroad” (GLI-2), which was developed by the Trade Commissioner Service (TCS) Renewal Division. In this course, participants are informed of their responsibilities regarding the CFPOA, and Trade Commissioners participate in exercises where they apply TCS core values.Footnote xvii The Trade Commissioner Service’s CSR online training course also includes a CFPOA component which details employee obligations and reporting procedures. In addition, the Values and Ethics pre-posting presentation refers to the CFPOA and to DFAIT’s Policy and Procedure for Reporting Allegations of Bribery abroad by Canadians or Canadian Companies. This reference is also part of the Values and Ethics presentations to various stakeholders under the section covering the Public Servants Disclosure Protection Act.
Outreach – In addition to chairing New Ideas for Canada’s Fight Against Foreign Bribery in January 2012, DFAIT has continued, throughout the reporting period, to organize CSR seminars in various regions of the world, which include a specific focus on the CFPOA. The TCS Support Division’s CSR E-Bulletin and Canadian Direct Investment Abroad E-Bulletin provide regular updates to government partners on efforts to enforce and bring awareness of the CFPOA. DFAIT legal experts also made presentations and actively participated on panels raising awareness to Canada’s anti-corruption activities, including giving a presentation at the 2011 Conference of States Parties to the UN Convention against Corruption about legal mechanisms for freezing assets of corrupt foreign officials and combatting the bribery of foreign public officials.
- Export Development Canada (EDC)
Combating Corruption – EDC’s policy statement with respect to bribery is set out in EDC’s Code of Business Ethics, which states, in part, that “[u]nder 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 GuidelinesFootnote xviii which outline measures that 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.
At EDC, exporters are required, with few exceptions, to sign anti-corruption declarations. There may be small variations 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.
In cases where companies are facing allegations of bribery in any jurisdiction, EDC undertakes enhanced due diligence which can include, among other things, an interview with the company and a request for a more detailed anti-corruption declaration.
Awareness Raising – 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 also 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 2012, EDC published a new customer booklet, entitled Financial Crime in International Trade- A Guide for Canadian Exporters and Importers which has a section devoted to combating corruption and bribery.
EDC provided training in 2012 to update its Foreign Representatives on the UK bribery legislation and latest cases under the CFPOA.
In the course of its due diligence in connection with allegations of corruption, EDC has had discussions 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 the Code of Conduct and training for their staff.
EDC continues to seek opportunities to educate customers about corruption through various means. In 2012, EDC convened a workshop on combating corruption with speakers from the industry and the RCMP at the Prospectors and Developers Association of Canada (PDAC) Annual Convention for the global mining sector. For a broader Canadian business audience interested in exporting or investing abroad, EDC produced an anti-corruption webcast. To benefit from practical experience, the speakers included the RCMP and a company convicted under the US legislation, the Foreign Corruption Practices Act.
EDC’s Chief Corporate Social Responsibility Advisor presented at a number of sessions across Canada to raise awareness with its customers and other stakeholders on the risks of bribery in international business. These included sessions with law firms improving governance and management in the petroleum sector and Transparency International’s Day of Dialogue.
- Canadian International Development Agency (CIDA)
Dealing with Allegations of Corruption – CIDA’s Protocol for Dealing with Allegations of Corruption associated with funding by CIDA 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 also has principles and guidelines, approved in December 2009, for the conduct of investigations of fraud, corruption and wrongdoing, including disclosures of wrongdoing made by public servants. These principles and guidelines require CIDA employees to report to the Chief Auditing Executive allegations or evidence of fraudulent or corrupt practices, including possible violations of the CFPOA, related to CIDA-financed activities. These 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.
In addition, CIDA has in place a policy that requires entities wishing to enter into a contract or contribution agreement with CIDA to declare previous corruption-related convictions and sanctions and to 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.
A Protocol is also in place for entities found guilty of corruption, which is to be implemented if/when an entity declares a previous corruption-related offence involving activities funded by an organization other than CIDA. Published at the end of 2008, the Local Contracting and Contribution Agreement Guide includes additional provisions relating to anti-corruption and provides a certification form that must be completed by contractors and beneficiaries.
Managing Corruption as a Key Risk – CIDA approved its Corporate Risk Profile in 2008. Corruption risks are identified under three areas, including Fiduciary Risk, Human Resources Risk, and Socio-Political Risk. The Corporate Risk Profile establishes methods to analyze and mitigate these risks, and harmonizes them with Internal Audit and Financial Risk Management Unit procedures.
CIDA also participates actively in the OECD Development Assistance Committee (DAC) Task Force on Procurement, supporting procurement-related commitments of the Paris Declaration and the 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.Footnote xix 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.
Awareness Raising – CIDA has helped to raise awareness globally by supporting audit, transparency and anti-corruption work in partner countries and regions. CIDA supports awareness-raising work of international bodies such as the OECD DAC GOVNET and the Ulstein Group, as well as international organization such as Transparency International and its country chapters, and the Global Organization of Parliamentarians Against Corruption (GOPAC).
- Canada Revenue Agency (CRA)
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. As noted in the Eleventh Annual Report, the CRA has revised its Audit Manual and its Investigations Manual to address the tax non-deductibility of bribe payments to foreign public officials. To be in a better position to report to Parliament, as well as to international partners, should the need arise, the CRA is planning to track cases where payments are allowed under section 67.5 of the Income Tax Act.Footnote xx
Information Sharing – In 2004, Canada signed the Convention on Mutual Administrative Assistance in Tax Matters, which would enable Canada, subject to its domestic laws, to share with its law enforcement authorities information received under the Convention from tax authorities of other states parties. On November 4, 2011, Canada also signed a Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters. The Protocol updates the Convention on Mutual Administrative Assistance in Tax Matters to make it a more effective tool in combating international tax evasion. Legislative amendments are required for Canada to exchange tax information pursuant to the provisions of the Convention. Such legislation was tabled in Parliament in the past, but not adopted, and the Government has signalled its intention to reintroduce it.
Training and Outreach – In the Eleventh Annual Report, the CRA reported that training course TD1000-00B Income and Expenses – Basic Rules had been revised. The CRA anticipates that this course will now be ready for release in fiscal 2012-2013.
Furthermore, following both Canada’s Phase 3 Evaluation and Canada’s evaluation under the Inter-American Convention against Corruption, the CRA is in the process of drafting additional text to better train its auditors, examiners and investigators in detecting illegal payments (i.e. bribes). The CRA is planning to draft text aimed at aiding auditors, examiners and investigators in understanding the exceptions in the CFPOA under subsection 3(3). No dates have yet been set for the release of this information, as it is expected that this training will be expanded to include text that is created for the revised OECD Bribery Handbook.
- Department of Justice Canada
Mutual Legal Assistance – The Department of Justice’s International Assistance Group, which is Canada’s central authority for mutual legal assistance in criminal matters, has established a position dedicated to dealing with mutual legal assistance requests to and from Canada in international corruption cases. Legal counsel in this designated position works closely with the RCMP’s International Anti-Corruption Unit and other relevant law enforcement officials and prosecutors.
Awareness Raising – The Department updated a paper entitled “Canadian Public Integrity and Anti-Corruption Measures”, now available in English, French, Spanish and Portuguese, which highlights innovative Canadian approaches that may be of particular interest to other countries. In addition, Department of Justice officials continue to give presentations on the CFPOA as well as on anti-corruption activities, including the work of the OECD.
- Canadian Commercial Corporation (CCC)
Prohibiting Bribery – CCC includes in all of its domestic contracts with Canadian suppliers a clause in which the supplier warrants that it has not and will not contravene the CFPOA in relation to the contract with a foreign buyer. As such, should CCC determine that a Canadian supplier has contravened the CFPOA while under a contract with CCC, the Corporation will apply various sanctions which may include the termination of the contract with the supplier.
Codes of Conduct – CCC is committed to ensuring legal and ethical conduct in its business dealings and addresses issues of bribery and corruption within the general framework of CSR. As part of its CSR initiatives, the CCC has finalized a corporate specific Code of Conduct, which also incorporates the Values and Ethics Code for the Public Sector, 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 acknowledgement 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.
- Public Works and Government Service Canada (PWGSC)
PWGSC is committed to protecting taxpayers from fraudulent companies who seek to do business with the Government of Canada. In accordance with the Government of Canada’s commitment to strengthening accountability in procurement and real property transactions, PWGSC has implemented new measures that restrict suppliers convicted of bribing a foreign public official from being awarded a contract.
Effective July 11, 2012, PWGSC has extended the list of offences that render companies and individuals ineligible to bid on contracts to include the following:
- money laundering;
- participation in activities of criminal organizations;
- income and excise tax evasion;
- bribing a foreign public official; and
- drug trafficking.
The new offences will be added to the existing list for solicitations:
- frauds against the government under the Criminal Code of Canada;
- frauds under the Financial Administration Act;
- corruption, collusion, bid-rigging or any other anti-competitive activity under the Competition Act in the procurement process; and
- payment of a contingency fee to a person to whom the Lobbying Act applies.
In addition, both the new and existing lists of offences will now apply to PWGSC real property transactions, such as leasing agreements, letting of space, and acquisition and disposal of Crown-owned properties.
The new measures, including restrictions related to bribery of a foreign public official, will be applied to all future PWGSC solicitations and real property transactions. These measures will also allow the department to terminate future contracts and leases with companies or individuals that are convicted before the end of their contract or lease.
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
|Country||Deposit of instrument of ratification/ acceptance/ approval||Entry into force of the Convention||Entry into force of implementing legislation|
|Argentina||8 February 2001||9 April 2001||10 November 1999|
|Australia||19 October 1999||18 December 1999||17 December 1999|
|Austria||20 May 1999||19 July 1999||1 October 1998|
|Belgium||27 July 1999||25 September 1999||3 April 1999|
|Brazil||24 August 2000||23 October 2000||11 June 2002|
|Bulgaria||22 December 1998||15 February 1999||29 January 1999|
|Canada||17 December 1998||15 February 1999||14 February 1999|
|Chile||18 April 2001||17 June 2001||8 October 2002|
|Czech Republic||21 January 2000||21 March 2000||9 June 1999|
|Denmark||5 September 2000||4 November 2000||1 May 2000|
|Estonia||14 December 2004||12 February 2005||1 July 2004|
|Finland||10 December 1998||15 February 1999||1 January 1999|
|France||31 July 2000||29 September 2000||29 September 2000|
|Germany||10 November 1998||15 February 1999||15 February 1999|
|Greece||5 February 1999||15 February 1999||1 December 1998|
|Hungary||4 December 1998||15 February 1999||1 March 1999|
|Iceland||17 August 1998||15 February 1999||30 December 1998|
|Ireland||22 September 2003||21 November 2003||26 November 2001|
|Israel||11 March 2009|
|10 May 2009||21 July 2008|
|Italy||15 December 2000||13 February 2001||26 October 2000|
|Japan||13 October 1998||15 February 1999||15 February 1999|
|Korea||4 January 1999||15 February 1999||15 February 1999|
|Luxembourg||21 March 2001||20 May 2001||11 February 2001|
|Mexico||27 May 1999||26 July 1999||18 May 1999|
|Netherlands||12 January 2001||13 March 2001||1 February 2001|
|New Zealand||25 June 2001||24 August 2001||3 May 2001|
|Norway||18 December 1998||15 February 1999||1 January 1999|
|Poland||8 September 2000||7 November 2000||4 February 2001|
|Portugal||23 November 2000||22 January 2001||9 June 2001|
|Russian Federation||17 February 2012||17 April 2012||16 May 2011|
|Slovak Republic||24 September 1999||23 November 1999||1 November 1999|
|Slovenia||6 September 2001|
|5 November 2001||23 January 1999|
|South Africa||19 June 2007|
|18 August 2007||27 April 2004|
|Spain||14 January 2000||14 March 2000||2 February 2000|
|Sweden||8 June 1999||7 August 1999||1 July 1999|
|Switzerland||31 May 2000||30 July 2000||1 May 2000|
|Turkey||26 July 2000||24 September 2000||11 January 2003|
|United Kingdom||14 December 1998||15 February 1999||14 February 2002|
|United States||8 December 1998||15 February 1999||10 November 1998|
- Footnote i
The CFPOA can be viewed at the Department of Justice website
- Footnote ii
In addition to the OECD Convention, Canada is a party to two other international treaties related to bribery and corruption. The United Nations Convention against Corruption (UNCAC) entered into force on December 14, 2005. Not only does UNCAC adopt some of the language from the OECD Convention, but by providing global norms on 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 the UNCAC. Canada ratified the UNCAC on October 2, 2007. Canada is also a party to the Inter-American Convention against Corruption.
- Footnote iii
Annex A to this report contains information on the ratification status of the OECD Convention.
- Footnote iv
The 2009 Recommendation replaced the 1997 Revised Recommendation on Combating Bribery in International Business Transactions and calls on states parties to, among other things, periodically review their processes and approaches regarding small facilitation payments, improve cooperation in sharing information and evidence in foreign bribery investigations and prosecutions and in 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 2009 Recommendation also contains an annex which provides good practice guidance to companies on internal controls, ethics and compliance. The 2009 Recommendation can be viewed at: (PDF Footnote *, 187.31 KB)
- Footnote v
Decision-making power is vested in the OECD Council. It is made up of one representative per member country of the OECD, plus a representative of the European Commission. The Council meets regularly at the level of permanent representatives to the OECD and decisions are taken by consensus. The Council meets at the Ministerial level once a year to discuss key issues and set priorities for OECD work. The work mandated by the Council is carried out by the OECD Secretariat.
- Footnote vi
This document was adopted by OECD Council on May 25, 2009.
- Footnote vii
This document was adopted by OECD Council on December 14, 2006.
- Footnote viii
This document was endorsed by the OECD Development Assistance Committee in May 1996.
- Footnote ix
The most recent addition to the Working Group is the Russian Federation, which was invited to become a full participant on May 25, 2011 as a first step towards acceding to the Convention. The Russian Federation is expected to complete the accession process in the coming months.
- Footnote x
The Working Group evaluated Canada’s implementing legislation in July 1999 and concluded that the CFPOA met the requirements set by the OECD 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 the discretion of sentencing courts in imposing fines. The Phase 1 Report on Canada may be viewed at: (PDFFootnote *, 125.64 KB)
- Footnote xi
The Working Group approved the Phase 2 Report on Canada in June 2003. Overall, the report is positive in its evaluation of Canada’s fight against corruption. However, the Working Group made a number of recommendations in the report, which deal with measures to prevent and detect foreign bribery as well as measures to prosecute and sanction it. The Report also identified issues requiring follow-up by the Working Group because of insufficient practice at the time of the evaluation. The Phase 2 Report on Canada can be found at: (PDFFootnote *, 398.86 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, and a more detailed report after two years. 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’s Phase 2 Follow-up Report can be found at: (PDFFootnote *, 294.52 KB)
- Footnote xii
- Footnote xiii
The National Roundtables on Corporate Social Responsibility are detailed in the Seventh Annual Report to Parliament on the 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, which can be viewed at:ARCHIVED - Corporate Social Responsibility - Bribery and Corruption.
- Footnote xiv
A copy of the Bill C31.
- Footnote xv
No other prosecutions under the CFPOA have been reported to the Department of Justice by provincial Heads of Prosecution or by federal prosecutors in the time period relevant to this Report.
- Footnote xvi
For an overview of the Canadian Trade Commissioner Service.
- Footnote xvii
For an overview of the Canadian Trade Commissioner Service, see: http://www.tradecommissioner.gc.ca/eng/services.jsp.
- Footnote xviii
Since 2005, over 1,400 Commercial/Economic staff abroad have participated in the GLI-2 course, which continues to be delivered many times a year to recently hired employees.
- Footnote xix
- Footnote xx
Subsection 67.5(1) provides that no deduction shall be made in respect of an expense incurred for the purpose of doing anything that is an offence under section 3 of the CFPOA or under sections 119 to 121, 123 to 125, 393 and 426 of the Criminal Code.
- Footnote *
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