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Canada's Fight against Foreign Bribery
Fourteenth Annual Report to Parliament
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 (September 2012 - August 2013)
(September 2012 - August 2013)
- 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
- Annex A
Highlights - September 2012 to August 2013
- Bill S-14 entitled the Fighting Foreign Corruption Act, received Royal Assent on June 19, 2013. It amends the Corruption of Foreign Public Officials Act (CFPOA) by introducing nationality jurisdiction to allow the Government of Canada to exercise jurisdiction over Canadian citizens, permanent residents, and Canadian companies who commit offences under the CFPOA on the basis of nationality or residency, regardless of where the offences have taken place; increasing the maximum for prison sentences for offences under the CFPOA from five to 14 years; creating a new books and records keeping offence; giving the Royal Canadian Mounted Police (RCMP) the exclusive authority to lay charges under the CFPOA; clarifying that the offence of bribing a foreign public official applies to international business transactions regardless of profit; and, on a day to be fixed by order of the Governor in Council, providing for the removal of the facilitation payment exception that exempts payments made to officials to secure the performance of acts of a routine nature.
- Griffiths Energy International Inc., a privately-held oil and gas company based in Calgary, pleaded guilty on January 22, 2013, to a charge under the CFPOA related to securing an oil and gas contract in Chad. The company was sentenced on January 25, 2013 to pay a $9,000,000 fine with a 15% victim surcharge, for a total amount of $10,350,000, which is the largest financial penalty to date under the CFPOA.
- On August 15, 2013, Mr. Nazir Karigar was convicted by the Ontario Superior Court of agreeing with others to offer bribes to Indian government officials contrary to paragraph 3(1)(b) of the CFPOA to facilitate the execution of a multi-million dollar contract for the supply of a security system by Cryptometrics, a Canadian high-tech firm. The conviction marks the first time that an individual has been convicted under the CFPOA, and the first time that a matter has gone to trial under the CFPOA.
On December 17, 1997, Canada signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactionsof the Organisation for Economic Co-operation and Development (OECD Convention).Footnote i Parliament passed the Corruption of Foreign Public Officials Act (CFPOA) to implement Canada’s obligations under the OECD Convention into Canadian law.Footnote ii 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 iiiThe CFPOA came into effect on February 14, 1999.
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, 40 states have ratified the OECD Convention, including the 34 member states of the OECD and six non-member states: Argentina, Brazil, Bulgaria, Colombia, Russia, and South Africa. Footnote iv
- 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 v 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 vi
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 TransactionsFootnote vii; the OECD Recommendation on Bribery and Officially Supported Export CreditsFootnote viii; and the Recommendation on Anti-Corruption Proposals for Bilateral Aid and Procurement.Footnote ix
- The Peer Review Process
The OECD Convention provides for mutual evaluation by members of the OECD Working Group on Bribery in International Business Transactions (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 ConventionFootnote x, 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 xi Phase 2 studies and assesses the structures put into place to enforce national laws and determine their practical application.Footnote xii 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 2012 and August 2013, Canada’s participation included the following:
Canada as Lead Examiner – The Phase 3 Evaluation report on Australia, for which Canada and Japan were lead examiners, was discussed and adopted by the Working Group during its plenary meetings in October 2012. Both Japan and Australia are to provide a follow-up report to the Working Group in December 2013. Canada remains co-Lead Examiner for both assessments until the completion of the Phase 3 Evaluations.
Canada’s Phase 3 Evaluation Follow-Up – Canada presented its final written report in the Phase 3 follow-up procedure to the Working Group in March 2013, which was adopted in March 2013 and published in May 2013. The follow-up report noted that the majority of the previous recommendations have been fully implemented, and that Canada has agreed to report back in writing one year later on progress made towards fully implementing the outstanding recommendations given that Bill S-14 had not been adopted as of the plenary meetings of March 2013.Footnote xiii
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, counselling others to commit bribery. Following the adoption of Bill S-14, the CFPOA also makes it an offence to maintain or destroy books and records to facilitate or hide the bribing of a foreign public official. Laundering property and proceeds of such bribery, as well as possession of property and proceeds, are offences under the Criminal Code.
Based on recommendations from business stakeholders, civil society and the OECD Working Group on Bribery, the government introduced amendments in the Senate on February 5, 2013, to strengthen the CFPOA.Footnote xiv Bill S-14, entitled the Fighting Foreign Corruption Act, received Royal Assent on June 19, 2013. It amends the Corruption of Foreign Public Officials Act (CFPOA) by increasing the maximum penalty applicable to the offence of bribing a foreign public official from five to 14 years; creating a new books and records offence punishable by a maximum penalty of 14 years; introducing nationality jurisdiction to allow the Government of Canada to exercise jurisdiction over Canadian citizens, permanent residents and Canadian companies who commit offences under the CFPOA, regardless of where the alleged offences have taken place; giving the Royal Canadian Mounted Police (RCMP) the exclusive authority to lay charges under the CFPOA; clarifying that the offence of bribing a foreign public official applies to international business transactions regardless of profit; and providing for the removal at a later date of the facilitation payment exception that exempts payments made to officials to secure the performance of acts of a routine nature.Footnote xv
Before the introduction of nationality jurisdiction for the CFPOA, Canada enforced the CFPOA exclusively through the exercise of territorial jurisdiction, which allowed Canada to prosecute offences under the CFPOA when there was a “real and substantial link” between the offence and Canada, regardless of whether the offence occurred in Canada or abroad. The introduction of nationality jurisdiction makes it possible to enforce the CFPOA against Canadian nationals, Canadian companies and permanent residents on the basis of their Canadian nationality without requiring that there be a real and substantial link to Canada for the offence. Territorial jurisdiction will continue to be exercised for all other persons not covered by nationality jurisdiction. In addition, unlike some other countries, Canada can extradite its nationals to face criminal prosecution in other countries for bribery offences.
- Investigations and Prosecutions
There are currently 36 ongoing investigations, four convictions and one case in which charges have been laid but not yet concluded under the CFPOA.Footnote xvi
Mr. Ramesh Shah and Mr. Mohammad Ismail – On February 29, 2012, the RCMP arrested and on April 11, 2012 jointly charged two former employees of SNC Lavalin, Ramesh Shah of Oakville, Ontario, and Mohammad Ismail of Mississauga, Ontario, for allegedly paying bribes in relation to the awarding of a contract for the supervision and consultancy services for the construction of the PADMA multipurpose Bridge in Bangladesh and did thereby commit an indictable offence contrary to paragraph 3(1)(b) of the CFPOA. A preliminary inquiry took place in April 2013, and both accused were committed to stand trial. The matter remains before a Canadian court.
Mr. Nazir Karigar – On August 15, 2013, Mr. Nazir Karigar was convicted by the Ontario Superior Court of agreeing with others to offer bribes to foreign public officials contrary to paragraph 3(1)(b) of the CFPOA. The RCMP laid charges against Mr. Nazir Karigar under the CFPOA on May 28, 2010 for making a payment to Indian government officials to facilitate the execution of a multi-million dollar contract for the supply of a security system by Cryptometrics, a Canadian high-tech firm. The conviction marks the first time that an individual has been convicted under the CFPOA, and the first time that a matter has gone to trial under the CFPOA. Hearings took place in 2012 with final arguments in March 2013. Sentencing is expected in the fall of 2013.
Griffiths Energy International Inc. – Griffiths Energy International Inc., a privately-held oil and gas company based in Calgary, pleaded guilty on January 22, 2013 to one count of bribery under the CFPOA and was sentenced on January 25, 2013 to pay a $9,000,000 fine with a 15% victim surcharge, for a total financial penalty of $10,350,000. In the fall of 2011, the company’s new management team and replacements for most of the Board of Governors found internal irregularities in its contracts with Chad dating to 2009. In particular, a $2 million consulting contract with a company controlled by the Chadian ambassador’s wife was found in Griffiths’ internal documents, as well as an offer to her and several officials to purchase four million shares of the company in return for preferential treatment to secure lucrative energy properties in Chad. The company reported these irregularities and admitted to the bribery, which led to the aforementioned guilty plea and financial penalty - the largest to date under the CFPOA. Proceedings to forfeit the proceeds of this offence are ongoing.
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 $8.26 million CDN plus the 15% Victim Fine Surcharge, totalling $9,499,000.00 CDN. In addition, the company 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.
- The Royal Canadian Mounted Police (RCMP)
Enforcement – Until the recent 2013 Federal Policing Re-engineering, the corruption of foreign public officials was referenced in the mandate of the former RCMP Commercial Crime Program. The International Anti-Corruption Program is now managed under the umbrella of the RCMP Federal Policing Support Services, Federal Coordination Centre (FCC). There is an Inspector and two Sergeants in the FCC who provide subject matter expertise internally and externally to national and international partners as well as government departments. The RCMP has the capability to track all CFPOA cases being handled nationally 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 to the RCMP as the law enforcement body with exclusive authority to lay charges under the CFPOA.
In 2008, the RCMP established the International Anti-Corruption Unit, comprised of two seven-person teams based in Ottawa and Calgary, respectively. With the 2013 Federal Policing Re-engineering, both teams retained their locations and base complement of personnel. Ottawa is now referred to as the National Division and the team is part of the Sensitive & International Investigations Section. The National Division has a Superintendent in charge of 115 personnel divided into four investigative teams and one quick response team. Similarly, Calgary RCMP has a Superintendent in charge with approximately 130 personnel divided into four Federal Policing Investigative Teams. Respecting corruption, the investigative teams are 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;
- allegations that a foreign public official has secreted or laundered money in, or through, Canada; and
- request for international assistance.
Due to the serious repercussions that allegations of corruption can have for business transactions and international relations, they are taken very seriously by the RCMP and treated with the utmost confidence for reasons of privacy and ensuring the integrity of investigations.
Training and Cooperation – The RCMP includes the issue of foreign bribery and the CFPOA in its training of all RCMP liaison officers prior to departure for overseas assignments. Having a specific session about the corruption of foreign public officials is designed to raise awareness of the RCMP’s responsibility among liaison officers. To this end, the RCMP has participated in numerous international 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.
RCMP Headquarters and investigative units have 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 foreign bribery matters. 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 international anti-corruption 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. Information about International Anti-Corruption and the RCMP mandate is also included on both 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: nine 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 32 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. The PPSC has also made presentations and actively participated on panels raising awareness to Canada’s anti-corruption activities, including for a gathering of international enforcement officials in Washington, D.C. and the Canadian Bar Association.
- Foreign Affairs, Trade and Development Canada (DFATD, as of June 26, 2013); formerly the Department of Foreign Affairs and International Trade (DFAIT)
In Canada and Beyond – DFATD’s Trade Commissioners and other personnel at Canadian missions work closely with Canadian companies doing business abroad through the provision of a range of services and support.Footnote xvii 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). DFATD 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.
Reporting Obligations – In March 2010, the Department adopted the Policy and Procedure for Reporting Allegations of Bribery abroad by Canadians or Canadian Companies, which instructs Canadian missions, 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 DFATD officials is sent to DFATD Headquarters and passed on to law enforcement in accordance with the established procedures.
Training – DFATD 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, DFATD 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) Planning and Client Service Support 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. Additionally, the training for Trade Commissioners’ new contact management system, TRIO 2.0, contains a specific section on the CFPOA and reporting obligations for officers.Footnote xviii The Trade Commissioner Service’s CSR online training course also includes a CFPOA component, which details employee obligations and reporting procedures. Trade Commissioners were recently reminded of these obligations and procedures in a special edition of the Client Service Bulletin in May 2013.
In addition, the Values and Ethics pre-posting presentation refers to the CFPOA and to DFATD’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. Senior departmental personnel, including Heads of Mission and Senior Trade Commissioners, received specialized pre-posting training, which included an overview of corruption issues, particularly their responsibilities with respect to the CFPOA, as well as facilitated case studies on how to respond to allegations of corruption.Footnote xix
Outreach – In addition to chairing New Ideas for Canada’s Fight Against Foreign Bribery in January 2012, DFATD 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 International Trade Portfolio and Responsible Business Conduct Division’s CSR E-Bulletin provides regular updates to government partners on efforts to enforce and bring awareness of the CFPOA. Additionally, the recent June 2013 amendments to the CFPOA were featured in an article of Canada Export, the public E-magazine of the Trade Commissioner Service. DFATD legal experts also made presentations and actively participated on panels raising awareness to Canada’s anti-corruption activities, including about legal mechanisms for freezing assets of corrupt foreign officials and combating the bribery of foreign public officials.
International Assistance and Development – The International Assistance Protocol for Dealing with Allegations of Corruption associated with funding by DFATD 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, including referral to the RCMP and legal termination of a contract or an agreement due to default. To this end, Canada’s international development assistance 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 department’s employees to report to the Chief Auditing Executive allegations or evidence of fraudulent or corrupt practices, including possible violations of the CFPOA, related to financed activities.
In addition, the Government of Canada has in place a policy that requires entities wishing to enter into a contract or contribution agreement with DFATD 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 not be eligible to bid or receive project funding until their eligibility status changes. Entities have the opportunity to make representations to DFATD to show that steps have been taken to counter the problem so that they may bid or receive project funding. However, DFATD 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.
Managing Corruption as a Key Risk in International Assistance and Development – Under the Corporate Risk Profile, corruption risks are identified under three areas: 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.
Canada 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 xx For international development assistance, 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 DFATD’s Operational Guide to Program-based Approaches.
In addition, Canada has helped to raise awareness globally by supporting audit, transparency and anti-corruption work in partner countries and regions. In its international assistance, Canada 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).
- Export Development Canada (EDC)
Combating Corruption – EDC’s policy statement with respect to bribery is set out in EDC’s Code of Business Ethics (the “Code”). The Code was strengthened in 2012 to place emphasis on EDC’s obligation to undertake anti-corruption due diligence on transactions involving parties convicted of corruption. The Code states, in part, that “[u]nder no circumstances will EDC, directly or indirectly, knowingly give, offer or agree to give or offer a bribe or otherwise knowingly contravene any applicable law relating to bribery or other corruption. Further, EDC will not knowingly support a transaction that involves the offer or giving of a bribe, will exercise reasonable diligence and care not to unknowingly support such a transaction, and will exercise reasonable due diligence to ascertain and address situations where parties associated with certain transactions involving EDC support have been convicted of bribery”.
EDC also amended its Code of Conduct to, among other things, incorporate the Government of Canada’s Values and Ethics Code for the Public Sector. This amendment further enhances the commitments expected of EDC’s staff for ethical conduct.
EDC also has in place Anti-Corruption Policy GuidelinesFootnote xxi which outline measures that EDC will apply to combat corruption, including (i) possible notification to 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 to sign anti-corruption declarations. In general, the anti-corruption declarations state that, with respect to the transaction(s) 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. Transaction documentation also generally includes 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. The outcome of the due diligence exercise will determine whether or not EDC will provide support. As reported in EDC’s CSR Annual Report for 2012, enhanced due diligence in connection with allegations of corruption was carried out on 28 transactions in calendar year 2012. As a result of this direct engagement with its customers, EDC was able to raise awareness and provide advice to customers on the risks of bribery and corruption, and best practices to protect themselves against such risks. By this means, EDC encouraged various firms to put in place anti-corruption mechanisms, such as explicit policies or a Code of Conduct, an independent third party vehicle for autonomous disclosures (whistleblowing procedures), and training for their staff.
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 also has 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. EDC continues to seek opportunities to educate customers about corruption through various means. For example, EDC’s Vice-President for Corporate Social Responsibility presented at a number of sessions across Canada to raise awareness with EDC customers and other stakeholders on the risks of bribery in international business. As part of this effort, EDC sponsored a number of public events, including Transparency International’s Day of Dialogue held in May of 2013. Approximately 100stakeholders attended including a mix of company representatives, civil society and government. In June 2013, EDC participated in the launch of the Canada Network of the UN Global Compact – a new network to encourage Canadian companies to adhere to the 10 Principles of the Compact, which include a commitment to “work against corruption in all its forms, including extortion and bribery.” EDC led a number of roundtable discussions at this session on the anti-corruption principle.
- 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 xxii
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. Canada needed to implement certain legislative amendments to its tax laws before being able to give full effect to the Convention and its Protocol. These legislative amendments were contained in Bill C-48, which received Royal Assent on June 26, 2013 and, consequently, Canada is now in a position to ratify the Convention.
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 2013-2014.
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 designated a legal counsel to deal with all incoming and outgoing corruption-related mutual legal assistance requests. This legal counsel works closely with the RCMP 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 DECD.
- 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. In addition, CCC is strengthening its CSR policy to reinforce its due diligence process and integrate new developments in this area.
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 on the external website (http://www.ccc.ca).
- 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, apply to all 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.
- Treasury Board
Canada amended its Government Contracts Regulations in September 2011 to improve the fairness, openness and transparency of government contracting by deeming certain integrity clauses in all federal government bid solicitation documents and procurement contracts. The deemed terms:
- prohibit the payment of contingency fees to consultant lobbyists;
- declare that the bidder has not been convicted under section 121, 124 or 418 of the Criminal Code;
- provide the contractor’s consent to publicly disclose basic information about a procurement contract; and
- require a contractor to return any advance payments and provide the contractor’s consent that the government may cancel the contract in the event of non-compliance with a deemed term.
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 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions can be viewed at theOECD website.
- Footnote ii
The CFPOA can be viewed at theDepartment of Justice website.
- Footnote iii
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 iv
Annex A to this report contains information on the ratification status of the OECD Convention.
- Footnote v
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: http://www.oecd.org/dataoecd/11/40/44176910.pdf
- Footnote vi
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 vii
This document was adopted by OECD Council on May 25, 2009.
- Footnote viii
This document was adopted by OECD Council on December 14, 2006.
- Footnote ix
This document was endorsed by the OECD Development Assistance Committee in May 1996.
- 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: http://www.oecd.org/dataoecd/13/35/2385703.pdf.
- 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: http://www.oecd.org/dataoecd/20/50/31643002.pdf.
- Footnote xii
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: http://www.oecd.org/dataoecd/5/6/36984779.pdf.
- Footnote xiii
Canada’s phase III report may be consulted on the OECD website.
- Footnote xiv
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 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.
- Footnote xv
Bill S-14 may be consulted online at: http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?Language=E&Mode=1&billId=5960855.
- Footnote xvi
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 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. The TRIO 2.0 training course was delivered to approximately 600 participants over the 2012/2013 reporting period.
- Footnote xix
During the reporting period the Head of Mission Training program had 50 participants, and the Client Service Training Program for STCs had 24 participants.
- Footnote xx
Information on MAPS are available at: http://www.oecd.org/dac/effectiveness/procurement.
- Footnote xxi
EDC’s Anti-Corruption Policy Guidelines are available on EDC’s website at: http://www.edc.ca/english/docs/acpg_e.pdf.
- Footnote xxii
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.
- Date Modified: