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Canada's Fight against Foreign Bribery
Fifteenth 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 2013 - August 2014)
Table of Contents
- Highlights - September 2011 to August 2012
- The OECD Anti-Bribery
- The Corruption of Foreign Public Officials Act (CFPOA)
- Canada and the Fight against Foreign Bribery
Highlights - September 2013 to August 2014
- 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 Corruption of Foreign Public Officials Act (“CFPOA”) to facilitate the awarding of a multi-million dollar contract to Cryptometrics, a Canadian high-tech firm, for the supply of a security system. On May 23, 2014, Mr. Karigar was sentenced to three years' imprisonment. 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 September 16, 2013, charges were laid against Kevin Wallace, Zulfiquar Ali Bhuiyan and Abul Hasan Chowdhury. It is alleged that the three individuals agreed, with others, to pay bribes to officials in Bangladesh in relation to the construction of the Padma Multipurpose Bridge project.
- On June 4, 2014, U.S. nationals Robert Barra and Dario Berini and U.K. national Shailesh Govindia were charged with agreeing to pay bribes to Indian officials in violation of the CFPOA. Mr. Govindia is also charged with one count of fraud under section 380 of the Criminal Code. The charges against these individuals flow from the same events that led to the conviction of Nazir Karigar.
- On December 11, 2013, the Government launched public consultations on the Canada Business Corporations Act (“CBCA”). As part of these consultations, stakeholders were invited toprovide input as to the adequacy of existing CBCA provisions on corporate records, accounting standards, audits, and corporate governance frameworks in preventing bribery and corruption and in enhancing the ability of authorities to access information on corporate beneficial ownership to further support Canada's obligations under the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Anti-Bribery Convention”). The CBCA consultation concluded on May 15, 2014. Stakeholders' submissions are posted on Industry Canada's website. Officials are reviewing submissions and will be conducting further policy analysis as part of the ongoing review of the CBCA.
On December 17, 1997, Canada signed the OECD Anti-Bribery ConventionFootnote i and Parliament passed the CFPOA to implement Canada's obligations under the OECD Anti-Bribery 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 OECD Anti-Bribery Convention.Footnote iii The CFPOA came into effect on February 14, 1999.
The OECD Anti-Bribery Convention
The OECD Anti-Bribery 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 Anti-Bribery Convention came into force on February 15, 1999, following Canada's ratification.
To date, 41 states have ratified the OECD Anti-Bribery Convention, including all 34 member states of the OECD and seven non-member states: Argentina, Brazil, Bulgaria, Colombia, Latvia, Russia, and South Africa.Footnote iv Since the OECD Anti-Bribery Convention entered into force in 1999, over 300 individuals and over 100 entities have been sanctioned under criminal proceedings for foreign bribery in over one-third of these States Parties. Of those, over 80 of the sanctioned individuals were sentenced to prison for foreign bribery in one-third of these States Parties. Almost 400 investigations are ongoing in over half of these States Parties.
- Companion Instruments
The OECD Anti-Bribery 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 (“2009Recommendation”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 Anti-Bribery 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 Transactions and the Convention on Mutual Administrative Assistance in Tax Matters;Footnote vii the OECD Recommendation on Bribery and Officially Supported Export Credits;Footnote viii and the Recommendation on Anti-Corruption Proposals for Bilateral Aid and Procurement.Footnote ix
- The Peer Review Process
The OECD Anti-Bribery Convention provides for mutual evaluation by members of the OECD Working Group on Bribery in International Business Transactions (Working Group) on their enforcement and implementation of the OECD Anti-Bribery Convention and companion instruments. The Working Group is comprised of representatives from the states parties to the OECD Anti-Bribery 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 x 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 OECD Anti-Bribery 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 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. Discussions regarding the scope and procedures of Phase 4 commenced March 2014 and remain ongoing. Phase 4 is expected to start in late 2015.
- Canada and the Peer Review Process
As a state party to the OECD Anti-Bribery 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 2013 and August 2014, Canada's participation included the following:
Canada as Lead Examiner - An Additional Phase 3 Oral Follow-up report on Australia, for which Canada and Japan were lead examiners, was discussed by the Working Group during its plenary meetings in December 2013. Australia is expected to provide a Two-Year Written Follow-up report in October 2014. Japan provided Follow-up reports to the Working Group in December 2013 and in March and June 2014, and is expected to provide Additional Follow-up reports in October and December 2014. 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 Additional Phase 3 Written Follow-up Report to the Working Group in March 2014. The Additional Follow-up Report noted that three previously outstanding recommendations have now been fully implemented, given that Bill S-14 had been adopted before the plenary meeting of March 2014.Footnote xiii The Working Group's peer review of Canada will move on to Phase 4.
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. 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. Bill S-14, entitled the Fighting Foreign Corruption Act, received Royal Assent on June 19, 2013. It provided 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 xiv As described below, Canada continues to take significant steps to strengthen the CFPOA to further deter Canadian companies and persons from paying bribes to foreign public officials in the course of business. As part of these changes, the Government of Canada has been conducting outreach to enhance awareness and to encourage companies to adopt measures that can effectively implement their legal obligations with a zero-tolerance approach to the bribery of foreign public officials.
- Investigations and Prosecutions
There are currently 27 ongoing investigations, four convictions and three cases in which charges have been laid but not yet concluded under the CFPOA.Footnote xv
On September 16, 2013, charges were laid against Kevin Wallace, Zulfiquar Ali Bhuiyan and Abul Hasan Chowdhury. It is alleged that the three individuals agreed, with others, to pay bribes to officials in Bangladesh in relation to the construction of the Padma Multipurpose Bridge project.
On June 4, 2014, Robert Barra, Dario Berini and Shailesh Govindia were charged with agreeing to pay bribes to Indian officials in violation of the CFPOA. Mr. Govindia is also charged with one count of fraud under section 380 of the Criminal Code. The charges against these individuals flow from the same events that led to the conviction of Nazir Karigar.
On January 31, 2014, charges were laid against two former SNC Lavalin executives, Sami Bebawi and Stéphane Roy, with respect to allegations of bribes to foreign public officials in Libya. Sami Bebawi has been charged with one count of fraud over $5,000, two counts of possession of proceeds of crime, four counts of possession of stolen property, and one count of corruption of foreign public official (pursuant to subsection 3(1) of the CFPOA. Stéphane Roy has been charged with one count of fraud over $5,000, one count of corruption of foreign public official pursuant to subsection 3(1) of the CFPOA, and one count under paragraph 7(2)(a) of the Special Economic Measures Act acting under article 41 of the Charter of the United Nations.
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 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. On 23 May 2014, Mr. Karigar was sentenced to three years' imprisonment. 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.
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 back 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 founder 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.
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, contrary to paragraph 3(1)(b) of the CFPOA, covering the period from 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 C$190,984) in May 2005 to AKM Mosharraf Hossain, then the Bangladeshi State Minister for Energy and Mineral Resources, in order to influence the Minister in his dealings with Niko Bangladesh. In June 2005, Niko Resources Ltd. paid travel and accommodation expenses for the same Minister to travel from Bangladesh to Calgary to attend the GO EXPO oil and gas exposition, and improperly paid approximately C$5,000 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 plus the 15% Victim Fine Surcharge, totalling $9,499,000.00. In addition, the company was placed under a probation order, which put the company under the Court's supervision for three years to ensure that audits were 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, contrary to paragraph 3(1)(a) of the CFPOA and was ordered to pay a fine of $25,000. 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, contrary to subparagraph 426(1)(a)(ii) of the Criminal Code. He received a six-month sentence and was subsequently deported to the U.S.
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 – The International Anti-Corruption Program is managed under the umbrella of the RCMP Federal Policing Special 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 to 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 the 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. Ottawa is referred to as the National Division and the team is part of the Sensitive and 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;
- investigating allegations that a foreign person has bribed a Canadian public official;
- investigating allegations that a foreign public official has secreted or laundered money in, or through, Canada; and,
- providing assistance on international assistance requests.
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 and cover the CFPOA and include the various contacts and their roles.
RCMP Headquarters and investigative units have also established a point of contact 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 the 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 calls attention to International Anti-Corruption Day on its website. The RCMP also reaches out to the media to discuss the RCMP'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 33 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. Further partnering is being done with several universities where the RCMP conducts presentations for projects on anti-corruption related courses.
- 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 Anti-Bribery 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 of 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)
In Canada and Beyond - DFATD plays a lead role in representing Canada at international anti-corruption forums, such as the Working Group on Bribery, and in outreach efforts with emerging economies regarding corruption and in coordinating Canada's whole-of-government approach to meeting its international anti-corruption obligations. In addition, 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 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 CSR.
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 committed 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 established procedures.
Training – DFATD continues to provide information and training to 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 continued to deliver the mandatory, comprehensive four-day training course called “The Core Training Program for Trade Commissioners,” which was developed by DFATD's Trade Commissioner Service (TCS). 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 the Trade Commissioners' new contact management system, TRIO 2, contains a specific section on the CFPOA and reporting obligations for officers.Footnote xvii The TCS' CSR online training course also includes a CFPOA component, which details employee obligations and reporting procedures. In February 2014 a new, more intensive training course on the CFPOA and how to assist companies avoid corrupt practices was piloted by the International Trade Portfolio and Responsible Business Conduct Division. The full-day course was attended by officers from the Trade, Political, and Development streams, including via videoconference from across Canada and from some missions in Latin America.
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, receive specialized pre-posting training, which includes 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 xviii
Outreach – In addition to chairing New Ideas for Canada's Fight Against Foreign Bribery in January 2012, DFATD continues to organize CSR seminars in various regions of the world, which include a specific focus on the CFPOA. DFATD's CSR E-Bulletin provides regular updates to government partners on efforts to enforce and bring awareness of the CFPOA. DFATD legal experts also made presentations and actively participated on panels raising awareness of 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 DFATD'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 its 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.
Furthermore, Canada requires that all DFATD international assistance programming incorporates a governance perspective, which reinforces Canada's commitment to strengthening governance and fighting corruption through its international development assistance, and emphasises Canada's views on linkages between governance and sustainable development. Canada is also engaged in anti-corruption reforms through partnerships with other donors and in joint donor funding mechanisms to prevent conflict and corruption, and to enable citizens to hold their governments accountable.
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 xix For international development assistance, assessments are 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 approach to results-based management.
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, as well as international organizations.
- Export Development Canada (EDC)
Combating Corruption - EDC's policy statement with respect to bribery is set out in EDC's Code of Business Ethics.
EDC also has in place Anti-Corruption Policy GuidelinesFootnote xx 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 charged with or, within the previous five years, have been convicted of, bribing a foreign public official. Transaction documentation also generally includes exclusions, representations, warranties and covenants, as applicable, dealing with bribery of foreign public officials, or compliance with laws generally.
In 2013, EDC engaged with some of its long-term customers at the most senior levels on corruption issues. Through this dialogue, EDC provided feedback to customers on the strength of their anti-corruption policies, and provided expertise on how to set the proper tone at the top, how to encourage companies to make improvements in their corporate governance and how to educate employees about Canada's CFPOA.
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 2013 CSR Annual Report, enhanced due diligence in connection with allegations of corruption was carried out on 41 transactions in calendar year 2013. In several cases, changes in corporate governance, including recommendations for third-party audits, and continued monitoring of higher-risk business, were necessary conditions of EDC support.
As a result of this direct engagement with its customers, EDC was able to raise awareness and provide information to customers on the risks of bribery and corruption, and best practices to protect themselves against such risks.
Awareness Raising - EDC has a dedicated page on its website for information on combating corruption and bribery, including links to the CFPOA, the OECD Anti-Bribery Convention, and the OECD Recommendation on Bribery and Officially Supported Export Credits.Footnote xxi 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. A number of sessions were convened across Canada to raise awareness with EDC customers and other stakeholders of the risks of bribery in international business, including EDC sponsorship of public events such as, the G20 Anti-Corruption Working Group, the Credit Institute of Canada National Capital Branch and business school graduate students.
- 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 disallowed 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 (“Convention”), which would enable Canada, subject to its domestic laws, to share with its law enforcement authorities information received under this 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 (“Protocol”). The Protocol updates this Conventionto 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 this Convention and its Protocol. These legislative amendments were contained in Bill C-48, which received Royal Assent on June 26, 2013 This Conventionwas ratified by Canada on November 21, 2013, and is in effect, in respect of Canada, as of March 1, 2014. Further, Economic Action Plan 2014 Act, No. 1 (Bill C-31), which was tabled in the House of Commons on March 28, 2014 and received Royal Assent on June 19, 2014, contains an amendment to section 241 of the Income Tax Act, section 211 of the Excise Act, 2001 and section 295 of the Excise Tax Act to permit the disclosure by a government official of taxpayer information to a law enforcement officer of an appropriate police force (domestic or foreign) where there are reasonable grounds to believe that the information will afford evidence of a listed offence. The listed offences specifically include section 3 of the CFPOA.
Training and Outreach - Following both Canada's Phase 3 Evaluation and Canada's evaluation under the Inter-American Convention against Corruption, the CRA has created additional text in the form of an awareness course (to better prepare its auditors, examiners and investigators in detecting illegal payments, for example, bribes. The CRA recently updated the text in the course to include the relevant changes to the CFPOA . It should be noted that this training was expanded to include text that was created for the revised OECD Bribery Awareness Handbook for Tax Examiners (“Handbook”). The revised Handbook has been released and was made available on the OECD website on November 7, 2013. The Handbook was made available to all CRA employees through its internal website. The awareness course is expected to be released in 2014-2015.
- Department of Justice Canada
Mutual Legal Assistance - The Department of Justice's International Assistance Group (IAG), 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.
Training and Outreach - The IAG regularly liaises with the Central Authorities from other countries to educate foreign officials with respect to the Canadian legal requirements to obtain effective assistance in criminal matters. The IAG works closely with foreign officials to provide assistance in drafting requests for legal assistance, which allows them to make more effective requests to Canada in the fight against corruption. Moreover, the IAG provides advice to Canadian prosecutors and law enforcement and foreign officials regarding assistance that can be provided without the requirement of a formal request.
Awareness Raising –Department of Justice officials participate in international anti-corruption forums and continue to raise awareness of the CFPOA and of international anti-corruption activities, including with the provinces and territories.
- 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. Should there exist credible suspicion that a Canadian supplier has contravened the CFPOA while under a contract with CCC, the latter will apply various sanctions which could include the termination of the contract with the supplier, as well as notifying the RCMP or the appropriate law enforcement agency. In addition, CCC strengthened its CSR policy to reinforce its due diligence process and integrate new developments in this area.
CCC also utilizes external resources to bolster its internal anti-corruption expertise and practices. CCC has joined Trace International, a non-profit organization founded to provide practical and cost-effective anti-bribery compliance services for multinational companies and their commercial intermediaries. CCC, through its membership in Trace International, now offers a training module designed especially for those who work directly with Canadian exporters and foreign government buyers. The anti-bribery module is mandatory for all employees to complete.
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 and Business Ethics (“Code”), 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 on the internal portal and are required to sign an acknowledgement and agreement confirming their understanding of the Code and their responsibility to comply with the Code. The Code is 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 which 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, through its Integrity Framework, that restrict suppliers convicted of a list of offences from doing business with PWGSC.
Effective July 11, 2012, PWGSC extended the list of offences that render suppliers ineligible to do business with PWGSC,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.
These new offences were added to the existing list for solicitations:
- frauds against the government under the Criminal Code;
- 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.
On March 1, 2014, PWGSC further strengthened the integrity of its procurement and real property transactions by adding the following nine new offences that will render suppliers ineligible to do business with PWGSC:
- bribery of judicial officers;
- bribery of officers;
- secret commissions;
- criminal breach of contract;
- fraudulent manipulation of stock exchange transactions;
- prohibited insider trading;
- forgery and other offences resembling forgery; and
- falsification of books and documents.
In addition, the following changes were introduced to the Framework:
- Debarment of suppliers who receive foreign convictions similar to the Canadian offences listed in the Integrity Framework;
- Expansion of debarment conditions to include suppliers who have pleaded guilty to criminal offences listed in the Integrity Framework, and have received an absolute or conditional discharge;
- Requirement for all contractors to extend the same terms and conditions to subcontractors; and,
- Introduction of a 10-year, fixed debarment period.
The new measures, including restrictions related to bribery of a foreign public official, apply to all contracts and procurement instruments put in place by PWGSC. In addition, both the new and existing lists of offences also apply to PWGSC real property transactions, such as leasing agreements, letting of space, and the acquisition and disposal of Crown-owned properties. Under the Integrity Framework, the department no longer enters into a contract or a real property transaction with suppliers, if they, their current members of their board of directors, including company affiliates, have been convicted of any of the listed offences in Canada and abroad in the past 10 years. This also applies to those who have pleaded guilty to the listed offences and have received an absolute or conditional discharge. These measures will also allow PWGSC 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.
- Industry Canada
In its Economic Action Plan 2013 and in Canada's G8 Action Plan on the Transparency of Corporations and Trusts, Canada committed to improve corporate transparency. In addition, Canada further committed in its Economic Action Plan 2014 to consider options to further strengthen corporate transparency in Canada, including an explicit ban on bearer instruments. In December 2013, a public consultation was launched with respect to the Canada Business Corporations Act (“CBCA”) to help identify ways in which the CBCA can better promote important policy objectives, such as assessing the adequacy of corporate governance legislation in preventing bribery and corruption, the use of bearer shares , and enhancing the ability of authorities to access information on corporate beneficial ownership (i.e., to ensure that corporations are not used for illicit activities such as corruption, tax evasion, money laundering or terrorist financing). This consultation was also undertaken to ensure that the governance framework for CBCA corporations remains effective, supports investment, and instills investor and business confidence. Public consultations concluded on May 15, 2014, and input received will be considered and shared within government as part of this ongoing initiative.
- Footnote i
The OECD Anti-Bribery Convention can be viewed at the OECD website: http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf
- Footnote ii
The CFPOA can be viewed at the Department of Justice website: http://laws-lois.justice.gc.ca/eng/acts/C-45.2/index.html.
- Footnote iii
In addition to the OECD Anti-Bribery 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 Anti-Bribery 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
Ratification status of the OECD Anti-Bribery Convention can be found at:
- 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/daf/anti-bribery/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 OECD Recommendation was adopted by OECD Council on May 25, 2009. The Handbook was released on November 7, 2013, and can be viewed at http://www.oecd.org/ctp/bribery-corruption-awareness-handbook.htm. The Convention on Mutual Administrative Assistance in Tax Matters was ratified by Canada on November 21, 2013, and is in effect in respect of Canada as of March 1, 2014. It can be viewed at: http://www.keepeek.com/Digital-Asset-Management/oecd/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en#page1. Ratification status can be viewed at: http://www.oecd.org/ctp/exchange-of-tax-information/Status_of_convention.pdf.
- 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 Anti-Bribery Convention.
- Footnote 11
The Phase 1 Report on Canada can be found at: http://www.oecd.org/dataoecd/13/35/2385703.pdf.
- Footnote xii
The Working Group approved the Phase 2 Report on Canada in June 2003. Overall, the report was positive in its evaluation of Canada's fight against corruption. However, the Working Group made a number of recommendations in the report, which dealt 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. 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
The Working Group's Phase 3 report on Canada can be found on the OECD website at: http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/Canadaphase3reportEN.pdf. The Working Group's Written Follow-up to its Phase 3 Report can be found at: http://www.oecd.org/daf/anti-bribery/CanadaP3writtenfollowupreportEN.pdf.
- Footnote xiv
The facilitation payment exception has not yet been eliminated. When Bill S-14 was tabled and introduced in February 2013, the Minister of Foreign Affairs explained that the delay was in part to afford time to do outreach with the business community to raise awareness and to provide an opportunity to adjust its internal practices and procedures. Bill S-14 may be consulted online at: http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?Language=E&Mode=1&billId=5960855.
- 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, see: http://www.tradecommissioner.gc.ca/eng/services.jsp.
- Footnote xvii
Since 2005, over 1,800 Commercial/Economic staff abroad have participated in the course, whichwas replaced by the new Core Training Program for Trade Commissioners in Spring 2014. Between March and July 2014, it has been delivered to 130 participants, and will continue to be delivered throughout the year to new employees.
- Footnote xviii
During the reporting period the Head of Mission Training program had 32 participants, and the Client Service Training Program for STCs had 41 participants.
- Footnote xix
Information on MAPS are available at: http://www.oecd.org/development/effectiveness/45181522.pdf.
- Footnote xx
EDC's Anti-Corruption Policy Guidelines are available at: http://www.edc.ca/EN/About-Us/Corporate-Social-Responsibility/Documents/anti-corruption-guidelines.pdf.
- Footnote xxi
EDC's dedicated page related to information on combating corruption and bribery can be found at: http://www.edc.ca/EN/About-Us/Corporate-Social-Responsibility/Pages/business-ethics.aspx.
- 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: