Measures against corruption – Text proposal

WTO structured discussions on investment facilitation for development

Communication from Canada

Canada’s Proposal for Investment Facilitation for Development

The following communication dated 21 September 2020 is being circulated at the request of the delegation of Canada.

Introduction

1. The Joint Ministerial Statement on Investment Facilitation for Development (WT/MIN(17)/59), released at the 11th WTO Ministerial Conference, recognized the need to create a more transparent, efficient, and predictable environment for facilitating cross-border investment. Various proposals in the Preamble and Objectives sections of the informal consolidated text (INF/IFD/RD/50/Rev.2) identify as the central objective of these discussions to improve Members’ domestic environments for investment. Another proposal in the Preamble section recognizes the importance of preventing and combatting corruption in international trade and investment. Indeed Canada agrees that reducing corruption can make a significant contribution to a more welcoming environment for foreign investment.

2. Incorporating robust anti-corruption provisions in the WTO Agreement on Investment Facilitation for Development would signal the importance that Members ascribe to the ethical standards of their regulatory systems. The provisions proposed below set out specific steps that each Member should take to prevent and combat corruption as it relates to foreign investment. In this way, they reinforce the collective commitment of host governments to fighting corruption in matters that affect trade and investment.

3. Canada also reserves the right to table additional text proposals on this or other issues in the course of the negotiations.

Text proposal

27. Measures against corruption

Definitions

foreign public official means an individual holding a legislative, executive, administrative or judicial office of a foreign country, at any level of government, whether appointed or elected, permanent or temporary, paid or unpaid, and irrespective of that person’s seniority; and an individual exercising a public function for a foreign country, at any level of government, including for a public agency or public enterprise;

official of a public international organisation means an international civil servant or an individual who is authorised by a public international organisation to act on its behalf; and

public official means an individual:

1. holding a legislative, executive, administrative, or judicial office of a Member, whether appointed or elected, permanent or temporary, paid or unpaid, and irrespective of that person’s seniority;
2. who performs a public function for a Member, including for a public agency or public enterprise, or provides a public service, as defined under that Member’s law and as applied in the pertinent area of that Member’s law; or
3. defined as a public official under a Member’s law.

27.1 Scope

27.1.1. The scope of this Article is limited to measures to eliminate corruption with respect to any matter covered by this Agreement.

27.1.2. The Members recognise that the description of offences adopted or maintained in accordance with this Article, and of the applicable legal defences or legal principles controlling the lawfulness of conduct, is reserved to each Member’s law, and that those offences shall be prosecuted and punished in accordance with each Member’s law.

27.2 Measures to combat corruption

27.2.1. In accordance with its legal system, each Member shall adopt or maintain measures to prevent and combat corruption with regard to matters covered by this Agreement, and, where appropriate, provide effective, proportionate and dissuasive civil, administrative or criminal penalties for failure to comply with such measures.

27.2.2. In complying with this Agreement, each Member should take into account relevant internationally agreed instruments that have been acceded to by that Member, such as the United Nations Convention against Corruption, done at New York on October 31, 2003, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, with its Annex, done at Paris on November 21, 1997, or the Inter-American Convention Against Corruption, done at Caracas on March 29, 1996. Nothing in this Agreement shall affect the rights and obligations of the Members under those instruments.

27.2.3. Each Member shall adopt or maintain legislative and other measures as may be necessary to establish as criminal offences under its law, in matters that affect international investment, when committed intentionally, by any person subject to its jurisdiction:

1. the promise, offering or giving to a public official, directly or indirectly, of an undue advantage, for the official or another person or entity, in order that the official act or refrain from acting in relation to the performance of or the exercise of his or her official duties;
2. the solicitation or acceptance by a public official, directly or indirectly, of an undue advantage, for the official or another person or entity, in order that the official act or refrain from acting in relation to the performance of or the exercise of his or her official duties;
3. the promise, offering or giving to a foreign public official or an official of a public international organisation, directly or indirectly, of an undue advantage,^{Footnote 1} for the official or another person or entity, in order that the official act or refrain from acting in relation to the performance of or the exercise of his or her official duties, in order to obtain or retain business or other undue advantage in relation to the conduct of international business; and
4. the aiding or abetting, or conspiracy^{Footnote 2} in the commission of any of the offences described in subparagraphs (a) through (c).

27.2.4. Each Member shall make the commission of an offence described in paragraph 27.2.3 or 27.2.7 liable to sanctions that take into account the gravity of that offence.

27.2.5. Each Member shall adopt or maintain measures as may be necessary, consistent with its legal principles, to establish the liability of legal persons for offences described in paragraph 27.2.3 or 27.2.7. In particular, each Member shall ensure that legal persons held liable for offences described in paragraph 27.2.3 or 27.2.7 are subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, which include monetary sanctions.

27.2.6. A Member shall not allow a person subject to its jurisdiction to deduct from taxes expenses incurred in connection with the commission of an offence described in paragraph 27.2.3(a), (b), and (c).

27.2.7. In order to prevent corruption, each Member shall adopt or maintain measures as may be necessary, in accordance with its laws and regulations, regarding the maintenance of books and records, financial statement disclosures, and accounting and auditing standards, to prohibit the following acts carried out for the purpose of committing any of the offences described in paragraph 27.2.3:

1. the establishment of off-the-books accounts;
2. the making of off-the-books or inadequately identified transactions;
3. the recording of non-existent expenditure;
4. the entry of liabilities with incorrect identification of their objects;
5. the use of false documents; and
6. the intentional destruction of bookkeeping documents earlier than foreseen by the law.

27.2.8. Each Member shall consider adopting or maintaining measures to protect, against any unjustified treatment, any person who, in good faith and on reasonable grounds, reports to the competent authorities any facts concerning offences described in paragraph 27.2.3 or 27.2.7.

27.3 Promoting Integrity among Public Officials

27.3.1. To fight corruption in matters that affect investment, each Member should promote, among other things, integrity, honesty and responsibility among its public officials. To this end, each Member shall endeavour, in accordance with the fundamental principles of its legal system, to adopt or maintain:

1. measures to provide adequate procedures for the selection and training of individuals for public positions considered especially vulnerable to corruption, and the rotation, if appropriate, of those individuals to other positions;
2. measures to promote transparency in the behaviour of public officials in the exercise of public functions;
3. appropriate policies and procedures to identify and manage actual or potential conflicts of interest of public officials;
4. measures that require senior public officials and other public officials as considered appropriate by the Member, to make declarations to appropriate authorities regarding, among other things, their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials; and
5. measures to facilitate reporting by public officials of any facts concerning offences described in paragraph 27.2.3 or 27.2.7 to appropriate authorities, if those facts come to their notice in the performance of their functions.

27.3.2. Each Member shall endeavour to adopt or maintain codes or standards of conduct, in accordance with the fundamental principles of its legal system, for the correct, honourable and proper performance of public functions, and measures providing for disciplinary or other measures, if warranted, against public officials who violate the codes or standards established in accordance with this paragraph.

27.3.3. Each Member, to the extent consistent with the fundamental principles of its legal system, shall consider establishing procedures through which a public official accused of an offence described in paragraph 27.2.3 may, where appropriate, be removed, suspended or reassigned by the appropriate authority, bearing in mind respect for the principle of the presumption of innocence.

27.3.4. Each Member shall, in accordance with the fundamental principles of its legal system and without prejudice to judicial independence, adopt or maintain measures to strengthen integrity, and to prevent opportunities for corruption, among members of the judiciary in matters that affect international investment. These measures may include rules with respect to the conduct of members of the judiciary.

27.4 Application and Enforcement of Anticorruption Laws

27.4.1. In accordance with the fundamental principles of its legal system, a Member shall not fail to effectively enforce its laws or other measures adopted or maintained to comply with paragraph 27.2.3 through a sustained or recurring course of action or inaction, after the date of entry into force of this Agreement for that Member, as an encouragement for investment.^{Footnote 3}

27.4.2. In accordance with the fundamental principles of its legal system, each Member retains the right for its law enforcement, prosecutorial and judicial authorities to exercise their discretion with respect to the enforcement of its anti-corruption laws. Each Member retains the right to take bona fide decisions with regard to the allocation of its resources.

27.4.3. The Members affirm their commitments under applicable international agreements or arrangements to cooperate with each other, consistent with their respective legal and administrative systems, to enhance the effectiveness of law enforcement actions to combat the offences described in paragraph 27.2.3.

27.5 Participation of Private Sector and Society

27.5.1. Each Member shall take appropriate measures, within its means and in accordance with fundamental principles of its legal system, to promote the active participation of individuals and groups outside the public sector, such as enterprises, civil society, non-governmental organisations and community-based organisations, in the prevention of and the fight against corruption in matters affecting international investment, and to raise public awareness regarding the existence, causes and gravity of, and the threat posed by, corruption. To this end, a Member may, for example:

1. undertake public information activities and public education programmes that contribute to non-tolerance of corruption;
2. adopt or maintain measures to encourage professional associations and other non-governmental organisations, if appropriate, in their efforts to encourage and assist enterprises, in particular SMEs, in developing internal controls, ethics and compliance programmes or measures for preventing and detecting bribery and corruption in international investment;
3. adopt or maintain measures to encourage company management to make statements in their annual reports or otherwise publicly disclose their internal controls, ethics and compliance programmes or measures, including those that contribute to preventing and detecting bribery and corruption in international investment; and
4. adopt or maintain measures that respect, promote and protect the freedom to seek, receive, publish and disseminate information concerning corruption.

27.5.2. Each Member shall endeavour, in accordance with the fundamental principles of its legal system, to encourage investors, taking into account their structure and size, to:

1. adopt or maintain sufficient internal auditing controls to assist in preventing and detecting offences described in paragraphs 27.2.3 and 27.2.7 in matters affecting international investment; and
2. ensure that their accounts and required financial statements are subject to appropriate auditing and certification procedures.

27.5.3. Each Member shall take appropriate measures to ensure that its relevant anti-corruption bodies are known to the public and shall provide access to those bodies, if appropriate, for the reporting, including anonymously, of any facts concerning the offences described in paragraph 27.2.3.