Canadians caught up in Cuban anti-corruption crackdown

A Canadian businessman prosecuted by the Cuban government may go to jail after he reportedly denounced corruption in the Havana government’s awarding of contracts.

According to Reuters, Cy Tokmakjian, 74, of Toronto-area transportation company The Tokmakjian Group and two of the company’s Canadian employees, stood trial last month on charges of bribery and other “economic crimes.”

The company had been doing about $80 million in business annually with Cuba over the last 22 years, selling transportation, mining, and construction equipment but had reportedly been losing contracts.

Cuban prosecutors are seeking a 15-year prison term for Tokmakjian and 12 years each for two of managers. All three have maintained their innocence.

As well, 14 Cubans including a former deputy minister of the Sugar Ministry have also been accused in the case of charges that include bribery, tax evasion, and falsifying bank documents.

Tokmakjian was arrested in 2011 and held for nearly 2.5 years before being charged after his company was caught up in a crackdown on corruption by Cuban president Raul Castro.

International trade and investment lawyer John Boscariol, of McCarthy Tétrault LLP, says it sounds similar to other crackdowns happening in China. While there could be other issues at play behind the scenes, he notes there are important takeaways for Canadian companies doing business in developing countries.

“We haven’t just seen this in Cuba but in China as well,” says Boscariol.

Many of the companies who are subject to crackdowns in China are large foreign companies such as pharmaceutical company GlaxoSmthKline Inc.

“The Chinese seem to be going after these large companies under their domestic corruption laws,” he says.

Often, what may appear as a regular practice in a country in order to get business done may still be against the laws of that country and land people or companies in a corruption net.

“I don’t mean to suggest in this case it was their fault and they’re not getting framed but I think it brings out an important point that you should be cognizant of the written laws you’re operating in,” he says.

Boscariol says companies have focused more on the anti-corruption legislation of their home countries and paid less attention to the laws of the countries they’re operating in.

“When we talk about corruption compliance and advising companies on this we always discuss the U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act, and the U.K Bribery Act, but we should also be clear to clients the laws of the jurisdictions they are operating in also apply,” he adds.

For example, facilitation payments are allowed under the CFPOA and FCPA, but are prohibited under the laws of most host countries companies operate in.

“No host country is going to have laws that allow their own officials to be paid small bribes,” he says. “So a company that allows for payment of facilitation payments may not be consistent with the written domestic law they are operating in.”

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