Foreign anti-bribery enforcement comes under scrutiny

An international report highly critical of Canada’s enforcement of its foreign official anti-bribery laws will likely increase pressure on Canadian authorities and companies to improve compliance in this area, a panel of experts told a Toronto audience last week.
The Organisation for Economic Co-operation and Development report released March 28 says Canada needs to do more to investigate and prosecute bribery of foreign public officials by Canadian companies.

It also notes that given the size of Canada’s economy and its high-risk industries — oil, gas, and mining — Canada should review its law and approach to enforcement. “The OECD report is very critical of Canada’s efforts,” says Anita Anand, a professor at the University of Toronto Faculty of Law.

Since the Corruption of Foreign Public Officials Act passed in 1999, only a single prosecution under it has been completed in Canada, but there are currently 20 ongoing investigations and one case is in the courts.

The report acknowledges the number of investigations has increased, crediting the creation of the RCMP International Anti-Corruption Unit. It “has been making substantial efforts to investigate allegations of the bribery of foreign public officials and raise awareness of the offence,” says the report, adding “Canada’s ability to successfully prosecute these investigations will be in jeopardy unless the Public Prosecution Service of Canada is given the resources it needs to prosecute the large volume of cases that may soon follow the investigations.”

Insp. Gord Drayton, who heads the RCMP unit in charge of investigating corruption of foreign officials under the act, says the investigations will continue. He says the force has the necessary manpower to investigate and will be aided by external RCMP teams if further assistance is needed.

Drayton does point out the unit faces some problems, like not enough reporting of this type of offence, the long time investigations require, and the fact that the Canadian legislation is very short and can be hard to interpret.

“There is no jurisprudence on it, so it’s very difficult,” he says.

Drayton was speaking last week at an expert panel held at the University of Toronto Faculty of Law and moderated by James Peterson, counsel at Fasken Martineau DuMoulin LLP and former federal minister of international trade.

Panel members noted that in addition to the Canadian law, which meets the country’s international obligations, many Canadian companies operating abroad are also mindful of U.S. and U.K. legislation in this area, which could affect Canadian companies.

“It does have an impact on us, everywhere we go,” says Deborah Alexander, Scotiabank executive vice president, general counsel, and secretary. “Around the world we go to highest common denominator, and that’s usually the U.S. legislation at the moment — what’s in the books in the U.K. will be a higher standard just in terms of its obligations. But the practical thing is you do not go around the world and ignore the U.S. legislation and its impact.”

She added that Scotiabank, which operates in about 50 countries, has an internal code on corruption and bribery of foreign officials that is stricter than both the Canadian and U.S. legislation.

Transparency International’s corruption perceptions index for 2010 shows Canada’s corruption at home is one of the lowest in the world, ranking sixth in the world, so this country has an obligation to offer a level playing field in poorer countries where corruption is rampant, says Bronwyn Best, executive director at Transparency International Canada Inc.

Best adds Canada has signed on to all the appropriate conventions on the matter — both at the OECD and the United Nations — so it has an obligation to fully enforce the anti-corruption laws against its own companies operating abroad.

But the OECD report will have consequences beyond Ottawa, because it will be read in places like Washington, which takes an aggressive look at compliance with its own laws, often prosecuting companies that have only a tangential tie to the United States, says Philip Urofsky a partner at Shearman & Sterling LLP based in Washington, D.C. and London.

He says the OECD report saying Canada is not being tough enough on its own companies might mean U.S. authorities may decide to go after Canadian companies to make an example. “The U.S. is going to read the OECD report, and that’s what they are going to take out from that report,” says Urofsky, who is a former U.S. federal prosecutor.

On the other hand, Anand adds that tough U.S. enforcement might be one of the reasons behind the low number of prosecutions in Canada, as this country might be getting a free ride with companies already complying out of fear of the U.S. legislation.

Beyond the neighbours to the south, attention has now turned to the U.K. Bribery Act, which will affect Canadian companies that do business in the U.K. and beyond. It comes into force July 1 and is stricter than any other legislation of its kind in the U.S. and Canada because it prohibits “facilitation payments,” a grey area left open for small sums, goods, and services given to foreign officials to facilitate doing business overseas.

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