Karigar could be made example of in first conviction under CFPOA

When Nazir Karigar is sentenced the first week of April for conspiring to bribe a foreign public official, contrary to the Corruption of Foreign Public Officials Act, it is likely the court will be looking to send a strong message, say legal observers.

In August, Ontario Superior Court Justice Charles Hackland ruled in R. v. Karigar that Karigar, an Indian-Canadian businessman acting as an agent, plotted to bribe Indian officials on two occasions amounting to US$450,000. His targets were officials at Air India in Mumbai and an Indian cabinet minister, whom he offered cash in exchange for a contract to use a security technology system from Canadian firm Crypto Metric.

“The case does show that the government is taking action against individuals and a company’s worst fears that their senior officials could go to jail over this kind of thing may come true,” says James Klotz, chairman of the anti-corruption and international governance group at Miller Thomson LLP and the past chairman and president of Transparency International Canada.

There appears to be two schools of thought in the legal community in terms of what Karigar’s punishment will be. Some are wagering he may get two years less a day, while others say it could be more, warranting incarceration in a federal prison.

“Even at two years less a day, you’d still be sending quite a strong message,” says Kristine Robidoux, a partner with Gowling Lafleur Henderson LLP and the lawyer who defended both Griffiths Energy International Inc. and Niko Resources Ltd. in CFPOA cases. “Nothing will send a message to the boardrooms of Canada’s companies as strongly as seeing an individual go to jail.”

The maximum penalty Karigar could face is five years in prison. Amendments to the CFPOA that came into force last June changed the maximum to 14 years, however Karigar’s case began in 2011 before they were introduced. The increase in penalty means the maximum is higher in Canada than it is in the U.S. or U.K.

Robidoux says she expects the court will take a general deterrence approach and not specific deterrence.

“How big a stick they need to hit him with in order to send the message of general deterrence across to Canada’s boardrooms is really going to be the question,” she says.

The court has a broad range of sentencing options including discharge (but not likely), suspended sentence with probation, a fine, or a custodial sentence. Anything up to two years less a day will be served in a provincial facility and anything two years or more will be in a federal institution.

Previous cases in Canada involving foreign bribery include Griffiths Energy and Niko Resources. In both the accused entered guilty pleas. That resulted in fines of $10.3 million for Griffiths (based on a bribe of $2 million offered to the wife of Chad’s ambassador to Canada) and $8.2 million for Niko, in which a Bangladeshi official was bribed with a $250,000 SUV and a free trip to New York and Calgary.

“To say the fines are disproportionate to the size or nature of the bribe is to vastly understate the sting of this,” said Norm Keith, a partner with Fasken Martineau DuMoulin LLP, speaking at a white-collar crime seminar held in Toronto last week. “The word is if you want to plead guilty or play ball with the prosecutor and not go through a trial you’re going to write a big cheque. That’s unfortunate because I think these fines are higher than they should have been but they are now the defector benchmark.”

Keith said it will be interesting to see if Karigar receives jail time. Karigar is said to have health problems and may not receive a jail sentence. However as the first to defend and be convicted under CFPOA, he may be made an example of by the court.

“That would certainly send a strong message. If it’s anything two years or greater then this is the court saying this is a case that warrants federal incarceration and that won’t be lost on any of the criminal lawyers across the country,” says Robidoux.

Canada’s courts have generally been reluctant to send individuals to jail for lengthy periods of time for this type of white-collar crime. Karigar was an agent for the organization he acted for but his conduct was “fairly brazen” in terms of how the bribe was negotiated and pursued, however it was also “unsophisticated” says Robidoux.

“The manner in which Mr. Karigar attempted to blow the whistle on the company showed a lack of sophistication and that will be taken into account by the sentencing court,” she adds.

For its part, Crypto Metric’s officials claimed they didn’t know the law and to date no one from the company has been charged.

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