Canada amps up fight against bribery

Changes could affect staffing, policy, culture

In January, Griffiths Energy International in Calgary pleaded guilty to bribery in admitting it had paid millions of dollars in cash and shares to a public official and his spouse in the African nation of Chad, in exchange for exclusive access to resources in two regions, according to media reports.

Under Canada’s Corruption of Foreign Public Officials Act (CFPOA), Griffiths will pay a penalty of $10.35 million. And while the CFPOA has had few convictions thus far, that could change as Canada looks to beef up its anti-corruption legislation, with proposed amendments that bring it closer in line to acts in the United Kingdom and United States.

“Our government... expects Canadian business to play by the rules. Canadian companies can compete with the best and win fairly,” said Foreign Affairs Minister John Baird on Feb. 5. “To signal our commitment and our expectation that other countries do the same... our government is redoubling our fight against bribery and corruption.”

The proposed amendments would make it easier for the government to prosecute Canadian individuals or companies for bribery in other countries, regardless of where the alleged bribery has taken place. The maximum penalty would also increase, with unlimited fines and a maximum jail term of 14 years.

And the definition of “business” would include all businesses, regardless of whether a profit is made.

But two of the major changes involve “facilitation” payments and the “cooking” of books and records. The act currently states facilitation payments made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the official’s duties or functions do not constitute bribes. This amendment would eliminate that exception.

For those who seek to enforce the act, it’s very hard to know the extent to which the bribery of a public official is part of the ordinary business of Canadians operating abroad, said Brandon Barnes, an associate in the litigation group at law firm Davis in Toronto.

“There is an understanding in many countries that a form of facilitation payment for low-level corruption that we would see as corruption in Canada is the cost of doing business.”

It’s expected this amendment will be phased in, according to Allison FitzGerald, an associate experienced in international arbitration, trade and investment at law firm Norton Rose in Ottawa.

“There’s an explicit recognition it will take some time for people to incorporate this as part of their business practice, in terms of how they manage their business abroad.”

The other important amendment would add a new offence around books and records of account concerning the bribery of foreign public officials or hiding such bribery. This change will require diligence on the part of management to ensure financial records are maintained in a transparent manner, said Sarah MacGregor, a partner in forensic services at PwC in Toronto.

“Companies must ensure that any sensitive payments are clearly identified and appropriate supporting documentation is obtained and retained in respect of such transactions.”

This kind of prosecution is much more common in the U.S., said FitzGerald.

“Canada is casting a broader net in terms of what it’s going to look at and what tools it’s going to provide the RCMP to examine, investigate and, as appropriate, prosecute.”

This change is a realistic one when the evidentiary burden is considered, said Barnes, as a public official receiving a bribe already has an incentive not to co-operate with Canadian authorities and might be protected by diplomatic immunity.

“However, in investigating that kind of bribe, enforcement authorities will uncover dishonest books, questionable accounts and previously those have all been indicia or hallmarks of a corrupt practice but were not criminalized in and of itself.”

Impact on HR

HR will play an important role when it comes to the changes, say the experts.

“HR professionals are going to find themselves as the number one point people inside businesses for dealing with compliance policies to do with corruption, in addition to forensic accountants and people in finance who have to keep the records,” said Barnes.

When it comes to recruitment and staffing, foreign nationals may be unaware the business they’re working for is associated with Canada, he said, so it’s important they understand Canadian laws cross borders.

Human resources should also ensure company policies are translated into the local languages of the various locations, said MacGregor.

And the change around facilitation payments will require HR professionals to communicate and reinforce the company’s expectations and standards prohibiting such payments to all employees.

“HR professionals should also take note of this when obtaining visas in foreign jurisdictions, an area prone to facilitation payments by companies and agents acting on their behalf,” she said.

Human resources should also ensure no employee suffers any adverse consequences for refusing to pay bribes, even if that results in the loss of business, said MacGregor.

“Companies may consider providing positive incentives to employees who conduct ethical and compliant behaviour.”

Organizations will need to revise policies around appropriate conduct and train staff on the revisions, said FitzGerald.

“There might be certain people in the organization, because of their roles... (who) have a higher risk exposure than others.”

There’s also a need for a reporting or whistleblowing mechanism, said FitzGerald, and, as part of that, an investigation protocol that allows an organization to determine what, if anything, has taken place that needs to be addressed.

And finally, there’s culture, said Barnes.

“There is perhaps a misbelief... that corruption is a cultural factor, that it’s something that’s endemic or can’t be avoided or it would almost be offensive to suggest a different way of practice and that is not universally true and it’s an attitude that might allow for the kind of slip-ups that will eventually catch the attention of the law in Canada.”

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