Until relatively recently, paying bribes to foreign officials was simply part of the cost of doing business for Canadian companies working abroad.
Surprisingly, many Canadian lawyers and business people are still not aware that it’s an offence in Canada to bribe or cover up a bribe of a government official elsewhere in the world, says Michael Osborne of Affleck Greene McMurtry in Toronto, who is a member of the Canadian Bar Association’s Anti-Corruption Team.“I suspect many lawyers would take the view that what goes on in [another] country stays in that country and not realize it’s an offence.”
But with the government starting to strongly enforce the 1999 Corruption of Foreign Public Officials Act in the past few years, people making – or taking – bribes are facing fines in the millions of dollars and serious jail terms are also a possibility. That should be a big deterrent, Osborne says. “If you’re doing business in other countries, you need to be aware of the CFPOA. You need to know what the rules are so that when and if you get asked for a bribe … you’ll know what to do.”
Several conventions signed in the past several years have included anti-corruption sections, including the Trans-Pacific Partnership, signed earlier this year by Canada and 11 other Pacific Rim countries, and which is still awaiting ratification. But serious attempts to combat bribery date back 20 years. The Inter-American Convention against Corruption was introduced in 1996 and, a year later, Canada and the other members of the Organisation for Economic Co-operation and Development signed the world’s first international instrument, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Corruption had been widely tolerated for years before the OECD convention was introduced. It used to be legal to bribe a foreign public official anywhere except the U.S. And in Canada, paying a bribe was even considered a deductible income tax business expense.
The OECD convention was designed as a supply-side attack, essentially fighting corruption by going after the companies and individuals from large economies paying the bribes instead of fighting the corrupt functionaries. Unfortunately, “everybody in the OECD signed on and passed laws and did nothing, more or less,” says Osborne. “Basically we didn’t really enforce our own anti-corruption law for a little bit over a decade. And we were shamed into enforcing it by three OECD peer review reports and Transparency International, which ranks countries based on their enforcement of the law.”
Canada established the International Anti-Corruption Team within the Commercial Crime Branch of the RCMP in 2007. But it wasn’t until 2011 that Niko Resources pleaded guilty to one count of bribery after admitting to attempting to influence the Bangladesh State Minister for Energy and Mineral Resources by giving him a $191,000 vehicle and paying his travel costs. Niko’s total penalty was $9.5 million.
Griffiths Energy International was fined a total penalty of $10.35 million in 2013 after admitting to paying a $2-million success fee to a company controlled by the wife of the ambassador of the Republic of Chad. That penalty came despite the company’s new management disclosing the matter to authorities and fully cooperating with the RCMP investigation.
Individuals convicted of bribery can be imprisoned for up to 14 years, says Osborne, which means that “absolute or conditional discharge is no longer available. So your chances of not getting a criminal record as an individual charged under this law are not good.” A significant 2013 Ontario decision found Nazir Karigar guilty of bribery under CFPOA for agreeing to pay bribes to officials at Air India and the Indian Minister of Civil Aviation. Karigar was given a three-year sentence.
CBA-ACT recently commented on Chapter 26 of the TPP, titled “Transparency and Anti-Corruption.” In a submission to government the team notes that chapter is less forceful in some areas than the anti-corruption clauses of some other international agreements to which Canada is a party, and that it exceeds them in others -- for example, the prohibition against allowing tax deductions for expenses incurred in the commission of prescribed corruption offences.
Osborne says the transparency part of Chapter 26 is very helpful because it establishes certain key rule-of-law framework requirements that require “countries to adhere to what we would view as being fairly typical administrative fairness concepts in dealing with investors from other countries.”
Areas where the TPP is not as forceful as other agreements include extra-territorial jurisdiction over nationals, mutual legal assistance and extradition. But overall, CBA-ACT supports Chapter 26 by “noting the potential to benefit Canadian businesses by increasing transparency and respect for the rule of law and reducing corruption in TPP countries.”
Osborne says the TPP agreement doesn’t add a lot to existing international instruments and nothing in it requires a change to Canadian law. He adds that the treaty doesn’t go as far as the United Nations Convention against Corruption but he’s not particularly concerned because “the parties to the TPP, all of them are parties to the UNCAC and all except for Brunei, Malaysia, Peru, Singapore and Vietnam are also parties to the OECD anti-bribery convention.”
Although there are countries where bribery is accepted, companies doing business abroad must acknowledge that the law against corruption “is enforced and there are going to be commercial as well as legal consequences,” says Milos Barutciski, who co-heads the international trade group at Bennett Jones in Toronto. “You can put to rest the old-school thinking that that’s the way business is done in Africa, Asia or Latin America.”
But he adds there are countries rife with petty corruption where it’s still necessary to pay a “facilitation payment,” a small bribe that secures the performance of a routine, administrative task. “The question then becomes at what stage is the facilitation payment something more?”
Barutciski says the long-held belief that the only way a company can do business in some countries is through bribes and corruption is not true. “In most countries you can do business without doing that and in fact, in many instances, the shakedown is just that, it’s a shakedown.”
More countries taking the view that “there is an international anti-corruption norm is a good thing,” says Osborne. “The more chances we have to attack corruption, ultimately the less corruption we’re going to have. That’s a goal that everybody shares, except perhaps those who are benefiting from the bribes. Clean business is better business.”
Ann Macaulay is a Toronto writer and editor.