Is Your Business at Risk of Breaching Anti-Bribery Laws?

Does your company have an anti-bribery policy in place? Is your company complying with Canadian anti-bribery laws regarding domestic and foreign officials? Is paying for an expedited permit or licence issued by a government official considered bribery for the purposes of Canadian law? Here are the basics that your company needs to know.

Is Your Business at Risk of Breaching Anti-Bribery Laws?

You or your company are at higher risk of potentially breaching Canadian anti-bribery laws if you are bidding on or are engaged in government contracts in Canada or in foreign countries. Additionally, you are also at higher risk if, in order to operate, you require a permit, licence, or visa that is issued by a public body (for example, this could include safety fitness certificates, CVORs, operating authorities, liquor licences, food and drug licences from Health Canada or a foreign equivalent, import or export certificates or licences, environmental permits, building permits, etc…).

The more often you are required to interact with public officials here in Canada or abroad, the more exposed you are to potentially breaching Canada’s anti-bribery laws.

Canada has three sets of legislation that govern bribery: The Corruption of Foreign Public Officials Act (“CFPOA”) (*1), the Criminal Code (the “Code”) (*2), and the Extractive Sector Transparency Measure Act (*3). The latter governs payments made by companies involved in mining, oil and gas to foreign and domestic governments and will not be discussed in this article.

Bribery of Foreign Officials

A foreign public official is a person who holds a legislative, administrative or judicial position of a foreign state, who performs public duties or functions for a foreign state (including a person employed by a board, commission, corporation or other body performing functions on behalf of a foreign states), or an official or agent of a public international organization formed by two or more states or governments. (*4)

Under the CFPOA, an individual or company has committed the offence of bribery if:

(i) they have given, offered, or agreed to give or offer, directly or indirectly, a loan, reward, advantage or benefit of any kind (“Foreign Bribe”) to a foreign public official, or to anyone for the benefit of a foreign public official; and
(ii) the Foreign Bribe was offered to obtain an advance in the course of business; and
(iii) it was offered as payment for the official to act or not to act in connection with the performance of their duties or functions; or
(iv) it was offered to induce the official to use their position to influence acts or decisions of a foreign state. (*5)

The description of a Foreign Bribe for the purposes of the CFPOA is quite broad and accordingly, could expand to relatively minor offers as long as some form of benefit or advantage is provided. Additionally, the offence has been committed even if the Foreign Bribe has not actually changed hands, as the legislation covers both giving and agreeing to give a Foreign Bribe.

The CFPOA is also broad enough to cover indirect Foreign Bribes where a third party has provided the Foreign Bribe to a foreign official on behalf of a company or individual.

[NOTE: See UPDATE below – Facilitation Payments are now prohibited] Currently, a “Facilitation Payment” made to expedite or secure the performance by a foreign official of any act of a routine nature that is part of their duties or functions, such as issuing a permit, licence or qualification to do business in another country, as well as certain other routine acts, are not considered Foreign Bribes. However, under Bill S-14 which amended the CFPOA, the elimination of Facilitation Payments was introduced but this elimination is not yet in force. (*6)

There are also certain exceptions for when a Foreign Bribe is not an offence, for example, where it is permitted or required under the laws of the foreign state. (*7)

The offence does not need to be committed in Canada for the CFPOA to apply. The reach of the CFPOA extends to acts or omissions committed outside of Canada if the person committing the act is a Canadian citizen, a permanent resident who is present in Canada after having committed the act or omission, or is a public body, corporation, society, company, firm or partnership that is incorporated, formed or otherwise organized under the laws of Canada or a province. (*8)

Bribery of Domestic Officials

Under the Code, it is an offence for anyone to, directly or indirectly, give, offer or agree to give or offer, any money, valuable consideration, office, place, employment, pay a commission or reward, or confer an advantage or benefit of any kind (“Bribe”):

(i) on an official as payment for their cooperation, assistance, exercise of influence or for an act or omission in connection with any matter of business relating to the government; or
(ii) to an employee or official of the government with which that person has dealings. (*9)

Similarly, to the CFPOA, the description of a Bribe is broad enough to expand to relatively minor offers as long as some form of benefit or advantage is provided. An offence has been committed even if the Bribe has not actually changed hands as the legislation covers both giving and agreeing to give a Bribe. The offence under the Code also covers indirect Bribes where a third party has provided the Bribe to an official on behalf of a company or individual.

There is no exception for Facilitation Payments under the Code. Accordingly, small payments made to low-level officials to expedite routine services are considered Bribes under the Code.

How to Protect Your Business

The best method of protecting your business from breaching Canada’s anti-bribery laws is by having a robust anti-bribery policy in place that is circulated to employees and contractors, and is monitored and enforced.

In order to create or revamp your anti-bribery policy, each company should start with a risk assessment identifying areas where your business interacts with government officials, including through third party intermediaries. Next, with the assistance of counsel, you should set up or revise an existing anti-bribery policy that is targeted to specific risk factors of your business. This policy should be circulated to all employees as well as third party contractors, who should confirm in writing that they have received the policy. Consider implementing training for staff and contractors. Finally, engage counsel to assist with intermittent self-audits to ensure that the policy is being property enforced.

Jaclyne Reive

Twitter: @jaclyne_reive
Blog: https://jaclynereive.wordpress.com

Endnotes
(*1) S.C. 1998, c. 34.
(*2) R.S.C. 1985, c C-46.
(*3) S.C. 2014, c. 39, S. 376.
(*4) CFPOA s. 2.
(*5) Ibid., s. 3(1).
(*6) Ibid., s. 3(4).
(*7) Ibid., s. 3(3).
(*8) Ibid., s. 5(1).
(*9) Code s. 121.

***UPDATE ON FACILITATION PAYMENTS – NO LONGER ALLOWED:

As of October 31, 2017, “Facilitation Payments” (amounts paid to expedite the performance by a foreign official of any act of a routine nature) are no longer allowed under Canadian anti-bribery laws. In the October 2017 issue of The Navigator, we discussed anti-bribery legislation in Canada, including the fact that “Facilitation Payments” were one of the exceptions to the general anti-bribery rules under the Corruption of Foreign Public Officials Act (“CFPOA”) (*1), but that this exception was expected to soon be repealed.

An Order in Council by the Governor General fixed October 31, 2017 as the date that companies are no longer allowed to make Facilitation Payments in order to secure performance by a foreign official for routine acts that are normally part of their duties or functions, such as issuing a permit, licence or qualification to do business in another country. (*2) Since the intent to repeal section 3(4) of the CFPOA, which previously allowed these types of payments, was announced in June 2013, the delay in passing the repeal was meant to allow “Canadian organizations to adjust their practices and internal policies in a manner conducive to conducting business without recourse to facilitation payments.” (*3) We note that Facilitation Payments to Canadian officials are already prohibited under Canadian law.

What Does This Mean for Your Business?

We strongly recommend having a review conducted of your existing anti-bribery policies to ensure that they properly address the prohibition of Facilitation Payments, especially if, in order to operate, your company requires a permit, licence, or visa that is issued by a foreign public body (for example, this could include safety fitness certificates, operating authorities, food and drug licences, carrier or freight forwarder customs codes, import or export certificates or related licences, environmental permits, building permits, etc…), or if it is bidding on or is engaged in government contracts with foreign countries.

The more often your company is required to interact with public officials abroad, including the United States and Mexico, the more exposed it is to potentially breaching Canada’s anti-bribery laws, even if it has a third party working as an intermediary on its behalf.

A breach of our laws does not need to be committed in Canada for the CFPOA to apply. Its reach extends to acts committed outside of Canada if the person committing the act is a Canadian citizen, a permanent resident who is present in Canada after having committed the act or omission, or is a public body, corporation, society, company, firm or partnership that is incorporated, formed or otherwise organized under the laws of Canada or a province. (*4)

A breach of the CFPOA is considered an indictable offence and a person can be liable to imprisonment for up to 14 years. (*5) Note that directors and officers can potentially be found liable. Additionally, the monetary penalties awarded by the Courts for foreign and domestic bribery are often steep as there is no cap on the amount of the fines that can be ordered. For example, some of the leading cases for severe bribery included fines upward of C$9 million. (*6)

Make sure your company has a robust anti-bribery policy in place addressing interactions with both domestic and foreign officials, including Facilitation Payments and its accounting and record keeping methods. Ensure that the policy is circulated to employees and third-party contractors, and is monitored and enforced.

Jaclyne Reive

Twitter: @jaclyne_reive
Blog: https://jaclynereive.wordpress.com

Endnotes
(*1) S.C. 1998, c. 34.
(*2) Canada Gazette, Vol. 151, No. 23, November 15, 2017.
(*3) Ibid.
(*4) CFPOA, s. 5(1).
(*5) Ibid., s. 3(2).
(*6) See for example: R v Niko Resources Ltd., [2012] AWLD 4536 and R v Griffiths Energy International, [2013] AH 412 (Alta QB).

This article is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via this website does not create a lawyer-client relationship. Unless otherwise noted, all content on this website (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Jaclyne Reive. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Jaclyne Reive.

 

 

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