Corruption of Foreign Public Officials Act

Very few lawyers have had opportunities to work on Corruption of Foreign Public Officials Act (“CFPOA”) cases. The CFPOA has long interested me but until recently my only work with this statute was outside of court. It was a case of my own, working with Sarah Rankin, that inspired this topic. The charges against our client were stayed, and there will be no trial. While it would be interesting to specifically discuss how it unfolded, there is a publication ban. The CFPOA in Canada itself, however, is a subject worth exploring.

The CFPOA is not unique to Canada. Countries around the world have similar statutes to penalize their own residents or businesses if they participate in certain kinds of corrupt behaviour while engaged in business abroad. These local laws are primarily the result of international treaties reflecting global efforts to fight corruption in government. They are motivated by the belief that corruption across borders - in forms like bribery and conspiracy - creates barriers to international trade, hinders international development and undermines faith in government institutions.

The underlying treaty (The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions) came into force in 1999, and Canada put legislation in place to comply. In 2013 it was amended to include stiffer penalties and offences related to financial record keeping.

The legislation stands out for two reasons: its long jurisdictional reach and that there have only ever been four known convictions in the almost-20 years it has been in place. The first three were all corporate defendants in Alberta. Those three pleaded guilty and paid fines.

The first guilty plea was Hydro-Kleen Group Inc. in 2005. The company was charged with two counts of bribing an American immigration officer. Two people, the president of the company and an employee, were also charged. The company pleaded guilty and received a fine of $25k. The charges against the president and employee were dropped.

In 2011, Niko Resources Ltd pleaded guilty to bribing the Minister of Energy and Mineral Resources in Bangladesh. The bribe included the use of a vehicle valued at close to 200k, and international travel costs, all aimed at gaining favour for a subsidiary. Niko Resources Ltd paid a fine of $9.5 million.

In 2013 Griffiths Energy International Inc pleaded guilty to paying off the wife of a diplomat to secure oil rights in the Republic of Chad. The company paid a fine of 10.35 million. Showing just how small the legal community can be, perhaps particularly so in this relatively arcane area of law, both Niko Resources Ltd and Griffiths Energy International were advised by the same lawyer and their guilty pleas were presided over by the same judge.

The only conviction at trial, in what appears to be the only trial to actually have occurred, was in the case of an individual in Ontario named Nazir Karigar who was working as an agent for Cryptometric, a company selling facial recognition technology. In 2013 he was found to have conspired to bribe officials at Air India and a cabinet minister in India, with roughly 450k. He was sentenced to 3 years imprisonment. His is the only known case of a jail sentence under the CFPOA. It is also the only known conviction of an individual as opposed to a company.

Karigar’s appeal was dismissed in reasons released on July 6, 2017. In doing so, the Court of Appeal for Ontario explained how the act of bribery, or conspiracy to bribe, in a foreign country can be a crime punishable in Canada. An accused does not need to be a Canadian, or reside in Canada, so long as there is a real and substantial connection between the offence and Canada. It is a flexible but nuanced analysis for jurisdiction that separates it from the Criminal Code of Canada sanction against bribery for example, which is more strictly limited to actions inside Canada’s physical borders.

A few other cases, like ours, have partially proceeded through the justice system and I haven’t mentioned all of them. There are also some other cases before the courts today. While it isn’t clear what will become of the pending cases, the decision in Karigar – the only appellate decision on point - will guide them all. Undoubtedly, litigation will continue and another Court of Appeal will have to consider the same legislation. There is more to come in this evolving area of law – that is especially true where individual criminal, as opposed to organizational, penalties and culpability is concerned. Companies, individuals, and lawyers practicing in this area must stay vigilant and up to date as the precedents slowly unfold. It is also wise to consult a lawyer about business practices before implementation.

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