Parliament Tightens Key Anti-Corruption Legislation

On June 19th, 2013, the Government of Canada enacted several substantial amendments to the Corruption of Foreign Public Officials Act (the “Act”), which originally came into force on February 14th, 1999, in order to meet Canada’s obligations under the Organisation for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The amendments significantly broaden the application of criminal liability under the Act to Canadian companies operating abroad, and greatly increase the maximum prison term for individuals convicted of foreign bribery.

The Act makes it a criminal offence to provide a benefit of any kind, directly or indirectly, to a foreign public official for the purpose of obtaining or retaining an advantage in the course of business:

1. in exchange for an act or omission by the official in connection with the performance of the official’s duties or functions; or
2. to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.

The relevance of the Act to Canadian companies was underscored recently when Niko Resources Ltd. was fined $9.5 million in June of 2011 for bribing the Minister of Energy and Mines of Bangladesh, and Caracal Energy International Inc. (formerly Griffiths Energy International Inc.) was fined $10.35 million in January of 2013 for bribes paid to Chad’s ambassador to Canada. These high-profile convictions have led many companies to implement comprehensive corporate anti-corruption policies, which are now considered an industry standard for resource issuers operating in jurisdictions where corruption may be widespread and tolerated.

The following are key provisions of the recent amendments to the Act:

1. A broadened definition of “business”:
   The amendments remove the words “for profit” from the definition of “business”. This amendment applies the Act to all businesses, regardless of whether they are profit-seeking.
2. An increase of the maximum jail term:
   The maximum jail term for individuals convicted under the Act has increased from 5 to 14 years. The 14-year maximum penalty means that both a discharge and a conditional sentence are no longer available to those convicted of bribing a foreign public official. The fine amount remains unlimited.
3. Elimination of the “facilitation payments” exemption:
   Facilitation payments are payments made to expedite or secure performance by a foreign public official of any “act of a routine nature” that is part of that official’s duties or functions (not including a decision to award new business, or to continue business with a particular party). Facilitation payments were not considered bribes under the previous Act, but are prohibited under the amended Act.
4. Creation of a books and records offence:
   The amendments create a new offence that prohibits certain bookkeeping and corporate records practices for the purpose of bribing foreign public officials, or hiding such bribery. This offence is punishable by a maximum of 14 years’ imprisonment and unlimited fines.
5. The addition of nationality jurisdiction:
   The amendments allow the Government of Canada to exercise jurisdiction over all persons or companies that have Canadian nationality, regardless of where the alleged bribery has taken place.
6. Exclusive RCMP authority:
   The amendments provide exclusive authority to the RCMP to lay charges under the Act.

For more information about the Act and how Boughton Law can assist in the development of a comprehensive corporate anti-corruption policy, please contact any member of the Boughton Law Securities Group.

The information contained in this update is only a summary and is not considered to be legal advice. 

Tags: Article; Securities