The recent criticism by the OECD Working Group of Canada’s record of foreign bribery detection, investigation and prosecution should be seen as an opportunity for the country’s lawmakers and enforcers to deepen their efforts, says Anthony Cole, a UK lawyer practicing in Calgary with Christine Silverberg, retired Chief of Police and lawyer of the firm Wolch, Hursh, deWit, Silverberg & Watts.
Cole, who has lectured in the UK and internationally on the UK Bribery Act and the UK Proceeds of Crime Legislation, notes that at the time of the OECD Working Group’s report, Canada had just one successful prosecution for bribery of a foreign public official under its 1999 Corruption of Foreign Public Officials Act (CFPOA).
“That statistic either indicates a saint-like resistance on the part of Canadian businesses to bribery, or suggests a sub-optimal regime for detecting and prosecuting incidents of bribery,” says Cole. “I would favour the latter. In my experience, very few people embark on projects with the intention of bribing people along the way, but don’t have effective plans in place to respond to solicitations of bribery.”
Canadians doing business overseas are no less exposed to such demands than their counterparts from other jurisdictions where foreign bribery prosecutions are more frequent and more successful, says Cole. “I have some difficulty with the view that Canadians are inherently less likely to succumb to such demands.”
Even more telling is the fact that in the single case that has been successfully prosecuted, the fine was less than the amount of the bribe, indicating a lax approach in the enforcement of the legislation. Meanwhile, the US has had dozens of convictions and fined several multinationals hundreds of millions of dollars.
Out of Sight, Out of Mind
One problem is that to enforce a charge under Canadian law, prosecutors must show a real and substantial link to Canada. This territoriality principle doesn’t apply in most other developed countries, including the US and the UK, who, by adopting a nationality test, have an unquestioned ability to prosecute their own citizens no matter where the offence is committed.
In countries where companies operate through local agents and huge networks of subcontractors, Canada’s territoriality test is making it harder to make charges stick.
“The OECD’s Working Group did a pretty good job of highlighting the main shortcomings of the Canada’s foreign bribery legislation,” says Cole. “But less-than-perfect legislation can be overcome by a determined campaign to unveil and punish cases of overseas bribery. Resourceful and well-funded law enforcement bodies can still achieve results.”
The UK Turnaround
He refers to the UK, where successive OECD Working Groups leveled similar criticism at Britain’s overseas ant-bribery legislation, and in the wake of that, resources were committed to the problem, culminating in the Serious Fraud Office (“SFO”) bringing several successful and high-profile actions involving alleged bribery.
“A key part of the success of the SFO was an increased awareness of the usefulness of UK Proceeds of Crime legislation in the context of foreign bribery, rather than a dogged reliance on the cumbersome and discredited foreign bribery legislation in force at the time,” he says. “In this way, momentum has been built by the UK authorities ahead of the introduction of very comprehensive and powerful anti-bribery legislation, and the issue has been taken seriously by well-informed businesses operating in the UK, even without the Bribery Act being in force.”
Cole sees the establishment of two dedicated anti-corruption units of the RCMP – one in Ottawa and one in Calgary – as a sign of a more determined approach by Canadian authorities to tackling bribery. But, he notes, the deployment of these resources may be insufficient as investigations in these areas can be complex, technologically intensive, and involve inter-agency communications and responses that are time consuming.
“While the OECD Working Group report referred to a statement by the RCMP that it had over 20 active overseas bribery investigations, the real test will be whether any of these investigations result in successful prosecutions,” says Cole. “Without successful prosecutions, it will be difficult to convince other OECD countries that Canada is taking seriously its obligations under the OECD Anti-Bribery Convention.”
Silverberg agrees that immediate steps are required. “Tackling corruption once it has been allowed to take root is an incredibly difficult task”, she says. “A better approach is to build a system and promote a culture that provides unfertile ground for corruption to grow. However, that path requires a leadership with a clear vision about what needs to done.”
Anthony Cole Anthony dot cole at silverberglegal ot com
Christine Silverberg christine at silverberglegal dot com