Canadian Corruption of Foreign Public Officials Act

The consequences for violating the CFPOA consist of a five-year maximum term of imprisonment if found guilty of bribing a foreign public official- this ensures that it is an extraditable offence.

Posted by Joe Gerard in Corruption, Ethics & Compliance on July 14th, 2010

Almost two weeks ago, I was reading through a local paper, and stumbled across an article discussing the arrest of Nazir Karigar, a Canadian citizen accused of bribing an Indian official. Since our company is located in Canada, the article prompted me to dig a bit deeper and look into the implications faced by those charged under the Canadian Corruption of Foreign Public Officials Act (CFPOA). According to CBC News, it’s been reported that this is only the second time a charge has been made under the CFPOA.

Canada is part of the OECD, which enacted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions on February 15th, 1999. Canada has identified the need to work harder to crack down on the bribery of foreign public officials. As mentioned in the Wrageblog post “Questioning Canada’s Commitment to Combating the Corruption of Foreign Public Officials: Watching Bill C-31,” the country was labeled as a “laggard” by the OECD in 2009 for their lack in action when it comes to enforcing anti-corruption laws.

Canadian Department of Justice

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On February 14th, 1999, the CFPOA was introduced as law in Canada. The CFPOA states that an offence is committed against the act:

“In order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official.”

The act applies to everyone, Canadian or not, and isn’t limited to individuals, as it includes corporations. In the OECD Convention against bribery, the offence of bribing foreign public officials refers to the conduct of “international” business. According to the Department of Justice in Canada, a violation of the CFPOA occurs if the bribery of a foreign public official takes place “in the course of business.” This means that bribery doesn’t need to occur through cross border transactions in order to violate the CFPOA, it must however, have close ties to Canada. In an example provided by the Department of Justice, it would be illegal to bribe a foreign public official in Canada to obtain a business contract to build a new wing on an embassy in Canada.

The consequences for violating the CFPOA consist of a five-year maximum term of imprisonment if found guilty of bribing a foreign public official- this ensures that it is an extraditable offence. Since corporations cannot be imprisoned, they can be fined. If a corporation is found guilty of violating the CFPOA, the dollar value of the fine has no maximum and is set at the discretion of a judge. As outlined on the website for the Department of Justice in Canada:

“The Act allows for “facilitation payments,” which are made to expedite or secure the performance by a foreign public official of any “act of a routine nature” that is part of the foreign public official’s duties or functions.”

In response to the OECD’s “laggard comment” mentioned above, the Department of Justice in Canada created a new division in the RCMP (Royal Canadian Mounted Police), with a commissioned officer responsible for overseeing the anti-corruption programs. The unit investigates tips related to corrupt acts to increase enforcement of the CFPOA.

Export Development Canada (EDC)

As part of EDC’s social responsibility commitments, they require companies to sign a statement of declaration that denies any presence of corruption in EDC supported business transactions. If the declaration is signed without knowledge of corruption related to the transaction, liability will be voided, unless “willful blindness” is proven. We have previously addressed this issue in a post written about control person liability.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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