Canada Continues Efforts In Battling Foreign Corruption – 2017 In Review And What To Expect For 2018

In recent years, Canada has been steadily increasing its efforts at combatting corruption of public officials and improving transparency of payments involving governments and government-owned entities at home and abroad. 2017 was no exception to this trend, as Canada took several steps forward in combatting corruption. However, 2017 also witnessed important setbacks in those efforts and exposed certain enforcement pitfalls which speak to the limits of Canada's foreign corruption regime.

Here are some of the 2017 highlights of Canada's fight against foreign corruption to be aware of when addressing anti-corruption compliance, investigations and enforcement issues in 2018: (1) new developments in the enforcement of the Corruption of Foreign Public Officials Act;1 (2) repeal of the facilitation payment exemption under the CFPOA; (3) public consultations on Deferred Prosecution Agreements ("DPAs"); and (4) full implementation of the Extractive Sector Transparency Measures Act.2

1. CFPOA Enforcement

   Since the adoption of the CFPOA in 1998, there have been three foreign bribery convictions on guilty pleas - Hydro-Kleen Group (2005 - $25,000 fine), Niko Resources (2011 - $9.499 million fine plus a three-year monitoring order), and Griffiths Energy International Inc. (2013 - $10.35 million fine) - and one trial conviction of an individual, Nazir Karigar. A 2016 Parliament report has noted that there are 10 ongoing investigations in which charges have not yet been brought.3

   2017 continued to see a trend towards increased scope and enforcement of the CFPOA, Canada's primary foreign corruption law.4 This trend picks up on the June 2013 amendments to the CFPOA which bolstered the CFPOA with the introduction of a nationality-based jurisdiction and a books and records offence - powerful enforcement tools which have yet to be used in prosecution.

   The following summarizes the ups and downs of foreign corruption enforcement that made the news last year.

   1. Acquittals in R v Wallace

      2017 began with the momentous dismissal, in R v Wallace, of foreign corruption charges brought against three former SNC-Lavalin executives who were accused of bribing Bangladeshi officials in connection with the Padma Bridge project.5

      The Canada's Royal Canadian Mounted Police ("RCMP") had initially charged five individuals in connection with this matter. Charges against a foreign SNC-Lavalin agent were dismissed for want of jurisdiction6 and charges against another individual were dropped in exchange for his cooperation. The three remaining accused moved to exclude the prosecution's wiretap evidence. They argued most notably that the wiretaps were illegal, because they had been issued on the basis of non-credible and uncorroborated information obtained from anonymous tipsters by the primary lender for the Padma Bridge project, the World Bank.

      The Vice Presidency of Integrity ("INT") of the World Bank had initially approached the RCMP with information related to bribery allegations from four "tipsters", all but one of which remained anonymous. Based on these allegations, and without corroboration of their identity or information, the RCMP obtained a warrant to intercept communications of the SNC-Lavalin individuals.

      The former executives brought an application to have the wiretaps excluded. To support their application, the accused brought a motion seeking the production of the World Bank's investigative materials, including communications with the tipsters and source documents. As, under Canadian law, World Bank employees are granted immunity from court orders, the former executives further argued that whatever immunity the World Bank had under Canadian law against local proceedings had been waived by participating in the RCMP investigation.

      The disclosure application was fought all the way up to the Supreme Court of Canada where it was defeated.7 In upholding the World Bank's immunity over its investigation, the Court stressed the importance of worldwide cooperation among law enforcement authorities and international financial organizations such as the World Bank in the fight against the global problem of corruption. This ruling provides significant protection to the World Bank INT, and also improves the likelihood of cooperation between the World Bank and Canadian authorities in the future. An adverse finding could have resulted in a chilling effect on cooperation between these authorities. Given the expertise and information that is available to the World Bank, allowing this type of involvement can be crucial to prosecutions.

      Despite this setback, the accused nonetheless...