The Canadian Institute - Anti Corruption And Bribery Compliance US, UK, EU And Canada: How Does It All Fit Together?

Introduction

Compared to the relevant legislation in the U.S. and U.K. Canada's Corruption of Foreign Public Officials Act (CFPOA) is an exceedingly quick read. The full Act comprises two pages and can be read thoroughly in approximately five minutes. However, the reality is that for many Canadian corporations a review of the CFPOA alone is not enough. Most multinational Corporations will need to focus as much on the FCPA and the new UK Act as they do on the CFPOA.

This paper will outline some of the limitations of the CFPOA and consider, in contrast, the breadth of the U.S. and U.K. legislation.

Offence

The CFPOA makes it an offence to directly or indirectly give, offer or agree 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 official in order to obtain or retain an advantage in the course of business. Specifically the charging section states as follows:

3. (1) Every person commits an offence who, 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

   (a) as consideration for an act or omission by the official in connection with the performance of the official's duties or functions; or

   (b) 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.

   A foreign public official is defined as any person who holds a legislative, administrative or judicial position for a foreign state, a person who performs public duties or functions for a foreign state, including a person employed by a board, commission, corporation or other body or authority that is established to perform a duty or function on behalf of the foreign state, or is performing such a duty or function. It also includes an official or agent of a public international organization that is formed by two or more states or governments or by two or more public international organizations.

   Importantly the CFPOA defines business to mean any business, profession, trade, calling, manufacture or undertaking of any kind carried on in Canada or elsewhere for profit.

   The penalty provision allows for a sentence of up to five years in prison and/or an unlimited fine. Probation is also available to the corporate entity that would typically be focussed on future compliance and auditing procedures and governmental oversight. In the first significant Canadian CFPOA offence, Niko Resources Ltd. was fined $9.5 million and placed on probation for three years.

   Exceptions

   There are essentially three defences to payments that could otherwise be characterized as offensive under the Act. The CFPOA permits a loan, reward, advantage or payment in circumstances where:

   (i) it is permitted or required under the laws of the foreign state;

   (ii) the payment was a reasonable business expense; and

   (iii) the payment falls within the 'facilitation payment' exception.

   Jurisdiction

   On jurisdiction, Canada stands alone. In contrast to the U.K. and U.S. Acts, Canada's jurisdiction is relatively narrow. Indeed, Canada is the only party to the OECD Convention that relies on territorial jurisdiction as opposed to nationality jurisdiction. This fact is seen as a potential obstacle to effective enforcement of our international obligations. The OECD Working Group has concluded that Canada's jurisdiction is much narrower than for most other Convention Parties.

   In the Guide prepared by the Department of Justice, Canada's jurisdiction is described as follows:

   'Canada has jurisdiction over the bribery of foreign public officials when the offence is committed in whole or in part in its territory. To be subject to the jurisdiction of Canadian courts, a significant portion of the activities constituting the offence must take place in Canada. There is a sufficient basis for jurisdiction where there is a real and substantial link between the offence and Canada. In making this assessment, the court must consider all relevant facts that happened in Canada that may legitimately give Canada an interest in prosecuting the offence. Subsequently, the court must then determine whether there is anything in those facts that offends international comity. (See R. v. Libman (1985), 21 C.C.C. (3d) 206 (S.C.C.))'

   The issue of the limits on territorial jurisdiction as it applies to the CFPOA has yet to be addressed head on by the Canadian courts. The Canadian decision most often referred to in the context of extraterritorial or transnational jurisdiction is the Supreme Court of Canada decision in R. v. Libman. The court noted that the primary basis of Canadian criminal jurisdiction is territorial. The court further commented as follows:

   '...States ordinarily have little interest in prohibiting activities that occur abroad and they are, as well, hesitant to incur the displeasure of other states by indiscriminate attempts to control activities that take place wholly within the boundaries of those other countries...'

   The court in Libman held, as reflected in the CFPOA Guide, that in considering Canadian jurisdiction over transnational offences, the courts must take into account all relevant facts that take place in Canada 'that may legitimately give this country an interest in prosecuting the offence. The jurisdictional threshold from that decision, is whether there is a 'real and substantial link' between the offence and Canada. It was also held in that decision that to make an offence subject to Canadian jurisdiction a significant portion of the activities constituting the offence had to take place in Canada.

   When the Libman case was decided in 1985 the Supreme Court commented that transnational offences were not a type the courts had been called upon to deal with frequently. Much has changed since that time. International commerce has grown exponentially. It is impossible to predict how that growth would affect future Supreme Court rulings on territorial jurisdiction.

   The Supreme Court in Libman noted that it would be a 'sad commentary on our law' if seasoned practitioners could 'operate on a world-wide scale from a Canadian base by the simple manipulation of a technicality of the law's own making. The Libman decision leaves a lot of room for debate whether isolated acts in foreign states would be sufficient to reach the threshold of a 'real and substantial link' between the offence and Canada.

   In 2009 Parliament made a failed attempt to address the jurisdiction issue. In part, Bill C-31 was going to amend the CFPOA to incorporate a nationality principal. In order to get around the potential roadblock of the existing caselaw, deeming provisions were going to be put in place by Bill C-31. Those provisions would have extended the jurisdiction...