Canada’s First Fraud Bribery Trial of CFPOA Results in Conviction

Posted by Shannon Walker

on September 4, 2013

stock illustration bribeThe first Canadian trial of an individual accused of violating the Corruption of Foreign Public Officials Act has resulted in a conviction. Mr. Nazir Karigar, an agent for Cryptometrics Canada, was convicted for agreeing to pay $450,000 in cash to Air India officials and the Indian Minister of Civil Aviation in order to secure a contract for the purchase of facial recognition software. While three companies have already pleaded guilty to violations of the CFPOA, this is the first case to go to trial and the first conviction of an individual under the CFPOA.

The ruling gives a broad interpretation to the elements of a bribery offence. Specifically, what is required to prove a conspiracy and to define what a payment of a bribe legally is. This ruling will undoubtedly be looked upon favourably by the Crown, and more charges under the CFPOA offences will undoubtedly follow.

According to Crown documents, in April 2006, Mr. Karigar met colleagues in India to determine how to win the Air India bid, and the point was made that Indian officials would have to be paid in order to secure the contract. Shortly thereafter, Mr. Karigar gave the Vice President of Business Development for Cryptometrics documents listing various Air India officials and how much money and how many company shares each official should be offered.

Cryptometrics transferred $200,000 to Mr. Karigar’s Indian bank account in June 2006, in response to an email in which Karigar stated that the money was needed to pay an Air India official. The money was allegedly intended to bribe a Mr. Mascarenhas, who was the co-chair of the Air India selection committee at the time. Approximately 6 weeks later, in August 2006, CryptoMetrics was short-listed as one of two qualified bidders.

In March 2007 the CEO of Cryptometrics entered into an agreement with Mr. Karigar to transfer $250,000 into his Indian bank account in order to secure the Air India contract. Emails state that if the contract was not won, the money would be returned to the Cryptometrics.

In May 2007, (presumably) suspecting that an investigation was being launched, Mr. Karigar met with a Canadian trade commissioner in Mumbai and told her that Cryptometrics used an agent to pay a bribe to the Indian Minister of Civil Aviation in order to finalize the contract. The Air India contract was never finalized.

Mr. Karigar emailed the fraud section of the US Department of Justice in August 2007, with a short description of the bribery scheme and a request for immunity. (Cryptometrics’ headquarters were in the US)

The Justice agreed with Mr. Karigar’s defence counsel that the evidence did not prove that bribes were actually paid to specific public officials. However, he found that the evidence proved beyond a reasonable doubt that Mr. Karigar conspired with others at Cryptometrics to offer bribes to obtain the Air India contract.

The Justice stated that requiring proof of the offer or receipt of a bribe, and the identity of a specific foreign public official, would be too burdensome and make the CFPOA difficult to enforce given the challenges in obtaining evidence from some foreign jurisdictions.

The CFPOA definition of bribe describes a person 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” in order to induce the official to influence an act or decision.

Mr. Karigar’s defence counsel argued that the word “agrees” required an agreement between the person paying the bribe and the person receiving the bribe, which was not proven on the evidence at trial. The Crown argued that receipt of a bribe is not required to prove a bribery offence, but rather that a conspiracy or agreement to bribe a foreign public official is sufficient.

The Justice found that the action required to prove the “agrees” element of the offence is a conspiracy to pay a bribe and a belief that a bribe was paid to a foreign public official. Any agreement between two people to make or offer a bribe is sufficient.

The Crown is therefore not required to prove that a bribe was actually paid to a foreign public official who had the ability to offer a business advantage. This makes it easier for the Crown to prove bribery offences, because it would often be difficult to prove that a foreign official actually agreed to receive a bribe and the official actually received the payment.

This also makes it easier to prove bribery offences because the Crown does not have to prove the identity of a particular recipient of the intended payment.

A “real and substantial link” to Canada existed because Mr. Karigar was a Canadian resident for many years, he was employed or acted as an agent for Cryptometrics Canada, he contemplated obtaining work for a Canadian company through bribery, much of the work under the potential Air India contract would have been done by employees in Canada, and most of the documents and emails were seized in Canada.

This is an important interpretation of the “real and substantial link” test. Amendments to the CFPOA in June 2013 will make it easier to prosecute bribery offences by creating jurisdiction over Canadian citizens, permanent residents, and businesses organized under federal or provincial laws wherever they are in the world. There is little doubt that this precedent will result in many more prosecutions of both individuals and corporations in Canada.