CFPOA: Canada Increases Corruption Enforcement
On February 5, 2013 the federal government proposed amendments to the Corruption of Foreign Public Officials Act (CFPOA) which, if passed, were intended to give Canada a much broader reach and pose a more serious threat to Canadians and Canadian businesses who attempt to gain a business advantage through bribery. On June 19, 2013, the amendments were passed and granted Royal Assent status.
The CFPOA prohibits giving or even offering any type of benefit to a foreign public official, or any other person, where the intention is to obtain or retain a business advantage. Since the 2008 creation of the RCMP’s International Anti-Corruption Unit, the government has increased enforcement and pursued several high profile corruption cases. As is evidenced by these amendments, the Canadian Government has signalled that it will increase its efforts to combat international corruption. These amendments speak to the Government’s tougher approach to enforcement of the CFPOA in recent years, as witnessed by prosecutions of Niko Resources in 2011 and more recently of Griffiths Energy, both of which plead guilty to offences under the CFPOA. In some ways, the CFPOA will now be tougher than its US counterpart (FCPA)
The amendments ultimately make several significant changes to the CFPOA, including establishing the nationality principle as the basis of jurisdiction for offences, broadening the definition of “business” to which the CFPOA applies, creating a books and records offence and increasing the maximum term of imprisonment. It also provides exclusive authority to the RCMP to prosecute in respect of charges, and increases the maximum individual penalty from 5 to 14 years imprisonment.
The new changes are in currently enforceable, but the amendment repealing the CFPOA provisions regarding the facilitation of payments, will come into force on a date fixed by the Government.
The legislation, in its current form, applies to activities with a “real and substantial” connection to Canada, but the entrenchment of the nationality principle will mean that the CFPOA will cover activities by Canadian nationals and Canadian-based businesses regardless of where the activity took place. Also of note, by removing the words “for profit” from the definition of “business” in the previous version, the amendments ensure that the Act applies to all business activities, whether profitable or pursued as a loss-leader.
The amendments also stand to increase the number of activities that fall within the scope of the Act, by eliminating an exception for facilitation payments. Facilitation payments are made to expedite or secure acts of a routine nature by foreign public officials (e.g., payments made to a customs official to clear goods more quickly).
A new books and records offence similar to that contained in the FCPA was introduced. The new offence will capture activities that falsify or hide records and payments related to the bribery of foreign public officials. A key difference is that the new offence will be a criminal offence subject to the “beyond a reasonable doubt” threshold. The comparable U.S. provision is enforced civilly and falls under a less onerous civil “balance of probabilities” but does not attract criminal liability for the book-keeping offence.
Previously, charges under the CFPOA could be recommended by any police force in Canada, but the amendments give exclusive authority to prosecute to the RCMP. According to the original Government announcement in 2008, the RCMP established an International Anti-Corruption Unit, which is dedicated to raising awareness about and enforcing the CFPOA. Giving unique responsibility for enforcement to the RCMP Unit should lead to greater consistency in the enforcement of the law and to a more efficient use of resources.
Finally,the amendments will also increase the penalty for individual offenders. The maximum penalty will go from a maximum of five years imprisonment to a 14 year jail term for individuals. The unlimited fines for individuals and corporations, subject to the discretion of the judge, remains.