Law Times

Page 8 March 25, 2013 �� Law Times ��� Focus On Energy Law Businesses warned about foreign corruption Recent cases, legislative amendments suggest increased enforcement BY SIOBHAN McCLELLAND For Law Times T hose looking to do business in foreign countries by paying bribes should take note: recent cases and proposed legislative amendments suggest the government is cracking down on companies that bribe foreign public officials. In January, the court ordered oil and gas business Griffiths Energy International Inc. to pay $10.35 million in fines after the company pleaded guilty to bribery charges. The Calgary-based firm has subsidiaries that conduct oil and gas business in Chad. This latest prosecution, in addition to changes to anti-corruption legislation, signals a trend indicating the government is clamping down on bribery of foreign officials not only in the oil and gas sector but also in other Canadian industries operating abroad. ���There is a global push to get rid of corruption,��� says Michael Osborne, a partner at Affleck Greene McMurtry LLP. ���We���re in an environment right now where compliance with antibribery legislation is suddenly very much front and centre.��� Riyaz Dattu, a partner at Osler Hoskin & Harcourt LLP, agrees. He calls the Griffiths matter a very significant case following an earlier high-profile matter involving Niko Resources Ltd. ���The reason why I think Griffiths Energy is so remarkable is it confirms that the government is going to be vigorously enforcing the Corruption of Foreign Public Officials Act. Niko Resources is not an aberration but the start of a continuing trend that we���re going to see.��� The first notable decision in this line of anti-bribery cases occurred in 2003 when proceedings were ongoing regarding charges against Alberta-based Hydro Kleen Group Inc. over the payment of bribes of $30,000 to a U.S. immigration official. In January 2005, Hydro Kleen pleaded guilty to one count under the act. In January 2008, the RCMP established its international anti-corruption unit. Dattu says there are currently approximately 35 active investigations. In January 2009, Niko Resources found itself in hot water over improper payments to government officials in Bangladesh that resulted in a fine of $9.5 million. In March 2011, the Organization for Economic Cooperation and Development released its report evaluating Canada���s efforts to combat bribery of foreign public officials in international business transactions. The report noted several areas of concern for Canada, including the fact that the offence of bribing a foreign public official ���only applies to bribes for the purpose of obtaining or retaining an advantage of business carried out in Canada or elsewhere ���for profit.������ It wasn���t clear whether the provision also covered not-for-profit businesses. Another concern relates to low statutory maximum penalties for violating the Corruption of Foreign Pubic Officials Act. As well, the report stated that ���extraterritorial jurisdiction in Canada for offences under the [act] requires a ���real and substantial��� link to the territory of Canada.��� The OECD recommended Canada take ���such measures as may be necessary to prosecute its nationals for the bribery of foreign public officials committed abroad.��� Canada was to provide the OECD with a written followup report on the recommendations this month. In the most recent case involving Griffiths Energy, the company admitted that its subsidiary in Chad paid US$2 million to help secure exploration contracts in that country. The money went to a consulting company owned by Nouracham Niam, the wife of Chad���s ambassador, Mahamoud Bechir. Osborne says the cases ���are sending a pretty clear message that the government is taking this seriously and that we can expect aggressive enforcement going forward of the Corruption of Foreign Public Officials Act.��� Part of this aggressive enforcement lies in the proposed amendments to the act that are before the Senate in Bill S-14. The new amendments address several of the recommendations by the OECD, including ensuring that Canadian law can now deal with bribes occurring in foreign countries. ���Our current corruption of foreign officials law does not contain any express assumption of extraterritorial jurisdiction,��� says Osborne, adding that by their nature, offences involving bribes of foreign officials take place abroad. ���This is a problem because the whole purpose of the legislation is to deal with bribes paid to foreign governments.��� He says that the proposed amendments say the court can find Canadian companies, citizens or permanent residents guilty if they pay a bribe outside the country to a public official. However, he notes this also means ���Canadian citizens working for foreign companies will be caught by this provision.��� Another proposed amendment would expand the law so that it applies to not-for-profit companies as well. There���s also a new books-and-records offence that makes it illegal to falsify the document in order to hide bribes. Dattu says the provision ���will make it easier for the watch out for.��� To illustrate, Osborne says that when employees are negotiating with an agent to get business done and the person asks for a large commission, they���ll have to make inquiries about whether the payment amounts to a bribe. ���It���s wise to have an anticorruption clause in a contract with an agent or a supplier.��� Dattu also points out that ���We���re in an environment lawyers themselves have to be vigilant to ensure a bribery right now where compliance scheme doesn���t somehow imwith anti-bribery legislation plicate them. ���When engaged is suddenly very much in transactions where there is front and centre,��� a foreign component, transsays Michael Osborne. actional lawyers will have to make sure that they get people with expertise on antigovernment to convict, if not on the basis of bribery, on the basis corruption issues helping out on that payments that were made these deals to make sure that the out were not properly recorded due diligence that ought to be done is done properly.��� in the books and records.��� Although the legislation���s goal Maximum prison sentences will also increase for officers is to root out corruption, there���s and directors to 14 years from concern that the measures could cost Canadian businesses. five years. ���The hope is the playing field Finally, the bill repeals the exception for facilitation pay- will be levelled, that Canadian ments, an area defined under s. businesses will not find that 3(4) as a payment used to ���expe- their competitors will march in dite or secure the performance and pay the bribes happily,��� says by a foreign public official of Osborne. ���I���m not sure how effective that any act of a routine nature that is part of the foreign public of- will be because some countries are laxer than others. But there is ficial���s duties or functions.��� For lawyers whose clients have international scrutiny.��� He adds that ���in the short businesses in foreign countries, this means that clients need to be term, Canadian companies will aware of their need to conform to be at a bit of a disadvantage compared with companies that the proposed amendments. ���You need to have a compli- are unscrupulous and prepared to violate the law.��� ance program,��� says Dattu. ���In order for a law like this ���You need to train people. You need to have oversight over to work, the companies have to subsidiaries and foreign opera- trust that if they refuse to pay a tions and you need to update bribe, someone else won���t agree your compliance program regu- to pay that bribe,��� he says, notlarly to deal with issues that you ing that law-abiding companies encounter so that it���s a living have to rely on the government document, not simply a policy to enforce the law. ���If a Canadian company were statement that���s out there and to go abroad, be asked for a bribe, that nobody really follows.��� Osborne agrees. ���Basically, you and refuse and then another Caneed a policy that says we don���t nadian company comes along pay bribes and you need to edu- and pays the bribe, if the Canadicate your employees in this. You an government doesn���t detect and need to educate your employees prosecute that, then what does in the sorts of danger signs to that tell the honest company?��� LT A DAILY BLOG OF CANADIAN LEGAL NEWS [ WWW.CANADIANLAWYERMAG.COM/LEGALFEEDS ] LegalFeeds-BB-LT-Apr23-12.indd 1 www.lawtimesnews.com POWERED BY CANADIAN LAWYER & LAW TIMES 12-11-23 9:59 AM

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