Law Times

Law Times • JuLy 23, 2012 Forensics/Private Investigators FOCUS ON Anti-corruption law getting some bite Recent arrests confirm new get-serious attitude towards bribery BY JUDY VAN RHIJN For Law Times new get-serious attitude by law enforcers towards bribery and corruption. With legislation proliferating around the globe and increased enforcement of existing laws, more and more Canadian companies are seek- ing guidance on how to wend their way through an increas- ingly complex international en- vironment. Although the act had been R ecent arrests under the Corruption of For- eign Public Officials Act have confirmed a in force since December 1998, it has taken more than a decade for any real expectation of en- forcement to permeate the busi- ness community. It was only as recently as 2008 that the RCMP established its international anti- corruption unit comprised of two seven-member teams based in Ottawa and Calgary. The Pub- lic Prosecution Service of Cana- da has also established a subject- matter expert position located in Ottawa that liaises with other key organizations. Although investi- gations take a very long time, these measures have started to show results. In 2005, Hydro-Kleen Group Inc. pleaded guilty to bribing a U.S. immigration officer who worked at the Calgary Interna- tional Airport and was ordered to pay a fine of $25,000. On July 24, 2011, Niko Resources Ltd. pleaded guilty in relation to pay- ments and benefits forwarded to the Bangladesh state minister for energy and mineral resourc- es. The company received a fine of $9,499,000 and a probation order for three years. have laid charges against Na- zir Karigar, the first individual charged under the act, for al- legedly making a payment to an Indian government official to obtain a multimillion-dol- lar contract for a Canadian technology firm. This mat- ter is due to come before the Ontario Superior Court of Justice in September. In late April 2012, two former SNC- Lavalin Group Inc. employ- ees were charged with cor- ruption in relation to a bridge project in Bangladesh. More charges may well be in the works as the RCMP currently has more than 20 investiga- tions underway. Susan Hutton, a partner Since then, authorities to employees abroad? Abso- lutely, not be expensive to create. It's " says Hutton. "It need a simple piece of legislation. Senior management must be aware of it and make it clear they won't tolerate any vio- lations of the law and make sure nobody does violate. Corrupt practices often come to light when businesses are changing hands, says Andrew Faith. at Stikeman Elliott LLP, warns companies that if anti-corrup- tion wasn't on their radar screen before, it certainly should be now. "The Canadian legislation is part of a web of similar leg- islation, but the scope of each country' If a Canadian company has con- nections to the U.S. or the U.K., they must ensure that they are instructing their employees to be on the lookout for transgressions under those acts as well. They must keep as tight control of their foreign employees as they do of their domestic employees. They must keep their eyes and ears open." Andrew Faith of Polley Faith s legislation is different. rica, eastern Europe, Russia, and Asia where there is ingrained corruption. There are so many Canadian mining and energy companies operating around the world which have limited oversight of those things. They are hiring people locally and are not aware of what local offices are doing. Those people are part of the culture and want to suc- ceed in their business." In Faith' LLP in Toronto began his career doing investigations under the U.S. Foreign Corrupt Practices Act that came into force in the 1970s. "You see a lot of this be- haviour in places where it' of the business fabric," he says. "It' s part s a long-standing practice that goes on in countries like Af- practices oſten come to light when businesses are changing hands. "You oſten see, through the due-diligence process, sums of money paid inexplicably. There may be transfers of funds or benefits to people in govern- ment in a foreign country. That' s experience, corrupt what the legislation is designed to address: North American companies assisting in the cor- ruption of public officials abroad and benefiting from that. Now the government is getting bet- ter and smarter at enforcing the [act]. They are combating that very effectively. s " can be severe. "One reason companies should be very con- cerned that they are not contra- vening the act is that one of the potential penalties is jail, The penalties, Hutton notes, tions need to audit corporate governance and their head- quarters' oversight of field officers and put policies in place so they can detect any non-compliance. Faith agrees. "Organiza- " also needs to address the company' help to speed up the thing they are already supposed to be do- ing, warns. "They should be taking proactive steps to ensure that they are not operating in defen- sive mode where they are leſt trying to mitigate damages." In fact, the maximum penalty " she tion payments. "The act ex- cludes facilitation payments to government officials that An anti-corruption policy s attitude to facilita- " them to do something they shouldn't. Nor should it influence a government decision to award new business or to continue to do business with the company. That' " says Faith. "It is not meant to influence laid out in the law is five years of prison, which makes it an extra- ditable offence. Judges have the discretion to impose any fines with no maximum. There are also the commercial ramifica- tions. In the SNC-Lavalin mat- ter, the accusations of bribery prompted the World Bank to suspend a US$1.2-billion loan and temporarily barred a com- pany subsidiary from bidding on other contracts in the country. For this reason, lawyers should be advising their clients to put anti-corruption programs and policies in place. "Do you need a formal program explicit CANADIAN LAW LIST 2012 YOUR INSTANT CONNECTION TO CANADA'S LEGAL NETWORK Inside you will find: • an up-to-date alphabetical listing of more than 58,000 barristers, solicitors and Quebec notaries, corporate counsel, law firms and judges in Canada; • contact information for the Supreme Court of Canada, the Federal Court of Canada, Federal Cabinet Ministers, departments, boards, commissions and Crown corporations; • legal and government contact information related to each province for the Courts of Appeal, Supreme Courts, County and District Courts, Provincial Courts, law societies, law schools, Legal Aid, and other law-related offices of importance. MORE THAN A PHONE BOOK Hardbound • Published February each year • On subscription $149 • L88804-571-26084 One-time purchase $165 • L88804-571 • ISSN 0084-8573 Prices subject to change without notice,to applicable taxes and shipping & handling. Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation www.lawtimesnews.com CLL - 1/4 pg - 5X.indd 1 1/20/12 10:55 AM CANADIAN LAW LIST clearly not a facilitation payment. The government realized com- panies find it hard to compete if they can't do that. In some coun- tries, it' s tine government acts done." arranging delivery of mail, get- ting a visa or securing water service or electricity. "It' s essential to getting rou- Faith gives the examples of acknowledgment that not to exempt it would completely handcuff Canadian business." "There is a basic under- s an PAGE 9 standing in Canadian law that facilitation payments are small payments to officials who aren't otherwise paid enough," says Hutton. "For example, when See Facilitation, page 13

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