White Collar Crime
Mark Morrison, Jamie Olsen, Paul Schabas, Sean Boyle and Simon Seida
On Wednesday, June 19, 2013, the amendments to the Corruption of Foreign Public Officials Act (CFPOA) received royal assent following passage by the Parliament of Canada on Tuesday, June 18, 2013. The amendments were originally proposed on February 5, 2013, and were intended to close significant loopholes, create certain new offences, and generally strengthen Canada's primary international anti-corruption legislation.
The amendments are a significant development for Canadian anti-corruption and anti-bribery law. Paired with the recent thrust of investigations and prosecutions, the amendments highlight the increased importance of a strong anti-corruption compliance program.
The following are the key changes and additions that the amendments introduce:
- Nationality Jurisdiction – Prior to the amendments, the CFPOA contained a significant loophole by applying territorial jurisdiction. Territorial jurisdiction created enforcement difficulties as there must be a territorial nexus between Canada and the offence for the CFPOA to apply, meaning that some part of the formulation, initiation or commission of the offence must have taken place within Canada. Considering that the CFPOA is directed at transactions that predominantly occur abroad, territorial jurisdiction hampered the ability of Canadian authorities to enforce the CFPOA in cases where the entire transaction occurs abroad.
The proposed amendments have closed the territorial jurisdiction loophole by employing nationality jurisdiction in line with other global anti-corruption legislation, such as the United States Foreign Corrupt Practices Act (FCPA). The relevant provision deems acts of Canadian citizens, permanent residents, corporations, societies, firms or partnerships on a worldwide basis to be acts within Canada for the purposes of the CFPOA. This provision essentially subjects all Canadian citizens and companies to global regulation by Canadian authorities under the CFPOA.
- Increased Penalties – The amendments have significantly increased the penalties for violations of the CFPOA. Maximum imprisonment for violation of the CFPOA is now 14 years, as opposed to five years prior to the amendments.
- Books and Records Offence – New offences now exist for concealing bribery in accounting records. Pursuant to the new books and records provisions, it is an offence to keep secret accounts, falsely record, not record or inadequately identify transactions, enter liabilities with incorrect identification of their object, use false documents, or destroy accounting books and records earlier than permitted by law for the purpose of concealing bribery of a public official. Similar to the bribery offence under the CFPOA, the new books and records provisions carry a maximum sentence of 14 years' imprisonment.
While this new offence shares some similarity with the books and records provisions of the FCPA, it is not likely to have the same impact in Canada as it has had in the United States. In the United States, a large number of FCPA settlements have been made pursuant to the books and records provisions, which include civil resolution options. Conversely, in Canada the new books and records provisions are criminal, meaning both that the authorities must prove an offence to the higher standard of proof, and also that there is no civil resolution option provided under the CFPOA.
- No Facilitation Payments – Prior to the amendments, an exception from the CFPOA's bribery prohibition existed in respect of facilitation payments. Facilitation payments are small payments to low-level officials made to secure or expedite performance of 'acts of a routine nature'. Under the amendments, the exception for facilitation payments will eventually be removed. The timing for removal of such exception is subject to a further order of the Governor in Council. Companies whose anti-corruption policies currently allow for facilitation payments should consider modifying their policy accordingly.
- No For-Profit Requirement – Prior to the amendments, application of the CFPOA was restricted to for-profit transactions. This allowed for potential arguments that any particular payment did not violate the CFPOA because it was not directly tied to a for-profit purpose. Under the amendments, this potential argument is no longer available as the for-profit restriction has been removed.
- Double Jeopardy – Previously, the CFPOA did not specifically address the potential availability of double jeopardy protection in circumstances involving prosecutions for the same conduct in different jurisdictions (for instance in the United States under the FCPA). While common law arguments for such protection did exist, the availability of a double jeopardy defence based on the principles of autrefois acquit or autrefois convict was by no means certain. The amendments now clarify this uncertainty and ensure that Canadian companies and individuals tried in another jurisdiction cannot be convicted for the same conduct in Canada.
The amendments culminate an effort by the Canadian government to increasingly combat bribery and corruption by Canadian citizens and companies. Both the scope and reach of the CFPOA has been expanded by these amendments, underscoring the need for companies with international operations to ensure implementation of robust anti-corruption compliance programs to deter and detect improper conduct. For further information on developing a robust anti-corruption compliance program, please click here.
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Tags: Litigation & Dispute Resolution, Business Crimes, Investigations & Compliance