Canada's "problematic" track record of ignoring bribery offences by its citizens and corporations abroad has prompted the Organization for Economic Co-operation and Development (OECD) to raise significant concerns in an unusually harsh report released Monday.
"Canada's regime for enforcement remains problematic in important areas," the Paris-based organization said in a statement, calling on Canada in its report to "urgently take such measures as may be necessary to prosecute its nationals for the bribery of foreign public officials."
Among the most serious problems, the OECD cites jurisdictional loopholes in Canada's laws, weak penalties and an insufficient number of prosecutors and police assigned to go after offenders.
"It's definitely a black eye for the country," said Rudy Duschek, a fraud examiner who works as a corporate consultant on white-collar crime. "Canada's enforcement against bribery is pathetic."
Since the Corruption of Foreign Public Officials Act came into force in 1999, Canada has only recorded a single conviction of a Canadian company on foreign bribery charges. (Another case is before the courts.) But the OECD found the penalty imposed - an Alberta company was fined $25,000, less than the bribe it paid - was too low to be "effective, proportionate and dissuasive."
The OECD notes that while Canada applies "nationality jurisdiction" - meaning a Canadian who commits an offence abroad is liable to prosecution and punishment here - to such crimes as child sex tourism and terrorism, it insists when it comes to bribery there must be a "real and substantial link" to Canadian territory.
The OECD calls that "overly restrictive."
"In Canada, the question is: Was the plot formed or hatched here? Some component has to be based here," explained Mark Morrison, a partner with Blake Cassels & Graydon LLP who specializes in anti-corruption compliance. "That makes it much more difficult to prosecute."
By contrast, the U.S. prosecutes its citizens accused of bribery abroad even if there is little or no geographic connection to their home country and the U.K. is planning changes to its laws to do likewise.
On a positive note, the OECD did single out the "diligent efforts" of a new RCMP Anti-Corruption unit which has "over 20 active investigations" under way - but it warned the future of these and other cases "may be uncertain" because of serious staff shortages.
It said Ottawa has no federal prosecutors exclusively devoted to handling these crimes and the RCMP unit has lost "many" members recently who are "often" re-assigned to the other investigations.
The OECD concluded there were enough "significant issues" raised in its report to ask Canada to "report back on progress" by October.
But there will be more bad news for Canada on the bribery front before that.
The Globe and Mail has learned that Transparency International (TI), a group that monitors corruption around the world, will again scold Canada for doing little to fight bribery in its annual ranking of countries this May.
For the past seven years Canada has been the only G7 state to be listed among the worst offenders with "little or no enforcement," joining such countries as Bulgaria, Greece, Mexico, and Poland.
"Canada will stay in the bottom category" one of the report's authors, Fritz Heimann, said in an interview.
"I find it shocking that with a legal system like Canada's so little has been done," he said, describing his upcoming report and the one issued by the OECD on Monday as "a damning and shaming exercise."
"It doesn't work as quickly as we would like," he said.