For years Canada's enforcement of foreign bribery was a joke relative to the U.S., Germany and the U.K. -- that is, relative to other major economies -- but some recent movement has got people thinking that things are starting to change.
Technically, Canada already has legislation in place, the Corruption of Foreign Public Officials Act, passed in 1999, but the country has been criticized for weak enforcement. The Act is also considered ineffective because it has a narrow jurisdiction, so foreign subsidiaries of Canadian companies may be exempt, and Canadians who live abroad do not apply.
Still, Mark Mendelsohn of law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP said things here appear to be improving, and of all people, he would know. Before joining the firm, he was deputy chief of the fraud section of the criminal division of the United States Department of Justice.
For some history, Canada's first foreign bribery prosecution was a minor one in 2005, involving Hydro-Kleen, and the next charge wasn't laid until July 2010. Then last year Niko Resources was dinged for bribery of public officials in Bangladesh and paid a $9.5-million fine.
Behind the scenes, the RCMP set up two special units in Calgary and Ottawa in 2008 to specifically investigate overseas corruption. As of 2011, 23 probes are underway.
So progress, yes. But we're still far behind our southern neighbours, who are governed by the Foreign Corrupt Practices Act. Under that legislation, 18 individuals have been charged, including 12 foreign citizens and three dual citizens, and five defendants were sentenced in 2011 with jail terms that ranged from 24 months to 15 years.
And while Niko Resource's $9.5-million fine was big for Canadians, it was modest by American standards. South of the border, 16 companies have been charged with average sanctions of $34-million (U.S.). However, that number is skewed by some very large payments, including $219-million for JGC and $70-million for Johnson & Johnson.
The sectors under the most scrutiny include financial institutions and private equity, pharma, and both oil and gas and mining. For anyone in these areas, Mr. Mendelsohn pointed out that what may seem like frivolous items, such as small gifts, travel and hospitality may qualify as bribes. And the sums don't have to be big. Companies can be investigated for alleged bribes of just hundreds of, or a few thousand, dollars.
Tim Kiladze