RCMP say Canadian companies are now self-reporting allegations of bribery

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More Canadian companies are self-reporting allegations of bribery and corruption to the RCMP to avoid criminal prosecutions that could land executives in jail and damage their businesses.

RCMP Inspector Denis Beaudoin of the National Division Sensitive and International Investigations unit said Canadian companies are taking advantage of a 2018 Criminal Code amendment that could allow them to pay financial penalties rather than face trial and potential conviction under the federal Corruption of Foreign Public Officials Act.

The introduction of remediation agreements in 2018 – often referred to by their U.S. name: deferred prosecution agreements – provides pretrial alternatives to address alleged corporate misconduct. They require a corporation to co-operate substantially with the police and prosecutors.

Deferred prosecution agreements were cast in the national spotlight in early 2019, when The Globe and Mail reported that Prime Minister Justin Trudeau and top aides attempted to persuade Jody Wilson-Raybould when she was attorney-general to overrule federal prosecutors and grant one to Montreal-based engineering and construction giant SNC-Lavalin Group Inc. on fraud and bribery charges.

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“What we are seeing is definitely an increase in self-reporting,” Insp. Beaudoin said in an interview. “Companies going from pretty much none before September, 2018, [when the law came into effect] to where we have them every year now.”

Insp. Beaudoin would not say how many companies have self-reported to the RCMP, but added that there are “several” every year.

In most cases, new company managers discover what looks like a bribery payment and bring the allegation to the RCMP. The people responsible often funnel money through a subcontractor, who then pays off a government official in a country where they want to obtain a contract.

Most corruption cases the Mounties are investigating involve companies in the mining, engineering and construction sector, Insp. Beaudoin said.

“Normally, they call us because the act has already occurred and they found out after the fact and they are scared about what could happen, so they decide to call us to do an investigation,” he said.

Even with self-reporting, Insp. Beaudoin says it takes three to four years to complete an investigation and refer the matter to the Public Prosecution Service of Canada to decide whether to grant a deferred prosecution agreement.

Still, the fact that Canadian companies are reporting allegations of bribery saves time and money, since offshore investigations of such crimes are complex and require the assistance of police in the affected countries, Insp. Beaudoin said.

Under the remediation law, companies can avoid prosecution if they undertake corporate governance reforms, pay hefty fines and turn over all available evidence of corruption by individual employees or subcontractors.

Companies prefer to seek a remediation agreement, because a criminal conviction would bar them from bidding on government contracts in Canada for up to five years, and up to 10 years in many other jurisdictions.

In August, 2019, federal Ethics Commissioner Mario Dion found Mr. Trudeau violated the Conflict of Interest Act by improperly pressing Ms. Wilson-Raybould to instruct the director of the Public Prosecution Service, Kathleen Roussel, to grant a deferred prosecution agreement.

The Prosecution Service had declined to do so because the offences were so serious. They centred on allegations the company paid $48-million to influence the awarding of government contracts under Moammar Gadhafi’s regime and defrauded various Libyan organizations of roughly $130-million.

In December, 2019, a division of SNC-Lavalin pleaded guilty to one charge of fraud and agreed to pay a $280-million fine.

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