A judge has approved a precedent-setting $10.35-million penalty against a Calgary energy company, describing its payment of $2-million to a diplomat's wife as the firm pursued lucrative opportunities in Africa as "an embarrassment to all Canadians."
The fine for Griffiths Energy International Inc., a small oil and gas firm based in Calgary, settles charges it faced under Canada's Corruption of Foreign Public Officials Act following a company investigation that unearthed payments made in connection with efforts to secure oil properties in the Republic of Chad. The penalty is the largest the RCMP has garnered since establishing specialized teams to investigate foreign corruption.
In Alberta's Court of Queen's Bench on Friday, Justice Scott Brooker called the case "a serious matter."
Justice Brooker, who in 2011 approved a $9.5-million fine for Niko Resources Ltd., which pleaded guilty to bribing a Bangladeshi minister with a luxury SUV and a trip to New York and Calgary, said not only is the case an embarrassment to Canadians, but it also undermines Chad's bureaucracy.
According to an agreed statement of facts filed in court this week, the late Bay Street financier Brad Griffiths and one of his business partners, Naeem Tyab, spent six months in 2008 establishing contacts within Chad's embassy and inquiring about oil and gas leases in the African country.
The pair, along with Parvez Tyab, founded Griffiths Energy – which considered bribing Chad's ambassador to Canada, Mahamoud Adam Bechir. However, Griffiths Energy's outside legal counsel advised against paying off the ambassador, who was based in Washington, D.C., because he was a government official.
Instead, Griffiths Energy paid a fee to a company owned by the ambassador's wife, Nouracham Niam, handing over a $2-million bribe in February, 2011, under the guise of consulting contracts, according to the filing.
"The major aggravating factor in this case is the size of the bribe made," Justice Brooker said on Friday, noting it was significantly more than what was seen in the Niko Resources case.
However, a new management team took over at Griffiths Energy during the summer of 2011. Immediately after learning of the company's agreements with Chad officials, the executives contracted Gowling Lafleur Henderson LLP to investigate the transactions. Justice Brooker noted the new management team went to police with the results of their internal investigation and saved the prosecution time and money. He said the company has now implemented robust internal anti-corruption measures and has shown remorse for its past actions.
Given all these factors, he concluded the $10.35-million penalty – recommended in a joint submission from the Crown and Griffiths Energy lawyers – is reasonable.
RCMP Inspector Greg Shields, head of Calgary's commercial crime section, said he knows of companies in the U.S. that have voluntarily disclosed corrupt foreign dealings to police, but this is the first time he has seen such a case in Canada.
"I believe that it does set a precedent as far as voluntary disclosure for corporations in Canada," said Insp. Shields.
"I'm hoping if there are similar cases with other corporations that they will also come forward," he said, adding the fines levied might be more favourable to companies if they voluntarily confess past misdeeds.
He said this settles actions related to Griffiths Energy but would not comment on the potential of further investigations related to the matter.
Gary Guidry, now president and chief executive officer of Griffiths Energy, also spoke briefly to reporters following the judgement.
"Griffiths Energy regrets the actions of the past management and the past board of directors. The actions were wrong. They were inappropriate," Mr. Guidry said.
"When we found those actions, we blew the whistle. We co-operated with the authorities."
He emphasized the Gowlings investigation "showed the inappropriate consulting agreements had nothing to do with the granting of licences" for the private company's exclusive rights to develop reserves in southern Chad. "We're glad to have this behind us, and ready to move on with what we do best – oil and gas exploration, and production."
Federal Crown prosecutor Bob Sigurdson said the $2-million cannot be retrieved at this time, however he has initiated forfeiture proceedings in relation to the shares purchased by the Chad ambassador's wife and two others. The court will re-visit the matter on Feb. 15.
Greg Draper, a forensic accountant with MNP LLP and a former RCMP white-collar crime investigator, said assessing penalties in cases such as Griffiths Energy is difficult because there's such limited Canadian case law.
Law enforcement officials, he said, will be "emboldened and buoyed" by verdicts such as these. However, it remains to be seen whether the decision by the Calgary company to proactively come clean, and accept the record fine, inspires other firms to do the same.
"It's significant leadership on the corporate governance side, and that's really to be commended," Mr. Draper said. "For other companies, it will really depend on whether they see the fine as a glass-half full or glass-half empty circumstance."