The Lawyers Weekly - April 1, 2011

THE LAWYERS WEEKLY
April 1, 2011 | 15

Governments around the world increasingly focus on preventing the practice of bribery of foreign government officials. Two of the most recent examples of the current impetus for enforcement are the pending implementation of the Dodd-Frank Act in the U.S. and the Anti-Bribery Act in the U.K.

The Dodd-Frank Act, a major financial reform bill signed into law on July 21, 2010, creates an incentive for “whistleblowers,” entitling individuals who alert the Securities and Exchange Commission or the Commodities Futures Trading Commission of violations of securities and commodities laws from 10 to 30 per cent of any recovery in excess of $1 million. Although the Dodd-Frank Act has faced criticism from major U.S. companies for placing U.S. filers at a competitive disadvantage, there is no indication the implementation of the Act will be impeded on this basis.

The U.S. already has a strong track record of combating corruption under the Foreign Corrupt Practices Act (FCPA). Enforcement actions leading to hundreds of millions in fines against major corporations such as Siemens, Halliburton/KBR and Technip have reminded the world of the potential severity of facing charges for violation of the FCPA. The Dodd-Frank Act will tighten the noose on foreign bribery practices even further.

The U.K. has also been actively combating international bribery, most notably penalizing both BAE Systems and Innospec Ltd. However, the U.K. Bribery Act 2010 will bring the threat of enforcement, and the reach of the U.K.’s laws, to a new level. Although the subject of significant criticism by the U.K. business community which has led

ANDREW
THOMPSON

&PRAKASH
NARAYANAN

“

Since the enactment of Canada’s Corruption of Foreign Public Officials Act,…Canada has been the subject of criticism both at home and abroad for its shortcomings in enforcement.

to the implementation of the Act being postponed, the Act (if implemented in its current form) will be sweeping in its scope and potentially far broader than the FCPA.

For example, the Act will create a new strict liability corporate offence (no knowledge or element of intent required) for failing to prevent bribery. There are also fewer exceptions for offenders; for example, the Act does not include an exception for “ facilitation payments” (payments made to expedite or secure performance of routine, non-discretion-ary governmental action).

So where does Canada stack up against these two close allies?

Since the enactment of Canada’s
Corruption of Foreign Public Offi-
cials Act (CFPOA) in 1999, Can-
ada has been the subject of criti-
cism both at home and abroad for
its shortcomings in enforcement.
In fact, a 2004 report by an
Organization for Economic Co-
operation and Development
(OECD) working group on cor-
ruption stated that “no govern-
ment-wide agenda for proactively
addressing foreign bribery has
been developed [by Canada].”
Part of the criticism Canada
has faced is due to limited
enforcement. There have only
been two prosecutions under the
CFPOA made public to date. The
first concerned bribes paid by
Hydro Kleen Group Inc. to a sen-
ior U.S. immigration inspector at
the Calgary International Airport.
The second, currently in progress
at the Ontario provincial court in
Ottawa, involves the alleged brib-
ery of an Indian government offi-
cial by a former employee of
Cryptometrics Canada Inc.

Some of the explanation for Canada’s limited record is attributable to situational factors. The CFPOA is only 11 years old and arguably one should expect growing pains with implementation. For instance, the first 11 years of FCPA resulted in only a small number of prosecutions relative to today’s number (averaging about three FCPA-related prosecutions a year).

Canadian enforcement efforts may also be hampered by institutional impediments. For instance, Canada has not empowered its securities exchanges to enforce the CFPOA, instead relying on the RCMP. Canada is also the only signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions that applies “territorial jurisdic-

An oddity in International Trade

Lawddities Lawddities Snakes (and more) on a plane

Thailand airport authorities recently detained a man for attempting to smuggle over 200 rare and endangered animals out of the country — in three suitcases.

Bangkok officials detained the Indonesian man after a luggage scan at the airport revealed images of a large assortment of animals jammed inside his three bags. The animals included tortoises, snakes, a parrot, spiders, lizards and even a squirrel. The man is in police custody and faces charges for his illegal smuggling attempt, according to TRAFFIC, a wildlife trade monitoring network.

Forget Snakes on a Plane— this guy brought the whole zoo. — Natalie Fraser

Legal Oddities in (Blank) Law

tion” to the offence of bribing a foreign public official, requiring that a court find a “real and substantial connection” between the alleged offence and Canada. In contrast, other countries have adopted the “nationality principle,” which extends jurisdiction over nationals even when that national is abroad without requiring any jurisdictional nexus.

However, Canada has taken steps to ramp up enforcement efforts. In 2008, the RCMP created the International Anti-Cor-ruption Unit; the RCMP confirmed in February that the unit is pursuing 23 separate investigations under the CFPOA.

In the coming years, we may
see greater levels of enforcement
in Canada. However, until Can-
ada’s legislators address some of
the systemic issues noted above, it
is likely that Canada will be
unable to match the efforts of its
peers in the U.S. and U.K. n

Andrew Thompson is an associate practising in the Business and International Trade Groups with Blake, Cassels & Graydon LLP in Toronto. Prakash Narayanan is an associate at the same firm, where he practises in the Business and International Trade Groups, as well as being a member of the India Practice Group.

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