Costs of corruption can be staggering
Risk can loom larger in a smaller world By Donalee Moulton
Greasing palms is now very risky business. And very expensive business. Niko Resources Ltd, a publicly traded natural
gas company based in Calgary, found
that out the hard way last summer when
it pleaded guilty in the Court of Queen’s
Bench to one count of bribery under the
federal Corruption of Foreign Public Officials Act (CFPOA). The conviction — the
first since the establishment of a special
CFPOA investigative unit in 2008 — cost
the firm roughly $9.5-million in fines and
three years on probation.
This was no slap on the wrist, and in
the wake of the court’s decision, in-house
counsel are taking a closer look at their
own anti-bribery policies and processes.
Corruption “is a big issue for any company that does business outside the country. The world is getting smaller,” said
James Klotz, a partner in the Business Law
Group of Miller Thomson LLP in Toronto.
It is also nuanced, he said. “Corrup-
tion is very complex. At one end of the
spectrum is handing the envelope of cash
to an official. That’s pretty easy [to as-
sess], but what if you take an official to
lunch every day?”
The answer to those questions lies in
understanding the global landscape in
which an organization operates. “An
in-house lawyer should ensure the com-
pany understands the full range of for-
eign and domestic anti-corruption laws,
and best practices, that apply to its op-
erations— which may vary dramatically
from country to country and transaction
to transaction,” said Patrick Garver, se-
nior advisor to the Good Governance
Group, a British-based strategic advisory
company, and former general counsel of
Barrick Gold Corp. in Toronto.
“As a rule, wherever a company op-
erates, they are subject to the laws of
that jurisdiction,” said Cliff Sosnow, a
partner with Blake Cassels & Graydon
LLP (Blakes) in Ottawa. “However,
there are key jurisdictions whose laws
bear careful scrutiny simply because of
the intensity of government oversight
or the breadth of application. For Cana-
dian companies, in addition to Canadian
law, in-house counsel need to consider
the scope and application to company
operations of the U.S. Foreign Corrupt
Practices Act and the U.K. Bribery Act.”
Once in-house counsel understand
the lay of the land, they need to act.
“Counsel should help tailor the com-
pany’s anti-corruption policies to the
company’s particular risk profile in
terms of where it does business, the in-
dustry in which it operates, the nature
of its normal transactions, its points
of contact with government officials,
and the like. That keeps the policies
relevant and efficient,” Garver said.
The policies must be grounded in reality,
said Adam Rambert, an associate with
Norton Rose Canada LLP in Toronto.
“Robust anti-bribery policies must reflect
both applicable laws and business activi-
ties,” he stressed.
