Introduction
Facts
Basis for partial acquittal
Requirement to prove accused knew foreign public official's status
Test under US law


Introduction

Amidst the media focus on the ongoing SNC-Lavalin proceedings, the conviction of two businesspeople on charges of bribing foreign public officials in India appears to have crept under the radar. Yet the judgment in question, that of the Ontario Superior Court of Justice in R v Barra,(1) is notable in the context of enforcement of Canada's Corruption of Foreign Public Officials Act because of the court's views on who is a foreign public official and the requirement that the Crown prove that the accused had knowledge of the status.(2)

Facts

The convictions in Barra arise from the same factual matrix addressed in the 2014 case of R v Karigar.(3) Karigar was the first case in which an individual was sentenced to jail time for an offence under the Corruption of Foreign Public Officials Act (the 67-year-old Mr Karigar was sentenced to three years' imprisonment).

As in Karigar, the charges in Barra concerned agreements to pay bribes to two employees of Air India and the Indian minister of civil aviation in order to secure a contract for Cryptometrics Canada Inc for the sale of facial recognition software. Robert Barra, the US-based CEO of the parent company of Cryptometrics, and Shailesh Govindia, a local agent in India, were both charged with an offence under Section 3 of the Corruption of Foreign Public Officials Act.

The court found Barra and Govindia guilty of agreeing to pay bribes to the minister of aviation. By itself, the fact that the Crown secured two convictions is worthy of attention, especially given that only a handful of Corruption of Foreign Public Officials Act charges have been brought to date and even fewer have resulted in convictions. However, the most significant aspect of Justice Smith's decision is the acquittal of Barra on charges of bribing the two Air India employees.

Basis for partial acquittal

As a starting point, Smith concluded that the two Air India employees were indeed 'foreign public officials' within the meaning of the Corruption of Foreign Public Officials Act, consistent with the finding of Justice Hackland in Karigar. Central to this conclusion was the fact that Air India was "directly owned by the Indian Government".(4) However, Smith also found that the Crown was required to prove that Barra knew the official character of the two Air India employees. Thus, while there was a conviction on the bribery of the Indian minister of civil aviation, there was also an acquittal on the bribery of the two Air India employees on the basis of Barra's lack of knowledge of their official status.

Requirement to prove accused knew foreign public official's status

This requirement to prove the accused's knowledge of the employees' status as foreign public officials was not addressed by either the trial or appeal court in Karigar, or in any other Corruption of Foreign Public Officials Act case to date. Instead, Smith drew this element from a 1921 decision of the Ontario Court of Appeal in Rex v Smith,(5) a case relating to charges of domestic bribery under what is now Section 120 of the Criminal Code. However, Smith did not conduct a detailed analysis of the statutory provisions; instead, he simply concluded that the knowledge requirement recognised in Rex v Smith is equally applicable to a charge under Section 3 of the Corruption of Foreign Public Officials Act.

In any event, having found that the Crown needed to show knowledge of the Air India employees' official status, Smith found that the Crown had failed to discharge their burden on this issue. Unfortunately, the judgment contains little analysis on precisely what relevant facts Smith felt the Crown had failed to establish. There appears to have been no dispute that Barra knew that the two individuals in question were Air India employees. However, somewhat cryptically Smith at least appears to have regarded testimony by two of Barra's Cryptometrics colleagues that they (mistakenly) believed that Air India was a Crown corporation as being important in the context of the acquittal. The reasoning behind this aspect of the decision is somewhat unclear; the relevant passage reads:

Mr. Bell and Mr. Berini both testified that they believed that the Captain and MMD [an unidentified employee of Air India] were employees of Air India which they believed was a Crown Corporation. They were not aware that these employees of Air India were foreign public officials. This was a reasonable inference to make in the circumstances. Air India is not a Crown Corporation and is owned directly by the Indian government, which made the Captain and MMD foreign public officials as defined under the Act.(6)

A reasonable interpretation of the above passage is that Smith had considered that employees of a 'Crown corporation', as Smith used the term in his judgment, are not necessarily foreign public officials. However, Smith did not specify what Barra's co-conspirators actually understood the term 'Crown corporation' to mean. Nor did he provide his analysis of why employees of a Crown corporation might fall outside the definition of foreign public officials under the Corruption of Foreign Public Officials Act or why a belief that an entity is a Crown corporation would have a materially different consequence in the context of a Corruption of Foreign Public Officials Act prosecution to a belief that the entity is directly owned by a foreign government.

Further, it is worth noting that at least as a matter of Canadian law, a 'Crown corporation' is defined under Canada's Financial Administration Act as "a corporation that is wholly owned directly by the Crown", subject to certain irrelevant exclusions.(7) As such, the apparent distinction drawn by Smith between a Crown corporation on the one hand and a company "directly owned by the Indian government" on the other is hard to follow.

Notably, the definition of 'foreign public official' under the Corruption of Foreign Public Officials Act does not directly refer to the concept of state-ownership or control in any event. Instead, the definition is more general and captures (among others) those who:

perform public duties or functions for a foreign state, including a person employed by a… corporation [that is] established to perform a duty or function on behalf of the foreign state, or is performing such a duty or function.(8)

The judgment in Barra currently remains within the appeal period. If the Crown does appeal the acquittal on the charges relating to the Air India employees, it is hoped that the Court of Appeal will provide much-needed clarity as to:

  • the specific factors that determine whether an employee of a state-owned or state-controlled entity (whether directly or indirectly) is, or is not, a foreign public official within the meaning of the Corruption of Foreign Public Officials Act; and
  • the elements that the Crown must prove in relation to the accused's state of mind, including the extent of the accused's knowledge regarding the precise role or function of the relevant officials, especially in cases involving employees of state-owned or controlled entities.

Test under US law

The United States has some measure of judicial guidance on the application of the equivalent definition in the American Foreign Corrupt Practices Act.(9) Specifically, in United States v Esquenazi a federal appeals court established a highly-fact-specific test for determining whether an employee of a foreign state-owned or state-controlled entity is a foreign official within the meaning of the Foreign Corrupt Practices Act. The test requires an assessment of:

  • the degree of control that a state has over an employer entity; and
  • whether an employer entity was performing a state function in the specific context of bribery allegations.

While the heavily fact-driven test established by the US appellate court has attracted significant criticism from some commentators for providing an insufficient degree of certainty, it is perhaps preferable to the situation created by the brief and somewhat elusive reasoning set out in Barra.

For further information on this topic please contact Anthony J Cole or David P Konkin at Dentons' Calgary Office by telephone (+1 403 268 7000) or email ([email protected] or [email protected]). Alternatively, please contact Paul Lalonde at Dentons' Toronto Office by telephone (+1 416 863 4511) or email ([email protected]). The Dentons website can be accessed at www.dentons.com.

Endnotes

(1) R v Barra, 2018 ONSC 57.

(2) While the most significant aspects of the judgment are highlighted in this article, a full copy is available here.

(3) R v Karigar, 2013 ONSC 5199 (conviction); R v Karigar, 2014 ONSC 3093 (sentencing); R v Karigar, 2017 ONCA 576 (appeal of conviction).

(4) R v Barra at Paragraph 45.

(5) Rex v Smith, 67 DLR 273; 1921 CanLII 634 (ONCA).

(6) Barra at Paragraph 45.

(7) Corruption of Foreign Public Officials Act, Section 2 (departmental corporations are excluded).

(8) Financial Administration Act, RSC 1985, Chapter F-11, Section 81.

(9) Foreign Corrupt Practices Act, 15 USC, Sections 78dd-1.