Global Investigations Review’s Adam Dobrik has reported that the Royal Canadian Mounted Police have closed a foreign bribery investigation into Ottawa-based health-sciences company, Nordion, citing a lack of evidence of wrongdoing, after the company self-reported foreign bribery-related concerns and cooperated with a subsequent investigation by the RCMP.
Declination marks a significant development for Canadian anti-corruption enforcement
This is a significant development for Canada’s nascent anti-corruption enforcement regime. It is the first known case in which a company has received a declination from the authorities following voluntary self-disclosure and cooperation after discovering potential violations of Canada’s Corruption of Foreign Public Officials Act (CFPOA).
The result for Nordion underscores the importance of careful consideration for companies that discover alleged violations of anti-bribery laws, and it also reinforces the need for companies to conduct risk analyses, third party due diligence, and to implement robust anti-corruption compliance policies, especially when operating in high-risk countries.
Background of the investigation and declination by the RCMP
As publicly reported, Nordion disclosed an ongoing internal investigation into possible FCPA and CFPOA violations in August 2012. A legal team, led by compliance & investigations lawyers, including former US and Canadian prosecutors, from global law firm Baker & McKenzie’s Toronto, Chicago, and San Francisco offices, commenced negotiations in late 2012 with US and Canadian authorities following the self-disclosure of the company’s internal concerns to the US DOJ, SEC, and Canada’s RCMP. Lawyers from law firm, Bennett Jones, were also later involved.
In addition to the RCMP’s declination, according to public documents, the SEC secured an agreement from a rogue former Nordion employee, Mikhail Gourevitch, a Canadian citizen, to pay a USD $66,000 civil penalty, USD $100,000 in disgorgement, and USD $12,950 in prejudgment interest. Nordion also reached a civil settlement with the SEC and agreed to pay a USD $375,000 penalty for lacking sufficient internal accounting controls and for falling short of expectations to conduct FCPA due diligence to prevent Mr. Gourevitch from carrying out his illicit bribery scheme in collusion with a third-party agent in Russia.
It is unknown whether Canadian authorities will pursue charges against Mr. Gourevitch or use the extra-territorial reach of the CFPOA to pursue the unnamed Russian agent.
Self-reporting, cooperation, and internal investigations have clear benefits
The declination by Canadian authorities following self-disclosure marks the second time in recent years that a Canadian company has seemingly received credit for coming forward voluntarily to authorities in Canada – the first being the Griffiths Energy case, in which that company self-disclosed unlawful payments of bribes to ambassadorial officials from Chad, Africa. Griffiths received a reduced fine for sel-reporting and cooperation on sentencing in that case.
The Nordion declination represents an important milestone in the development and understanding of Canada’s anti-corruption enforcement regime, and now forms part of a trilogy of cases in Canada alongside Niko Resources and Griffiths Energy.
In particular, it illustrates that conducting a thorough internal investigation, self-reporting possible CFPOA violations, and taking remedial steps if necessary, followed by cooperation with the RCMP, can greatly benefit a company. And, again, it highlights the need for Canadian companies to implement effective country and industry-specific anti-bribery/corruption compliance policies and procedures to prevent potential misconduct by employees in the first place.
The legal risks and the ethical issues associated with corruption, and the increasing enforcement and jurisdictional reach of the Canadian, British, and American anti-bribery regimes, clearly necessitates that executives and board members across Canada make anti-fraud and corruption compliance a top priority.