Mining and exploration companies with projects in developing nations should take note that an amendment to the Foreign Corrupt Practices Act (CFPOA) has been approved by the Senate and is currently before the House of Commons. Bill S-14 is intended to address certain criticisms of the existing legislation, most notably from the Organisation for Economic Co-operation and Development (OECD), an international organization of 34 countries of which Canada is a member.
The CFPOA makes it a crime to bribe a foreign public official in order to obtain or retain an advantage in the course of business. To date, three companies have pleaded guilty and been convicted of offences under the CFPOA, the latter two resulting in fines of approximately $10 million each.
Bill S-14 proposes to make the following changes to the CFPOA:
- the offence of bribing a foreign public official will be expanded beyond business carried on “for a profit” to include activities not carried on for profit. As a result, the CFPOA will apply to charities and other not-for-profit organizations in addition to for-profit corporations;
- the maximum period of imprisonment for bribing a foreign public official will be increased from 5 years to 14 years;
- instead of requiring a “real and substantial connection” between Canada and the location where acts of bribery occur as is currently the case, the CFPOA will apply to acts of bribery anywhere in the world where such acts are conducted by Canadian citizens, permanent residents present in Canada, Canadian corporations or other entities created under the laws of Canada or a province;
- “facilitation payments” (generally, payments to a public official to expedite a routine governmental act that is part of the official’s duties, and not to obtain or retain business or any other undue advantage), which are currently permitted as an exception to the offence of bribing a foreign public official, will become illegal at a future date to be set by the Governor in Council;
- a new offence of manipulation or falsification of accounting records to conceal bribery has been created, which attracts a maximum sentence of 14 years in prison; and
- whereas currently many different categories of peace officers that exist in Canada are empowered to enforce the CFPOA, the Royal Canadian Mounted Police will be given exclusive jurisdiction to charge persons for offences under the CFPOA.
It is important for companies operating internationally, especially in developing nations, to have appropriate policies and procedures in place to ensure compliance with the CFPOA and other applicable anti-bribery legislation throughout the world. When entering into transactions with companies that also operate internationally, it is important to ensure appropriate due diligence is conducted and appropriate language is contained in contracts relating to the transaction to minimize the possibility that your corporation will attract liability through under the CFPOA and other applicable anti-bribery legislation through its association with proposed business partners or other counterparties.
Dentons’ team of seasoned professionals throughout Canada, the US, Europe, Russia and the CIS, Africa, Asia Pacific and the Middle East represents corporate clients, boards of directors, board committees, hedge funds, partnerships and joint ventures, audit firms and individuals in connection with all aspects of anti-corruption compliance, enforcement and defense.