A former agent of an Ottawa high-tech company, Nazir Karigar, was recently found guilty of conspiring to bribe several Indian government officials in the first Corruption of Foreign Public Officials Act (the "CFPOA" or the "Act") case to go to trial.
The conviction of an individual and a paid agent is a clear illustration of Canada's recent efforts to bolster its enforcement of anti-corruption legislation against both corporate entities and individuals.
On August 15, 2013, Justice Charles Hackland of the Ontario Superior Court found that Mr. Karigar had conspired to distribute at least $450,000 in bribes to decision makers at Air India, a state-owned entity, as well as to an Indian government minister. There was however no evidence as to whether funds were actually offered or paid to a foreign public official. This demonstrates the power of the conspiracy provisions as imported from the Criminal Code into the CFPOA.
The Court found that section 3 (1) of the Act criminalizes the act of one who "... directly or indirectly gives, offers or agrees to give or offer ... an advantage or benefit of any kind". The use of the term "agrees" imports the concept of conspiracy into the Act. In doing so, it meets Canada's obligations under the Convention to criminalize conspiracies to give or offer bribes to foreign public officials.
The Crown's theory, accepted by the Court, was that Mr. Karigar assumed a leading role in a conspiracy with several persons associated with Cryptometrics Canada and persons in India to bribe officials administering the bidding process on a tender issued by Air India, for the purpose of influencing them to award the contract to Cryptometrics Canada. As events transpired, the contract was never awarded to Cryptometrics Canada or any entity represented by Karigar. However, Justice Hackland observed that there was a significant body of evidence that Mr. Karigar and certain others agreed to offer bribes to a targeted group of Air India officials and the Indian Minister of Civil Aviation. The evidence established that Air India is a corporation owned and controlled by the Government of India and that the targeted officials fall within the definition of "foreign public officials" under the CFPOA.
An unusual aspect of the case is that Mr. Karigar described the scheme in an e-mail sent under a pseudonym "Buddy" to the Fraud Section (FCPA) of the US Department of Justice stating he had information about US citizens paying bribes to foreign officials and inquired about reporting the matter. Mr. Karigar ultimately admitted that he was "Buddy".
An important part of the Court's decision is the rejection of a requirement on the prosecution to prove the offer of, or receipt of, a bribe and the identity of a particular recipient in a conspiracy case. The Court observes that this would require evidence from a foreign jurisdiction, possibly putting foreign nationals at risk and would make the legislation difficult if not impossible to enforce and possibly offend international comity.
The contemplated recipients of bribes in Karigar were identified in spreadsheets such that they were found to have qualified as foreign officials under the Act. Given this fact, the reference by Justice Hackland dismissing the requirement of proof of the identity of a particular recipient should be considered as obiter.
Justice Hackland raises an important policy consideration, in his observation that requiring proof of the identity of a particular recipient would require evidence from a foreign jurisdiction, possibly putting foreign nationals at risk and would make the legislation difficult if not impossible to enforce. There must, however, be outer limits to this policy consideration, as the Canadian scheme requires that bribery relate to a foreign official and not a private official; as such there should be some evidence that the contemplated recipients be from a category of persons who would qualify as foreign officials, without necessarily naming the specific intended recipient.
The outer limits and parameters of the identification of a particular recipient will likely be the source of further litigation in the future.
Karigar additionally argued that Canada lacked territorial jurisdiction to try the offence. Recent changes to the Act on this issue are not retroactive and did not apply to Karigar. The Court therefore applied the "real and substantial connection" test to the facts. Justice Hackland held that territorial jurisdiction was clearly established in this case. Had the contract been awarded the evidence showed that a great deal of the work would be done by employees in Ottawa. This scenario provided a sufficient connection to confer jurisdiction on the Court over the bribery offence charged.
Ultimately, the Court found that Karigar believed that bribes needed to be paid as a cost of doing business in India and he agreed with others to pay such bribes. The lesson learned continues to be that it is essential that the tone from the top reject the notion that bribes are a cost of doing business and that agents will not be used as vehicle to improperly achieve objectives.
Corporate leadership must be ever vigilant in monitoring and, where appropriate, auditing the process of negotiations and agreements made with agents and third parties who may be interacting with government officials on their behalf