Canadian companies face many dilemmas working abroad. Canadian domestic ethical standards can be challenged by foreign regulatory impediments, “local customs” and expectations of foreign officials. The temptation to improperly facilitate a transaction can lead to a path of bribery, multi-jurisdictional criminal and civil proceedings, fines, forfeiture of assets, reputational damage and, potentially even, imprisonment.
INDICTED AND GUILTY PLEA
Indicted for bribery on June 23, 2011 under Canada’s Corruption of Foreign Public Officials Act (the Foreign Corruption Act ), Niko Resources Ltd. (Niko), a Calgary-based oil and natural gas company, pleaded guilty to the bribery charge in an agreed statement of facts filed with the Alberta Court of Queen’s Bench on June 24, 2011.
In the Spring of 2005, a few months after a blowout of one of the company’s natural gas wells in Bangladesh, Niko provided Bangladesh’s state minister for energy and mineral resources, AKM Mosharraf Hossain, with a gift of a luxury vehicle. In addition, Niko paid for Mr. Hossain’s trip to Calgary for the 2005 Gas and Oil Expo event, and for his trip to New York in the same year to visit family.
The agreed statement of facts included a recommendation on sentencing for the bribery, which the Court accepted. The Court’s sentence includes a fine of $8,260,000, plus an additional 15% Victim Fine Surcharge for a total fine of $9,499,000. Additionally, the sentence includes a Probation Order, which places Niko under the Court’s supervision for the next three years to ensure audits are done to guarantee Niko’s compliance with the Foreign Corruption Act. Niko will bear the costs of such compliance.
Canada’s Royal Canadian Mounted Police (RCMP) recently launched an initiative to pursue charges and fines for foreign bribery under the Foreign Corruption Act. The Niko sentence is the most severe penalty that has yet been handed out to date under the Act, but others may follow.
The RCMP are currently conducting over 20 investigations into other Canadian public companies for alleged corruption involving foreign public officials. The message to Canadian companies with cross-border business is clear: Canada is pursuing enforcement of the Foreign Corruption Act and companies must review their practices and procedures before conducting business in foreign jurisdictions. Companies with cross-border dealings should conduct an internal risk assessment, and obtain advice to develop a compliance policy and program that fits their needs, dealing with bribery concerns, extortion issues, a whistleblower policy and training. The bottom line is that your company, its assets and your liberty and reputation are at stake.