Domestic bribery: legal framework
Sections 121 to 123 of the Criminal Code prohibit the improper provision of benefits to Canadian government officials and employees. Section 426 of the Criminal Code criminalises private-sector bribery.i Offences involving bribery and corruption of Canadian government officials
Section 121(1)(a) of the Criminal Code prohibits the offering or giving of a benefit to a federal or provincial government official, or any member of his or her family, that creates a quid pro quo arrangement. An official that accepts such a benefit also commits an offence under this section. The purpose of this Section is to prevent exchanging benefits for influence in government and deter overt forms of domestic corruption.
Section 121(1)(b) prohibits giving a benefit to a federal or provincial government official in the course of business dealings between an accused and government. Section 121(1)(c) criminalises the receipt of such a benefit. The purpose of Sections 121(1)(b) and (c) is to preserve the appearance of integrity, rather than integrity itself. Unlike Section 121(1)(a), these offences do not require a quid pro quo arrangement. Also, written pre-approval from the head of the branch of government conducting business with an accused is a complete defence to Section 121(b) and (c) offences.
For the purpose of Sections 121(1)(a)–(c), government officials include employees or officials of: (1) federal and provincial governments; (2) government-controlled corporations; and (3) municipalities acting as agents of the federal or provincial crown.
Section 122 of the Criminal Code prohibits corruption of public officials in positions of trust. This Section criminalises using a public office for a purpose other than the public good if the misconduct arises to a serious and marked departure from the standard of responsibility and conduct expected of an individual in the accused's position of public trust. Under this section, public officials are not limited to federal or provincial government officials and include any person in a position of duty, trust, or authority, particularly if that person is in a corporation or the public service. Canadian courts have held that officials of First Nations bands are public officials for the purpose of Section 122.
Section 123 of the Criminal Code functions the same way as Section 121(1)(a), but applies to municipal government officials.ii What constitutes a benefit under the Criminal Code
Domestic bribery offences under the Criminal Code capture more than cash payments. Sections 121 and 123 of the Criminal Code each prohibit the payment or receipt of a 'loan, commission, reward, advantage, or benefit of any kind.' In R v. Hinchey, the Supreme Court of Canada defined a 'benefit' under the Criminal Code as anything that amounts to a 'material or tangible gain'. The Supreme Court also set out factors to determine whether something is a 'material or tangible gain', including the: (1) relationship between the parties; (2) history of reciprocal arrangements between the parties; and (3) size or scope of the benefit. Other Canadian courts have expanded these factors to include, in part, the: (1) manner in which the gift was bestowed; (2) nature of the provider's dealings with government; and (3) state of mind of the provider and receiver.
Canadian courts have not identified a specific value threshold for what constitutes a benefit, but have identified specific items that do, or do not, constitute 'material or tangible gains'. Canadian courts have found that hockey tickets, extravagant meals, gift cards over C$500, and payment for travel represent a material gain, but items such as infrequent and moderately priced meals, coffee, and low value promotional items do not.iii Private corruption
Section 426 of the Criminal Code criminalises the provision or receipt of secret payments or benefits to or by an agent, including an employee, as consideration for actions related to the affairs or business of an agent's principal, including an employer. There are two separate offences contained in Section 426: (1) a donor offence, committed by a third party providing a benefit; and (2) an agent/recipient offence, committed by an agent receiving a benefit. These offences can be committed independently and do not require the donor and recipient to act in concert. Secrecy is a crucial element for this offence. There is no offence if an agent makes adequate and timely disclosure of the benefit to his or her principal.iv Organisational liability
Pursuant to Section 22.2 of the Criminal Code, Canadian organisations can be party to offences committed by their 'senior officers' if the senior officer intended, in part, to benefit the organisation by committing the offence. An organisation can also be criminally liable if a senior officer: (1) commits an offence themselves; (2) directs other representatives of the organisation to commit an offence; or (3) fails to take all reasonable steps to prevent another representative of the organisation from committing an offence the senior officer knew would be committed.
A 'senior officer' is defined broadly by the Criminal Code and includes any representative that plays an important role establishing an organisation's policies or manages an important aspect of the organisation's activities, including directors, chief executive officers, and chief financial officers. Canadian courts have found that even a general manager can be considered a 'senior officer' and create criminal liability for an organisation.v Liability of directors, officers and employees
Under Section 21 of the Criminal Code, an organisation's directors, officers or employees may be charged as a party to an offence that the organisation itself has been charged with. A party to an offence under the Criminal Code includes anyone that commits an offence, or assists or encourages the commission of an offence. There is no strict or automatic liability for directors, officers or employees of organisations guilty of bribery. Instead, directors, officers or employees will only be guilty of a bribery offence committed by the organisation if they participated in or encouraged the commission of it.vi Penalties
Conviction under Sections 121–123, and 426 of the Criminal Code are punishable by up to five years in prison for individuals and unlimited fines for organisations. There are no limitation periods for indictable offences in Canada, and an accused can be charged for numerous offences in relation to a single act. Further, the Criminal Code prohibits the retention of proceeds of crime and a convicted organisation may be ordered to forfeit all proceeds – not just profits – related to a conviction.
Foreign bribery: legal frameworki CFPOA
Like the United States Foreign Corrupt Practices Act (FCPA), the CFPOA criminalises the provision of benefits to foreign public officials in consideration for, or to induce, any act or omission to be undertaken by an official in connection with their duties. Benefits provided through, or received by, third-party representatives with the ultimate goal of influencing a foreign public official are also prohibited by the CFPOA.
Under the CFPOA, a foreign public official includes any person that holds a legislative, administrative or judicial position, or performs a public duty or function for a foreign state. This includes employees of foreign boards, commissions or organisations established to perform a duty or function on behalf of a foreign state. The CFPOA is likely to consider employees of state-owned or controlled companies to be foreign public officials.ii Jurisdiction
Prior to amendments to the CFPOA passed in 2013 (the 2013 Amendments), the CFPOA only applied to misconduct with a 'real and substantial' connection to Canada. This limited Canada's ability to enforce the CFPOA because some portion of the initiation or commission of the offence had to occur within Canada. The 2013 Amendments deem all acts of Canadian citizens, permanent residents, corporations, societies, firms or partnerships to be acts within Canada for the purposes of the CFPOA. As a result, Canadian citizens and companies are subject to worldwide regulation under the CFPOA.
Canadian enforcement authorities can only enforce violations of the CFPOA committed by foreign citizens or entities if Canadian courts have jurisdiction over both the offence and the accused. To have jurisdiction over an offence committed by a foreign accused outside of Canada, the offence must have a 'real and substantial' link to Canada. To gain jurisdiction over a foreign accused, a Canadian court must be able to 'lay hands' on him, her or it. Canadian enforcement authorities gain jurisdiction over a foreign accused individual if he or she is subject to extradition or enters Canada. Canadian courts gain jurisdiction over a foreign organisation if its manager, secretary or other senior officer (discussed above), or the manager, secretary or other senior officer of one of its branches, enters Canada.iii Defences
Section 3(3) of the CFPOA sets out two defences for bribing a public official: (1) if the benefit provided is permitted or required under the laws of the foreign state or organisation for which the official acts; or (2) if the benefit was provided to pay reasonable expenses incurred in good faith by or on behalf of a foreign public official, provided those expenses were directly related to promoting or demonstrating the accused's products and services, or to the performance of a contract between the accused and the foreign entity for which the official represents. To rely on this defence, an accused must show the loan, reward, advantage or benefit was a reasonable expense incurred in good faith.
On 31 October 2017, the Canadian government repealed the facilitation payment exemption contained in the CFPOA. As such, facilitation payments are no longer permissible under Canadian law and organisations should consider prohibiting facilitation payments to ensure compliance with both the FCPA and CFPOA.iv Organisational liability
Section 22.2 of the Criminal Code, discussed in Section II.iv, is applicable to CFPOA offences.v Penalties
Conviction of bribing a public official under the CFPOA is punishable by up to 14 years' imprisonment for individuals and unlimited fines for organisations. Courts can also impose additional, onerous probationary terms on convicted companies, including a third party compliance monitor.