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Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

As of October 31 2017, facilitation payments are no longer excluded from the bribery offence under the Corruption of Foreign Public Officials Act and are thus not permitted under Canadian law. ‘Facilitation payments’ are payments made to expedite or secure the performance of any routine act by a foreign public official that is part of the official’s duties or functions and which therefore does not require discretion.

On September 25 2017 the Canadian government announced the launch of a public consultation seeking input on potential enhancements to the Integrity Regime and whether deferred prosecution agreements should be used. The Integrity Regime was introduced in 2015 to prevent suppliers with a record of unethical behaviour from being awarded contracts and real property agreements. Deferred prosecution agreements are voluntary agreements negotiated between an accused and the responsible prosecution, pursuant to which the criminal prosecution is suspended for a set period during which the accused must comply with certain terms, generally including full cooperation with law enforcement. Canadian law enforcement does not use deferred prosecution agreements – or similar non-prosecution agreements, in which the agency refrains from filing charges – as a means of resolving bribery offences under the Corruption of Foreign Public Officials Act, or other corporate crimes.

Legislative activity

Are there plans for any changes to the law in this area?

On September 25 2017 the Canadian government announced the launch of a public consultation seeking input on potential enhancements to the integrity regime and on whether deferred prosecution agreements should be used in Canada. The regime was introduced in 2015 to prevent suppliers with a record of unethical behaviour from being awarded contracts and real property agreements. Deferred prosecution agreements are voluntary agreements negotiated between an accused and the responsible prosecution, pursuant to which the criminal prosecution is suspended for a set period, during which the accused must comply with certain terms (generally including full cooperation with law enforcement). Canadian law enforcement does not use deferred prosecution agreements, or similar non-prosecution agreements, in which the agency refrains from filing charges, as a means of resolving bribery offences under the Corruption of Foreign Public Officials Act or other corporate crimes.

Legal framework

Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

Unlike many other jurisdictions, there is no central regulatory body responsible for the investigation of these matters. Both the Corruption of Foreign Public Officials Act and the Criminal Code are addressed as police matters and investigated and enforced by Canada’s federal policing authority, the Royal Canadian Mounted Police.

In Quebec, anti-corruption compliance is also enforced by the Unité permanent anticorruption (UPAC) pursuant to the province’s Anti-corruption Act. UPAC employs personnel from different agencies across Quebec, including the Sûreté du Québec, the anti-fraud squad of Revenu Québec and the anti-collusion unit of Transports Québec. Investigation units are appointed by the UPAC commissioner, and investigations and proceedings may be initiated based on information from audit teams acting under other government departments and bodies carrying out their respective mandates. UPAC is assisted by the prosecutorial services of the Bureau de lutte à la corruption et à la malversation, which is dedicated to providing legal assistance to UPAC in its anti-corruption efforts, and contains a team of prosecutors which advise investigators during each investigation and subsequently review final reports to determine whether prosecutions should be initiated. Quebec (which is also subject to federal law) is the only Canadian province with its own separate anti-corruption legislation or enforcement body.

Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

Key legislative provisions relating to bribery and corruption in Canada are contained in the Corruption of Foreign Public Officials Act, the Criminal Code and, in Quebec, the Quebec Anti-corruption Act. Further, various federal, provincial and municipal pieces of legislation address lobbying matters and potential conflicts of interest. Key provisions of the relevant legislation are outlined below:

Corruption of Foreign Public Officials Act (federal) Section 3(1) of the Corruption of Foreign Public Officials Act defines the bribery offence for foreign public officials. The bribery offence makes it illegal to give, offer or agree to give or offer any form of a loan, reward, advantage or benefit directly or indirectly to a foreign public official or to any person for the benefit of a foreign public official, in order to obtain or retain an advantage in the course of business.

Section 4(1) of the Corruption of Foreign Public Officials Act prohibits certain accounting practices where those practices are employed for the purpose of bribing a foreign public official or concealing a bribe.

Criminal Code (federal) Sections 119 to 125 of the Criminal Code specify various forms of domestic corruption, including:

  • Section 119 – Bribery of judicial officers;
  • Section 120 – Bribery of officers;
  • Section 121 – Frauds on the government;
  • Section 122 – Breach of trust by a public officer;
  • Section 123 – Municipal corruption;
  • Section 124 – Selling or purchasing public office; and
  • Section 125 – Influencing or negotiating appointments or dealing in offices.

Additional key provisions under which corruption may be prosecuted include fraud under Section 380 and secret commissions under Section 426, as well as conspiracy under Section 465, which may be used in combination with the foregoing to prosecute co-parties in a corruption scheme.

Anti-corruption Act (Quebec) In addition to establishing the office of the Anti-Corruption Commissioner (Article 4) and the creation of UPAC (Article 8), Quebec’s Anti-corruption Act contains certain legislative measures to facilitate the fight against corruption and collusion, including:

  • information exchange (Article 17);
  • whistleblower protection measures (Article 26-35); and
  • fines for fiscal fraud (Articles 37-38).

Quebec (which is also subject to the federal laws) is the only Canadian province with its own separate anti-corruption legislation or enforcement body.

International conventions

What international anti-corruption conventions apply in your jurisdiction?

Canada is a party to the following international anti-corruption conventions:

  • The Organisation for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
  • The United Nations Convention against Corruption.
  • The Inter-American Convention against Corruption.

Specific offences and restrictions

Offences

What are the key corruption and bribery offences in your jurisdiction?

Key Canadian anti-corruption offences include the following:

  • Corruption of Foreign Public Officials Act (federal):
    • Section 3(1) – Bribing a foreign public official;
    • Section 4(1) – Accounting (books and records offence);
  • Criminal Code (federal):
    • Section 119 – Bribery of judicial officers;
    • Section 120 – Bribery of officers;
    • Section 121 – Frauds on the government;
    • Section 122 – Breach of trust by a public officer;
    • Section 123 – Municipal corruption;
    • Section 124 – Selling or purchasing public office;
    • Section 125 – Influencing or negotiating appointments or dealing in offices;
    • Section 380 – Fraud; and
    • Section 426 – Secret commissions.

Hospitality restrictions

Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?

Gifts, travel expenses, meals and entertainment may constitute an award, advantage or benefit in contravention of the anti-corruption provisions of either the Corruption of Foreign Public Officials Act or the Criminal Code. Unlike certain other jurisdictions, there is no government-issued guidance available for acceptable gifts and hospitality under Canadian law. While the amount of a gift or payment is often taken into account when determining whether it was given for the purpose of a bribe, there is no de minimis threshold for the amount of a bribe under the legislation.

Section 3(3) of the Corruption of Foreign Public Officials Act provides an exemption from the bribery offence where the loan, reward, advantage or benefit:

  • is permitted or required under the laws of the foreign state or public international organisation for which the foreign public official performs duties or functions; or
  • was made to pay the reasonable expenses incurred in good faith by or on behalf of the foreign public official which are directly related to the promotion, demonstration or explanation of the person’s products or services, or the execution or performance of a contract between the person and the foreign state for which the official performs duties or functions.

Courts have not yet ruled on the specific circumstances in which these exemptions apply.

The Criminal Code does not contain any such exceptions and courts have found that an advantage or benefit under the code may include gifts. While courts have suggested that the size of the gift is a crucial indicator of whether it should be perceived as an advantage or benefit, and that a trivial gift would likely not constitute a benefit for the purposes of the code, there is little guidance on the threshold at which a gift would constitute a bribe. Federal, provincial and municipal codes of conduct may provide some guidance as to what is generally acceptable. For example, the Canadian government’s Policy on Conflict of Interest and Post-employment requires that gifts be “infrequent and of minimal value, within the normal standards of courtesy or protocol, arise out of activities or events related to the official duties of the public servant concerned” and not “compromise or appear to compromise the integrity of the public servant concerned or of his or her organization”. However, such policies are binding on government officials and employees rather than the giver of any gift or hospitality, and thus do not fully clarify the threshold at which such benefits may be considered a bribe.

Facilitation payments

What are the rules relating to facilitation payments?

Before October 31 2017 the Corruption of Foreign Public Officials Act excluded facilitation payments – payments made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the official’s duties or functions, and which therefore does not require discretion – from the act’s bribery offence. As of October 31 2017, facilitation payments are no longer excluded and are thus not permitted under Canadian law.

Liability

Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Yes. Both individuals and companies can be held liable under anti-corruption laws.

The Corruption of Foreign Public Officials Act expressly applies to conduct by Canadian citizens, permanent residents and companies or corporate entities formed or incorporated in Canada. One individual has been convicted under the act (R v Karigar) while a number of companies have been charged and pleaded guilty. Similarly, both individuals and companies can be held liable under the domestic corruption provisions of the Criminal Code.

Corporate criminal liability under both the Corruption of Foreign Public Officials Act and the Criminal Code is determined under Section 22.2 of the code, which stipulates that a company is party to an offence if, with the intent at least in part to benefit the organisation, one of its senior officers:

  • acting within the scope of their authority, is a party to the offence; 
  • acting within the scope of their authority, directs the work of other representatives so that they commit the act or omission specified in the offence; or 
  • knowing a representative is or is about to be party to the offence, does not take all reasonable measures to prevent them from doing so.

Under Section 2 of the code, ‘senior officer’ is defined as:

a representative who plays an important role in the establishment of the organization’s policies or is responsible for managing an important aspect of the corporation's activities and, in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer.”

Pursuant to R v Pétroles Global, an employee need not be senior management or a member of the board of directors to constitute a senior officer under Section 2 of the Criminal Code and therefore engage corporate criminal liability under Section 22.2. The court held that the title of an employee is not decisive, and courts may consider the full scope of what constitutes a ‘management position’. As such, individuals who are responsible for managing an important aspect of an organisation’s activities – including middle managers – may engage the criminal liability of a corporation, even if such individuals have no influence over the establishment of policies. Although the Court of Appeal granted the motion for leave to appeal in September 2013, Pétroles Global filed a discontinuance in May 2015, which was accepted by the Court of Appeal in June 2015.

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

Yes, agents can be held liable for bribery offences in certain circumstances. The Corruption of Foreign Public Officials Act prohibits directly or indirectly giving, offering or agreeing to give a prohibited reward or benefit. In Karigar the agent of a Canadian company was convicted under the Corruption of Foreign Public Officials Act for agreeing to bribe foreign officials of the Indian government in order to secure a supply contract. The court found that Karigar, a former paid agent of the company hired to assist in obtaining business in India, had entered into an agreement to offer bribes to public officials for the purpose of securing the contract. Similarly, companies and individuals may be convicted under the bribery provisions of the Corruption of Foreign Public Officials Act for bribes indirectly for the benefit of a foreign public official – for example, in R v Griffiths Energy International Inc the accused corporation pleaded guilty under Section 3(1) of the act for the payment of a C$2 million bribe and shares to a corporate entity owned by the wife of the Chadian ambassador.

Both the Corruption of Foreign Public Officials Act and the Criminal Code also prohibit aiding and abetting a corruption offence. In addition, agents or facilitating parties may be charged with conspiracy under Section 465 of the Criminal Code, in tandem with the offence committed.

Agents or facilitating parties which had no knowledge of the offence being committed, and were not wilfully blind to the offence, are not liable. The crown must prove that the accused party intentionally committed the acts constituting the offence or was wilfully blind to the offence.

Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

Yes. Foreign companies and individuals are subject to the corruption offences in either the Corruption of Foreign Public Officials Act or Criminal Code if the offence is deemed to have taken place in Canada pursuant to the "real and substantial connection" test laid out in R v Libman. Under Libman, the test would generally be met – and a foreign individual or company subject to prosecution – if a significant portion of the activities which constitute the offence took place in Canada.

Under Section 5(1) of the Corruption of Foreign Public Officials Act, Canadian citizens, permanent residents and companies may also be prosecuted for offences committed outside of Canada. However, as Section 5(1) does not extend to foreign companies or individuals, Canada does not have jurisdiction over foreign companies or individuals with regard to offences committed outside of Canada (see R v Chowdhury).

Multiple US and UK nationals have been charged under the Corruption of Foreign Public Officials Act in connection with Cryptometrics’ agreement to pay bribes to Indian officials (see Karigar), and a US corporation has been convicted under the act (Griffiths Energy International Inc).

Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

Canadian law includes some protection for whistleblowers at federal and provincial level, but less so than certain other jurisdictions such as the United States.

Under Section 425.1 of the Criminal Code, it is an offence for employers to threaten to or to take disciplinary action, demote, terminate or otherwise adversely affect employment with the intent to force the employee to refrain from providing information to law enforcement about an offence or to retaliate against an employee who has already provided such information. Section 425.1 applies to employees who report to law enforcement officials only, and not to employees who report wrongdoing to other parties such as media sources or outside agencies or advocacy groups.

In addition, federal public sector employees are protected from whistleblowing retaliations under federal whistleblower legislation. The Public Servants Disclosure Protection Act prohibits employers from taking retributive action against a public servant who has made a protected disclosure or has, in good faith, cooperated in an investigation into a disclosure or an investigation commenced under the act. Similar legislation exists in several provinces, including in Ontario and Alberta. The federal law has received significant criticism for alleged inadequacies, for instance putting the onus on whistleblowers to prove that adverse actions were intended by the employer as reprisals. In June 2017 the House of Commons Government Operations and Estimates Committed released a report recommending substantial changes to the federal act to enhance whistleblower protection – the Canadian government has not yet accepted the committee's recommendations.

In the last decade the trend has been towards enhanced whistleblower protections and incentives. For example, in 2016 the Ontario Securities Commission (OSC) launched its Office of the Whistleblower and its Whistleblower Program, the first ‘bounty for tips’ programme in Canada providing financial incentives to those who report corporate misconduct to the OSC. The model is similar to the programme established by the Securities and Exchange Commission in the United States except that it must accommodate for differences in Canada. No such ‘bounty for information’ programme exists in the criminal or anti-corruption sphere, or in any other Canadian jurisdiction except Ontario. On June 20 2016 the Quebec Securities Commission (AMF) also officially launched its Whistleblower Program. However, unlike in Ontario, the AMF will build on an approach based strictly on confidentiality, anti-reprisal measures and anonymity for whistleblowers who denounce violations of AMF laws. The AMF rejects a rewards-based system.

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

There are no explicit reporting obligations under the Corruption of Foreign Public Officials Act or the Criminal Code. Organisations may self-report, either as a risk mitigation measure or due to contractual obligations with clients or service providers. Such self-reporting or cooperation with authorities may encourage leniency at sentencing. However, leniency is at the discretion of the prosecuting authority and subject to court approval.

Deferred prosecution agreements are not available in Canada. However, in 2017 the federal government launched consultations to consider the introduction of deferred prosecution agreements as an additional tool for prosecutors in holding offenders to account and to deter corporate misconduct.

Similar to other types of criminal offences, defendants may also enter into plea agreements under either the Corruption of Foreign Public Officials Act or the bribery provisions of the Criminal Code. For example, in both R v Niko Resources Ltd and R v Griffiths Energy International Inc the defendant companies pleaded guilty to conduct in violation of the Corruption of Foreign Public Officials Act.

Canada’s federal policing authority, the Royal Canadian Mounted Police, would generally be the appropriate authority to which the organisation should report. Publicly traded corporations may also be required to disclose offences to relevant securities regulators and in public filings, if the offence or subsequent enforcement action materially affects their reporting obligations.

Dispute resolution and risk management

Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

Similar to other types of criminal offences, defendants may enter into plea agreements under either the Corruption of Foreign Public Officials Act or the bribery provisions of the Criminal Code. For example, in R v Watts [Hydro Kleen], R v Niko Resources Ltd and R v Griffiths Energy International Inc, the defendant companies pleaded guilty to conduct in violation of the Corruption of Foreign Public Officials Act.

Deferred prosecution agreements are not available in Canada. However, in 2017 the federal government launched consultations to consider the introduction of deferred prosecution agreements as an additional tool for prosecutors to use in holding offenders to account and to deter corporate misconduct.

Because corruption matters are addressed as a police and criminal matter in Canada, it is more challenging to address matters that arise at the investigation stages, in contrast with some other jurisdictions such as the United States where corruption are part of a regulator’s purview.

Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

Yes. Section 3(3) of the Corruption of Foreign Public Officials Act provides an exemption from the bribery offence where the loan, reward, advantage or benefit:

  • is permitted or required under the laws of the foreign state or public international organisation for which the foreign public official performs duties or functions; or
  • was made to pay the reasonable expenses incurred in good faith by or on behalf of the foreign public official that are directly related to the promotion, demonstration or explanation of the person’s products or services, or the execution or performance of a contract between the person and the foreign state for which the official performs duties or functions.

Canadian courts have not yet ruled on the specific circumstances in which these exemptions apply.

The Corruption of Foreign Public Officials Act does not create an exception or safe harbour for de minimis payments. The act previously contained an exemption for facilitation payments; however, this exemption was repealed in October 2017.

What other defences are available and who can qualify?

The Corruption of Foreign Public Officials Act provides limited affirmative defences. Please see above.

Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

An effective anti-corruption programme is one that is endorsed and enforced by management, designed to address the unique circumstances of a company and is routinely reviewed to ensure that it continues to address the company’s specific risks adequately. A compliance programme typically addresses the following key topics:

  • responsibilities for compliance;
  • internal controls, auditing practices and documentary policies;
  • internal reporting mechanisms;
  • enforcement and disciplinary procedures;
  • training and education; and
  • regular maintenance and review.

Record keeping and reporting

Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

Record keeping, accounting and disclosure provisions are found in provincial corporate or securities legislation such as the Ontario Business Corporations Act and the Ontario Securities Act, as well as multiple statutes including:

  • the Corruption of Foreign Public Officials Act;
  • the Criminal Code;
  • the Income Tax Act;
  • the Canada Business Corporations Act; and
  • the Canadian Extractive Sector Transparency Measures Act.

What are the requirements for record keeping?

Section 4(1) of the Corruption of Foreign Public Officials Act prohibits certain accounting practices where those practices are employed for the purpose of bribing a foreign public official or concealing a bribe:

  • establishing or maintaining accounts which do not appear in any of the books and records that are required to be kept in accordance with applicable accounting and auditing standards;
  • making transactions that are not recorded in the books and records or that are inadequately identified in them;
  • recording non-existent expenditures in the books and records;
  • entering liabilities with incorrect identification of their object in the books and records;
  • knowingly using false documents; or
  • intentionally destroying accounting books and records earlier than permitted by law.

A violation of Section 4(1) is a criminal offence with a penalty of imprisonment for up to 14 years. Unlike the Foreign Corrupt Practices Act in the United States, Canada does not have a civil provision in the Corruption of Foreign Public Officials Act relating to incorrect books and records or failure to have internal controls. Section 4(1) applies to both private and public companies.

More generally, the Criminal Code contains certain offences that may be relevant to record keeping and accounting practices, including:

  • false pretence;
  • forgery;
  • fraud;
  • falsification of books; and
  • documents and false prospectus.

The Canadian Extractive Sector Transparency Measures Act requires Canadian businesses involved in resource extraction to file and make publicly available reports regarding certain types of payments made to both domestic and foreign governments.

In addition, there are record keeping, accounting and disclosure requirements in other statutes, including the federal Income Tax Act and the Canada Business Corporations Act, as well as in provincial corporate and securities legislation.

Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

There are no explicit reporting obligations under the Corruption of Foreign Public Officials Act or Criminal Code. However, organisations may self-report, either as a risk mitigation measure or due to contractual obligations with clients or service providers. Self-reporting and cooperation with authorities may encourage leniency at the sentencing stage, but this is at the discretion of the prosecuting authority and subject to court approval.

Deferred prosecution agreements are not available in Canada. However, in 2017 the federal government launched consultations to consider the introduction of deferred prosecution agreements as an additional tool for prosecutors to use in holding offenders to account and to deter corporate misconduct.

Similar to other types of criminal offence, defendants may enter into plea agreements under either the Corruption of Foreign Public Officials Act or the bribery provisions of the Criminal Code. For example, in R v Watts [Hydro Kleen], R v Niko Resources Ltd and R v Griffiths Energy International Inc, the defendant companies pleaded guilty to conduct in violation of the Corruption of Foreign Public Officials Act.

Canada’s federal policing authority, the Royal Canadian Mounted Police, would generally be the appropriate authority to which the organisation should report. Publicly traded corporations may also be required to disclose offences to relevant securities regulators and in public filings, if the offence or subsequent enforcement action materially impacts their reporting obligations.

Penalties

Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

Individuals convicted of either bribery or accounting violations under the Corruption of Foreign Public Officials Act are liable to imprisonment for a maximum term of 14 years. Specific punishments are prescribed for each anti-corruption offence under the Criminal Code, with maximum sentences ranging from five to 14 years.

The only individual conviction under the Corruption of Foreign Public Officials Act, in R v Karigar, resulted in a prison sentence of three years. However, Karigar was decided before amendments to the act raising the maximum prison term from five to 14 years. As such, sentences awarded under the existing act could potentially be significantly higher. Convictions under the Criminal Code have varied significantly based on the circumstances of each case.

Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

Corporations convicted under the Corruption of Foreign Public Officials Act are subject to unlimited fines. Corporations convicted under the Corruption of Foreign Public Officials Act to date have been fined C$25,000 (R v Watts [Hydro Kleen]), C$9.5 million (R v Griffiths Energy International Inc) and C$10.35 million (R v Niko Resources Ltd).

Corporations convicted under the Corruption of Foreign Public Officials Act or certain other legislation (including specified provisions of the Criminal Code) may also face debarment from doing business with:

  • the federal government under the Integrity Regime;
  • the New Brunswick government under the Procurement Act and General Regulation thereto; and
  • the Quebec government under the Act respecting contracting by public bodies.