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Canada’s Anti-Corruption Legislation – after more than 10 years, could increased enforcement be near?


This blog post is contributed by Ryna Ferlatte,  CA·IFA, CPA, CFF, Practice Leader for MNP's Investigative & Forensic Services team in Toronto.

The CFPOA, which came into effect in February 1999, makes it illegal for companies to make any payments, directly or indirectly, to foreign public officials for the purpose of obtaining or retaining an advantage in the course of business. The CFPOA was enacted as part of Canada’s commitment as a signatory to the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. To date, enforcement under the legislation has been minimal, and the lack of enforcement in Canada has been the subject of criticism from individuals and organizations monitoring the implementation of the OECD convention by its signatories.

Based on last week’s announcement, it seems that the tide may be changing, and Canadian firms doing business internationally should be concerned. Obviously, one concern is that the CFPOA provides for both fines and prison terms for persons convicted. A second concern is the reputational damage firms could face if convicted. But perhaps an even bigger concern is the fact that law enforcement agencies around the world charged with investigating breaches of anti-corruption legislation are increasingly exchanging information, and prosecution in multiple jurisdictions is possible.

The U.S. in particular has been aggressive in enforcing its own Foreign Corrupt Practices Act (FCPA) and is increasingly investigating foreign companies suspected of breaches. According to Shearman & Sterling LLP’s FCPA Digest - Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act (January 2011), a total of $1.7 billion USD in fines were levied by the U.S. government in 2010 for FCPA breaches, most of which were against non-U.S. companies. The UK has also enacted its own Bribery Act, which has been called the toughest anti-corruption legislation in the world. For example, contrary to the FCPA or CFPOA, the UK Bribery Act does not make exceptions for facilitation payments or certain bona-fide hospitality and promotion expenses.

Management and staff time, legal and other professional fees, bad publicity, and fines – the cost of an investigation for organizations can be astronomical. If you are doing business internationally, you should ensure that you have a solid compliance program and other internal controls in place to protect your organization and your brand from breaches of anti-corruption legislation. It is key that you understand what your risks are. For instance:

  • Are you operating in jurisdictions with a high risk of corruption?
  • Do you have any government touch-points your organization has overseas?
  • Have you retained any agents, consultant or distributors to help you operate in foreign jurisdictions?
  • Are unsure whether the fees you are paying these parties are in line with the services they are providing, for that specific market?
  • Based on your operations, are you subject to U.S., U.K, or other anti-corruption legislation?

If you answered yes to any of these questions, you should assess the risks your organization may face with respect to the various anti-corruption laws to which it may be subject. Specifically you should assess whether your compliance program goes far enough – because complacency in this area is becoming an increasingly risky and potentially very costly proposition.