The controversy in Canada involving Québec-based corporate giant SNC-Lavalin highlights the need for a parliamentary review of the legal scheme for fighting foreign corruption.
Underpinning the scandal is a corporate criminal prosecution for the alleged bribery of Libyan officials by SNC-Lavalin officials and the question of a plea deal. Since corporations cannot do jail time, a fine is the obvious punishment. But how large should the fine be, and with what consequences? Should SNC-Lavalin be barred from consideration for future government contracts?
It was only in 1999 — almost 20 years to the day of the Globe and Mail‘s report about allegations that Canada’s former attorney general felt pressured to help SNC-Lavalin — that the bribery of a foreign public official became a crime under Canadian law.
Until then, paying a bribe or kickback to secure a contract abroad was seen as the cost of doing business in a foreign land.
Pushed as a fast-tracked initiative, with all-party support, passage of the Corruption of Foreign Public Officials Act was a foregone conclusion. Introduced in the Senate in December 1998, the law received only two days of parliamentary consideration, before it was brought into force in February 1999.
Speedy passage, however, meant that Parliament had not set aside any time to consider the more delicate details, such as the role of plea deals to save court time. And parliamentarians had failed to consider the question of who are the victims of foreign corruption, because plea deals are likely to involve the payment of a victim surcharge to fund victims assistance programs.
Why was Canada so keen to rush this new law into place? The answer lies in international pressure.
The OECD Anti-Bribery Convention
In mid-1998, Canada and other G8 states made a commitment to ratify the Organisation for Economic Co-operation and Development’s (OECD) Anti-Bribery Convention before the year’s end. The OECD is the international club of countries with advanced economies.
It was this keenness to join that led Canadian parliamentarians to accept the Corruption of Foreign Public Officials Act, the legislation that put into motion the OECD convention’s terms. Those terms include a provision that the investigation and prosecution of foreign bribery “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”
Canada also accepted the supply-side focus of the OECD’s approach — often called active bribery — as it focuses on the conduct of the one offering the bribes. But the demand side of foreign bribery isn’t always passive if an individual recipient encourages a corporate payment, and so the demand-side aspect is worthy of further parliamentary review in Canada.
Indeed, after a study in 2008, the Law Commission of England and Wales concluded there should be two general offences of bribery, one for the conduct of the payer and the other for the conduct of the recipient.
Illegal to offer rewards to foreign officials
Corruption takes a variety of forms, with bribery being the standard offence for addressing corruption in the public sphere.
With the Canadian Corruption of Foreign Public Officials Act in place, it is illegal to offer undue rewards to foreign public officials to obtain improper advantages in the conduct of international business. The act has created work for business lawyers offering compliance advice.
But the act has also fostered disappointment. In 20 years, there have only been four convictions. Three convictions, secured by guilty pleas, have involved Alberta-based companies in the oil-and-gas sector, while the fourth concerned an Ottawa-based individual in the technology sector.
There’s rarely any mention of the tally of closed investigations, acquittals and stayed proceedings. That tally includes the 2017 acquittal of several people associated with SNC-Lavalin and a bridge development project in Bangladesh; the same bridge project that led to SNC-Lavalin’s negotiated acceptance of World Bank debarment in 2013.
Critiques lead to amendments
Criticism of Canada’s performance under the act has resulted in amendments in 2013. And in 2014, new transparency measures were imposed on the natural resources sector.
In 2017, the law’s reach was extended, at last, to cover all forms of bribes, and in 2018, a Canadian version of the deferred prosecution agreement, pioneered in the United States, was added to prosecutors’ toolboxes.
But Canada’s legislative scheme has not kept pace with the multi-jurisdictional realities of fighting foreign corruption.
In its 2018 annual report to Parliament, Global Affairs Canada continued to hail the $10.3 million fine paid by Griffiths Energy International as “the largest to date under the CFPOA.” But no mention is made of the English Court of Appeal’s assessment that this was a “relatively modest sum” given the surge in share value for the successor company in the United Kingdom.
Corruption violates integrity
It is often said that “corruption is not a victimless crime.”
And no less a body than the Supreme Court of Canada has opined that: “Corruption … undermines confidence in public institutions, diverts funds from those who are in great need of financial support, and violates business integrity.”
But more work is needed from Parliament on the definition of a victim. Past plea deals have included the payment of sizeable victim surcharge fees into provincial victims-of-crime funds.
But how do these funds offer assistance to the victims of foreign bribery in, say, Bangladesh or Chad, or to a company’s employees in Canada?
Lastly, there is the larger question, now ripe for review, about the hope placed on using criminal law to secure the often-stated goal of securing a level playing field for Canadian companies operating abroad.
This commentary was originally published in The Conversation on February 27, 2019.