Jan. 22, 2020 - In a decision handed down on December 9, 2019,1 the Québec Superior Court stressed the importance of keeping the identity of whistleblowers and their statements confidential in the context of investigations into wrongdoing within a public body. Confidentiality can be lifted only when there are serious...
Prison Term Imposed for Violation of Canadian Corruption of Foreign Public Officials Act
On May 23, 2014, Nazir Karigar was sentenced to three years in prison for agreeing, in his capacity as an agent of a Canadian business, to offer bribes to Air India officials and India’s then Minister of Civil Aviation in relation to a bid for a security contract. Mr. Karigar is the first individual to be sentenced under Canada’s Corruption of Foreign Public Officials Act (CFPOA). The decision is notable not only for the length of the prison term, but also for the fact that the conviction was based upon an agreement to offer bribes. In fact, the Crown did not prove an actual payment to foreign public officials and the contract was not awarded to Mr. Karigar’s principal.
Over 30 investigations are estimated to have been instituted under the CFPOA in response to international criticism of Canada’s historically poor enforcement record. The CFPOA is Canada’s principal legislation combatting bribery of foreign public officials with respect to international business transactions. It is somewhat similar to some of the measures found in the United States’ Foreign Corrupt Practices Act and the United Kingdom’s Bribery Act.
In essence, the CFPOA prohibits anyone from giving or offering a loan, reward, advantage or benefit of any kind — directly or through intermediaries — to a foreign public official as consideration for an act or omission by the latter to obtain or retain a business advantage. As the Karigar case illustrates, the CFPOA also criminalizes an agreement to offer any such bribe, even if no benefit is actually paid out to a foreign public official.
Other technical aspects of the CFPOA both expand and limit its scope. A more detailed discussion of the CFPOA can be found in our Anti-Corruption Legislation in Canada publication.
Penalties and Sanctions
In addition to being the first sentence against an individual, the Karigar decision is the first rendered by a court following a contested hearing. Prior fines imposed under the CFPOA were issued against corporations pursuant to guilty pleas and joint submissions on sentence. The highest corporate fine to date is $10.35 million. In addition to fines, these resolutions have also included ongoing probations and audits.
In determining Mr. Karigar’s sentence, the Ontario Superior Court of Justice considered the following aggravating and mitigating factors:
- The bribery scheme’s sophistication
- The involvement of senior public officials at Air India and an Indian Cabinet Minister
- The sum advanced ($450,000) for the purpose of bribery and the millions of dollars in bribes and stock benefits that would have been conferred over time to the public officials had the scheme worked
- Additional circumstances of dishonesty, such as the entry of a fake competitive bid to create the illusion of a competitive bidding process, and the receipt of confidential insider information for the bid preparation
- The accused’s sense of entitlement with respect to the bidding process
- The accused’s personal involvement in conceiving and orchestrating the bribery proposal
- The high level of co-operation on the accused’s part concerning the conduct of the prosecution, as reflected by the accused’s extensive admissions and the fact that he brought the bribery scheme to the attention of the authorities
- The accused’s respectable reputation prior to his involvement in this matter, and absence of prior criminal involvement
- The accused’s advanced age and health issues
- The complete failure of the bribery scheme, which limited the harm to the promotion of corruption among a limited group of foreign public officials
The Court stressed that, in the case of charges against an individual, even with mitigating factors such as co-operation, poor health and the absence of prior criminal activity, the overriding need to deter violations of the CFPOA requires a significant sentence of incarceration in a federal penitentiary. The Court also commented that “[t]he idea that bribery is simply a cost of doing business in many countries, and should be treated as such by Canadian firms competing for business in those countries, must be disavowed.” (Read the Court’s full sentencing decision.)
Mr. Karigar has 30 days to appeal his conviction and his sentence.
At the time of the offence by Mr. Karigar, a violation of the CFPOA was subject to a fine at the discretion of the court and imprisonment of up to five years. The maximum term of imprisonment has since been increased to 14 years. As such, it is expected that the Crown will seek proportionately harsher sentences under the amended CFPOA.
The severity of the sentence imposed on Mr. Karigar highlights the willingness of courts to impose significant incarceration sentences on individuals, in spite of their co-operation. This is consistent with the imposition of substantial fines on corporations, even where guilty pleas were entered.
Given the extraterritorial reach and broad scope of the CFPOA and similar legislation in other jurisdictions, international businesses should take care to adopt appropriate compliance policies and seek legal advice with respect to circumstances that may raise issues under anti-corruption legislation.
Jan. 21, 2020 - In our annual forecast of the year ahead for Canadian competition and foreign investment review law, we evaluate how developments in 2019 will influence these areas of the law in 2020. We discuss below the main issues and trends to watch for this year. Continued Focus on Enforcement in the Digital...