The Canadian Parliament recently enacted Bill S-14 amending the Corruption of Foreign Public Officials Act (CFPOA). The CFPOA makes it a crime in Canada for a person or company to gain unfair business advantages by bribing foreign public officials. Bill S-14 places CFPOA in line with the U.S. Foreign Corrupt Practices Act and the UK's Bribery Act, in some respects.
The CFPOA was originally enacted in 1999 based on the guidelines issued by the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Convention's introduction in 1997 has led to more stringent and uniform approaches against the bribing of foreign public officials. Nearly forty countries have now become members of the OECD.
In its 2009 annual report, OECD raised objections to certain limitations in the CFPOA and recommended changes, some of which are reflected in Bill S-14. The amendment raises the maximum penalty for the foreign bribery offense from a maximum of five years' imprisonment to fourteen years. CFPOA now also allows additional imprisonment of up to fourteen years for failure to maintain books and records in accordance with the CFPOA, which prohibits bookkeeping practices and other types of transactions that are intended to hide bribes.
The amendment also allows Canada to prosecute Canadian companies, citizens, and permanent residents for violations of the CFPOA occurring wholly outside of Canada, as US and UK Law allow. Prior to the enactment of Bill S-14, Canada's jurisdiction was limited to bribery offenses committed in whole, or in part, within its territory.
The OCED convention guidelines have become a major incentive for nations to be more active in bringing corruption charges. Many nations are now reevaluating their current laws to follow a more progressive and uniform approach in combating bribery. However, not all of the recommendations made by the OCED have been adopted uniformly across the globe. For example, Bill S-14 accommodated the OCED's recommendation to eliminate the exemption in the CFPOA for "facilitation payments" – payments made to foreign public officials to expedite or secure performance of routine governmental actions. Rather than requiring Canadian companies to quit this practice "cold turkey," however, the exemption will end on a date to be set by order of Canada's Governor in Council.
Canada joins the UK in adopting the OCED's recommendations against facilitation payments. The United States, which has for the most part abided by the guidelines of the OCED convention, continues to allow an exemption for facilitation payments under the FCPA. Canada's action in toughening the CFPOA is another reason for U.S. multinationals applying a "least common denomination" approach to compliance to re-examine their policies toward facilitation payments.
If you have any questions on the content of this alert, please contact John P. Lowe Jr. at (585) 295-4499 or jlowe@hblaw.com, or any other attorney in our Corporate practice area.