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Amendments to the Corruption of Foreign Public Officials Act

June-20-2013

Lawyer Jonathan Feldman
Area Corporate Finance and Securities, Litigation, Asia Practice, White Collar Risk Management and Investigations

Summary

Amendments to the Corruption of Foreign Public Officials Act (the “Act”) came into force on June 19, 2013.  The amendments strengthen the government’s ability to combat corruption and bribery of foreign public officials in international business transactions.

Summary of Amendments

The Act prohibits payments to foreign public officials in order to obtain or retain an advantage in the course of business.  The following is a summary of the significant amendments to the Act:

Prohibition of Facilitation Payments

Before the amendments came into force, the Act included an exception for facilitation payments.  A payment to a foreign public official was not an offence if it was made to expedite or secure the performance of any routine act that was part of the official’s duties or functions (e.g., the issuance of a permit or processing of official documents).  This amendment will come into force on a date to be determined.

Establishment of Nationality Jurisdiction

The amendments establish jurisdiction over all Canadian citizens, permanent residents and corporations incorporated in Canada, regardless of where the alleged offence is committed.  No real or substantial connection to Canada is required for the Act to apply to an individual or corporation.

No “For Profit” Requirement

Before the amendments came into force, the Act only applied to businesses that carried on a business for profit.  The Act now also applies to not-for-profit organizations.

Increase in Maximum Penalties

The amendments have increased the maximum penalty under the Act from 5 years to 14 years in prison. Unlimited fines may also be imposed.

New Books and Records Offence

The amendments create an additional offence pertaining to the books and records of a company or person required to be kept in accordance with accounting and auditing standards.  It is an offence to:

  • establish and maintain an account that does not appear in the books and records;
  • engage in transactions that are not recorded in those books and records or that are inadequately identified;
  • record non-existent expenditures;
  • enter liabilities with incorrect identification of their object;
  • knowingly use false documents; and
  • intentionally destroy accounting books and records earlier than permitted by law.

RCMP Authority

Only an officer of the Royal Canadian Mounted Police or any person designated as a peace officer under the Royal Canadian Mounted Police Act may lay charges for an offence under the Act.

Practical Considerations for Businesses

In light of these amendments, Canadian companies conducting business abroad should develop adequate internal controls, ethics and compliance programmes or measures for preventing and detecting bribery. These compliance programs should include a system of financial and accounting procedures to ensure the maintenance of accurate books and records. Companies are also encouraged to assess the risk of bribery in the context of potential international transactions.

For further information on these amendments, please contact any member of our Corporate Securities or Litigation Law Groups.