Article Detail



Article

UK and Canadian Anti-Corruption Legislation – Quick Reference Guide

Date

October 1, 2015

AUTHOR(s)

John W. Boscariol
Marc-Alexandre Hudon
Richard Temple


In today’s global business world, compliance with anti-corruption legislation has never been more necessary or relevant. However, with the extensive recent changes and the ever growing extraterritorial reach of the legislation, this task has rarely been more challenging or complex. The UK and Canada are two key jurisdictions where companies can be held liable notwithstanding that the activity took place in neither the UK nor Canada. Sanctions include huge fines, criminal convictions, disbarment from tendering, cancelled contracts, brand destruction: a catastrophic risk for any company. Those companies that are able to effectively navigate and mitigate these risks will have a significant competitive advantage in their international markets.

As an introduction to these wide-ranging and overlapping laws, this article provides a high level comparison of the main UK and Canadian anti-corruption legislation.

Relevant Provision

UK Bribery Law

Canadian Bribery Law

What is the main bribery legislation?

The Bribery Act 2010 (“BA”)

The Corruption of Foreign Public Officials Act (“CFPOA”) and the Criminal Code (“CC”)

When did it come into force?

1st July 2011

14th February 1999 (CFPOA)

What are the key offences?

Bribing another person - active bribery (Section 1 BA)

Being bribed by another person – passive bribery (Section 2 BA)

Bribing a foreign public official (Section 6 BA)

A commercial organisation can be liable under the above offences based on the common law identification principle

Bribing a foreign public official (Subsection 3(1) CFPOA)

Bribing Canadian federal, provincial or municipal officials (Sections 119 to 125 CC)

Giving or receiving secret commissions (Section 426 CC)

A commercial organization can be liable under the above offences based on the acts of its “senior officers”, which includes its directors, CEO, CFO and “representatives” who play an important role in the establishment of its policies or are responsible for managing an important aspect of its activities. “Representatives” include directors, partners, employees, agents and contractors of the organization. (Section 22.2 CC)

Is it an offence to fail to prevent bribery?

In addition to the above offences, if a commercial organisation fails to prevent conduct that would amount to an offence under the above sections, then commercial organisations can be liable for failing to prevent bribery (Section 7 BA)

No, this is not a separate offence. However, commercial organizations are liable for acts of “senior officers” who, knowing that a “representative” of the organization is or is about to be party to bribery, do not take all reasonable steps to stop them (Section 22.2 CC)

Are there books and records offences?

No accounting related offences under the BA

The Companies Act 2006 does however require companies to keep adequate accounting records and failure to do so is a criminal offence

Specified accounting–related activities (such as using false documents or failing to properly record transactions) are prohibited when undertaken for the purposes of bribery or hiding bribery (Section 4 CFPOA)

Who are the relevant enforcement authorities?

Serious Fraud Office

The Royal Canadian Mounted Police are responsible for investigating and laying charges under the CFPOA and the Public Prosecution Service of Canada is responsible for prosecuting such offences.

Is knowledge of the offence required?

Under Section 7 BA there is no requirement to prove motive or intent on the part of the commercial organisation

Section 1 BA requires intent to induce or reward improper performance of a relevant function or activity or knowledge or belief that acceptance of the financial or other advantage would itself constitute improper performance

Section 2 BA requires no intent or knowledge save for one case.

Section 6 BA requires the person giving the bribe to intend to influence the foreign public official in their capacity as such and to obtain or retain business or a commercial advantage

Yes. Such knowledge also includes wilful blindness, i.e., where “the accused, with actual suspicion, deliberately refrained from making inquiries because he or she did not want his or her suspicions confirmed”

Who does it apply to?

UK companies, UK partnerships and British nationals

Foreign individuals ordinarily resident in the UK

Foreign corporate bodies carrying on a business or part of a business in the UK (Section 7 offence only) which depends on whether they have a “demonstrable business presence” in the UK

Any individual or body corporate carrying out bribery in the UK

Senior officers of a body corporate

Canadian companies, partnerships, and other organizations and Canadian nationals

Foreign organizations (subject to jurisdiction as per below)

Foreign nationals located in Canada

What UK or Canada connection is required for the legislation to apply?

For Sections 1, 2 and 6 BA, an offence is committed where acts or omissions forming part of an offence were undertaken within the UK or anywhere in the world by those with a close connection to the UK and the relevant act or omission would have been an offence if made in the UK (Section 12 BA)

For Section 7 (BA) commercial organisations are liable for acts of associated persons (for example agents, employees, subsidiaries and joint venture partners) anywhere in the world regardless of whether or not they have any connection with the UK

Territorial jurisdiction (common law): a significant portion of the activities constituting the offence took place in Canada (a “real and substantial link” between the offence and Canada)

Nationality jurisdiction (Section 5 CFPOA): persons who commit bribery and related offences outside of Canada are deemed to have committed those offences in Canada if those persons are:

(i) Canadian citizens;

(ii) permanent residents of Canada and, after the commission of the offence, are present in Canada; or

(iii) an organization that is incorporated, formed or otherwise organized under the laws of Canada or a province

Are there any defences?

Save for exceptions for the intelligence services and armed forces, there are no defences under sections 1, 2 and 6 BA

There is a defence to the Section 7 offence for commercial organisations which have put in place “Adequate Procedures” designed to prevent persons associated with the commercial organisation from undertaking such conduct

There is extensive guidance as to what constitutes Adequate Procedures

Whilst it is a question of fact in the circumstances, the Ministry of Justice Guidance highlights a risk-based approach to Adequate Procedures based on the principles of proportionate procedures, top-level commitment, risk assessment, due diligence, communication (including training) and monitoring and review

No person is guilty of the bribery offence if the payment is:

(i) permitted or required under the laws of the foreign state or

(ii) made to pay the reasonable expenses incurred in good faith by or on behalf of the foreign public official that are directly related to the promotion, demonstration or explanation of products and services or the execution or performance of a contract between the person and the foreign state

Does it apply to facilitation payments (payments to expedite the performance of routine operations)?

Yes

No, facilitation payments are currently exempt (Subsection 3(4) CFPOA). However, recent CFPOA amendments indicate that the exemption may be removed shortly.

What are the penalties?

Individuals - up to 10 years imprisonment

Companies - criminal penalty with an unlimited fine

Debarment from public contracts

There are also other offences under other UK legislation e.g. directors disqualification and money laundering offences

Individuals - up to 14 years imprisonment

Companies - criminal penalty with an unlimited fine

Debarment from public contracts (e.g., PWGSC Integrity Regime – July 3, 2015)

Are deferred prosecution agreements (DPAs) available to enable companies to pay penalties, be subject to monitoring orders and other remedial steps without being convicted?

Yes

No

Can both UK and Canadian bribery legislation apply to the same matter?

Yes

Yes, although there is protection against double jeopardy

Does it apply to corruption in a private to private transaction where there are no public officials?

Yes

Yes, prohibitions against payment or receipt of secret commissions (Section 426 CC)

What are the key steps for obtaining protection?

See Adequate Procedures defence above

Implementation of policies and controls to ensure prevention and detection of anti-corruption violations, including with respect to:

  • clearly articulated written compliance policy with strong and explicit support from senior management
  • appointment of senior compliance officerswith independent reporting/oversight
  • training of internal and external parties
  • screening, retention, and ongoing monitoring of third parties
  • internal audit and testing of controls
  • accounting controls for accurate books and records
  • internal reporting, investigation, remediation and disclosure procedures

Implementation of policies and controls to ensure prevention and detection of anti-corruption violations, including with respect to:

  • clearly articulated written compliance policy with strong and explicit support from senior management
  • appointment of senior compliance officers with independent reporting/oversight
  • training of internal and external parties
  • screening, retention, and ongoing monitoring of third parties
  • internal audit and testing of controls
  • accounting controls for accurate books and records
  • internal reporting, investigation, remediation and disclosure procedures

What are the main problem areas in practice for companies?

Use of standard “paper” compliance programs without conducting effective risk-assessment and ensuring there is actual, ongoing and documented application of controls

Policing and preventing payments by associated persons including agents, employees and joint venture partners worldwide is always challenging

Use of standard “paper” compliance programs without conducting effective risk-assessment and ensuring there is actual, ongoing and documented application of controls

Policing and preventing payments by associated persons including agents, employees and joint venture partners worldwide is always challenging

Who should I contact at McCarthy Tetrault for advice?

Richard Temple [email protected] or Rob Brant [email protected]

John Boscariol [email protected] or Pierre Boivin [email protected]


McCarthy Tétrault – September 2015

Expertise