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No Bribe, No Bribee, No Essential Offence Elements in Canada… But Conspiracy Conviction Under CFPOA Affirmed

On July 6, the Ontario Court of Appeal released the first Canadian appellate decision to address the scope of Canada’s Corruption of Foreign Public Officials Act (the “CFPOA”), upholding the conviction of Nazir Karigar for agreeing to offer bribes to Indian officials in relation to a bid for a security contract. The decision confirms that the foreign corruption offence casts a wide net, prohibiting not only giving or offering of bribes to foreign public officials, but also “agreeing” to give or offer bribes, regardless of whether the targeted official partakes in an agreement and regardless of whether a bribe was actually paid. The decision also rejected an attempt to narrow the ‘real and substantial’ connections necessary to establish Canada’s jurisdiction over foreign corruption.

Background

The facts before the trial judge, Justice Hackland of the Ontario Superior Court of Justice, and his key findings on the application of the CFPOA in this case are set out in detail in our earlier client alert at First Trial Under Canada’s Corruption of Foreign Public Officials Act Results in Conviction. Nazir Karigar, an Ottawa-based businessman, had approached Cryptometrics Canada offering to use his “good connections” with Air India and other Indian public officials in order to secure a major contract for facial recognition technology. In the course of their enterprise, Karigar along with his associates and certain executives of Cryptometrics:

  • openly discussed the payment of bribes to Indian officials in order to secure the contract;
  • prepared a spreadsheet budgeting intended bribes, in cash and in shares, to identified Indian officials;
  • designed a sham proposal, through a related entity, in order to create the appearance that the bidding process was competitive;
  • transferred monies to Karigar, upon the latter’s request, with the understanding that they would be remitted to officials listed in the spreadsheet; and
  • discussed how to amortize the bribes in order to maintain the profitability of the project.

The money at issue (approximately US$450,000) could not be traced beyond its transfer by Karigar to an agent in India to the attention of a foreign official. Karigar ultimately had a falling out with his co-conspirators and reported them to the Canadian and US authorities.

On August 15, 2013, Karigar was convicted under the foreign corruption offence for his agreeing to offer bribes – even though the Crown was unable to prove that the bribes were offered or remitted to the Indian officials. He was sentenced to three years in prison. For details on the Court’s sentencing of Karigar, see our previous client alert at First Prison Sentence Under Canada’s Corruption of Foreign Public Officials Act Sends Strong Message to Business Community. It is important to note that at the time of the relevant facts, a CFPOA violation was subject to a discretionary fine and imprisonment of up to 5 years. The maximum imprisonment term has since been increased to 14 years and it is expected that the prosecution will seek proportionately harsher sentences under the amended offence.

Karigar appealed on the grounds that Justice Hackland had made several errors in his determination. These related to the meaning of “agree”, the scope of territorial jurisdiction, the co-conspirator exception to the hearsay rule, and misapprehension of the evidence. All grounds of appeal were rejected. The Ontario Court of Appeal’s most important rulings were on the nature of agreement necessary to establish the offence and territorial jurisdiction.

Broad interpretation of agreement

Karigar argued on appeal that the foreign corruption offence required proof of an agreement between the accused and the foreign public official. It was his position that because the evidence only revealed an agreement between him and his partners, and not with any of the Indian officials, the conviction could not stand.

The Ontario Court of Appeal rejected the argument, noting that the offence is committed when a person “directly or indirectly gives, offers or agrees to give or offer [our emphasis]” a bribe to a foreign public official. Accordingly, the offence is committed as soon as the accused agrees to give or offer a bribe, regardless of whoever else is party to the agreement. In the Court’s words:

There is no limiting language on who must “agree”, prescribing the parties to the agreement. It does not say that the agreement must be with the foreign official, only that the loan, reward, advantage or benefit that is the subject of the agreement must be a loan, reward, advantage or benefit to (or for the benefit of) a public official. On the language alone, there is no basis to read in a limitation on who must be parties to an agreement.

The Court noted that this interpretation was aligned with Canada’s obligations under the Organisation for Economic Co-operation and Development’s Convention on Combatting Bribery of Foreign Public Officials, which prohibits conspiracies to bribe as well as actual bribes of foreign officials.

Extensive jurisdiction over foreign corruption

The Court also rejected Karigar’s argument that his conviction should be overturned because the essential elements of the offence had taken place abroad, outside of the jurisdiction of the Canadian authorities.

The offence in this case was committed prior to the June 19, 2013 amendments to the CFPOA which extended the foreign corruption offence’s extraterritorial reach to acts committed abroad by Canadian citizens, residents and corporations. Nevertheless, even in the absence of a jurisdiction automatically determined by citizenship, the Court found that Canadian citizenship could be considered, in addition to other factors, in determining whether there was a real and substantial link with Canada, the jurisdictional test established by the Supreme Court of Canada in R. v. Libman in 1985.

Importantly, the Court confirmed the principle that the real and substantial link test “is not limited to the essential elements of the offence, and that the bribery could not be hived off from the legitimate aspects of the transaction for the purpose of the territorial connection analysis.” The fact that essential elements of the offence in this case, such as the decision to bribe foreign officials and the dealings in India, may have taken place outside of Canada did not change the finding that other aspects of the transaction – including legitimate aspects – were sufficiently linked to Canada. Among those were the facts that:

  • the accused was a Canadian businessman who approached a Canadian company with the business proposal that eventually involved bribery;
  • the advantage and fruits of the contract obtained through bribery would benefit a Canadian company;
  • a great deal of the contract work was to be done in Canada; and
  • the bulk of the documentary evidence was seized in Canada and all the witnesses were from Canada.

Key implications for anti-bribery enforcement and compliance

The decision is a reminder that the foreign corruption offence condemns conduct – the giving, the offering or the agreeing to give or offer a bribe – regardless of the result. It signals that the offence can be committed regardless of:

  • whether the conduct had any impact or influence on the targeted official;
  • whether the bribe changed hands; or
  • whether a foreign public official or other persons were party to the agreement.

Karigar was convicted even in the absence of any evidence as to what became of the bribe money, whether it was ever offered or paid to anyone who qualified as a foreign public official and whether such person could influence the outcome of the bidding process. Notwithstanding those shortcomings in the prosecution’s case, there was very good evidence of a specific agreement to offer a bribe, as noted above. The juxtaposition of the emails, spreadsheets and fund transfers left no reasonable doubt for the trial judge concerning the existence of an agreement to bribe a list of foreign public officials with a view to securing a contract.

The decision is also notable for its flexible approach toward Canada’s jurisdiction over transboundary crimes, and is relevant for establishing territorial jurisdiction over CFPOA violations committed by Canadians prior to June 19, 2013 and non-Canadians after that time, as well as over other white collar criminal offences. It is an important precedent with respect to Canada’s jurisdiction over non-Canadians engaged in corruption of foreign public officials. The Ontario Court of Appeal’s approach to jurisdiction is similar to the notion of “qualified territoriality” proposed by the Ontario Superior Court in Chowdhury v. H.M.Q. – another foreign corruption case – where it was acknowledged that “bright territorial lines have blurred as economies globalize and modern developments in travel and information technology lead to more transnational and international criminal activity.” It follows that courts may greenlight enforcement actions over transboundary offences that arguably have limited links with Canada, even absent a clear statutory grant of extraterritorial jurisdiction.

Recent developments

There have been three other convictions under the CFPOA, all of companies and all following guilty pleas. Global Affairs Canada has most recently reported that there are 10 ongoing CFPOA investigations.

Karigar remains the first and, so far, the only individual to be convicted under Canada’s foreign corruption offence. Others involved in the conspiracy, Cryptometric’s former CEO and COO (both US nationals) and an agent for the company (a UK national), have been charged with agreeing to pay bribes to Indian officials in violation of the CFPOA. The company agent is also charged with theft under section 334 of the Criminal Code. Their cases are currently before the courts.

A number of other foreign corruption cases are proceeding in Canadian courts. In November 2016, the president of Canadian General Aircraft, Larry Kushniruk, was charged under the CFPOA with conspiring to bribe Thai military officials in respect of the sale of a commercial passenger airplane. The charges were laid against the Calgary-based businessman even though the investigation did not, reportedly, reveal evidence that Thai public officials were actually bribed or were parties to the conspiracy – a fact pattern similar to the Karigar matter.

Also, earlier this year, the Ontario Superior Court of Justice dismissed the case against former SNC-Lavalin executives accused of bribing government officials involved in the Padma Bridge project in Bangladesh, after excluding wiretap evidence determined to be obtained on the basis of a faulty warrant. Foreign bribery charges against SNC-Lavalin with respect to major construction projects in Libya are set for a 50-day trial in September of 2018, while both bribery and economic sanctions charges against former SNC-Lavalin executives in connection with activities in Libya continue to proceed through the courts.

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