THE CFPOA OF 1998

The enactment for Canada of the CFPOA in 1998 was somewhat unusual. Although there was clearly no emergency, the legislation came forth as a fast-tracked initiative, originating in the Senate rather than in the elected House of Commons, at the behest of a then Liberal Party-led federal government. Indeed, Parliament spent only two days considering the provisions of the new law. A bill was introduced in the Senate on 1 December 1998 and underwent its three stages of consideration in the Senate on 3 December 1998. It then sailed through all phases of consideration in the House of Commons on 7 December 1998, with its link to international developments, and general support for those developments, providing the explanation for its speedy passage through Parliament in under a week.

As noted in the introduction, the CFPOA was designed to support Canadian ratification of the 1997 OECD Anti-Bribery Convention. This convention was an international initiative itself influenced by domestic legislation enacted by the United States to criminalize the giving of foreign bribes,^{Footnote 45} although the OECD convention was not the first so-called “ABC” convention to tackle “anti-bribery and corruption.” That distinction belongs to the 1996 Inter-American Convention against Corruption, later ratified by Canada in 2000.^{Footnote 46} Nevertheless, the link between Canada’s CFPOA and the Anti-Bribery Convention was widely acknowledged, both within and outside Parliament and within and outside Canada.

The OECD convention itself was also a fast-tracked initiative, with the call for negotiating a binding treaty to address the bribery of foreign public officials having been made at an OECD ministerial meeting in May 1997, with the recommendation that “Member States submit legislative proposals to their national legislatures to criminalize such bribery and seek their enactment by the end of 1998.”^{Footnote 47} By November 1997, a convention text was in place, open for signature and ratification. In May 1998, Canada and other G8 states announced that they would make every effort to ratify the OECD Anti-Bribery Convention by the end of 1998,^{Footnote 48} leading to Canada’s enactment of the CFPOA in December 1998. Canada would later announce that it would be the state whose actions brought the convention into force, with Canada’s ratification, after that of Germany, Japan, the United States, and the United Kingdom,^{Footnote 49} being, in the words of Canada’s then minister of foreign affairs, “the key which will unlock the door.”^{Footnote 50}

The Anti-Bribery Convention requires its states parties to establish a domestic criminal law offence of bribery for the offering of undue rewards to foreign public officials to obtain improper advantages in the conduct of international business^{Footnote 51} and to take measures to establish the liability of legal persons for this crime.^{Footnote 52} The convention also requires the imposition of appropriate punishment and penalties and that states parties take action to ensure that the proceeds of foreign bribery can be seized and confiscated.^{Footnote 53} However, it is a convention that focuses on what is often called active, rather than passive, bribery, focusing on the supply side of foreign bribery, even though this distinction may fail to accord appropriate recognition to the role of a bribe recipient in soliciting or arranging for the bribery to take place. Indeed, after a thorough review of domestic bribery laws, the Law Commission for England and Wales has concluded that “there should be two general offences of bribery: one concerned with the conduct of the payer, and the other concerned with the conduct of the recipient.”^{Footnote 54}

The CFPOA is the implementation vehicle for Canada’s obligations under the OECD Anti-Bribery Convention. As such, the CFPOA has made the bribery of a foreign public official to obtain or retain an advantage in the course of business an indictable offence, subject to a maximum term of five (now fourteen) years of imprisonment.^{Footnote 55} Offering a bribe, however, is not the only offence of relevance, with the Act (and later the Criminal Code) making clear that the possession of property, or the proceeds of property, obtained through foreign bribery, and the laundering of such property or proceeds, are also offences under Canadian law.^{Footnote 56} Canadian law also enables the prosecution of a conspiracy or an attempt to commit these offences and also applies to situations of aiding and abetting. Corporations, as well as individuals, may be charged, without regard to nationality, with the Act’s reference to “person” intended to include corporations, using the same principles of corporate criminal liability as apply to Canadian Criminal Code offences.^{Footnote 57} As noted in a Department of Justice guide to the CFPOA circulated in 1999, “[c]orporations, of course, cannot be subject to imprisonment, but they can be fined. The amount of any fine would be at the discretion of the judge, and there is no maximum.”^{Footnote 58}

In introducing the proposed legislation, the government’s designated spokesperson identified the bribery of public officials as “one of the major problems encountered in international trade and investment,” while also making a brief mention of corruption’s corrosive effect on “the rule of law, democracy and human rights.”^{Footnote 59} She also drew attention to the support of the Canadian business community for the Anti-Bribery Convention, describing their views as supportive of “an opportunity to create an environment in which Canadian companies will be able to compete on the basis of quality, price and service.”^{Footnote 60} The official opposition was also supportive of the bill, although somewhat critical of the government’s use of a fast-tracking procedure ordinarily reserved for the passage of emergency legislation.^{Footnote 61}

Later that same day, the details of the proposed legislation were considered by a Committee of the Whole, with the then minister of foreign affairs, Lloyd Axworthy, appearing in person to answer questions. In his opening statement, the minister once again emphasized the link between an effective business climate, good governance, and the rule of law, while also noting that the export of goods and services served as an opportunity to export our values.^{Footnote 62} He explained that it was his responsibility to shepherd the bill through Parliament because of its treaty implications, but recognized that the law’s enforcement would be a matter for the federal minister of justice and for provincial attorneys general.^{Footnote 63} A number of questions were asked about the legislation’s scope, including its ability to address incidences of both indirect and direct bribery as well as its non-application to non-profit corporations. A question was also raised as to whether Canadian businesses would be disadvantaged by the imposition of high standards. The opposition, however, was supportive of both the legislation and the Anti-Bribery Convention, with the only amendment being the inclusion of a reporting to Parliament provision, which prompted the minister to predict “it would be a short report,” given his assessment that few prosecutions were likely to occur in Canada.^{Footnote 64}

The most obvious non-governmental body with an interest in tackling foreign corruption is Transparency International, founded in 1993 by Peter Eigen and nine others, to promote greater accountability in international economic development, with Eigen having served as a former program manager with the World Bank.^{Footnote 65} Two representatives from the Canadian chapter of Transparency International also testified before the Senate’s Committee of the Whole, with both individuals having ties to Canada’s business community.^{Footnote 66} Their comments focused on the importance of undertaking anti-corruption efforts and the role to be played by the Anti-Bribery Convention, although mention was also made of an association between human rights and corruption, with it being recognized by the chapter’s then president that “companies that engage in corruption show considerable contempt for the rights and status of the people who are being corrupted.”^{Footnote 67}

Upon the conclusion of the committee’s proceedings, the bill was immediately read a third time and adopted by the Senate on 3 December 1998. It was introduced in the House of Commons on 7 December 1998 and then went immediately to Second Reading, shepherded by the parliamentary secretary to the minister of foreign affairs, Julian Reed. Reed repeated many of the points made previously by the minister, noting corruption’s distorting effects on international trade and competition as well as public policy and the public interest.^{Footnote 68} He also embraced the goal of implementing the Anti-Bribery Convention as a means to “enhance Canada’s reputation as a world leader in fighting corruption.”^{Footnote 69} The bill was then fast-tracked through its committee stage, and then Third Reading,^{Footnote 70} so as to be adopted that same day.^{Footnote 71} The new law received royal assent on 10 December 1998, enabling Canada to ratify the Anti-Bribery Convention a week later. The CFPOA came into effect on 14 February 1999,^{Footnote 72} a day before the Anti-Bribery Convention entered into force on the international legal plane.^{Footnote 73}

THE FFCA OF 2013

Fourteen-and-a-half years later, Canada’s legislative scheme for addressing the corruption of foreign public officials underwent substantial amendment,^{Footnote 74} this time at the initiative of a Conservative Party-led government. Again, the legislation was introduced first in the Senate and then the House of Commons, although, on this occasion, a bit more time was allocated within each house for consideration at the committee stage. The bill was introduced on 5 February 2013, underwent Senate committee consideration in late February and early March, and received Third Reading on 26 March 2013. A day later, it was introduced in the House of Commons, underwent House of Commons committee consideration in early June, and received Third Reading on 18 June 2013. The Act, to be cited as the Fighting Foreign Corruption Act (FFCA), received royal assent the next day.^{Footnote 75}

As with the CFPOA, the FFCA had widespread support from parliamentarians of all political affiliations. The accepted, and often stated, aim of the legislative scheme remained the continued creation of a level playing field for international business,^{Footnote 76} with the amendments best viewed as an effort to update Canada’s foreign bribery law in response to criticisms from within the OECD^{Footnote 77} and others,^{Footnote 78} including Transparency International Canada.^{Footnote 79} Legislative change was therefore needed, in the words of the parliamentary secretary to the minister of foreign affairs, “to answer the call for enhanced vigilance,” but not to secure a radical overhaul or introduce a new scheme.^{Footnote 80}

This “call for enhanced vigilance” was also reinforced by additional international developments, including Canada’s ratification in 2000 and 2007 of the leading treaties of regional and universal application on anti-bribery and corruption — the Inter-American Convention against Corruption ^{Footnote 81} and the United Nations Convention against Corruption.^{Footnote 82} However, these new treaties did not prompt any overhaul of the CFPOA. Canada took the position that it could rely on existing domestic law for the performance of its international obligations,^{Footnote 83} although both the inter-American and UN conventions aim to address both active and passive foreign bribery.^{Footnote 84} There is one aspect found codified in both conventions, however, that Canada has stated it cannot accept. This aspect concerns an obligation to consider establishing an offence of “illicit enrichment” to criminalize “a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income.”^{Footnote 85} This treaty obligation, however, is one of consideration, which is also made subject to a state party’s constitution and the fundamental principles of its legal system, with Canada having lodged statements of understanding with each treaty depositary to explain that it would not be establishing such an offence on the grounds that it would be contrary to the presumption of innocence guaranteed by Canada’s Constitution.

As for the content of the FFCA, there were six changes made to Canada’s legislative scheme for addressing foreign bribery. This Act amended the CFPOA to increase the maximum sentence of imprisonment from five to fourteen years,^{Footnote 86} to create a new “books-and-records” offence specific to foreign bribery to prohibit the use of deceptive or “off-the-books” accounts,^{Footnote 87} and to extend the legislation’s application to all bribes paid in the course of business, whether a business was earning a profit or not.^{Footnote 88} (Canada had been the only OECD country to add this “for-profit” qualification in its domestic law, with the Anti-Bribery Convention drawing no distinction between “for-profit” and “not-for-profit” business transactions.^{Footnote 89}) The 2013 changes also expanded the jurisdictional reach of the CFPOA and centralized the Act’s enforcement, while also removing a defence to a foreign bribery charge for what are known in law as “facilitation payments” or, more colloquially, “grease payments.” This last change, however, was made contingent on a federal Cabinet decision to bring this particular amendment, as distinct from the Act as a whole, into force.^{Footnote 90}

Of these changes, the most noteworthy was that concerning jurisdictional reach and the use of nationality as a basis for asserting jurisdiction so as to give the Canadian legislative scheme a degree of extraterritorial effect.^{Footnote 91} Ordinarily, Canadian criminal law deals with offences that take place in Canada,^{Footnote 92} with territoriality having long been recognized under international law as a valid basis for prescribing crime.^{Footnote 93} However, it is also well recognized that a state may choose to exercise its jurisdiction over its nationals, wherever they are located,^{Footnote 94} with the nationality principle providing support for the prosecution of Canadians who commit certain prescribed crimes abroad, including treason, terrorism, and child sex tourism.

However, in enacting the CFPOA in 1998, Canada had decided not to embrace a nationality approach for the offence of foreign corruption, later explaining to its OECD peer reviewers that territorial jurisdiction is very broadly interpreted by Canadian courts and that it was Canadian policy to not take extraterritorial jurisdiction unless required to do so by a treaty obligation.^{Footnote 95} Later, Canada would also lodge a declaration upon ratifying the UN Convention against Corruption in 2007, stating explicitly that there was “effective and broad territorial jurisdiction over corruption offences” in Canada.^{Footnote 96} The OECD peer reviewers, however, had their doubts about the effectiveness of relying solely on territorial jurisdiction, apparently supported through meetings with the Ontario Provincial Police and the Ontario Ministry of the Attorney General.^{Footnote 97} Canada’s assessment later received judicial support in the successful prosecution of an Ottawa businessman named Nazir Karigar for offering bribes to officials in India, including an Indian cabinet minister, with a view to securing a multi-million dollar contract with Air India to provide biometric facial recognition technology.^{Footnote 98} The defence challenged the matter of jurisdiction, and, since the facts of the case took place when the CFPOA only provided for territorial jurisdiction, the Crown was required to prove the existence of a real and substantial link between the offence and Canada in keeping with the test that had been long established by the Supreme Court of Canada in Libman v The Queen.^{Footnote 99} Neither the trial judge nor the Ontario Court of Appeal had any difficulty in concluding that territorial jurisdiction was “clearly established.”^{Footnote 100} Nor was it difficult to find guilt, with the bribery arrangement having come to light through an unindicted co-conspirator’s cooperation with the police.

Outside pressure, however, can lead to change, notwithstanding an ex post facto confirmation of the legal strength of Canada’s arguments favouring the status quo, with Canada having been singled out by the OECD in 2006 as the only party to the Anti-Bribery Convention that had not established nationality jurisdiction for foreign bribery.^{Footnote 101} Three years later, Canada attempted to change this statistic. In May 2009, Canada’s minister of justice brought forward a proposal to add a nationality jurisdiction clause to the CFPOA; however, the bill died on the order paper as a result of the 2009 prorogation of Parliament.^{Footnote 102} The change was eventually made in 2013, with its supporters making the argument that nationality jurisdiction removes the burden on the Crown of having to prove the required “real and substantial link” between the offence and Canada, allowing the Crown to focus its efforts and resources on proving the bribery. Of course, by definition, nationality jurisdiction does not extend the CFPOA’s jurisdiction to address the situation of a non-national, who has committed no specific acts in Canada’s territory, as confirmed by the court’s dismissal of an effort to prosecute a Bangladeshi politician who was alleged to have made efforts to influence the award of the Padma bridge project to SNC-Lavalin.^{Footnote 103} Territorial jurisdiction, however, does support the charging of non-nationals under the CFPOA for acts taking place in Canada, with two Americans and one British national currently facing charges in relation to the same Air India bribery case discussed above.^{Footnote 104}

The other amendment of note in 2013 was that to remove the exception for facilitation payments so as to make clear that such payments are considered bribes,^{Footnote 105} an amendment that has, at last, been brought into force on 31 October 2017.^{Footnote 106} Facilitation payments are those made to expedite or secure the performance by a foreign public official of any act of a routine nature, such as the issuance of a permit or licence, the processing of official documents such as visas and work permits or the provision of normal public services.^{Footnote 107} Some view such payments as a lesser concern, with the then minister of foreign affairs, John Baird, who was taking the lead with respect to the 2013 amendments, referring to facilitation payments as “the younger sister of a bribe.”^{Footnote 108} It has also been noted that Canada’s statutory defence for such payments was “virtually identical to a defence in the U.S. Foreign Corrupt Practices Act,”^{Footnote 109} and, as noted in a report by the OECD Working Group, many Canadian companies in the extractive sector are aware of the US exception for facilitation payments due to their listing on a US stock exchange.^{Footnote 110} However, following this logic, Canadian companies trading on the London Stock Exchange should be aware that facilitation payments attract liability under British law and, in any event, changing views now cast the US position as being contrary to current best practice.^{Footnote 111} While it is true that in 1997, within the OECD, the criminalization of small facilitation payments had not been considered practical or effective,^{Footnote 112} by 2009, the OECD was recommending that countries review their policies and approach and that companies prohibit or discourage their use.^{Footnote 113} By the time the Canadian Parliament was considering amendments to the CFPOA in 2013, thirty-six of the forty parties to the Anti-Bribery Convention had no provision in their domestic laws to allow facilitation payments,^{Footnote 114} and under the UN Convention against Corruption, the default position from the perspective of a treaty of universal application is that facilitation payments are considered a form of bribery, unless a defence is made available by a state’s domestic law.^{Footnote 115}

As for the views of those working at the coalface, peer reviewers with the OECD Working Group had noted that “representatives of the legal profession in Canada [had] expressed a high level of concern about the defence for ‘facilitation payments’, believing it would create a ‘large area of uncertainty’, and some felt that it should be repealed.”^{Footnote 116} Nevertheless, the Canadian Bar Association’s self-described anti-corruption team, in its testimony in 2013 before the Senate, and then the House of Commons, took the position that the time was not yet ripe to require the criminalization of facilitation payments made to foreign officials.^{Footnote 117} The anti-corruption team was described by an association staff lawyer as “comprising lawyers in private practice and in-house counsel across Canada, who are experts in the field of anti-bribery and anti-corruption.”^{Footnote 118} However, its submissions failed to generate much support, likely as a result of its representative’s repeated use of a hypothetical example of the prospect of fourteen years of imprisonment for paying CDN $20 to secure an exit visa. Indeed, one senator later wondered aloud, and, thus, on record, if this was a case of “very little input from members of the bar association” before the representatives presented the association’s position.^{Footnote 119} Clearly, very little weight had been accorded by the association’s representative to the likely exercise of prosecutorial discretion in the face of such a de minimis infraction.^{Footnote 120}

On the proposed increase in the maximum prison sentence, the Canadian Bar Association was also critical, drawing attention to the fact that offences that carry a maximum sentence of fourteen years are not eligible for discharges, either absolute or conditional, or for conditional sentences, such as sentences served in the community.^{Footnote 121} On this aspect, however, the association received no support from Transparency International Canada, which viewed the prospect of a lengthy sentence as a deterrent to the commission of corruption.^{Footnote 122} There was also little guidance available from the case law,^{Footnote 123} although testimony from civil servants made clear that the change to a maximum of fourteen years would bring the sentencing regime for foreign bribery in line statutorily with that for the bribery of a Canadian public official.^{Footnote 124} Article 3(1) of the Anti-Bribery Convention provides support for making such a comparison. In Canada, there are different maximum sentences in use for domestic corruption offences, but the bribery of a judge, police officer, and others employed in the criminal justice system is subject to a maximum sentence of fourteen years.^{Footnote 125} A lower maximum of five years’ imprisonment applies to those who commit fraud on the government through the bribery of other officials.^{Footnote 126}

The FFCA also centralized (and unified) Canada’s enforcement effort by granting the RCMP the exclusive authority to lay charges under the CFPOA,^{Footnote 127} thus eliminating the potential for overlap with the Ontario Provincial Police and the Sûreté du Québec, among others. Several comments were made during the debates on the establishment of a RCMP International Anti-Corruption Unit in January 2008, comprising a team based in Ottawa, being the nation’s capital, and another team in Calgary, being a key location for Canada’s extractive industries.^{Footnote 128} A member of the Public Prosecution Service of Canada (PPSC) is assigned to advise the two RCMP teams on ongoing anti-corruption investigations,^{Footnote 129} and the training for RCMP liaison officers serving in international posts has also been broadened to include issues of foreign bribery and the CFPOA.^{Footnote 130} The RCMP’s website advises that it has liaison officers working in twenty-six locations outside Canada.^{Footnote 131}

As for the wider context in which this legislation was brought forward, the proposed amendments were announced just weeks after a Calgary-based company, then known as Griffiths Energy International, had agreed to pay a CDN $10.35 million fine as part of a guilty plea to a charge of paying bribes to secure oil concessions in Chad.^{Footnote 132} Parliamentarians were also aware, or made aware during the debates,^{Footnote 133} that Canada’s largest engineering and construction firm, SNC-Lavalin, was facing charges of corruption in both Canada and abroad^{Footnote 134} and that Niko Resources, another Calgary-based oil and gas company, had been fined CDN $9.5 million in 2011 after pleading guilty to bribing a former energy minister with the provision of an expensive car and paid travel expenses to secure concessions in Bangladesh.^{Footnote 135} The House of Commons was still considering the proposed legislation when it became known that SNC-Lavalin had been debarred from bidding on contracts with the World Bank for a ten-year period, following allegations of bribery involving the Padma bridge project in Bangladesh.^{Footnote 136} It was later announced that this sanction would also bar SNC-Lavalin from bidding on projects sponsored by Canada’s own international development agency.^{Footnote 137} Parliamentarians were also advised that the government had announced that, with effect on 11 July 2012, the bribing of a foreign public official under the CFPOA would render that individual or company ineligible to bid on contracts with the federal government’s Department of Public Works and Government Services,^{Footnote 138} a policy that would be extended in 2014 to include bribery convictions under foreign laws.^{Footnote 139}

On Canada’s record of activity under the CFPOA, the minister of foreign affairs had stated during his appearance before the Senate that there were thirty-five ongoing investigations,^{Footnote 140} a number later repeated in the House of Commons by his parliamentary secretary.^{Footnote 141} But Canada’s record at that time of only three convictions, albeit with a fourth soon to follow,^{Footnote 142} was viewed as weak, with media reports having drawn attention to external assessments of Canada’s record as being the worst within the G7.^{Footnote 143} Indeed, as a senior government official confirmed in his testimony before the Senate in 2013, “[t]here have been only five cases, and they have either been decided by the court or are currently before the court.”^{Footnote 144} But, for some, “numbers tell the tale,” with one parliamentarian noting that “227 cases [had been] prosecuted in the United States, 135 in Germany, 35 in Switzerland, 24 in France and in Italy and the United Kingdom 18 and 17 respectively.”^{Footnote 145}

THE EXTRACTIVE SECTOR TRANSPARENCY MEASURES ACT OF 2014

A year later, in 2014, the federal Parliament bolstered its efforts to deter and detect corruption by enacting legislation requiring companies operating in the oil, gas, and mineral sectors to disclose details of payments made to domestic and foreign governments. Known as the Extractive Sector Transparency Measures Act,^{Footnote 146} the Act received royal assent in December 2014 and entered into force on 1 June 2015. There is, however, no guidance to be gleaned from the parliamentary record as the Act was buried within an omnibus bill of some 580 pages concerning the government’s economic action plan and thus received little mention.^{Footnote 147} Luckily, though, a purpose clause has been included as section 6 of the Act, which makes express the connection to the CFPOA, with the purpose clause advising the “measures that enhance transparency and … impose reporting obligations … are designed to deter and detect corruption including any forms of corruption under [the Criminal Code and the CFPOA].”

As with the enactment of the CFPOA in 1998 and the FFCA in 2013, international developments reflecting the desire for a level playing field were again a key motivating factor for Canadian legislative action, with the G8 leaders promising to take action to “rais[e] global standards of transparency in the extractive sector” and, thus, “reduce the space for corruption and other illicit activities” at their 2013 summit at Lough Erne.^{Footnote 148} The European Union (EU) has also adopted similar measures, requiring EU entities active in the extractive and logging sectors, and all companies in these sectors trading securities on a EU regulated market, to report payments made to governments in the countries in which they operate.^{Footnote 149} The inspiration for these measures comes from a voluntary effort known as the Extractive Industries Transparency Initiative (EITI),^{Footnote 150} which was developed by governments, companies, and civil society organizations as a means to promote the timely and accurate publication of information on key aspects of natural resources management, including how licenses are allocated and the amount of revenue generated by tax and social contributions. The EITI was launched by then UK Prime Minister Tony Blair in 2002 and endorsed by the G8 in 2004,^{Footnote 151} with the founder of Transparency International, Peter Eigen, appointed its first chair in 2006.^{Footnote 152}

DIPLOMATIC IMMUNITIES

There is an inherent international dimension to activities under the CFPOA, although this conduct need not cross borders to attract sanction under the Act. This inherent international dimension contains elements of both international relations and international law, as one would expect given the Act’s focus on conduct vis-à-vis a foreign public official. Within both the CFPOA and its international precursor, the Anti-Bribery Convention, a foreign public official is defined to include those exercising public functions on behalf of both foreign states and international organizations.^{Footnote 153} The OECD convention also makes clear the international connection by stating expressly that domestic enforcement activities “shall not be influenced by … the potential effect upon relations with another State or the identity of the natural or legal persons involved.”^{Footnote 154} And, yet, at no time during Parliament’s speedy passage of the CFPOA in 1998, or during its consideration of amendments to the Act in 2013, was mention made, or a question asked, about the prospects for interaction between the CFPOA and the law of immunities for both foreign officials and organizations.

Immunity law, by definition, carves out certain exceptions to jurisdiction, even within a state’s own territory and before a state’s own courts. The classic example of a state official who is protected by immunity is that of a foreign diplomat,^{Footnote 155} but there are others who benefit from immunities under international law, including consular officials, the agents and officials of organizations created by states and governments to operate on the international legal plane, and the organizations themselves.^{Footnote 156} These rules of diplomatic, consular, and organizational immunity are also rules of Canadian law, having been given “the force of law in Canada” by virtue of legislation such as the Foreign Missions and International Organizations Act.^{Footnote 157} These rules of immunity ensure that a foreign diplomat is immune from the criminal, civil, and administrative jurisdiction of the host state^{Footnote 158} and immune from measures of execution if a judgment is given against a diplomat.^{Footnote 159} A foreign diplomat is also under no obligation to give evidence as a witness,^{Footnote 160} with diplomatic immunities also extending to family members,^{Footnote 161} diplomatic premises,^{Footnote 162} and documents.^{Footnote 163} As a result, a foreign public official who solicits a bribe while serving as a diplomat will be immune from proceedings under the CFPOA, unless the foreign state waives the protections of diplomatic immunity.

This scenario is not so far-fetched as to warrant no discussion in Parliament, with the facts surrounding Griffiths Energy International (GEI) becoming public knowledge just weeks before Parliament’s consideration of the FFCA. GEI was a small, privately held, Calgary-based company, formed by the Toronto investment banker Brad Griffiths, along with energy company executives (and brothers) Naeem Tyab and Parvez Tyab.^{Footnote 164} As set out in an agreed statement of facts, GEI engaged in the bribery of a foreign public official to help secure oil and gas concessions in the central African country of Chad. The foreign public official involved was the ambassador of Chad to the United States and Canada, who along with his wife, plus the wife of the deputy chief of Chad’s diplomatic mission and one other, received certain benefits in return for providing assistance to secure the concessions in Chad. GEI later underwent a change of management; a change that led to the discovery of the bribes and the company’s subsequent cooperation with law enforcement officials. GEI’s admission of guilt can be found in the agreed statement of facts filed by GEI and the Crown prosecutor with the Court of Queen’s Bench in Calgary on 14 January 2013.^{Footnote 165}

According to the agreed statement of facts, GEI had entered into an agreement in August 2009 with the ambassador, on behalf of a Maryland-registered company called Ambassade de Tchad LLC, providing for the payment of a US $2 million fee if GEI was awarded the exclusive rights to explore and develop certain specified oil and gas reserves in southern Chad.^{Footnote 166} This agreement was later terminated after GEI received outside legal advice that such a benefit could not be given to a government official, and, in September 2009, GEI concluded a second agreement on identical terms with a Nevada-registered company called Chad Oil Consulting LLC, which was wholly owned by the ambassador’s wife.^{Footnote 167} A subscription agreement was also concluded, providing for the grant of four million so-termed “founders shares” in GEI, at a price of US $0.001 per share, to the ambassador’s wife as well as to two others, one of whom was the wife of the deputy chief of Chad’s embassy in Washington, DC.^{Footnote 168} In January 2011, GEI secured the desired production-sharing contract with the Republic of Chad. A renewed consulting agreement was also concluded, with the 2009 agreement having expired, and, in February 2011, Chad Oil Consulting LLC received its payment of the US $2 million fee.^{Footnote 169}

Six months later, an entirely new management team was in place at GEI, along with several new independent directors, with a plan for GEI to become a publicly traded company by the end of 2011. According to the agreed statement of facts, it was the preparations for the initial public offering that led to the discovery of the consulting agreements, which in turn led to an extensive internal investigation as well as voluntary disclosures to law enforcement authorities in both Canada and the United States.^{Footnote 170} By January 2013, a plea deal on corruption charges had been reached between GEI and the Canadian prosecutors, which included an agreement on sentencing. The agreed sentence was a fine, described as being in the amount of CDN $9 million, plus an additional 15 percent victim surcharge, for a total amount of CDN $10,350,000,^{Footnote 171} with it being jointly agreed that the sentence imposed “appropriately reflects the degree of planning, duration and complexity of the offence.”^{Footnote 172} The deal was accepted by the Court of Queen’s Bench, with Justice C. Scott Brooker suggesting that, had the company not voluntarily self-disclosed the wrong to law enforcement authorities, “this crime might never have been discovered.”^{Footnote 173}

However, it was a deal reached between GEI and the Crown, pitched by GEI’s lawyer to reporters “as a model for companies in future that find themselves in a situation where ghosts are uncovered.”^{Footnote 174} The deal did not include the individuals involved,^{Footnote 175} nor did it secure the return of the bribes. It did enable GEI to move on, with the company later shelving its plans for a Canadian initial public offering in favour of far better opportunities — opportunities made possible by the plea. In May 2013, GEI changed its name to Caracal Energy. By June, it had secured support from a major player — namely, the Anglo-Swiss resources giant Glencore Xstrata Plc,^{Footnote 176} now known simply as Glencore Plc — with which Caracal Energy traded a percentage share in its Chadian oil concessions in return for a cash infusion. By July 2013, Caracal Energy had begun trading its shares on the London Stock Exchange.^{Footnote 177} By August 2013, Caracal Energy was listed as a supportive company with the Extractive Industries Transparency Initiative,^{Footnote 178} suggesting it had successfully enhanced its reputational value. Then, in April 2014, Caracal Energy was acquired by Glencore for £807 million,^{Footnote 179} or US $1.3 billion,^{Footnote 180} leading to a surge in value for shareholders.^{Footnote 181} At £5.50 per share, those four million founders shares were now worth £22 million to those on the demand side of an identified foreign bribery transaction.

SEIZING AND FORFEITING THE PROCEEDS OF CORRUPTION

To be effective, the fight against foreign corruption must focus not only on the act of bribery but also on its ill-gotten gains, although admittedly, little was said about either confiscation or forfeiture during either Parliament’s passage of the CFPOA or its amendment in 2013.^{Footnote 182} As a state party to the Anti-Bribery Convention, Canada is required to take measures to provide that the bribe and the proceeds of foreign bribery are subject to seizure and confiscation.^{Footnote 183} However, the supply-side focus of the Anti-Bribery Convention suggests that the proceeds of interest are those derived by the briber from the transaction, assuming a passive recipient.^{Footnote 184} The UN Convention against Corruption takes a broader approach, addressing both supply-side and demand-side foreign bribery, and defines “proceeds of crime” so as to include “any property derived from or obtained, directly or indirectly, through the commission of an offence.”^{Footnote 185} The UN Convention against Corruption also includes a specific chapter on asset recovery, with the return of assets taken through corruption identified as “a fundamental principle.”^{Footnote 186}

When first enacted, the CFPOA did contain provisions drawing attention to both the possession and laundering of the proceeds of foreign bribery as specific crimes. However, since 2002,^{Footnote 187} Canada has opted to rely on the general provisions within its Criminal Code,^{Footnote 188} rather than an array of individualized federal statutes, to criminalize these activities, a policy choice that may be due for reassessment. Nevertheless, Canada’s Criminal Code does provide for the search, seizure, and detention of the proceeds of crime,^{Footnote 189} with mutual legal assistance arrangements between Canada and other countries paving the way for the enforcement of foreign restraint or forfeiture orders.^{Footnote 190} There are also cooperation incentives included within the scheme, with reciprocal sharing agreements enabling Canada to share the forfeited proceeds of crime with a foreign government where the latter’s enforcement agencies participated in the investigation of the offences that led to a forfeiture or the imposition of a fine or assisted in locating the forfeited assets.^{Footnote 191}

Here again, however, a Canadian case of foreign bribery can be used to illustrate the challenges posed by the complexities involved as well as the need for further work from law- and policy-makers to secure the effectiveness of the Canadian legislative scheme. Many have described GEI’s payment of a US $10 million fine as setting a new standard for CFPOA cases,^{Footnote 192} but few ask what happened to the US $2 million fee and the four million founders shares. And, yet, as is often the case with so-called white-collar crime, there is a need to “follow the money,” with developments since having prompted the British courts to describe the US $10 million fine as a “comparatively”^{Footnote 193} and “relatively modest sum.”^{Footnote 194}

After the plea deal was reached with GEI, and accepted by the court, forfeiture proceedings concerning the four million founders shares given by GEI to the wives of the Chadian diplomats were initiated by the Public Prosecution Service of Canada, leading to the seizure of the share certificates by the RCMP in June 2013 and the commencement of judicial proceedings on the forfeiture applications in August 2013.^{Footnote 195} Both the ambassador’s wife, Nouracham Bechir Niam, and the wife of the deputy chief of mission, Ikram Mahamet Saleh, appeared for the first time through representation by counsel.^{Footnote 196} Views were exchanged about the extent of disclosure required, and the admissibility of evidence obtained from those benefiting from diplomatic immunities, but then, in April 2014, the chief federal prosecutor informed the court and counsel that it was withdrawing the applications for forfeiture. No reasons for the withdrawal were given. Indeed, when the US Department of Justice later made several attempts to find out why the Canadian prosecution authority had withdrawn the proceeds-of-crime forfeiture applications, the Canadian authorities advised that they were unable to disclose without the signing of a non-disclosure letter, which the US authorities refused to do.^{Footnote 197} The British prosecutorial authority made a similar request to the same effect.^{Footnote 198}

Following the withdrawal of the Canadian actions, a draft order was prepared by defence counsel, approved as to form by the prosecuting counsel, and granted by the court,^{Footnote 199} the effect of which was to cancel the forfeiture of the shares as proceeds of crime- or offence-related property. As a result, the share certificates were returned and then surrendered in July 2014 to the stock transfer agent handling the acquisition of GEI (by then known as Caracal Energy) by the commodities giant Glencore. The proceeds for the sale of the four million founders shares were deposited in an account with the Royal Bank of Scotland, in the name of the stock transfer agent, Computershare Investor Services Plc. Both companies are British by registration, leading to the involvement of the United Kingdom’s Serious Fraud Office (SFO), although it was the US Department of Justice, and not the Canadian authorities, that made the mutual legal assistance request to the SFO to take steps to freeze the proceeds.^{Footnote 200}

To explain further, the US Department of Justice had initiated proceedings in relation to the shares owned by the ambassador’s wife, after the completion of her husband’s posting to the United States and his appointment as Chad’s ambassador to South Africa. However, with the deputy chief of mission still in his post, the United States had not taken action in relation to Mrs. Saleh’s shares in light of the possible claims for diplomatic immunity.^{Footnote 201} Thus, the US request to the SFO concerned the shares transferred to the ambassador’s wife, leading to the freezing of the proceeds of their sale by a UK court on 24 July 2014. Acting on its own initiative,^{Footnote 202} the SFO also issued proceedings against the Saleh shares, and, on 29 July 2014, the SFO secured a “property freezing order” under the British proceeds-of-crime legislation with respect to a sum of £4,400,000 plus interest, being the proceeds from the sale of the 800,000 shares that Saleh had acquired in 2009 for CDN $800.^{Footnote 203}

Saleh then went to court in the United Kingdom to seek the release of the funds, arguing that the Canadian court order of April 2014 had meant that she could dispose of the shares as she wished. The Queen’s Bench division of the High Court of Justice for England and Wales disagreed, as did the English Court of Appeal, with the case raising an interesting question about the impact of a prosecutorial authority’s decision to withdraw proceedings for forfeiture on the property, or its sale proceeds, when it comes into another jurisdiction. The Court of Appeal ruled that the Canadian order was not final and conclusive on the merits, nor a judgment in rem so as to bind the SFO and preclude any claim in the British proceedings, as no evidence had been tendered with respect to the assertion that Saleh was innocent of complicity. In the court’s view, the Canadian order had been made without a substantive hearing and in circumstances without the judicial consideration of the relevant facts and principles of law.^{Footnote 204} As a result, the alleged proceeds of crime resulting from the Griffiths Energy bribe have been seized,^{Footnote 205} but not as a result of the actions taken by Canadian authorities, and, indeed, the British judgment suggests the actions of Canadian authorities posed an impediment that needs to be addressed.

As for proceedings in the United States, the US Department of Justice initiated on 30 June 2015 a civil forfeiture action for the cash value of the four million shares, now under restraint in the United Kingdom, on the grounds that the proceeds were traceable to bribery payments made to Chadian diplomats when they were stationed in Washington, DC.^{Footnote 206} In an earlier action, filed in 2014, the United States was also seeking the civil forfeiture of over US $100,000 in allegedly laundered funds traceable to the payment of the US $2 million consultancy fee through US bank accounts and real property.^{Footnote 207} These funds are already under restraint, as a result of the execution of a US warrant for arrest in rem against Bank of America in September 2014.^{Footnote 208} The investigative and prosecutorial efforts undertaken by the US authorities in this case were part of the Kleptocracy Asset Recovery Initiative, launched by then US Attorney General Eric Holder in 2010^{Footnote 209} and designed to secure the forfeiture of the proceeds of foreign official corruption “and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.”^{Footnote 210}

MAKING VICTIMS A CLEARER CONCERN OF THE LEGISLATIVE SCHEME

Returning the proceeds of corruption is not, however, an easy task, with one World Bank study reporting that of the US $2.6 billion in assets recovered and frozen by OECD countries between 2006 and 2012, only about a sixth of the money seized was returned to victim countries.^{Footnote 211} This statistic would be just as stark if focused solely on returning the proceeds of foreign bribery rather than the proceeds of corruption writ large, since the explanation for the low rate of return rests in part with the difficulty in deciding to whom to return the funds. It is not easy to identify the victims of foreign corruption, nor is it easy to assess the quantum of damage suffered as a result of an act of corruption, with attempts to address what might be termed “general societal damage” suggesting a need to return the funds to a government, or government agency, for the support of public services. However, this option may in turn raise additional concerns, particularly if the foreign officials taking bribes are not merely a “few bad apples” but, rather, emblematic of a wider culture of corruption and cronyism within the foreign state. Concerns may also be raised about the intended use of the returned funds, with Chad, as a pertinent example, having used its oil revenues to buy weapons rather than relieve poverty in the face of an agreement with the World Bank that oil royalties be used for development purposes.^{Footnote 212} Such situations may in turn lead to a desire within the seizing state to hold off restoring or repatriating any funds until circumstances improve, albeit that, in relation to Africa, many of the continent’s rulers are among the longest serving in the world.^{Footnote 213} Alternatively, a seizing state may consider using the funds to support development projects and charities in the foreign state that have been vetted by its own development aid agency.

Concern is often expressed for the victims of corruption, but the policy question of how best to ensure that the proceeds of foreign bribery are put to use for the benefit of the victims of the crime is one that needs further study. There is also a need for clarity as to the definition of a victim, with the recently adopted Justice for Victims of Corrupt Foreign Officials Act (also known as the Sergei Magnitsky Law),^{Footnote 214} offering no definition despite its title, with this law authorizing targeted measures to be imposed on individuals considered responsible for, or complicit in, gross human rights abuses as well as significant acts of corruption.^{Footnote 215} It may well be that society as a whole, or the society as a whole within a foreign country, are the victims of corruption, lending support to the link often made between corruption and development. Indeed, during the passage of the CFPOA, and its amendment in 2013, this link was made, with Canada’s then minister of foreign affairs expressly recognizing in 2013 that “[e]very dollar that goes to a bribe is a dollar that does not benefit the people who desperately need a new school, or a new hospital, or what have you.”^{Footnote 216} But there was little else said by either the minister or others in Parliament about how to remedy this situation by way of a successful prosecution under the CFPOA, and there was no time allocated for further consideration given the speedy timetable adopted for the parliamentary proceedings.

Academic commentary has also recognized the development imperative for tackling corruption,^{Footnote 217} as have Canada’s courts, with the Supreme Court of Canada embracing the view in the opening lines of its judgment in World Bank Group v Wallace that “[c]orruption is a significant obstacle to international development. It undermines confidence in public institutions, diverts funds from those who are in great need of financial support, and violates business integrity.”^{Footnote 218} Canadian courts have also recognized that white collar crime, in general, is neither a harmless, nor victimless, crime, explaining further that “[a]ll Canadians, and society as a whole, are the victims when public officials breach the trust placed in them.”^{Footnote 219} It has also been accepted that “a fraud against a government agency is not a victimless crime as it results in a reduction in resources available to people who rely on government services,”^{Footnote 220} and our courts have made clear that having only foreign victims “does not make the activity any the less unlawful or mean that no crime has been committed in Canada when there exists a ‘real and substantial link’ or connection to this country.”^{Footnote 221}

But even if society as a whole in the foreign country concerned can be considered the victim in a case of foreign bribery, the question remains as to how best to remedy the diversion of funds, with restitution requiring proof that the bribe caused such a diversion. The creation of victim trust funds to support the activities of charitable endeavours and development projects in the foreign state is one option worthy of further study, with the creation of a distribution mechanism for such funds being an improvement on the present situation. Although sizeable victim surcharges have been imposed in two of the three corporate convictions under the CFPOA,^{Footnote 222} no benefit flows to the victims of the crimes at issue in these cases. Brought into being in 1989,^{Footnote 223} the victim surcharge is a financial penalty imposed on convicted offenders at the time of sentencing that helps fund the provision of services to all victims of crime, rather than specific victims, in ways to be determined by provincial and territorial authorities.^{Footnote 224} As a result, in the foreign bribery cases of Niko Resources and Griffiths Energy International, the assessment of a 15 percent victim surcharge resulted in payments being made of CDN $1.239 million and CDN $1.35 million for the benefit of Alberta’s victims of crime fund, without any mention of the use of these funds to carry out victim assistance activities of relevance in Chad or Bangladesh.^{Footnote 225} In both cases, the imposition of the fine and surcharge reflected the terms of a plea agreement reached between the Crown and corporate counsel that was accepted by the court as having taken into account all of the relevant factors for sentencing, including credit for saving prosecutorial resources through self-investigation and voluntary disclosure. However, in both cases, no mention was made of the foreign victims of the crimes, suggesting that further work needs to be done on how to factor in the victimization of foreign nationals through crimes of foreign bribery at the sentencing stage of a CFPOA proceeding.

ORGANIZATION IMMUNITIES AND THE INVESTIGATION OF CORRUPTION

In addition to posing obstacles for prosecution and restitution, immunities may also hamper investigation efforts, with the immunities bestowed on international organizations being of relevance given the need for their assistance in the investigation of many cases of foreign corruption. This aspect is well illustrated by reference to the recent judgment of the Supreme Court of Canada in Wallace. At issue in Wallace was the extent of immunity enjoyed by an international organization with respect to the disclosure of its records. The records at issue were those relating to a corruption investigation that had been carried out by the World Bank Group’s Integrity Vice Presidency (known as INT) with respect to a World Bank-financed bridge construction project in Bangladesh valued at US $2.9 billion.^{Footnote 226} In 2011, the INT received information from tipsters advising that three employees of the Canadian firm SNC-Lavalin, along with another man, were conspiring with Bangladeshi officials to pay kickbacks in exchange for the award of a bridge construction supervision contract to SNC-Lavalin. The INT investigated the matter and encouraged Bangladesh to do so as well, later establishing a high-level panel of experts led by the former prosecutor of the International Criminal Court, Luis Moreno Ocampo, to conduct an assessment of the investigative efforts undertaken by Bangladesh.^{Footnote 227} The INT’s investigation, bolstered by the panel’s conclusion that Bangladesh’s domestic efforts were unsatisfactory, later led to the ten-year debarment of SNC-Lavalin and its affiliates from future World Bank projects,^{Footnote 228} a contextual aspect acknowledged by the Supreme Court of Canada.^{Footnote 229}

As for the Canadian avenue for prosecution, the INT also shared the tipsters’ information with the RCMP, which used it to obtain wiretap authorizations in Canada, which in turn led to charges being laid in Canada against four individuals for the bribery of a foreign public official under the CFPOA.^{Footnote 230} The issue of immunity arose when the four accused made an application to an Ontario judge to compel the investigators within the World Bank Group to produce their documents, presumably with the intention of testing matters of credibility, knowledge, and motivation. The trial judge granted the application,^{Footnote 231} but, on an expedited appeal by the World Bank to the Supreme Court of Canada, this decision was overturned. In brief, the Court found that Canadian law gives domestic legal effect to the provisions of an international organization’s constitutive instrument providing for the bestowal of immunity on its officers and employees and the inviolability of its archives, with inviolability in this context referring to a freedom from unilateral interference by a state in the operations of an international organization.^{Footnote 232}

To explain further, the World Bank Group consists of five organizations, with the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) being the two organizations most relevant to the case given their role in promoting economic development through the provision of financial assistance. The IBRD was created in 1944 to help rebuild Europe after the Second World War, and it has gone on to assist middle-income and credit-worthy countries, while the IDA was created in 1960 to provide assistance to the world’s poorest countries. These organizations benefit from immunities conferred by treaty, with both organizations having been created by way of an agreement between states, the terms of which are found in a treaty text entitled Articles of Agreement.^{Footnote 233} When Canada joined the World Bank Group, it made a decision to accept the terms and conditions found in those treaties, including the recognition of personnel and archival immunities. These immunity obligations bind Canada as both a matter of international and Canadian law, with the treaty obligations having been given the force of law in Canada by Parliament’s enactment of the Bretton Woods and Related Agreements Act.^{Footnote 234} This Act is also capable of conferring immunities through the issuance of Orders in Council, as the Supreme Court of Canada has affirmed.^{Footnote 235}

As for the application of these organizational immunities, the Court has embraced a broad interpretive approach, thus ensuring that the archival records immunity “shields the entire collection of stored documents of the IBRD and the IDA from both search and seizure and from compelled production.”^{Footnote 236} The use of the word “archive” does not restrict the immunity to documents of a historical nature. It is also an immunity that is absolute, according to the terms of the organizations’ constitutive instruments, with Canada’s highest court confirming that the archival immunity bestowed on the IBRD and the IDA is not subject to waiver.^{Footnote 237} As for personnel immunity, the Court accepted the possibility of a waiver, provided it was made express by the organization, with the Court making clear the concern that “exposing the World Bank Group to forms of implied or constructive waiver could have a chilling effect on collaboration with domestic law enforcement.”^{Footnote 238} It was also the Court’s view, made clear in the opening paragraph of its judgment, that “[w]hen international financial organizations, such as the World Bank Group, share information gathered from informants across the world with the law enforcement agencies of member states, they help achieve what neither could do on their own.”^{Footnote 239}

It is sentiments such as this that lend support to the view that the judgment in Wallace “paves the way for [the] increased enforcement of Canada’s anti-corruption laws” while also creating “interesting challenges for the right to a fair trial.”^{Footnote 240} International development banks, in particular, have a role to play in using their access, specialist knowledge, and financial acumen to assist domestic law enforcement authorities to fight corruption, with several such organizations intervening in Wallace to make the argument that this information sharing depended on respect for their immunities.^{Footnote 241} The judgment has since been publicized by the INT as reaffirming “the unique role of multilateral institutions in fighting corruption,”^{Footnote 242} with two senior INT officials further opining that, “[i]n the context of INT operations, were cooperation with national authorities to be construed as an implied waiver of all of the Bank’s immunities, the institution’s ability to report violations of national laws would be constrained.”^{Footnote 243}

The INT was also worried that “[i]t would also have had a similarly chilling effect on INT’s ability to protect whistleblowers and confidential witnesses against discovery of their identities, exposing them to possible and very serious retaliation.”^{Footnote 244} There is, however, a balance to be achieved between facilitating the prosecution of transnational crimes through the use of informants and ensuring respect for basic rights to privacy and a fair trial,^{Footnote 245} with the Supreme Court of Canada having wisely left the door open to alternative remedies for “addressing any prejudice resulting from the World Bank Group’s assertion of its immunities.”^{Footnote 246} After the judgment, the charge against one of the four accused was dropped, and then, in February 2017, the remaining three individuals were acquitted at the request of the Crown,^{Footnote 247} taking into account the trial judge’s ruling in January 2017 that the wiretap evidence had been collected on the basis of information from tipsters that was “nothing more than speculation, gossip and rumour.”^{Footnote 248}

This end result in Canada matches that in Bangladesh, where authorities had long concluded that there was insufficient evidence to continue an investigation into the same corruption allegations,^{Footnote 249} a finding acknowledged by the INT in a 2016 annual report.^{Footnote 250} But, for parliamentarians considering amendments to the CFPOA in 2013, the only assessment then available was that provided by the World Bank, which had stated publicly in mid-2012 that it had “credible evidence corroborated by a variety of sources” that pointed to “a high-level corruption conspiracy” between Bangladeshi government officials, SNC-Lavalin executives, and private individuals.^{Footnote 251} It was on this basis that the World Bank secured a negotiated agreement from SNC-Lavalin to accept debarment^{Footnote 252} and cancelled its loan to Bangladesh, thereby highlighting a different dimension to the link often drawn between corruption and development. The loan would have provided CDN $1.2 billion in assistance for a rail and road connection that would bring economic and social benefits to some thirty million people in a country considered to be one of the world’s forty-seven least developed countries.^{Footnote 253}