In an age of massive data leaks, whistleblower bounties, and multimillion-dollar fines for violations of bribery and corruption laws, multinational corporate executives and board members must prioritize the implementation of robust anti-corruption compliance programs to safeguard their companies and shareholder value.
Recent examples nationally and internationally of allegations of illicit activities, in the public and private sector including Canadians, has once again raised the ire of the public. Financial transactions at the highest levels can be a blind spot for the average citizen and those tasked with protecting the public interest. Recent headlines also underscore how easily confidential personal and corporate information can be leaked, leading to significant reputational harm and legal risk for corporations and individuals.
Disclosures of this nature can drive cynicism among hardworking taxpayers to new heights and also serve as a motivator to install better preventive measures.
Where once bribery may have been deemed by some to be a cost of doing business in some parts of the world, in today’s global marketplace, bribery is not only a violation of criminal laws, it is widely accepted to be corrosive to the rule of law. Corruption distorts free markets and diverts funds away from education, health care, and other critical public services, and into the hands of criminals and corrupt officials.
Given the clearly negative impacts of corruption and bribery, global enforcement of anti-corruption laws is on the rise. While the U.S. Foreign Corrupt Practices Act is the world’s most widely enforced anti-bribery statute and, consequently, attracts the most attention, the UK Bribery Act, and Canada’s Corruption of Foreign Public Officials Act also have wide jurisdictional reach and severe penalties.
Transparency International, the leading non-profit organization engaged in the fight against corruption in international business transactions, reported in its 2015 Corruption Perceptions Index that two-thirds of the 168 countries it reviewed were perceived as having a serious corruption problem. With a significant increase over the past two decades in the number of Canadian companies with operations abroad, combined with the devastating reputational, financial, and societal costs associated with engaging in corrupt conduct, the importance of anti-bribery compliance programs has never been more clear.
One can add to these factors the recent efforts by the RCMP to increase its enforcement of the CFPOA under the strengthened amendments made during my time as a minister in the previous government. The RCMP’s multiple ongoing investigations and charges against reputable Canadian companies only serve to confirm that Canada is not only prepared to update our laws to bring us in line with our main allies in the U.S. and U.K. but that the Canadian government is also willing to impose real consequences on Canadian corporate actors engaged in corruption around the world.
In 2013, the government enacted important legislative changes to the CFPOA to strengthen the statute, including: increasing the maximum sentence of imprisonment to 14 years; implementing a new books and records offence to prohibit companies from keeping inaccurate financial records for the purpose of concealing bribery, punishable by up to 14 years’ imprisonment; and expanding the jurisdictional reach based on nationality.
Prior to these amendments, a CFPOA violation needed a “real and substantial” connection to Canada. In practice, this requirement meant that some part of the commission of the offence had to take place in Canada. The amended law instead deems acts of Canadian citizens and corporations on a global basis to be acts within Canada for the purposes of the CFPOA.
Complementary to the CFPOA, the Canadian government strengthened our public procurement policies through the Integrity Regime to ensure that companies with national or international convictions for fraud, bribery, and anti-trust misconduct are not permitted to contract with the federal government for up to 10 years.
In addition, concerns are not limited to high-risk regions or the private sector. The recent Charbonneau Commission in Quebec, the Gomery Commission, or the ongoing investigations into the Senate demonstrate that the government must be vigilant in ensuring ethical conduct in all sectors here at home and abroad.
As the Canadian government has increased the jurisdictional reach and penalties contained in its anti-corruption legislation, and at the same time stepped up enforcement efforts, the U.S. has continued to lead the way in driving enforcement under the FCPA. On April 5, the Fraud Section of the U.S. Department of Justice issued new FCPA guidance. The new policies substantially increase available FCPA law enforcement resources, improve co-ordination with foreign law enforcement, and add a pilot program to encourage voluntary disclosure and remediation.
A renewed commitment to investigation and enforcement by the U.S. authorities only serves to further underscore the importance of ensuring multinational corporations implement robust compliance programs.
Moreover, the active encouragement by the U.S. of voluntary reporting of misconduct highlights a key difference with Canadian approaches to enforcement. The existence of deferred prosecution agreements in the U.S. encourages corporate cultures of compliance by rewarding those companies that implement strong internal anti-corruption programs and that, upon discovering bribery-related activity, report and co-operate with the authorities, as well as take steps to remedy any problem areas.
Canada is ready for a robust DPA system accompanied by appropriate oversight, which, when employed in the right circumstances, would serve as a much-needed and balanced tool in Canada’s efforts to combat corporate misconduct and to encourage internal corporate cultures of compliance and good governance. This calibrated approach allows for a carrot-and-stick response by authorities and a firm but fair insertion of discretion by authorities tasked to prosecute these cases. Much of the enforcement activities fall to RCMP and CRA public servants who are in need of additional resources and a more clearly defined legislated mandate.
Now, more than ever, companies must develop and implement effective anti-corruption compliance programs, which should include strong leadership, rigorous internal policies and procedures, greater transparency measures, and regular employee training. These elements must be accompanied by region- and industry-specific risk analyses, and vigorous third-party agent and supplier due diligence from one end of the supply chain to the other.
The goal of any anti-corruption compliance program is to prevent and detect misconduct. However, as importantly, good governance can help strengthen the rule of law and the communities in which our corporations operate, both here at home and around the world.
Peter MacKay is a partner at Baker & McKenzie in Toronto. He is a former Canadian attorney general and minister of Justice, minister of National Defence, and minister of Foreign Affairs.
Recent examples nationally and internationally of allegations of illicit activities, in the public and private sector including Canadians, has once again raised the ire of the public. Financial transactions at the highest levels can be a blind spot for the average citizen and those tasked with protecting the public interest. Recent headlines also underscore how easily confidential personal and corporate information can be leaked, leading to significant reputational harm and legal risk for corporations and individuals.
Disclosures of this nature can drive cynicism among hardworking taxpayers to new heights and also serve as a motivator to install better preventive measures.
Where once bribery may have been deemed by some to be a cost of doing business in some parts of the world, in today’s global marketplace, bribery is not only a violation of criminal laws, it is widely accepted to be corrosive to the rule of law. Corruption distorts free markets and diverts funds away from education, health care, and other critical public services, and into the hands of criminals and corrupt officials.
Given the clearly negative impacts of corruption and bribery, global enforcement of anti-corruption laws is on the rise. While the U.S. Foreign Corrupt Practices Act is the world’s most widely enforced anti-bribery statute and, consequently, attracts the most attention, the UK Bribery Act, and Canada’s Corruption of Foreign Public Officials Act also have wide jurisdictional reach and severe penalties.
Transparency International, the leading non-profit organization engaged in the fight against corruption in international business transactions, reported in its 2015 Corruption Perceptions Index that two-thirds of the 168 countries it reviewed were perceived as having a serious corruption problem. With a significant increase over the past two decades in the number of Canadian companies with operations abroad, combined with the devastating reputational, financial, and societal costs associated with engaging in corrupt conduct, the importance of anti-bribery compliance programs has never been more clear.
One can add to these factors the recent efforts by the RCMP to increase its enforcement of the CFPOA under the strengthened amendments made during my time as a minister in the previous government. The RCMP’s multiple ongoing investigations and charges against reputable Canadian companies only serve to confirm that Canada is not only prepared to update our laws to bring us in line with our main allies in the U.S. and U.K. but that the Canadian government is also willing to impose real consequences on Canadian corporate actors engaged in corruption around the world.
In 2013, the government enacted important legislative changes to the CFPOA to strengthen the statute, including: increasing the maximum sentence of imprisonment to 14 years; implementing a new books and records offence to prohibit companies from keeping inaccurate financial records for the purpose of concealing bribery, punishable by up to 14 years’ imprisonment; and expanding the jurisdictional reach based on nationality.
Prior to these amendments, a CFPOA violation needed a “real and substantial” connection to Canada. In practice, this requirement meant that some part of the commission of the offence had to take place in Canada. The amended law instead deems acts of Canadian citizens and corporations on a global basis to be acts within Canada for the purposes of the CFPOA.
Complementary to the CFPOA, the Canadian government strengthened our public procurement policies through the Integrity Regime to ensure that companies with national or international convictions for fraud, bribery, and anti-trust misconduct are not permitted to contract with the federal government for up to 10 years.
In addition, concerns are not limited to high-risk regions or the private sector. The recent Charbonneau Commission in Quebec, the Gomery Commission, or the ongoing investigations into the Senate demonstrate that the government must be vigilant in ensuring ethical conduct in all sectors here at home and abroad.
As the Canadian government has increased the jurisdictional reach and penalties contained in its anti-corruption legislation, and at the same time stepped up enforcement efforts, the U.S. has continued to lead the way in driving enforcement under the FCPA. On April 5, the Fraud Section of the U.S. Department of Justice issued new FCPA guidance. The new policies substantially increase available FCPA law enforcement resources, improve co-ordination with foreign law enforcement, and add a pilot program to encourage voluntary disclosure and remediation.
A renewed commitment to investigation and enforcement by the U.S. authorities only serves to further underscore the importance of ensuring multinational corporations implement robust compliance programs.
Moreover, the active encouragement by the U.S. of voluntary reporting of misconduct highlights a key difference with Canadian approaches to enforcement. The existence of deferred prosecution agreements in the U.S. encourages corporate cultures of compliance by rewarding those companies that implement strong internal anti-corruption programs and that, upon discovering bribery-related activity, report and co-operate with the authorities, as well as take steps to remedy any problem areas.
Canada is ready for a robust DPA system accompanied by appropriate oversight, which, when employed in the right circumstances, would serve as a much-needed and balanced tool in Canada’s efforts to combat corporate misconduct and to encourage internal corporate cultures of compliance and good governance. This calibrated approach allows for a carrot-and-stick response by authorities and a firm but fair insertion of discretion by authorities tasked to prosecute these cases. Much of the enforcement activities fall to RCMP and CRA public servants who are in need of additional resources and a more clearly defined legislated mandate.
Now, more than ever, companies must develop and implement effective anti-corruption compliance programs, which should include strong leadership, rigorous internal policies and procedures, greater transparency measures, and regular employee training. These elements must be accompanied by region- and industry-specific risk analyses, and vigorous third-party agent and supplier due diligence from one end of the supply chain to the other.
The goal of any anti-corruption compliance program is to prevent and detect misconduct. However, as importantly, good governance can help strengthen the rule of law and the communities in which our corporations operate, both here at home and around the world.
Peter MacKay is a partner at Baker & McKenzie in Toronto. He is a former Canadian attorney general and minister of Justice, minister of National Defence, and minister of Foreign Affairs.
