Fighting International Corruption – Canadian Law Initiatives

Canada has long had laws prohibiting public corruption within its borders and more recently has enacted legislation respecting corruption of foreign officials. This paper outlines and discusses Canadian approaches to international public corruption by considering Canadian adherence to international conventions, Canadian law per se and Canadian promotion of anti-corruption efforts related to international corruption.

The meaning of corruption
Corruption in the public sector, in its most fundamental sense is about abuse of power1. It is about using the government for one’s own ends or using a governmental official for improper purposes. In Canada criminal corruption encompasses such things as bribery of officials and frauds on the government.

That corruption demeans democracy and delegitimises government action has long been understood by Canadian courts. In R. v. Hinchey the Supreme Court of Canada notes that the sections of the Criminal Code dealing with corruption were enacted to protect the integrity of government.

Canada’s adherence to international agreements
Canada has ratified a variety of international agreements and conventions aimed at eliminating international and cross-border corruption. It has ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the OAS Inter-American Convention Against Corruption, the United Nations Convention against Transnational Organised Crime and the United Nations Convention Against Corruption.

Canada has undertaken a number of steps to ensure the operability of the international conventions and agreements within its borders. It has enacted legislation (discussed below), its agencies such as the RCMP have established units including the International Anti-Corruption Unit to deal with international corruption and agencies such as the Export Development Corporation have acted to raise awareness of international corruption issues and laws dealing with such corruption.

Canada’s legislative framework respecting corruption
 In Canada, criminal law is a federal responsibility and corruption per se is a federal offence. Provincial governments can create what are known as provincial offences but these are not criminal offences in the same sense as federally prohibited activities or crimes. The federal government is also responsible for international affairs and so the intersection of international matters and international crime is of necessity primarily a federal matter.

Corruption has long been a concern in Canadian law and has long been covered by the Criminal Code5. Sections 118 to 126 of the Code prohibit dealing in offices, bribery of governmental and judicial officials, frauds on the government, contractor subscription to election funds, breach of trust and municipal corruption. They prohibit corruption by officials at all levels of government within Canada (federal, provincial and municipal) and at all levels of the judiciary (federal and provincial) and by people (and corporate entities) who attempt to corrupt governmental and judicial officials. The sections are time-tested and have proven effective in dealing with a range of corrupt practices affecting Canadian government itself.

More recently the federal parliament has enacted legislation which, while not dealing with criminal behaviour directly, is focused on behaviours which may lead to corruption at worst or unfair decision making at best. The enactment of the Federal Accountability Act6 created a Conflict of Interest Act which applies to cabinet members and various officials within the senior levels of government as well as former public office holders and amended the former Lobbyists Registration Act (now the Lobbying Act) which applies to those who lobby the federal government. The Conflict of Interest Act has prohibitions respecting misuse of government information and property and also contains rules respecting avoiding conflict of interest. The Lobbying Act requires registration by consultant and in house lobbyists and collects information about their lobbying efforts. Neither explicitly deals with dealing with foreign governments although prohibitions respecting misuse of information are broad enough to cover this – and this could be very important in the post employment period for former officials who may end up acting for or in the employ of companies which have or seek to have foreign operations.

In respect to activity involving foreign governments, the federal parliament has enacted legislation dealing with the corruption of foreign officials. The Corruption of Foreign Public Officials Act (hereafter CFPOA)7 was enacted in 1998 as a direct fulfilment of Canada’s obligation to implement the OECD convention noted above. The original version of CFPOA contained prohibitions against both inducing foreign officials to act in inappropriate ways and against money laundering. In 2001 an amendment took out the money laundering sections and put them into the Criminal Code itself. Money laundering can be part of a process to corrupt officials or a process in which officials engage in corruption themselves. It is, however, a broader offence which is not necessarily or only focused on governmental officials.

The core prohibition in CFPOA is centred on the inducement of foreign officials to act in such a way as to favour someone by exerting undue influence for that person or acting officially on that person’s behalf. Section 3 of the Act states in part:

3.  (1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official
(a)  as consideration for an act or omission by the official in connection with the performance of the official’s duties or functions; or
(b)  to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organisation for which the official performs duties or functions

No person will have been found to have violated section 3(1) if what they are doing is required by law (eg paying an official in order to get a permit where the official is required and does collect a fee on behalf of his or her government (sections 3(3) and (4)). The Act is thus not intended in some way to inhibit legitimate actions done in the course of foreign officials’ formal duties.

Punishment for violation of section 3(1) is imprisonment for up to five years. No fine is stated and this would logically be a problem where the offender is a corporation and not a natural person. However, the Criminal Code contains rules to deal with this and hence corporations could be subject to a fine for violations of indictable offences.

Enforcing the law
Canada has been criticised for a lack of enforcement of its international obligations respecting the corruption of foreign officials9. There have been no reported courts cases involving charges under the CFPOA, although there are some cases which make reference to the statute itself. There has been some news media reporting of investigations by the Royal Canadian Mounted Police (RCMP)10. The RCMP has two Anti-Corruption Units in its Commercial Crime Unit and has created a web form for reporting economic crime.

As noted previously there have been a variety of educational initiatives by various government agencies to make businesses aware of foreign corruption offences in Canadian legislation. EDC Canada has established Anti-Corruption Guidelines and CIDA has also established an anti-corruption protocol.

Gaps in the law and moving forward
Scholars and critics have identified some important differences between Canadian and other countries legislation (and case law). One critical issue that has emerged is the jurisdictional reach of the CFPOA.

With respect to jurisdiction, it appears that there must be a substantial link to Canada for charges to be laid under section 3 and a conviction to be obtained13. This has come to mean essentially that at least some element of the offence has to have been committed in Canada. This is problematic since Canadian individuals or firms could be involved in activities outside the country with some impunity under the Canadian Act. The government has introduced legislation this year to close this gap. Bill C-31 will make it an offence for Canadians to commit acts that would fall under the current offence section of CFPOA (s.3) even if they have acted solely outside of the country. This is a significant change and brings the Canadian statute into line with statutes such as the American Foreign Corrupt Practices Act.

Other legislation discussed above does not deal with foreign officials per se but recent questions have arisen about whether or not there should be some coverage in both the Conflict of Interest Act and the Lobbying Act – particularly with respect to activities of former public office holders who may be in a position to work for Canadian or foreign firms after they leave office and who may work in the international arena14. While the current legislation prohibits former public office holders and designated public office holders from acting with respect to lobbying or contacting the Canadian government for specified periods of time it is silent on matters involving foreign governments. Given the sensitivity of information potentially held as well as of potential influence held by such officials there may be a case for restricting dealings with foreign governments for specified periods so as to avoid any potential influence peddling and misuse of information.

Canada has put legislation in place in order to meet its obligations to fight international corruption. Its legislation is evolving as are its efforts to both enforce that legislation and to educate people about it.