On 17 December 1998, Canada ratified the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Canada also agreed to the 2009 OECD Recommendation for Further Combating Bribery of Foreign Public Officials. In addition to the OECD Convention, Canada is a party to the Inter-American Convention against Corruption (ratified 1 June 2000), and the United Nations Convention against Corruption (ratified 2 October 2007).
Canada followed through on its obligation under the OECD convention to implement legislation to criminalise bribery of foreign public officials by enacting the federal Corruption of Foreign Public Officials Act (CFPOA) on 14 February 1999. The CFPOA only addresses the bribery of public officials who are outside Canada.
The federal Criminal Code contains a number of domestic offences for bribery, fraud, breach of trust, corruption, and influence-peddling, among other offences, which are applicable to both public officials and private parties. The province of Quebec is the only sub-federal jurisdiction in Canada with its own anti-corruption legislation. Its Anti-Corruption Act came into force on 13 June 2011, at a time when allegations of significant corruption in relation to public construction contracts were being investigated.
There is limited official guidance relating to the interpretation and enforcement of Canada’s anti-bribery/anti-corruption regime. In May 1999, the federal Department of Justice published The Corruption of Foreign Public Officials Act: A Guide. It provides a general overview and background information about the CFPOA. However, it has not been updated to reflect amendments to the CFPOA since its creation and does not provide significant guidance.
The Public Prosecution Service of Canada (PPSC) is the national prosecuting authority for federal offences, including violations of the CFPOA (offences under the Criminal Code are primarily the responsibility of provincial Attorneys General). The PPSC has a Deskbook that sets out guiding principles as well as directives and guidelines regarding the exercise of federal prosecutorial discretion. The PPSC Deskbook contains a specific guideline for prosecutions under the CFPOA; however, it contains little information of practical use for the non-prosecutor. Similarly, the PPSC’s Proposed Best Practices for Prosecuting Fraud Against Governments does not contain information regarding interpretation and enforcement.
In response to criticism about low levels of enforcement, the CFPOA was significantly expanded through amending legislation in June 2013. The amendments broadened the scope and application of Canada’s anti-bribery of foreign public officials' regime, established new offences, and increased penalties, among other changes. More recently, the elimination of an exception in the CFPOA for facilitation payments (arising from the 2013 amending legislation) came into force on 31 October 2017.
Amendments to the Criminal Code authorising the use of remediation agreements (ie, deferred prosecution agreements) became available as a means of resolving criminal charges against businesses for certain offences under the Criminal Code and other criminal statutes, including the CFPOA. Deferred prosecution agreements have yet to be used in Canada since becoming available. They have been a source of considerable controversy in the few instances where they have been sought; most recently, Canadian construction and engineering giant SNC-Lavalin Group Inc has been involved in two cases in which remediation agreements have been considered and which are discussed in 7.6 Investigations.
Bribery of Foreign Public Officials
Section 3(1) of the CFPOA makes it an offence for anyone
“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 decision of the foreign state or public international organisation for which the official performs duties or functions.”
Definition of a Foreign Public Official
Foreign public officials are defined in section 2 of the CFPOA as:
The CFPOA offence of bribing a foreign public official is a full mens rea offence where Crown prosecutors need to prove guilt beyond a reasonable doubt.
Bribery of Domestic Public Officials
The Criminal Code contains a number of bribery and corruption offences related to government activity, including bribery of judicial officers (section 119), bribery of officers, such as police and persons employed in the administration of justice (section 120), frauds on the government (section 121), breach of trust by a public officer (section 122), municipal corruption (section 123), selling or purchasing public office (section 124), and influencing or negotiating appointments or dealing in offices (section 125). The Criminal Code also contains more general offences of fraud (section 380) and secret commissions (section 426), which apply to activities between private-sector parties, in addition to conduct involving public officials.
Each of the above-noted Criminal Code offences has different constituent elements; however, generally speaking, the Criminal Code provisions that address bribery and corruption in the public sphere (sections 119-125) contain similarly broad language to that of section 3(1) of the CFPOA. As a result, if the conduct involves a public official and is:
a) is given, offered, agreed, demanded, accepted, obtained; and
b) relates to an official, an official’s family, or to anyone for the benefit of an official;
it is likely to be captured by one or more offences.
The definitions of “office” and “official” in the Criminal Code (section 118) are broad. They include any office or appointment in the government, a civil or military commission, a position or any employment in a public department, or anyone appointed or elected to discharge a public duty.
For the offences of bribery of judicial officers (section 119) and bribery of officers (section 120), it is an element of both offences that the offering, accepting, or soliciting of a bribe must be done “corruptly”. There is no definition of the meaning of “corruptly” in these offences in the Criminal Code. However, Canadian courts have held that the term in this context has the same meaning as in the offence of secret commissions (section 426). It refers to an act done mala fide, not bona fide, and designed, wholly or partially, for the purpose of bringing about the effect forbidden by the offence (see, eg, R v Brown,  OR 944, 116 CCC 287 at paras 20-21).
Bribery of judicial officers (section 119), which includes judges and members of Parliament and provincial legislatures, must be connected to an act by the recipient of the bribe in his or her official capacity. Bribery of officers (section 120), which includes police officers and persons employed in the administration of justice, does not have the same requirement; an offence may be committed as long as there is intent to interfere with justice.
The Criminal Code provisions referenced above are full mens rea offences. They require proof of conscious intent — namely, that the accused set out deliberately to commit the prohibited act while having subjective knowledge of the circumstances. In short, the offeror of a bribe must be aware that they are giving or offering to give a bribe to a person who is receiving the bribe because of their position and with the intention of influencing the recipient’s conduct. Similarly, the recipient must have subjective knowledge and intention when accepting or offering to accept a bribe in order to possess the necessary mens rea for the commission of an offence.
Bribery in a Commercial/Other Setting
In both the private and public spheres, it is an offence under the Criminal Code, directly or indirectly, corruptly to give, offer or agree to give or offer to an agent or to anyone for the benefit of the agent, any reward, advantage, or benefit of any kind as consideration for doing or not doing, or for having done or not done, any act relating to the affairs or business of the agent’s principal, or for showing or not showing favour or disfavour to any person in relation to the affairs or business of the agent’s principal (section 426). It is also an offence (under the same section) for anyone who is an agent to receive a secret commission by demanding, accepting, offering or agreeing to accept any reward, advantage, or benefit of any kind in exchange for an act described above.
To qualify as an offence:
There is no general definition of bribery under Canadian law. As noted above, there are similarities between sections of the Criminal Code and section 3 of the CFPOA, which generally capture the direct or indirect offer or acceptance of a benefit by a public official or private party, in exchange for the recipient of the benefit doing or not doing something in their official capacity, or related to the affairs or business of their principal.
The Criminal Code does not define the meaning of “benefit”, or “reward”, “advantage” or “valuable consideration”. Certain other terms used in the offences describe specific benefits that are more easily defined and understood (eg, commission, money, loan, employment) or that are defined in the Criminal Code (eg, office).
Decisions by the Supreme Court of Canada have noted the extremely broad scope of the terms “benefit”, “advantage”, etc, and that they can include non-criminal conduct, such as the giving or receipt of certain gifts or trivial favours (eg, the purchase of a cup of coffee or lunch, or offering someone a ride when they are caught in the rain). As a result, the court has sought to limit the scope of these terms by evaluating on a case-by-case basis whether a benefit, reward, advantage, or valuable consideration confers a “material economic advantage”. This determination requires an examination of the relationship between the parties and the scope of the benefit. The closer the relationship between the parties (ie, family members or good friends versus business/professional contacts or mere acquaintances), and the smaller the benefit, the less likely it is that a benefit would satisfy the constituent elements of the Criminal Code offences. Ultimately, it is a question of fact for a judge or jury to determine based on all the evidence in a case (R v Hinchey,  3 SCR 1128, 147 Nfld & PEIR 1, at paras 40-70).
The CFPOA only criminalises the supply side of corruption (ie, the offering of bribes). In contrast, under the Criminal Code, it is also an offence to “accept” or “receive” a bribe (sections 119, 120, 121, 123, 124, 125, and 426).
The foregoing offences do not depend upon the consideration of whether the intended advantage or outcome for which a bribe was offered or accepted actually occurs. The fact that a bribe is offered or accepted can give rise to an offence.
Hospitality, Gifts, and Promotional Expenditures
The CFPOA exempts certain hospitality expenditures, gifts and promotional expenditures that are referenced in a saving provision (section 3(3)). Lawful gifts typically include items of nominal value (eg, reasonable meals and entertainment expenses proportionate to norms for the industry, cab fare, company promotional items, etc) and reasonable travel and accommodation to allow foreign public officials to inspect distant company facilities or receive required training.
The CFPOA historically contained an exception for facilitation payments made to foreign officials. On 31 October 2017, this exception was repealed. As a result, facilitation payments can give rise to an offence under section 3(1) of the CFPOA (as they can under the United Kingdom’s Bribery Act).
There are no de minimis or other exceptions for the offences in the Criminal Code. However, Canada’s federal and provincial governments provide guidance on the acceptable provision of gifts, hospitality and other expenses to certain public officials. For example, the federal Policy on Conflict of Interest and Post-Employment permits public servants to accept “gifts, hospitality and other benefits […] if they are infrequent and of minimal value, within the normal standards of courtesy or protocol, arise out of activities or events related to the official duties of the public servant concerned, and do not compromise or appear to compromise the integrity of the public servant concerned or of his or her organisation” (Appendix B, Requirement 2.3). Similarly, the Ontario conflict of interest rules permit public servants to accept “a gift of nominal value given as an expression of courtesy or hospitality if doing so is reasonable in the circumstances” (Ontario Regulation 382/07, section 4(2)).
In assessing whether a gift is a benefit or advantage constituting a secret commission, factors of significance include the nature of the gift, the prior relationship, if any, between the giver and the recipient, the manner in which the gift was made, the agent’s/employee’s function with their principal/employer, the nature of the giver’s dealings with the recipient’s principal/employer, the connection, if any, between the recipient’s job and the giver’s dealing, and the state of mind of the giver and the receiver (see, eg, R v Greenwood, 5 OR (3d) 71).
Unlike under the United Kingdom’s Bribery Act, failure to prevent bribery is not an offence under Canadian law.
Definition of Public Officials
As previously noted, the CFPOA defines a foreign public official in section 2 as:
The second branch of this definition covers many types of government agencies and state-owned enterprises.
For the purposes of the Criminal Code offences that criminalise bribery and corruption in the public sphere (section 119-125), the definitions of “office” and “official” in the Criminal Code (section 118) broadly include anyone holding any office or appointment under the government, a civil or military commission, a position or any employment in a public department, or appointed or elected to discharge a public duty. Employees of Crown corporations (state-owned enterprises in Canada) or arm’s-length federal business enterprises are not explicitly captured by the definition of “office” or “official”. However, they may be considered public officials if the nature of their position and employment fits within the definitions in the Criminal Code.
Bribery between Private Parties in a Commercial/Other Setting
As previously noted, bribery of foreign public officials is an indictable criminal offence under section 3 of the CFPOA.
The CFPOA does not apply to bribery involving private parties in commercial settings.
As previously noted, bribery between private parties in a commercial setting is captured by the secret commissions' offence in the Criminal Code (section 426). The general fraud offence in the Criminal Code also covers bribery in the private sphere: it is an offence for anyone to defraud the public or any person, whether ascertained or not, of any property, money, valuable security, or service, by deceit, falsehood, or other fraudulent means (section 380). The Supreme Court of Canada has determined that “other fraudulent means” is a term encompassing all other means which can properly be stigmatised as dishonest (R v Riesberry, 2015 SCC 65, at para 23). The two essential elements that must be established in a successful prosecution by the Crown are “dishonesty” and “deprivation” (R v Olan,  2 SCR 1175, at para 13). Dishonest conduct involves the wrongful use of something in which another person has an interest and has the effect, or risk, of depriving the other person of what is theirs. The use is wrongful if it is conduct that a reasonable decent person would consider dishonest and unscrupulous (R v Zlatic,  2 SCR 29). When the conduct is based on “other fraudulent means”, dishonesty is to be measured against the objective standard of what a reasonable person would consider being dishonest without regard for what the accused actually knew (R v Wolsey (2008), 233 CCC (3d) 205 (BCCA)). Actual economic loss is not required for there to be deprivation. This element is satisfied when detriment, prejudice, or risk of prejudice to the economic interests of the victim is established (R v Olan,  2 SCR 1175, at para 13).
The CFPOA does not criminalise influence-peddling.
Section 121 of the Criminal Code establishes a number of offences involving frauds on the government. Section 121(1)(a) specifically criminalises influence-peddling. The wording of the provision captures both the person supplying or offering a bribe and the public official — as well as the official’s family members or anyone for the benefit of the official — receiving or offering to accept a bribe. Whether the official can actually provide the outcome sought in the circumstances is irrelevant.
The CFPOA includes an offence related to record-keeping. Section 4 of the Act criminalises the hiding of payments, the falsification or destruction of records, and the knowing use of false documents for the purpose of either bribing a foreign public official or hiding the bribery of a foreign public official.
The Criminal Code contains an offence that criminalises the destruction or falsification of books and documents with the intent to defraud (section 397(1)) and there are general offences of forgery and using a false document (sections 366-368), but there is no financial record-keeping offence specific to bribery or corruption in the Criminal Code. The secret commissions offence in the Criminal Code also contains a narrower offence covering the provision of “a receipt, an account, or other writing” to an agent, or the agent’s use of such a record, with the intent of deceiving the agent’s principal (see section 426(1)(b)). The Income Tax Act and corporate statutes such as the Canada Business Corporations Act also contain provisions related to record-keeping.
The CFPOA only criminalises the supply side of corruption. The Act does not create any offences, or impose specific obligations, on public officials.
Public officials in Canada are held to a high standard in the exercise of their duties. At all levels of government (federal, provincial/territorial, and municipal) public officials are governed by codes of conduct and conflict of interest rules.
When public officials abuse or take advantage of their position in a manner that amounts to fraud or a breach of trust, they can be charged under section 122 of the Criminal Code with breach of trust by a public officer. In a 2006 decision, the Supreme Court of Canada clarified the constituent elements of this offence as follows:
Public officials who abuse their position could also be charged with the offence of frauds on the government under section 121(1)(d) of the Criminal Code. This provision applies if the public official purports to have influence with the government, a minister of the government, or an official, and accepts a bribe as consideration for co-operating, assisting, exercising influence, or an act or omission in connection with business transactions with or relating to the government, claims against the government or benefits the government is authorised or entitled to bestow, or the appointment of a person, including the public official themselves, to an office. In addition, a public official who misappropriates public funds could be charged with theft under section 330 of the Criminal Code.
Section 3 of the CFPOA and many of the Criminal Code provisions previously noted establish offences which may be committed directly by the accused, or indirectly by the accused through an intermediary. The use of an intermediary will generally not shield a company or individual from criminal liability.
An intermediary may be charged as a party to the offence committed by another person if they aid or abet the commission of an offence (section 21 of the Criminal Code). An intermediary could also be charged with conspiracy to commit an offence, which is a separate offence under section 465(1)(c) of the Criminal Code.
There are also offences for counselling another person to commit an offence (Criminal Code sections 22 and 464). Counselling has been interpreted to mean “procure, solicit, or incite” another person to be a party to an offence. In certain situations, such offences could apply to the intermediary or the party enlisting the intermediary.
Under Canadian law, there is no statute of limitations for indictable offences. Proceedings in relation to summary offences (or hybrid offences where the prosecution elects to proceed by way of summary conviction) must generally be instituted within six months of the offence (section 786(2) of the Criminal Code). All of the bribery and corruption offences under the CFPOA and the Criminal Code discussed in this chapter are indictable offences only, except for the general offence of fraud under section 380 of the Criminal Code, which is a hybrid offence. Fraud under CAD5,000 can be prosecuted by way of summary conviction.
The default territorial principle underlying Canada’s criminal law (which is codified in section 6(2) of the Criminal Code) is that no one can be convicted of an offence committed outside of Canada unless otherwise explicitly specified by Parliament. However, “all that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada” (ie, that there is a “real and substantial connection” to Canada) (R v Libman,  2 SCR 178, at para 74).
The CFPOA originally was based only on territorial jurisdiction (ie, offences where the conduct occurred in Canada or where there was a real and substantial link to Canada). However, the 2013 amendments added a broader nationality basis of jurisdiction. Section 5(1) of the CFPOA specifically provides that Canadian citizens, permanent residents, and corporations that commit the offence of bribing a foreign public official, or breaching the accounting provision, outside Canada (or who commit the offence of conspiring or attempting to commit these offences, the offence of being an accessory to these offences after the fact, or the offence of counselling in relation to these offences) are deemed to have committed the offence in Canada. Courts have since confirmed the application of a broader nationality basis to jurisdiction (R v Karigar, 2017 ONCA 576, at paras 27-28).
There is corporate as well as individual liability for bribery and corruption offences under Canadian law. The specific offences created by the CFPOA can be committed by any “person” as defined in section 2 of the Criminal Code, as can the Criminal Code offences. The definition of “person” includes “organisations”, which in turn is defined to encompass various types of entities including corporations.
Section 22.2 of the Criminal Code extends criminal liability to a corporation (or other organisation) when a “senior officer”:
A senior officer is not only one of the directing minds of the corporation, but is defined to include a representative who plays an important role in the establishment of an organisation’s policies or is responsible for managing an important aspect of the organisation’s activities. In the case of a corporation, senior officers include directors, the chief executive officer and the chief financial officer (section 2 of the Criminal Code). In addition, courts have interpreted mid-level employees with significant managerial responsibility to meet this definition (see R v Pétroles Global Inc, 2015 QCCS 1618).
Whether the acquirer of a business can be held liable for pre-acquisition conduct of a corporation depends upon the manner in which the transaction is structured. In share acquisitions and amalgamations, the potential liabilities continue to exist in the corporation. However, in an asset acquisition, it will be necessary to assess the contract between the parties to determine whether such potential liabilities were assumed by the purchaser or retained by the vendor.
The CFPOA and Criminal Code offences discussed in previous sections all require a mental element of knowledge and intent (and certain offences require “corrupt” intent). As such, a number of defences recognised at common law and in the Criminal Code are available for these offences (for example, defences that negate proof of the prohibited act, such as duress, or that negate the proof of the mental element, such as mistake of fact). In addition, defendants may contest any required element of the conduct covered by each offence (ie, actus reus, for example, whether the alleged benefit does, in fact, confer a material economic advantage).
The CFPOA contains exceptions to the offence of bribing a foreign public official where: (i) the benefit given is either permitted or required under the laws of the applicable foreign state or foreign public international organisation, or (ii) payment was made to reimburse reasonable expenses incurred in the promotion or demonstration of the person’s products and services or the execution or performance of a contract between a person and the foreign state.
None of the Criminal Code bribery or corruption offences contains any exceptions.
Since the repeal of the facilitation payments exception, there are no de minimis exceptions under Canadian law for any of the CFPOA offences. However, as previously discussed, there are certain exceptions under the CFPOA. The Criminal Code bribery and corruption offences also do not contain formal de minimis exceptions.
Canada’s laws do not exempt any sectors or industries from the CFPOA or the Criminal Code bribery and corruption offences.
No formal safe harbour, amnesty or other self-reporting programmes have been established for bribery or corruption offences by the authorities that enforce Canada’s anti-corruption laws (see Section 5 Penalties).
Self-reporting, co-operation with an investigation and compliance or remediation efforts are all potential “mitigating factors” which may be considered in the negotiation of a plea agreement with prosecutors, or by a court during the sentencing process. For example, Griffiths Energy International self-reported a bribe to the RCMP that led to a plea to bribery under the CFPOA. The CAD10.4 million fine imposed by the court reflected the company’s self-reporting and co-operation, including the significant sum of money saved by not having to investigate the matter and hold a full-blown trial (see R v Griffiths Energy International,  AJ No 412, at paras 15-18, 21).
Canada also recently enacted a Remediation Agreements regime under Part XXII.1 of the Criminal Code. It allows prosecutors and parties involved in corruption and various other types of offences to negotiate resolutions which do not include a criminal conviction. Self-reporting is a significant factor in the exercise of prosecutorial discretion for such resolutions (see Section 5 Penalties).
The maximum penalties under Canada’s bribery and corruption laws are very significant. The CFPOA offences and the offences of bribery of judicial officers, bribery of officers, and fraud under the Criminal Code can be punished by jail terms of up to 14 years for individuals. Other Criminal Code offences discussed herein are subject to jail terms of up to five years. The CFPOA and the Criminal Code also provide for a fine to be imposed on corporations and individuals in an amount at the discretion of the court.
In addition, corporations convicted of a CFPOA offence or certain Criminal Code offences face debarment from bidding on public sector projects.
The Canadian Government’s Integrity Regime debars individuals and corporations from contracting or subcontracting with federal government departments and agencies after being convicted of CFPOA offences or certain Criminal Code offences. The debarment period can range from ten years (with a possible reduction of ineligibility of up to five years) for convictions under the CFPOA and sections 119, 120, and 426 of the Criminal Code, to an open-ended period of time for convictions under sections 121, 124, and 380 of the Criminal Code.
Various provincial and municipal governments in Canada have procurement regimes or codes of conduct that include debarment rules. Convictions under the CFPOA or Criminal Code bribery and corruption offences will generally be problematic under such regimes or codes.
Offences under the CFPOPA and the Criminal Code bribery and corruption offences may also have consequences for firms’ activities abroad. For example, debarment may arise on projects financed by the World Bank Group pursuant to the Bank’s fraud and corruption policies, and cross-debarment by other multi-lateral development banks pursuant to the Agreement for Mutual Enforcement of Debarment Decisions.
The general principles and guidelines for sentencing both corporations and individuals in the Criminal Code (part XXIII, especially sections 718, 718.1, 718.2, 718.21, and 718.3) are applicable to the CFPOA as well as the Criminal Code bribery and corruption offences. Generally, there is no minimum or maximum fine for indictable offences. Maximum terms of imprisonment are established by statute (see 5.1 Penalties on Conviction), but there are no minimums except for section 380(1.1), which provides for a minimum of two years' imprisonment when the fraud is over CAD1 million.
In determining an appropriate sentence, the court will consider a number of factors, including the gravity of the offence, any advantage realised by the corporation or individual by committing the offence, the degree of planning, duration, and complexity of the offence, and whether there are other penalties being imposed, or related consequences.
In accordance with the principles of sentencing, repetition of an offence after a previous conviction generally results in the imposition of a more significant sentence than the sentence previously received (R v Wright (2010), 261 CCC (3d) 333 (Man CA)).
An offender who pleads guilty may present a joint recommendation with the Crown for an appropriate sentence (otherwise known as a plea bargain). The sentencing judge is generally bound to accept the joint recommendation unless they decide that it brings the administration of justice into disrepute or is contrary to the public interest (R v. Anthony-Cook, 2016 SCC 43, at para 32). Instances where a sentence judge does not accept a joint recommendation are exceedingly rare.
The CFPOA and the Criminal Code do not impose on individuals or corporations any compliance programme or other obligations to prevent corruption. As previously noted, failure to prevent bribery is not an offence under Canadian law.
Nevertheless, well-managed companies in Canada will undertake risk assessments and implement compliance programmes to attempt to prevent the serious consequences that may arise from bribery or corruption. Under the Criminal Code, measures taken to reduce the likelihood of committing a subsequent offence are to be considered as a mitigating factor in sentencing a corporation (section 718.21(j)).
Under Canadian law, no person has an obligation to report an offence or assist the police voluntarily in their investigation.
The CFPOA and the Criminal Code do not contain any self-reporting requirements. However, under the new remediation agreement regime that came into effect in Canada in 2018, whether a corporation self-reported is a factor for the prosecutor to consider in determining whether negotiation of a remediation agreement is in the public interest and appropriate in the circumstances. As previously noted, self-reporting and co-operation with an investigation are also factors under general sentencing principles.
As of June 2015, the Extractive Sector Transparency Measures Act requires that Canadian corporations operating in the extractive sector meet certain threshold conditions to disclose publicly, on a yearly basis, specific payments made to all governments in Canada and abroad. The purpose of the Act is to enhance transparency and deter corruption in the extractive sector. Failure to file a disclosure statement, filing a false or misleading statement, and structuring payments to avoid triggering reporting requirements, are all offences under this legislation, which are punishable on summary conviction by fines of up to CAD250,000.
There are limited protections for whistle-blowers under Canadian law. Section 425.1(1) of the Criminal Code and certain other specific legislation (such as the federal Public Servants Disclosure Protection Act and Competition Act, and the Public Service of Ontario Act, 2006) prevents employers from threatening or taking retaliatory action to deter or punish whistle-blowing employees.
The Ontario Securities Commission (OSC) and the Canada Revenue Agency (CRA) operate whistle-blower programmes that provide financial incentives to whistle-blowers under certain conditions. However, Canadian securities commissions and taxation authorities do not have enforcement powers for Canada’s bribery or corruption offences.
Provisions regarding whistle-blowing can be found in Section 425.1(1) of the Criminal Code and certain other specific legislation (such as the federal Public Servants Disclosure Protection Act and the Competition Act, and the Public Service of Ontario Act, 2006).
There is exclusively criminal enforcement of anti-bribery and anti-corruption laws in Canada. There are no civil or administrative enforcement bodies with responsibility for the CFPOA or offences under the Criminal Code.
Canada’s national police force, the Royal Canadian Mounted Police (RCMP), has sole authority for enforcing the CFPOA. The RCMP also enforces the Criminal Code and assists other police forces with investigations, typically when enforcement efforts are national, trans-provincial, or trans-national in scope. The RCMP’s jurisdictional powers are set out in the Royal Canadian Mounted Police Act.
At the provincial level, major municipal or provincial police services enforce the Criminal Code corruption and bribery provisions.
Police authorities have broad powers of search, seizure, information-gathering (eg, by production orders or by wire-tapping) and arrest, which are codified in the Criminal Code and are subject to judicial oversight.
Prosecutions of CFPOA offences and Criminal Code offences investigated by the RCMP are handled by the PPSC. The “Crown Attorney” (prosecutor) offices within provincial ministries of attorneys general are generally responsible for the prosecution of Criminal Code offences at the provincial level. Prosecutors review evidence referred to them by police authorities and take independent decisions regarding the laying of charges, conduct of prosecutions, and negotiation of guilty pleas (which are subject to court approval) or remediation agreements.
Prosecutors and police authorities often work together to ensure investigations are complete before charges are laid, so that prosecutors can bring cases to trial promptly. In Canada, an accused person has the right to be tried within a reasonable period of time. In R v Jordan (2016 SCC 27), the Supreme Court of Canada established that this means a presumptive ceiling beyond which delay — from the charge to the actual or anticipated end of trial — is presumed to be unreasonable. In the absence of exceptional circumstances, the presumptive ceiling is 18 months for cases tried in provincial courts, and 30 months for cases tried in superior courts.
COVID-19 has continued to reduce the progress of investigations and enforcement of the CFPOA and the Criminal Code corruption and bribery provisions. The trend of working from home means police authorities do not have the same level of access to their offices. Further, social distancing efforts and reduced in-person contact have made it more difficult for police authorities to engage with witnesses. As a result, investigations are delayed. However, courts have not found delays in prosecutions arising from COVID-19 to impact an accused person’s right to be tried within a reasonable period of time.
Enforcement authorities’ powers to gather evidence using search warrants, production orders (subpoenas) and wire-tapping generally require advance authorisation by the courts (see, eg, Criminal Code sections 185, 487, 487.014). Production orders can only be used to compel records from persons who are not under investigation.
Amendments to the Criminal Code in 2018 created the option of entering into a remediation agreement (essentially a deferred prosecution agreement). This type of resolution, available only for companies and not individuals, is likely to be used for some cases under the CFPOA and for Criminal Code bribery and corruption offences where it may be appropriate to avoid the severity of criminal convictions and automatic debarment consequences under applicable government procurement regimes.
Prosecutors have full discretion to initiate and conduct a prosecution and to negotiate remediation agreements or guilty pleas (which are subject to approval by the court). Even if there is a reasonable prospect of conviction, prosecutors can, at their sole discretion, refuse to conduct a prosecution or stop the proceedings if a prosecution would not best serve the public interest.
The scope of territorial and nationality-based jurisdiction under the CFPOA and applicable Criminal Code provisions is discussed in previous sections. However, Canadian courts cannot exercise personal jurisdiction over individuals or corporations unless they are properly charged and brought before the court in Canada. The RCMP does not have any formal powers to take enforcement action outside of Canada.
The RCMP may co-operate with foreign policing agencies, as well as international organisations such as the World Bank, in the investigation and enforcement of the CFPOA and the Criminal Code outside of Canada. For example, Canada has mutual legal-assistance treaties with numerous countries that facilitate cross-border criminal investigations. These treaties are implemented pursuant to the Mutual Legal Assistance in Criminal Matters Act.
Canada also has extradition treaties with numerous countries (under the Extradition Act). Such treaties allow Canada to seek the extradition of Canadian citizens or foreigners for purposes of prosecution of offences under Canadian laws, including the CFPOA and the Criminal Code, in certain circumstances.
Canadian construction and engineering giant SNC-Lavalin Group Inc has faced multiple sets of bribery charges in recent years. The company was first charged with criminal fraud under section 380(1)(a) of the Criminal Code and bribery contrary to section 3(1)(b) of the CFPOA in February 2015, in connection with millions of dollars of alleged bribes for public officials in Libya.
SNC-Lavalin was not invited to negotiate a remediation agreement and, in May 2019, a judge of the Court of Quebec ruled at a preliminary inquiry that there was enough evidence to send SNC-Lavalin to trial. In December 2019, the construction division of the company pleaded guilty to the charge of criminal fraud and negotiated a penalty of a CAD280 million fine (to be paid over five years) and a three-year probation order. All charges against the parent company and its international unit, and the charges under the CFPOA, were withdrawn as part of the guilty plea and fine, which was approved by the court.
In January 2020, Sami Bebawi, an SNC-Lavalin executive, was sentenced to eight and a half years’ imprisonment for fraud, corruption of foreign officials and laundering the proceeds of crime in connection with the company’s conduct in Libya. Mr Bebawi was also fined CAD24.6 million in lieu of the seizure of additional proceeds of crime. Failure to pay the fine within six months would result in Mr Bebawi serving an additional ten-year prison sentence. The convictions and sentence are currently under appeal.
SNC-Lavalin was charged along with two former executives in September 2021 with fraud against the government under section 121 of the Criminal Code, and fraud under section 380 of the Criminal Code, among other offences. The charges involve allegations of bribes paid in connection with a 2002 contract to refurbish Montreal’s Jacques Cartier Bridge. Unlike the previous case, SNC-Lavalin has been invited to negotiate a remediation agreement. If a remediation agreement is reached and approved by the court, SNC-Lavalin will be the first company to receive a remediation agreement in Canada.
Between 2011 and 2015, the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry (the Charbonneau Commission) investigated and reported on widespread corruption and collusion in the awarding and management of public construction contracts in Quebec. The final report made 60 recommendations to address the problems exposed during the inquiry. More than 300 people and companies have been charged since 2011 by Quebec’s anti-corruption police force, Unité permanente anti-corruption (UPAC). In September 2020, the Court of Quebec ordered a stay of proceedings against Nathalie Normandeau, a former cabinet minister in Quebec, on corruption-related charges investigated by the UPAC because the prosecution took too long. As previously noted, the Supreme Court of Canada’s 2016 decision in R v Jordan established presumptive time limits between the laying of charges and the completion of a trial. Normandeau had been charged in March 2016 with fraud, corruption, conspiracy, breach of trust and fraud against the government in relation to a contract award for a water-treatment plant.
In September 2020, Ontario’s Serious Fraud Office (SFO), a team of investigators and prosecutors dedicated to complex financial crimes, undertook what appears to be its first enforcement activity since the SFO was established in mid-2019. Charles Debono was deported to Canada from the Dominican Republic and charged by the Ontario Provincial Police with fraud over CAD5,000, laundering crime proceeds, bribery of an agent, personation with intent, and using, dealing and acting on a forged document in connection with a CAD56-million debit terminal Ponzi scheme.
In November 2020, the RCMP charged Damodar Arapakota for bribing a public official from Botswana, contrary to section 3(1) of the CFPOA. It is alleged that Mr Arapakota, a former executive from IMEX Systems Inc, provided financial benefit for a Botswanan public official and his family. New management of IMEX self-reported the allegations of Mr Arapakota’s conduct to the RCMP.
Canada does not yet have an extensive history of prosecutions under the CFPOA. Since the adoption of the legislation, there have been three guilty pleas: a fine of CAD25,000 against Hydro-Kleen Group in 2005, a CAD9.5 million fine and a three-year monitoring order against Niko Resources in 2011, and a CAD10.4 million fine against Griffiths Energy in 2013.
In 2017, the Ontario Court of Appeal upheld a decision convicting Nazir Karigar under the CFPOA for conspiring to bribe a foreign public official. Mr Karigar was the first person to defend charges under the CFPOA at trial and be convicted. He was sentenced to three years' imprisonment. An application for leave to appeal to the Supreme Court of Canada was dismissed in 2018.
In January 2019, Robert Barra and Shailes Govinda were also convicted under the CFPOA in connection with the same conspiracy. Notably, Mr Barra and Mr Govinda are not Canadian and were extradited from the United States and the United Kingdom, respectively, to face trial in Canada. Both received sentences of two and a half years’ imprisonment. However, in August 2021 the Ontario Court of Appeal overturned their convictions and ordered new trials.
As previously noted, Sami Bebawi’s recent prosecution under the CFPOA resulted in a sentence of eight and a half years (although this sentence was also for convictions on other charges under the Criminal Code, not just the CFPOA).
In a case that went all the way to the Supreme Court of Canada, Bruce Carson, a senior aide to former Prime Minister Stephen Harper, was convicted of influence-peddling for using his government contacts to promote the purchase of water-treatment systems by indigenous communities. In July 2018, Mr Carson was given a suspended sentence, one year of probation, and was ordered to perform 100 hours of community service.
Recently, the Nova Scotia Court of Appeal increased the sentence to 42 months in jail for Harold Dawson, who was convicted in 2019 of conferring an advantage on a government employee (Bry’n Ross) contrary to section 121(1)(b) of the Criminal Code. Mr Ross was also sentenced, and to 36 months in jail. Mr Dawson had provided Mr Ross with cash to ensure favourable contracts for his companies in relation to a Department of National Defence heating plant.
Many individuals have also been prosecuted and found guilty of a range of fraud and bribery offences under the Criminal Code as a result of the Charbonneau Commission and UPAC investigations. Sentences imposed range from conditional sentences, to be served in the community, to six years' imprisonment, depending on the individual’s involvement in the offence as well as other aggravating factors.
The OECD Working Group on Bribery issued its Phase 3 Report on Canada’s implementation of the OECD Anti-Bribery Convention in March 2011. The report made a number of recommendations to strengthen the CFPOA and Canada’s anti-bribery regime generally. Canada subsequently amended the CFPOA in June 2013, by adding a nationality basis for jurisdiction, establishing new offences, and increasing penalties, among other changes. More recently, the elimination of the exception in the CFPOA for facilitation payments was proclaimed into force on 31 October 2017.
After the enactment of the remediation agreement provisions of the Criminal Code in 2018, there are no changes or additions to Canada’s anti-bribery regime on the immediate horizon.
The SNC-Lavalin cases signal both a strong commitment to CFPOA enforcement, even when it involves a major Canadian-owned multi-national enterprise, and a turn towards the potential use of remediation agreements in appropriate circumstances. The RCMP has also indicated that it has numerous other CFPOA investigations in progress, but it is not clear how many will lead to prosecutions.
Background to Canadian Anti-corruption Law and Enforcement
Corruption in Canada is regulated extra-territorially under the Corruption of Foreign Public Officials Act (the CFPOA), and domestically under the Criminal Code. The CFPOA, brought into force in 1998 further to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Convention), prohibits bribery of foreign public officials (section 3) as well as keeping improper books and records for the purpose of bribing a foreign public official or hiding that bribery (section 4). Pursuant to section 5 of the CFPOA, any Canadian citizen, permanent resident or company incorporated or organised under the laws of Canada is criminally liable for offences committed outside Canada under the Act. This is in addition to those situations meeting the “real and substantial connection” test for criminal liability.
The Criminal Code creates a number of corruption offences domestically, including for bribery of judicial officers (section 119), bribery of officers including police (section 120), frauds on the government (section 121), breach of trust by a public officer (section 122), municipal corruption (section 123), selling or purchasing office (section 124), influencing or negotiating appointments or dealing in offices (section 125), and secret commissions (section 426). Canadian authorities may also rely on Criminal Code provisions governing fraud (section 380) and/or conspiracy for charges in connection with corrupt behaviour.
Unlike in several other jurisdictions such as the US, bribery and corruption are treated as purely criminal matters under Canadian law. Both the CFPOA and the Criminal Code are federal statutes enforced by law enforcement as a matter of criminal law, with the CFPOA enforced exclusively by the Royal Canadian Mounted Police (the RCMP) and Criminal Code provisions enforced by federal, provincial and local law-enforcement agencies. In the province of Quebec a specialised law enforcement agency, Quebec’s Unité permanente anti-corruption (UPAC) is tasked with investigating provincial and municipal corruption.
Enforcement of Corruption Offences
Canada has faced certain criticism in recent years recent years for a perceived lack of anti-corruption enforcement, in particular under the CFPOA. To date, only a handful of companies and individuals have been convicted under the CFPOA. Despite this, enforcement has become more prevalent in recent years and there have been a number of convictions and/or charges against individuals and corporations.
Background and current enforcement activity
In late 2019, SNC-Lavalin Inc. entered into a plea bargain whereby a division of SNC-Lavalin pleaded guilty to fraud under s. 380(1) of the Criminal Code. SNC-Lavalin had allegedly made payments to Saadi Gaddafi, the son of Muammar Gaddafi, to secure contracts in Libya. SNC-Lavalin was also charged with one count of bribing a foreign official under section 3(1)(b) of the CFPOA, which was dismissed under the plea bargain. The settlement included a negotiated penalty of CAD280 million in fines and three years' probation, resolving the criminal case against the Montréal-based engineering firm. Former SNC-Lavalin executive Sami Bebawi was also convicted by jury on 15 December 2019 of five separate counts relating to fraud, corruption of foreign officials, and laundering the proceeds of crime in connection with the alleged scheme. On 10 January 2020, Mr Bebawi was sentenced to a total of eight years in prison: four and a half for bribery under the CFPOA, and 45 months for each of the other charges.
The SNC-Lavalin conviction came on the heels of a number of individual convictions. These include: i) January 2019 guilty pleas by Robert Barra and Shailesh Govindia – the US CEO of Crypometrics Canada’s parent company and an agent acting on its behalf in India, respectively – in connection with bribery of Air India officials and the Indian Minister of Civil Aviation to secure a major contract, and ii) guilty pleas under the Criminal Code by SNC-Lavalin CEO Pierre Duhaime, Vice-President Riadh Ben Aissa and ex-hospital manager Yanai Elbaz in early 2019, mid-2018 and late 2018 respectively in connection with fraud in relation to the McGill University Health Centre super-hospital.
In November 2020, the RCMP brought CFPOA charges against Damodar Arapakota, a former executive of IMEX Systems Inc, for allegedly bribing a public official from Botswana following self-reporting of the allegations by the company; and ii) in January 2021, the Ontario Provincial Police charged three of their own officers, Constable Simon Bridle, Constable Mohammed Ali Hussain and Constable Bindo Showan with secret commissions and breach of trust related to allegations of corruption in the tow-truck industry in the province. Bridle faces an additional charge of obtaining sexual services for consideration. In February 2021, Inspector Steve Grosjean was also charged with breach of trust. Four other officers have been suspended and are under investigation, but do not face criminal charges.
Most recently, in September 2021 SNC-Lavalin Inc and SNC-Lavalin international Inc were each charged under the Criminal Code with offences including fraud against the government and conspiracy to commit fraud against the government in connection with the Jacques Cartier Bridge Refurbishment project, a CAD128 million contract in which SNC-Lavalin was a 50% consortium partner. Two individuals – SNC-Lavalin Inc vice-president Normand Morin and a former vice-president at SNC-Lavalin International Inc, Kamal Francis – were also charged. The charges were simultaneously announced by the RCMP and the Quebec Directeur des poursuites criminelles et pénales (DPCP). At the same time, the DPCP announced they had invited the companies to enter into negotiations for a remediation agreement, the form of deferred prosecution agreement (DPA) that came into force in Canada in September 2018. This is a rare example where a Canadian company has received an invitation to negotiate such an agreement. In a press release on the same day, SNC-Lavalin announced that it welcomes this opportunity.
Update on new remediation agreements
As previously noted, on 23 September 2021 the Quebec DPCP invited SNC-Lavalin to enter into the negotiation of a remediation agreement in respect of the charges announced against it the same day for fraud in relation to the Jacques Cartier Bridge project.
A DPA, a tool used in many other jurisdictions globally – referred to under the Criminal Code as a “remediation agreement” – is an agreement entered into between a company alleged to have engaged in economic crimes and a prosecutor, whereby prosecution is suspended while the organisation undertakes to fulfil various conditions. Such conditions may include monetary penalties, remediation measures, enhanced reporting requirements or allowing third-party oversight on compliance. When these undertakings are fulfilled, the charges are dropped. Prosecutors in Canada may enter into negotiations for a remediation agreement if the following conditions are met:
Factors to be considered when deciding whether to negotiate a remediation agreement include the circumstances in which the offence was brought to the attention of authorities (including whether the company self-reported the conduct), the nature and gravity of the offence, and the degree of involvement of senior management, among others.
Under the provisions of the Criminal Code enacting remediation agreements, prosecutors wishing to negotiate a remediation agreement must invite the accused to do so by giving written notice of the offer to enter into negotiations. Notably, previous attempts by SNC-Lavalin to enter into a remediation agreement in relation to corruption allegations in Libya (discussed above) were ultimately unsuccessful.
Remediation agreements are seen as an effective enforcement tool which has been used with significant success in other jurisdictions such as the US and UK, and as such are expected to be an important mechanism for Canadian authorities to investigate and enforce corruption offences.
Current Risks and Trends
Canadian companies have faced increased risks as a result of global and regulatory challenges, that have increased the need for effective anti-corruption programmes. Among other things, current trends in Canadian anti-corruption compliance and enforcement include increased risks as a result of the COVID-19 pandemic, increasing importance of supply chain diligence, developments in anti-money laundering law and compliance, and increased costs of compliance.
The COVID-19 pandemic has created significant business disruptions for Canadian companies, in their operations both domestically and overseas. Companies have faced new challenges in oversight over employees working from home, have faced disrupted supply chains, have had to reach out to new and different suppliers overseas, including government-controlled entities, and have been forced to work in new jurisdictions in which they may have little familiarity. All of this contributes to an increased corruption risk. While certain regulatory requirements were relaxed in the early part of the pandemic, enforcement authorities have continued to investigate and enforce corrupt behaviour.
In particular, disrupted supply chains during the pandemic have caused companies to work with new suppliers, partners and representatives in order to obtain goods and services. Often, companies have been forced to work with agents to address supply chain disruptions. It remains paramount for companies operating during and following the pandemic to ensure strict compliance, including ensuring all individuals and companies acting on their behalf are aware of their anti-corruption obligations, exercising oversight over representatives and third parties to ensure compliance, and conducting adequate identification of suppliers, customers and counterparties to ensure that they understand who they are doing business with and any associated risks.
Increased supply chain compliance risks and impact of foreign regimes on Canadian companies
Canadian companies have faced increasing supply chain risks from both the COVID-19 pandemic and developments in domestic and international law, requiring greater attention to human rights and corporate social responsibility obligations and supply chain diligence, both domestically and overseas. Canadian companies, like their counterparts in other jurisdictions, are facing increased pressure and are being exposed to financial stress due to supply chain issues. As a result, there is an increased opportunity for corporate wrongdoing while finding ways to deal with supply-chain issues, which entails a higher risk of corruption without proper vigilance over international human rights compliance.
Canadian companies are subject to both domestic and international human rights' obligations. In March 2020, the Supreme Court of Canada held in Nevsun Resources Ltd v Araya that corporations can be sued in Canada for breaches of customary international law, including when committed abroad. This may include human rights' obligations under international conventions such as the Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights, as well as domestic law such as provincial human rights' legislation and the Canadian Charter of Rights and Freedoms. These laws and conventions are informed by international and Canadian guidance including the Ten Principles of the United Nations Global Compact and Canada’s enhanced Corporate Social Responsibility Strategy.
On 13 May 2021, Global Affairs Canada released its new model Foreign Investment Promotion and Protection Agreement (the 2021 Model FIPA), which serves as the basis for how Canada is likely to approach future investment treaty negotiations. Among other things, the 2021 Model FIPA significantly expands on previous provisions related to responsible business conduct/corporate social responsibility. The 2021 Model FIPA also includes the promotion of internationally recognised standards which investors are encouraged to incorporate, including to:
Canadian companies may also be the target of or in certain circumstances subject to economic sanctions imposed by other jurisdictions in respect of human rights abuses, including, eg, global human rights sanctions regimes enacted by the United Kingdom on 6 July 2020 and the Council of the European Union on 7 December 2020.
Developments in anti-money laundering compliance
In recent years, public focus on corruption issues in Canada has often been linked to money laundering. In particular, following revelations of money laundering in Canada arising from the 2016 release of the Panama Papers, the government of British Columbia commissioned two reports (the 2018 German Report and the 2019 Maloney Report) detailing the extent of money laundering in the Province. In response, British Columbia proceeded in 2020 with its Commission of Inquiry into Money Laundering in British Columbia (the Cullen Commission). The Cullen Commission’s mandate is to inquire and provide recommendations surrounding money laundering in British Columbia. The Commission has been conducting hearings in order to make findings of fact, specifically regarding money laundering in the gaming and horse racing, real estate, financial institution and money services, corporate (including shell companies and financial instruments for the purposes of money laundering), luxury goods and professional services sections. The Commission is ongoing, and scheduled hearings have been conducted by video-conference into 2021, due to the COVID-19 pandemic. Closing submissions were made by participants in late October 2021.
The underlying perception of Canada as an easy place to launder money has led to changes in Canada’s anti-money laundering laws, regulations and enforcement. Significant recent developments include:
Increased costs of compliance
Canada has experienced an increase in financial crime compliance spending. According to LexisNexis Global Report entitled Trust Cost of Financial Crime Compliance Study, released on 9 June 2021 (the Report), the average annual cost of financial crime compliance per organisation in Canada increased from between 2019 and 2020 from USD14 million to USD5 million (+39.3%). This was consistent with findings that financial crime compliance costs surged globally in 2020 – likely as a result of the COVID-19 pandemic. The projected total cost across financial institutions worldwide is USD213.9 billion, up from USD180.9 billion the previous year. According to the Report, these costs arise from challenges including customer risk profiling, sanctions screenings, regulatory reporting, “know your client” or “KYC” rules for account onboarding and efficient alert resolutions.