An introduction to the Canadian Corruption of Foreign Public Officials Act (“CFPOA”)
While the U.S. Foreign Corrupt Practices Act (“FCPA”) remains the single most significant anti-bribery and corruption enforcement apparatus in the world, an increasing number of foreign jurisdictions have moved to implement or enhance their own regimes prohibiting the bribery of foreign officials, recognizing the significant deleterious effect of bribery at global scale. As noted by a number of reputable international organizations, including but not limited to, Transparency International, rampant bribery and corruption distorts markets, perpetuates economic inequality and stratification, and undermines a shared commitment to the principle of rule of law.
Chief provisions of the CFPOA & related definitions
In Canada, the chief foreign anti-bribery and corruption law is the Corruption of Foreign Public Officials Act (“CFPOA”) and largely parallels the substantive prohibitions contained in the FCPA.
In actuality, the CFPOA itself creates three (3) main criminal offenses. These offenses consist of:
Giving, offering, or agreeing to give or offer a benefit of any kind to a foreign public official, or for their benefit, as consideration for an act or omission by that official in connection with their duties;
Giving, offering, or agreeing to give or offer a benefit of any kind to a foreign public official, or for their benefit, to induce the official to influence any acts or decisions of the foreign state or organization; and
Engaging in improper accounting activities for the purposes of bribing a foreign public official or hiding such bribery, including modifying accounts, using false records, or intentionally destroying records.
Under section 2 of the CFPOA, a “foreign public official” is broadly defined as any person who holds an official position with a foreign state (including those occupying legislative, administrative, or judicial offices); a person who performs public duties or functions for a foreign state, including any person employed by a board, commission, corporation or other body that is established to perform a public function on behalf of the foreign state; and an official agent of a public international organization formed by several states or governments, or by several public international organizations. Relatedly, section 2 defines the term “foreign state” to include any country outside of Canada, including government departments, branches, agencies or subdivisions of foreign states.
A specific intent offense; Application of the CFPOA and available exceptions
Notably, the CFPOA itself is completely devoid of any reference to a specific mens rea requirement. As a result, Canadian courts have grappled with the issue of requisite intent with respect to violations of the CFPOA resulting in criminal liability. Under the test established by the Court of Appeal in the relatively recent case of R. v. Barra, (2021 ONCA 568), a person violates section 3(1) of the CFPOA (where the person bribed or offered a bribe is employed by a corporation) only when the accused knows not only that the person was employed by the corporation, but the corporation was established to perform a duty or function on behalf of a foreign state. In this vein, the Court of Appeal rejected the contention that a corporation bearing the name of a foreign state is a reliable indicia of whether the corporation itself carries out public duties or functions on behalf of a foreign state. As other legal commentators have noted, this creates a high bar for the Crown to overcome in the context of criminal proceedings commenced under section 3(1).
Canadian courts have also made it pellucidly clear that the CFPOA prohibits not only an agreement with a foreign government official to make payment to them, but also an agreement between two or more parties to make such payment—even if the foreign official was neither a party to, nor aware of, the agreement. Like its U.S. counterpart, moreover, the CFPOA has broad extraterritorial reach for Canadians and Canadian companies abroad and for foreign individuals and companies with a presence in Canada. A Canadian company doing business overseas may accrue CFPOA liability through its own actions (for example, directly bribing an official) or those of its senior officers and, depending on the circumstances, its employees or representatives. The operations in Canada of foreign companies are likewise subject to the provisions of the CFPOA if they are incorporated, organized, or formed under the laws of Canada or a Canadian province, or to the extent they maintain a presence in Canada (for example, operating a company branch or conducting other similar business activities with a sufficient Canadian nexus).
Finally, it should be noted that while section 3(3) of the CFPOA creates an exemption for “promotional expenses,” the exemption is extremely narrow and largely dependent on the actual circumstances requiring the expenditure in question. Exemptions of this nature are frequently used where a foreign government may be the customer and travel of foreign officials to a proposed project site or other destination is required. Under such circumstances, it may be permissible to reimburse reasonable expenses incurred by the foreign official in question. Individuals confronted with this scenario should engage competent counsel to carefully consider the ramifications of covering such “promotional expenses” to avoid running afoul of the CFPOA’s broader bribery prohibitions. Unlike the U.S. FCPA, the Canadian CFPOA contains no equivalent exception for “facilitating payments.”
Penalties for violations of the CFPOA
Individuals found guilty of a CFPOA breach face a maximum penalty of fourteen (14) years’ imprisonment. The court may also require the payment of a fine in lieu of or in addition to the sentence. Notably, the CFPOA subjects commercial organizations to the potential for unlimited fines. Additionally, any property and proceeds derived from the underlying criminal action are subject to government forfeiture. Finally, companies found guilty of a CFPOA violation are subject to debarment under the Integrity Regime of Public Services and Procurement Canada (“Integrity Regime”). Under the Integrity Regime, an organization is ineligible to do business for a period of ten (10) years with any Canadian government department following a conviction or a guilty plea with a conditional or absolute discharge for various offenses including bribing a foreign public official.
To date, prosecutions under the auspices of the CFPOA have been fairly infrequent. Nonetheless, it is expected that cross-jurisdictional cooperation—and the United States’ recent designation of the fight against global corruption as a core national security priority of the United States—will result in a steady uptick in cases brought under the CFPOA.
S.C. 1998, c. 34. ↩︎
See, R v. Karigar (2017 ONCA 576), rejecting—inter alia—the defense position that, to violate the provisions of the CFPOA, a party must have an agreement on a direct basis with a foreign official. According to Justice Feldman, the CFPOA contains no such limiting language. Accordingly, a party may be indirectly liable under the CFPOA even if that party merely agrees with another party to provide some “loan, reward, advantage or benefit” to a foreign official. ↩︎