Combating Corruption in Canada
Foreign
bribery cases are focus of new RCMP crackdown
Executives looking at
serious jail time if they pay bribes overseas, police say
The RCMP says it is pursuing Canadian
companies that pay bribes to win lucrative contracts overseas more aggressively
than it did in the past. RCMP Commissioner Bob Paulson (right) and Public
Safety Minister Steven Blaney are seen here in Ottawa, on Dec. 1, 2014. (Adrian Wyld/Canadian Press)
The RCMP says it is more aggressively
pursuing Canadian companies that pay bribes to win lucrative contracts overseas
and, in future, more cases will lead to real jail time for
individuals rather than just fines for companies.
Ottawa businessman Nazir Karigar was
sentenced to three years in prison last May for arranging bribes to public
officials in India, in a bid to win a $100-million security contract from Air
India.
He was the first Canadian to go to
prison for bribery overseas but the next one could be going away for a lot
longer, says Sgt. Patrick Poitevin of the RCMP’s sensitive and international
investigations unit.
Karigar was charged under an older
version of Canada’s Corruption of Foreign Public Officials Act, which
prescribed a maximum penalty of five years in prison.
'We are investigating not just the
companies, but the individuals that paid the bribe.'- Sgt.
Patrick Poitevin, RCMP
“With the amendments that were enacted
last year, it’s up to 14 years, which is the second-highest level of
sentencing in the Criminal Code,” said Poitevin.
He adds it’s now also possible to charge
individuals for merely agreeing to a bribe, even if no actual money changes
hands.
The staggering cost of
corruption
The United Nations estimates that more
than $1 trillion is paid in bribes each year. The cost of that corruption to
the world’s economy is a massive $2.6 trillion, most of it lost to poor
countries that can least afford it.
Corruption allows shoddy and overpriced
infrastructure projects to drive out well-built, cost-effective ones. It also
undermines the rule of law and people’s faith in democratic government. The
true cost of corruption in the developing world can be measured in schools and
hospitals that are never built, jobs that are never created, and resources that
are pilfered and spirited away to foreign bank accounts.
Many experts say the global toll of
corruption, in both lives and money, exceeds that of terrorism. Even in
countries such as Nigeria, where a brutal jihadist insurgency has killed
thousands in the past year, corruption consistently leads security in public
surveys as the most serious problem facing the country
Canada lags behind
While the Canadian government has
said it is redoubling its efforts
to crack down on foreign corruption and bribery, Canada has
historically done a poor job of preventing its companies from using bribes as a
tool to drum up business around the world — even though Canadian
companies are big players in some of the industries where bribery is most
common such as mining.
Canada has successfully prosecuted only
three major overseas corruption cases.
The U.S., by contrast, has convicted
more than 50 individuals since 2009 for paying bribes overseas under its
Foreign Corrupt Practices Act. More than 50 U.S. companies have also been
punished in the past five years, paying fines and forfeitures of about $3
billion.
The U.S. Justice Department also runs a
Kleptocracy Asset Recovery Initiative (KARI), which has returned multi-million
dollar sums to the countries where the bribes were paid. In chronically corrupt
countries where any money returned might simply be stolen again, the U.S. has
co-operated with NGOs. In one case, it returned $115 million of bribery-tainted
U.S. corporate profits to Kazakhstan, but not to the Kazakh government.
Instead, the money was used by an independent charity to help Kazakh children.
This year, the anti-corruption charity
Transparency International upgraded Canada from its lowest rating, "little
or no enforcement," to "medium."
"It's a recognition of the
prosecutions that have been accomplished," says TI Canada's Peter Dent, a
Toronto accountant. "But it doesn't rise yet to the level of active
enforcement you see in the U.S."
Making individuals pay
Stung by criticism from organizations
such as Transparency International, the RCMP is trying to make up for past
inaction. Three years ago, it scored its first major success when Calgary-based
Niko Resources pleaded guilty and paid a $9.5-million fine.
Niko Resources had caused an explosion
while drilling for gas in a Bangladeshi village. The blast destroyed the local
school and caused significant damage to the village, according to an agreed
statement of facts.
The company pleaded guilty to
presenting a new SUV and other benefits to the Bangladeshi minister in charge
of investigating the explosion and determining compensation.
Last year, Griffith Resources paid a
$10.35-million dollar fine for bribing the wife of a government official to
secure a mining concession in Chad.
But no individual paid for those crimes.
In fact Edward Sampson, the CEO of Niko Resources, made $4.8 million in
pay and stock options the year his company was convicted.
Sgt. Poitevin at the RCMP’s
anti-corruption unit said that is now changing and the results can be
seen in three pending cases involving bribes paid to win the Air India contract
— all charges against individuals.
There are also charges expected from the
investigations into SNC-Lavalin.
Transparency International's Peter Dent
welcomes the prosecutions, but hopes to see more. "So far there just
haven't been enough cases to make an effective deterrent."
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