Canada isn’t doing nearly enough to investigate and prosecute its citizens and
corporations for offences related
to bribing foreign public officials abroad, according to a
report released by the Organization for Economic Co-operation
and Development.
“Canada’s regime for enforcement remains problematic in
important areas,” the Paris-based
organization said in a statement,
noting urgent action is needed to
combat the problem.
The report says Canada has
only completed one prosecution
since it enacted its foreign
bribery law in 1999 and, given
the size of the economy and its
high-risk industries, the country’s laws and approach to
enforcement should be reviewed
to determine the reason.
Among other things, the
report takes Canada to task for
weak penalties and an insufficient number of prosecutors and
police assigned to go after
offenders under the Corruption
of Foreign Public Officials Act,
and to deal with anticipated
future cases.
While the report notes
enforcement has recently
increased, with one prosecution
in the works and more than 20
active investigations, it warns
that Canada’s ability to successfully prosecute the investigations
will be in jeopardy unless the
Public Prosecution Service of
Canada is given the resources it
needs to deal with the volume of
cases.
Among the recommendations,
the report also suggests police
and prosecutors shouldn’t be
allowed to consider factors like
the national economic interest
and relations with a foreign state
when deciding whether or not to
investigate or prosecute allegations of foreign bribery.
Rudy Duschek, senior consultant with chrismathers inc., a
firm of crime and risk consultants, said one prosecution by
Canadian authorities is
“extremely low” considering the
number of high-profile cases,
investigations and prosecutions
that have been undertaken by
other countries.
He suspects more bribery
offences are taking place, it’s
just that the culprits are not getting caught.
“Our government needs to
take foreign corruption seriously
because it is occurring,” he said.
Duschek, a chartered accountant, chartered financial analyst
and certified fraud examiner
who works as a corporate consultant on white-collar crime,
said there aren’t enough investigators to probe bribery offences,
or enough prosecutors to take
matters to court.
The OECD report notes that
the RCMP anti-corruption unit,
and, even if you do, there’s a
fairly good chance they’re going
to be able to extradite you.”
Facilitation payments have
been a focus area for many coun-
tries and the OECD has recom-
mended that Canada review its
policies and approach on small
facilitation payments, and
encourage companies to imple-
ment internal controls to pro-
hibit or discourage their use.
“In many cases, Canadian
businesses already have policies
and procedures that deal with
those sorts of payments,” said
Savage, “but not everyone does,
so it’s a good opportunity to
think about it and either change
the policies and procedures, or
remind employees about the policies, and perhaps educate them
to the fact that there is this shift.”
Canada’s record on bribery
offences was also recently
knocked by Transparency International. In May, the watchdog
released a report that singled out
Canada for failing to enforce
anti-bribery rules abroad. It suggested Canada should be more
committed to enforcement.
Canada was listed as one of
21 countries that have little or no
enforcement of bribery offences.
It is the only G7 country in that
category and has been in that
category since 2005.
Countries like the U.S. and
UK were in the list that actively
enforced anti-bribery rules
abroad.
Transparency International
said the Canadian legal system
and courts do not handle complex white-collar criminal cases
well and long delays occur in the
court process.
DUSCHEK
Another concern is the adequacy of resources for the
RCMP anti-corruption unit
which has 14 officers and who
periodically need to attend to
issues not related to bribery
offences.
The report concluded that
Canada has to show a more visible public commitment to
enforcement and allocate more
resources to the investigation
and prosecution of bribery
offences.
Transparency International
said high-level government
action is needed due to the enormous scale of bribery, noting
that the World Bank estimates
the global cost of corruption to
be $1 trillion US a year and that
corrupt money associated with
bribes received by public officials in developing and transition countries is up to $40 billion US per year.
“It does seem there’s going to be more
attention in this area because it is a fact
that jumps out and strikes you.”
Mike Savage, Ernst & Young
example of tougher legislation
that was enacted by Americans,
and it is “so much more powerful than the outdated Canadian
laws” on bribery.
Mike Savage, Canadian fraud
investigation and dispute services leader at Ernst & Young in
Toronto, said he’s not sure
whether the single prosecution
means Canadians simply don’t
pay bribes or if it’s just they
haven’t been caught, but either
way he suspects businesses in
this country will face increasingly vigorous investigations in
light of the OECD report.
SAVAGE
“It does seem there’s going to
be more attention in this area
because it is a fact that jumps
out and strikes you.”
What this means, he said, is
that Canadian businesses will
need to realign their organiza-
tion’s fraud risk-management
strategy and also be extra vigi-
lant when recording the true
nature of their transactions, so
that they can defend against
accusations of bribery.
In the U.S., where there has
been more vigorous enforcement, a lot of the focus has been
on the books and records of
companies and how payments to
government officials are
recorded in the books, he said.
Canadian companies haven’t
had to deal with that in the past,
he said, because the law doesn’t
specifically address how they
established in 2008, presently
has two teams — one in Ottawa
and one in Calgary — that deal
with bribery offences.
But Duschek warned the per-
sonnel devoted to bribery inves-
tigations is “just a small fraction
of what’s necessary if they’re
must record such expenses in
their records.
