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Tuesday, July 2, 2013

Corporate Criminal Liability for Bribery of Foreign Public Officials by Employees

This article looks at the nature of corporate liability for corrupt acts of employees in international business operations, in the context of the Canadian anti-bribery legislation, the Corruption of Foreign Public Officials Act [CFPOA].

There is a steady increase in the Royal Canadian Mounted Police’s international anti-bribery efforts pursuant to the CFPOA. Given Canada’s increased dedication to implementing the CFPOA, it is important for corporations to understand and address their risks of criminal liability.

The CFPOA makes it an indictable offence for an individual or organization to (i) directly or indirectly (ii) offer or give or agree to offer or give (iii) an advantage or benefit (iv) in order to obtain or retain an advantage in the course of business (v) to a foreign public official or to any person for the benefit of the foreign public official (vi) either as consideration for, or to induce an act or omission by the foreign public official.

While it is clear that the CFPOA establishes corporate criminal liability for the offence of bribing a foreign public official because corporations are legal persons, it is less clear how criminal liability attaches to corporations for bribery committed by their employees who are not the “directing minds” of the organization. This is particularly significant in corporate structures where employees exercise authority and discretion in their interactions with foreign public officials. It is necessary for corporations to implement adequate measures to guard against employee briberyabroad in order to steer clear of the CFPOA violations.

However, such due diligence may not be sufficient to protect corporations from criminal liability. Although Canadian courts have yet to address corporate criminal liability under the CFPOA, there is jurisprudence with respect to Criminal Code [Code] offences that establishes corporate criminal liability for crimes committed by employees regardless of corporate due diligence. That is, regardless of whether or not the corporation had policies and procedures in place and had instructed the employee not to commit the offence.

General criminal law concepts apply to the bribery offence created by the CFPOA. Accordingly, it is worth reviewing the criminal law concept of corporate criminal liability.

Bribery Is a True Crime with No Defence of Due Diligence

Criminal law recognizes three types of crimes: (1) absolute liability offences; (2) strict liability offences; and (3) mens rea offences, which are also known as true crimes. Criminal Code bribery is a true crime. It requires both actus reus (act or omission) and mens rea (mental element), and there is no defence of due diligence.

Although there is no jurisprudence establishing that bribery under the CFPOA is also a true crime, it is likely that this is the case, given the parallel language used for the Code and CFPOA bribery offences. In terms of corporate criminal liability for true crimes, the Supreme Court of Canada has held that the presence of either general or specific instructions to employees prohibiting the criminal conduct in question is irrelevant and has no effect in law in protecting the corporation from criminal liability.

Corporate Criminal Liability for Acts of Employees

Corporate criminal liability attaches to an organization through the acts and intentions of its seniorofficers acting within the scope of their authority. In 2004, Parliament amended the Code to legislate the circumstances under which a corporation can be found guilty for a crime committed by an employee. First, it must be proven beyond a reasonable doubt that the corporation’s senior officer was acting with the intent, in whole or in part, to benefit the organization. Next, it must be proven on the same standard of culpability that the senior officer was a party to the offence, acting within the scope of his or her authority; directed the work of other representatives of the corporation so that they commit the offence, having the mental state required to be a party to the offence and acting within the scope of his or her authority; or failed to take all reasonable measures to stop a representative of the corporation from being a party to the offence, knowing that he or she was a party or was about to be a party to the offence.

The Code defines “senior officer” as any director, partner, employee, agent, or contractor who plays an important role either in establishing the organization’s policies or managing an important aspect of the organization’s policies or activities. It is clear that the criminal law definition of “senior officer” is more expansive than the corporate law concept. It pushes corporate criminal liability down to lower levels of management of a corporation in appropriate circumstances.

For an employee to be acting within the scope of his or her authority means acting within the sector of the corporate operation to which the employee is assigned. This is a broad concept that catches many, if not most, corporate functions. Therefore, it is possible that a senior officer working abroad who is responsible for managing an important aspect of the organization’s activities can attract corporate criminal liability if he or she bribes a foreign public official.

Any member of the corporation, no matter the level, who commits a crime may attract corporate criminal liability if asenior officer was aware of the offence and failed to take reasonable measures to stop it. The scope of “reasonable measures” has yet to be judicially considered.

Corporate Criminal Liability Pursuant to the CFPOA for Acts of Employees

The U.K. Bribery Act does not afford corporations a due diligence defence with respect to the offence of bribing a foreign public official. However, it explicitly affords corporations a due diligence defence with respect to the offence of failing to prevent bribery. This means that even if the corporation committed the actus reus of the offence by failing to prevent bribery, it will be acquitted if it had adequate procedures in place to prevent the offence.

The Code and CFPOA do not explicitly afford corporations the defence of adequate measures with respect to bribery; nor does the U.S. Foreign Corrupt Practices Act. While anti-bribery policies and procedures are excellent starting points, it is clear that compliance requires more—with proper training, communication, monitoring, and follow-up being critical to avoiding the reputational and legal risks associated with being investigated for and charged with corrupt practices.

It remains unclear whether anti-bribery policies and procedures will be sufficient to protect corporations from criminal liability for acts committed by their employees contrary to the CFPOA. Nevertheless, a robust CFPOA compliance program is necessary to managing risks presented by certain business activities so that employees do not commit bribery.


Isa le said...

While corruption is pervasive, it is more endemic and developmentally corrosive in our African continent. This legislation may provide room to prosecute Canadian companies involved in corrupting public officials in African countries and thereby reduce corruption.

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