Stephen Natrass writes about the the first trial under Canada's Corruption of Foreign Public Officials Act (CFPOA) which recently concluded with a conviction on August 15, 2013.
Mr. Justice Hackland of the Ontario Superior Court found Nazir Karigar guilty of agreeing with others to offer a bribe to an Air India and another Indian government official, contrary to the CFPOA.
Although three companies have previously pleaded guilty under the CFPOA, this is the first case to go to trial and the first conviction of an individual under the CFPOA. The decision gives a broad interpretation to the elements of a bribery offence. In particular, the rulings on what is required to prove a conspiracy and to agree to payment of a bribe will undoubtedly be looked upon favourably by the Crown, and more charges under the CFPOA offences will likely follow.
The bribery scheme
Nazir Karigar is a Canadian businessman who worked in Ottawa for the security company CryptoMetrics Canada to help it win a bid to sell facial recognition technology to Air India. Much of the oral evidence at trial was from Karigar’s co-conspirator, Robert Bell, who was the VP, business development at CryptoMetrics. Extensive email records also provided evidence of the agreement to bribe at least two Indian public officials.
In April 2006, Karigar met colleagues in India to determine how to win the Air India bid, and the issue was raised that Indian officials would have to be paid in order to win. Shortly thereafter, Karigar gave Bell spreadsheets listing various Air India officials and how much money and how many company shares each official should be offered.
CryptoMetrics USA transferred $200,000 to Karigar’s Indian bank account in June 2006, following an email in which Karigar stated that the money was needed to pay an Air India official. The money was intended to bribe Captain Mascarenhas, who was the co-chair of the Air India selection committee.
In August 2006, CryptoMetrics was shortlisted as one of two qualified bidders. There was no conclusive evidence that Captain Mascarenhas ever actually received the money. In March 2007, the CEO of CryptoMetrics USA entered into an agreement with Karigar to transfer $250,000 USD to his Indian bank account in order to “secure the Air India contract.” If the contract was not won, the money would be returned to the company.
In May 2007, Karigar met with a Canadian trade commissioner in Mumbai and told her that CryptoMetrics used an agent to pay a bribe to the Indian minister of civil aviation in order to finalize the contract. The Air India contract was never finalized.
Karigar emailed the fraud section of the US Department of Justice in August 2007, with a short description of the bribery scheme and a request for immunity. Justice Hackland agreed with Karigar’s defence counsel that the evidence did not prove that bribes were actually paid to specific public officials. However, he found that the evidence proved beyond a reasonable doubt that Karigar conspired with others at CryptoMetrics to offer bribes to obtain the Air India contract.
Justice Hackland stated that requiring proof of the offer or receipt of a bribe, and the identity of a specific foreign public official, would be too burdensome and make the CFPOA difficult to enforce given the difficulties in obtaining evidence from some foreign jurisdictions.
Agreeing to give or offer a bribe
The offence of bribery at s. 3 of the CFPOA includes a person 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” in order to induce the official to influence an act or decision.
This language has never before been judicially considered in Canada. Karigar’s defence counsel argued that the word “agrees” required an agreement between the person paying the bribe and the person receiving the bribe, which was not proven on the evidence at trial.
The Crown argued that receipt of a bribe is not required to prove a bribery offence, but rather that a conspiracy or agreement to bribe a foreign public official is sufficient. Justice Hackland found that the action required to prove the “agrees” element of the offence is a conspiracy to pay a bribe and a belief that a bribe was paid to a foreign public official. Any agreement between two people to make or offer a bribe is sufficient. The Crown is therefore not required to prove that a bribe was actually paid to a foreign public official who had the ability to offer a business advantage. This makes it easier for the Crown to prove bribery offences, because it would often be difficult to prove that a foreign official actually agreed to receive a bribe and the official actually received the payment. This also makes it easier to prove bribery offences because the Crown does not have to prove the identity of a particular recipient of the intended payment.
A real and substantial link to Canada
Karigar also argued that Canada did not have territorial jurisdiction to try the offence. The CFPOA applicable at the time of trial required the Crown to prove a “real and substantial link” between the alleged offences and Canada (based on the Supreme Court of Canada’s decision in Libman v The Queen,  2 SCR 178. 2). The defence argued that most of the elements of the offence were required to have occurred in Canada. Based on the defence’s view, there would not have been sufficient connection to Canada because the dealings with Air India officials were mostly in India, the payments were made from the US by CryptoMetrics USA, and any unlawful consequences of the offence would occur in India.
Justice Hackland found that the real and substantial connection test is not limited to a finding that the essential elements of the offence occurred in Canada. Rather, a real and substantial link to Canada existed because Karigar was a Canadian resident for many years, he was employed or acted as an agent for CryptoMetrics Canada, he contemplated obtaining work for a Canadian company through bribery, much of the work under the potential Air India contract would have been done by employees in Canada, and most of the documents and emails were seized in Canada.
This is a broad interpretation of the real and substantial link test. Despite this recent interpretation, amendments to theCFPOA in June 2013 will make it easier to prosecute bribery offences by creating jurisdiction over Canadian citizens, permanent residents, and businesses organized under federal or provincial laws wherever they are in the world. The Crown is no longer required to prove a real and substantial link to Canada.
Karigar’s sentencing hearing has not been set, but he faces up to five years’ imprisonment (note that after the June 2013 amendments to the CFPOA, the maximum penalty for an individual is 14 years’ imprisonment). Once the sentence is determined, Karigar could also appeal the decision. This case was a test for the Crown to see how the judiciary would interpret the CFPOA. Given the broad interpretation of the elements of the offence of bribery, and the recent amendments to the CFPOA, we expect that the Crown will increase prosecutions of both individuals and corporations for bribery and the new books and records offence under the amended CFPOA. Stephen Nattrass Footnotes