The considerable anti-bribery compliance challenges faced by Canadian companies are largely attributable to two factors. First, Canadian companies invest heavily in challenging markets, including the BRIC and MENA countries. In addition, Canadian companies are disproportionately represented in the extractive industries, which has given rise to 19% of all international ant-bribery enforcement actions.
Because of this risk profile, Canadian companies face a growing likelihood of enforcement actions. The proximity of Canada to U.S. Markets, the very high volume of cross-border business and the presence of Canadian companies on U.S. Stock exchanges increase the likelihood that Canadian companies will be caught in the expansive net of the U.S. Department of Justice and SEC and gradually increasing enforcement in the rest of the world adds to that risk. So why are so few Canadian companies taking anti-bribery compliance seriously, investing in widely-benchmarked and well-established “best practices”?
Most Canadian companies remain in a state of complacency because of the very low rate of enforcement by the Canadian authorities. Without the vast fines and frequent prison sentences for bribery that are splashed across U.S. newspapers, it’s possible that U.S. companies would be in a similar position. Since Canada’s accession to the OECD Anti-Corruption Convention, the Royal Canadian Mounted Police and the Office of the Canadian Attorney General combined have publicly investigated or prosecuted just eight companies.
Canada received kudos and lots of publicity when it prosecuted Niko Resources in 2011, precisely because this was such new ground. Prior to Niko, the only other post-Convention conviction secured by Canadian authorities was against Hydro Kleen in 2005. The fine imposed in that case was modest. (By contrast, the fine agreed to by Niko in its settlement with the RCMP was nearly C$10 million.) Canada has charged only a handful of companies and individuals to date and, according to the RCMP’s estimate earlier this month, there are just 34 potential enforcement actions in the pipeline.
Canada’s lackluster record of enforcement can be attributed in part to the limited jurisdiction under the Corruption of Foreign Public Officials Act. It is the only OECD country that requires a strict territorial nexus to the corrupt activity to confer jurisdiction. This imposes an impossibly high barrier to enforcement of the law in most cases and that, in turn, lulls companies into concluding that anti-bribery compliance need not be a priority.
Elsewhere, however, actions against Canadian companies do seem to be moving forward. These include investigations in Switzerland, India, Tunisia, Bangladesh and the U.S. These active investigations, along with the recent bad press and ensuing loss of shareholder value experienced by SNC-Lavalin, may finally begin to rattle Canadian corporate complacency. It is not too early for these companies to begin building meaningful anti-bribery compliance programs, with appropriate training, due diligence on third parties, transparency around both in-bound and out-bound gifts, hospitality and travel and sanctions for employees that disregard the policy. Of course, to secure the management commitment, budget and staff for a robust program, Canadian companies must first believe there is a credible threat of prosecution.
About the Author
Alexandra Wrage is the president of TRACE, an anti-bribery compliance organization offering practical tools and services to multinational companies. TRACE offers a range of compliance solutions and most recently launched TRAC, a groundbreaking and publicly accessible platform that establishes a global standard for baseline due diligence and makes the information available to companies at no cost.
Alexandra Wrage is is the president of TRACE International. She is also the author of Bribery and Extortion: Undermining Business, Governments and Security and the host of the training DVD Toxic Transactions: Bribery, Extortion and the High Price of Bad Business produced by NBC. Ms. Wrage has written three compliance guidebooks and is a guest blogger on the Huffington Post. She speaks frequently on topics of international law, anti-corruption initiatives and the hidden costs of corruption. Ms. Wrage currently serves on the Independent Governance Committee (IGC) of the Fédération Internationale de Football Association (FIFA), football’s governing body. She has previously served as Chair of the Anti-Corruption Committee of the ABA’s International Section and Chair of the International Legal Affairs Committee of the Association of Corporate Counsel. She has participated in anti-bribery working groups with the OECD and the UN Global Compact. Ms. Wrage was named one of the “Canadians Changing the World” by the Toronto Globe and Mail in 2011. Prior to founding TRACE, Ms. Wrage was international counsel at Northrop Grumman where she was responsible for managing and improving the company’s FCPA program, including policy revisions, training, monitoring and board briefings. Ms. Wrage, a Canadian, studied law at Kings College, Cambridge University. She is a member of the Maryland and District of Columbia bar associations.