Foreign Bribery Rules Will Now Apply to NGOs
By Arthur Drache C.M., Q.C.
One might be forgiven if the announcement that the government is tightening up the legislation Corruption of Foreign Public Officials Act (CFPOA) dealing with bribery of foreign officials was moved to the front burner because of a couple of high profile cases which hit the headlines of late. Most recently, Calgary-based oil firm Griffiths International Inc. disclosed that it had paid $2-million in February, 2011 to the wife of Chad’s then-ambassador to Canada to help secure oil and gas exploration contracts in the African country. The RCMP is also investigating a case involving SNC-Lavalin Inc. where it is alleged that employees of the company paid $160-million to get business in Moammar Gadhafi’s Libya, including buying luxury yachts for Saadi Gadhafi, the son of the late dictator, according to warrants that were unsealed in January.
But is it important for NGOs to be aware that CFPOA will now apply to them.
Of course, many assume (rightly or wrongly) that NGOs operate on a higher ethical plane than do commercial enterprises. But the fact of the matter is that while they won’t make any public admission about the practice, some NGOs operating abroad do have to make payments to officials of those countries to facilitate their work.
A couple of years ago, The OECD issued a report which heavily criticized Canada’s record in terms of foreign corruption. One of the recommendation in that report said that Canada should amend its CFPOA legislation so it applies to bribery related to all international business, not just business “for profit.” This clearly was a suggestion that the legislation should apply to NGOs.
In the first week of February, amendments to CFPOA were introduced in the Senate and one of the amendments involved removing the words “for profit” in the definition of business to ensure that the act applies to all business.
The revised legislation also makes it clear that even if the offence took place in a jurisdiction other than Canada, it would be deemed to have taken place in Canada.
The new law will also deals with so-called “facilitation payments” money paid to foreign officials even if it’s not directly linked to gaining a business deal or advantage. Those payments, technically different from a bribe, will not be immediately made illegal, but the government will outlaw them at a later date, presumably to give companies warning of the changing rules.
The new law will also make it an explicit criminal offence for companies to hide bribery on their own books.
Now we have a situation where if an NGO or its employees or agents makes a payment to a foreign official, no matter how necessary such a payment might be to facilitate the charitable or humanitarian work it is involved with, it opens itself up to what amount to criminal sanctions in Canada.
And give the OECD report and the words of the legislation defining “business” it seems clear that it is the intention to extend the rules to NGOs and not a “drafting error”.
Canadian NGOs (not just charities) operating abroad should take note of the changes which are coming to the law and should take steps to let their employees and agents know what the consequences of making such payments could be.