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Ethics Canada cracks down Why anti-corruption compliance programs are more important than ever for corporations doing business outside the country. By Christa C.Wessel effective co-ordination among In addition,Niko Resources will be sub- various agencies to carry out ject to a three-year probation period, dur- CFPOA investigations. The ing which the court will supervise Niko’s OECD’s Working Group was compliance with the CFPOA through so concerned that it requested that audits and reports conducted by an inde- Canada report back on its progress in pendent third party at Niko’s expense. anada has long suffered from a dismal October 2011. While the conviction was a long time in Crecord of enforcing its international Among G7 countries, Canada also came coming, the results are significant for anti-bribery laws. But the $9.5-million set- last in Transparency International’s OECD Canadian corporations doing business out- tlement in June 2011 of the bribery case Anti-Bribery Convention Progress Report side Canada. against Calgary-based Niko Resources is a published in May 2011.The report headline For corporations the case highlights the signal from Canadian authorities that those describing Canada’s efforts was “Little or need for rigorous compliance and ethics days are over. no enforcement.” Previous Transparency program measures. Specifically the proba- In the 12 years since Canada ratified the International reports had called Canada a tion order requires that Niko Resources OECD Anti-Bribery Convention, there “laggard”and identified it as one of 20 or so strengthen its compliance, record-keeping had been only one conviction under the OECD countries making little or no effort and internal control standards and proce- Canadian Corruption of Foreign Public to enforce its anti-corruption commitment. dures.The probation order is quite specific Officials Act, 1998 (CFPOA), the country’s Whether by design or not,the timing of in detailing the requirements, and includes primary legislation dealing with Canadians the June settlement in the Niko Resources requirements similar to those imposed participating in corruption overseas. case is fortuitous. by the U.S. Department of Justice under In 2005, Alberta-based Hydro-Kleen The company admitted in Federal Foreign Corrupt Practices Act (FCPA) by the Group Inc., its president and an employee, Court that it had bribed a Bangladeshi U.S. Federal Sentencing Guidelines. were charged under the CFPOA for bribing minister in 2005 following an explosion at Specifically, the Niko Resources probation a U.S. customs official.The company plead- one of its natural gas fields, in an effort to order requires the following: ed guilty and was ordered to pay a $25,000 get favourable treatment.The bribes,total- fine,which the OECD considered to be not ing $195,000 were also tied to the negoti- 1. A system of internal accounting controls “effective, proportionate or dissuasive.” ation of a gas purchase contract.Niko pro- designed to ensure the company makes Since 1998,Canada has been the subject vided the minister with a luxury SUV and keeps fair and accurate books,records of three reviews by the OECD’s Working worth $190,000 and paid for non-business and accounts; Group on Bribery, the most recent of expenses for trips to Calgary, New York 2. A rigorous anti-corruption compliance which was published in March 2011. and Chicago. code,standards and procedures designed All three reports have been critical of The Alberta Court of Queen’s Bench to detect and deter violations of the Canada’s track record. They point to ordered Niko Resources to pay a fine in CFPOA and other applicable anti-cor- Canada’s poor legislative and institutional the amount of $8.6-million plus a victim ruption laws; framework for implementing the OECD surcharge of 15 per cent, for a total of 3. Compliance standards and procedures, Convention,its lack of committed resources $9.5-million. including internal controls, ethics and for coping with the substantial body of cases This is far above the $25,000 fine levied compliance programs on the basis of a that is expected to proceed to the prosecu- against Hydro Kleen and should serve as a risk assessment addressing the foreign ISTOCKPHOTO tion stage and lack of clarity concerning significant deterrent. bribery risks facing the company; 12 CCCA Canadian Corporate Counsel Association FALL 2011