On May 23, 2014, the first individual in Canada ever convicted of violating Canada’s Corruption of Foreign Public Officials Act (the “CFPOA”) was sentenced to three years in prison. The individual, Nazir Karigar, was convicted of offering or agreeing to bribe a foreign official in contravention of the CFPOA on August 15, 2013, following a contested trial. The sentence demonstrates that Canadian Courts will treat bribing foreign public officials as a serious crime in Canada. The significant sentence also raises the issue of whether Canada should have a more formal leniency process to encourage cooperation by rewarding companies and individuals for self-reporting transgressions under the CFPOA – as it does under Canada’s Competition Act.
Facts and Conviction
Mr. Karigar was hired by Cryptometrics Canada, a subsidiary of Cryptometrics US, based in New York. Mr. Karigar was to offer strategic advice on winning a bid issued by Air India to provide the airline with a facial recognition security system. Cryptometrics, US, in an attempt to secure this contract, transferred $450,000 from its US account to the account of Mr. Karigar who, in turn, offered this amount in bribes to the Indian Minister of Civil Aviation and officials of Air India, which is owned and controlled by the Government of India.
In the end, Cryptometrics Canada’s bid for the supply contract was unsuccessful. There was no evidence of what became of the $450,000 transferred to Mr. Karigar. Accordingly, there was no evidence that a bribe was actually accepted by a foreign public official. The Court nevertheless convicted Mr. Karigar because he agreed with others to offer a bribe to a foreign public official, and the CFPOA makes it a criminal offence if one “agrees to give or offer…an advantage or benefit of any kind.” In other words, it was sufficient for the Crown to prove only that Mr. Karigar believed that a bribe was paid to a public official.
Will Canada Adopt A Formal CFPOA Immunity and/or Leniency Program?
In sentencing Mr. Karigar, the presiding judge, Justice Hackland, emphasized general deterrence and the seriousness of crimes under the CFPOA. The CFPOA came into force in 1999. Until this sentence, however, the penalty Canadian Courts were prepared to impose on individuals for CFPOA violations was unclear (in this case, the defence sought a conditional discharge; the Crown, a four year prison term). The maximum prison sentence that Mr. Karigar could have received was five years in prison.
It is further noteworthy that the CFPOA was amended in June 2013, raising the maximum prison term for CFPOA crimes to 14 years. In contrast, the current maximum prison term for bribery of foreign public officials under the FCPA is 5 years; the U.K. Bribery Act, 10 years. Mr. Karigar was sentenced under the older version of the CFPOA given the time period his crimes were committed. It is unclear whether the Crown would have sought a longer prison term, and whether the Court would have granted a longer prison term, had the current version of the CFPOA applied to Mr. Karigar’s case. This is particularly noteworthy for pending CFPOA cases where individuals are charged.
The significant sentence raises the issue of whether Canada should have a more formal immunity and/or leniency process to encourage cooperation by rewarding companies and individuals for self-reporting transgressions under the CFPOA. Currently, no formal, transparent process exists as compared to the voluntary disclosure mechanisms set out by other government agencies, such as the Competition Bureau. Mr. Karigar may have availed himself of such a program had one existed in Canada.
The Competition Bureau’s immunity and leniency programs are generally regarded as the most effective tools for detecting and investigating criminal anti-competitive activities prohibited by the Competition Act. Under the Immunity Program, the first party to disclose to the Competition Bureau an offence not yet detected or to provide evidence leading to the filing of charges may receive immunity from prosecution from the Director of Public Prosecutions of Canada as long as the party co-operates with the Bureau. Under its Leniency Program, the Competition Bureau will recommend to the Public Prosecution Service of Canada that qualifying applicants be granted recognition for timely and meaningful assistance to the Bureau’s investigation and any subsequent prosecution. Leniency candidates are not eligible for a grant of immunity under the Bureau’s Immunity Program but their early admission and cooperation can earn them a substantial basis for lenient treatment in sentencing.
An anti-corruption immunity or leniency program, however, is not without difficulty. For example, under the FCPA, a common reward for voluntary disclosure is a deferred prosecution agreement, whereby the prosecution files criminal charges in court against the cooperating entity together with a concurrent request to defer the prosecution. If the cooperating entity fails to comply with the deferred prosecution agreement, the prosecutor can proceed with the charges. If the cooperating entity fully complies, the charges would be dismissed. Deferred prosecution agreements afford cooperating entities an opportunity to avoid prosecution. However, they can also expose these entities to broad ongoing investigations disproportionate to the self-reported offence, significant monetary penalties and potential follow-up civil litigation. Deferred prosecution agreements are, to date, not available in Canada. However, leniency programs, in whatever form, raise similar challenges, and a formal CFPOA leniency program, if implemented, would be no exception.
Given the significant penalties arising from CFPOA convictions, the time has come for more discussion regarding a formal CFPOA immunity and/or leniency program.