Canada’s Fight against Foreign Bribery

Nineteenth Annual Report to Parliament

Implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Enforcement of the Corruption of Foreign Public Officials Act

(September 2017 – August 2018)

Highlights – September 2017 to August 2018

• Canada (along with Korea) continued its duties as co-lead examiner for the OECD Working Group on Bribery (Working Group)’s Phase 4 review of Australia’s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention). This included reviewing the draft report and facilitating its ultimate adoption at the Working Group’s December 2017 plenary session. Canada is also scheduled to serve as co-lead examiner (along with Switzerland) with respect to France’s phase 4 review (to be presented to the Working Group in June 2020) and to be subject to its peer review (to be co-led by Austria and the United Kingdom), which is scheduled to be presented to the Working Group in June 2021.
• The RCMP continued to deliver its ambitious awareness-raising program, conducting over 75 anti-corruption-related training sessions and/or lectures to various target groups during the reporting period. One of the RCMP’s most progressive initiatives has been the Global Anti-Corruption University Project. The Project now involves students working with real Small and Medium-sized Enterprises to develop compliance-related programs and tools.
•  The “facilitation payments” exception was removed from the Corruption of Foreign Public Officials Act (CFPOA). Such payments are now included under the foreign bribery offences listed in the CFPOA.
• A remediation agreement (RA) regime has been enacted through the creation of a new Part (Part XXII.1) of the Criminal Code. An RA is a new tool available for use by prosecutorial authorities – at their discretion, in the public interest and in appropriate circumstances – to address corporate criminal wrongdoing.It is an agreement, between an organization accused of committing a listed offence and a prosecutor, to stay any proceedings related to that offence, if the organization complies with the terms of the agreement.

Background

On December 17, 1997, Canada signed the OECD Convention^{Footnote i} and Parliament passed the CFPOA to implement Canada’s obligations under the OECD Convention into Canadian law.^{Footnote ii} With the adoption of the CFPOA, which received Royal Assent on December 10, 1998, the Government of Canada deposited its instrument of ratification with the OECD on December 17, 1998, thereby becoming a party to the OECD Convention and triggering its coming into force on February 15, 1999.^{Footnote iii} The CFPOA came into force on February 14, 1999.

The OECD Convention

The OECD Convention aims to stop the flow of bribes and to remove bribery as a non-tariff barrier to trade, producing a level playing field in international business. To date, 44 states have ratified the OECD Convention, including all 36 member states of the OECD and eight non-member states: Argentina, Brazil, Bulgaria, Colombia, Costa Rica, Peru, Russia, and South Africa.^{Footnote iv} Since the OECD Convention entered into force, over 350 individuals and over 130 entities have been sanctioned under criminal proceedings for foreign bribery in over one-third of States Parties. Of those, over 100 of the sanctioned individuals have been sentenced to prison. Based on the most recent enforcement data, published in November 2017, there are currently over 500 investigations and over 140 prosecutions ongoing in States Parties relating to offences under the OECD Convention.^{Footnote v}

• Companion Instruments

The OECD Convention is supplemented by a number of companion instruments:

The 2009 Recommendation – The OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions^{Footnote vi} (2009 Recommendation) was adopted by the OECD Council^{Footnote vii} on November 26, 2009, and released on December 9, 2009 on the tenth anniversary of the OECD Convention. The 2009 Recommendation aims to strengthen mechanisms for the prevention, detection, and investigation of foreign bribery.
Guidelines for Multinational Enterprises – The OECD Guidelines for Multinational Enterprises (Guidelines), which were updated in May 2011, contain guidance regarding corporate social responsibility (CSR) aimed at multinational enterprises investing abroad. The Guidelines are supported by National Contact Points (NCPs), offices established by adherents to implement and raise awareness of the Guidelines. In February 2018, Canada’s NCP underwent a voluntary peer review to map its strengths and accomplishments, while also identifying opportunities for improvement.  The results should be made public in late 2018.

Other companion instruments include the OECD Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions^{Footnote viii}  and the Convention on Mutual Administrative Assistance in Tax Matters;^{Footnote ix} the OECD Recommendation on Bribery and Officially Supported Export Credits;^{Footnote x} and the Recommendation on Anti-Corruption Proposals for Bilateral Aid and Procurement.^{Footnote xi}

• The Mandatory Peer Monitoring Process

The OECD Convention provides for mandatory peer evaluation by Members of the Working Group on the enforcement and implementation, by States Parties, of the OECD Convention and the 2009 Recommendation. The Working Group is comprised of representatives from the States Parties to the OECD Convention.^{Footnote xii} The purpose of ongoing mutual evaluations of the implementation of the Convention and the 2009 Recommendation is to maintain an up-to-date assessment of the structures put in place to enforce related laws and rules and their application in practice.

The peer review monitoring system has, thus far, been carried out in three phases. Phase 1 is designed to evaluate whether the legal frameworks through which participants implement the OECD Convention meet the standards set by it.^{Footnote xiii} Phase 2 studies and assesses the structures put into place to enforce national laws and determine their practical application.^{Footnote xiv} Phase 3 is intended to be more focused than the Phase 2 evaluation, concentrating on progress made by the States Parties on the recommendations made during Phase 2, on issues raised by changes in domestic legislation or institutional frameworks of the States Parties, and on enforcement efforts, results and other horizontal issues.^{Footnote xv}

Phase 4 was launched in March 2016. As well as focusing on key horizontal issues, it endeavours to take a tailor-made approach, considering each country’s unique situation and challenges, progress made on weaknesses identified in previous phases of evaluation, enforcement efforts and results, and any issues raised by changes in the domestic legislation or institutional framework of each State Party.

• Canada and the Peer Review Process

As a State Party to the OECD Convention, Canada is committed to, and actively participates in, the peer review mechanism as a lead examiner, evaluated country, and member of the Working Group. Between September 2017 and August 2018, Canada’s participation included the following:

Canada as Lead Examiner – Canada (along with Korea) continued its duties as co-lead examiner for the Working Group’s Phase 4 review of Australia’s implementation of the OECD Convention. This included drafting and reviewing the report, and facilitating its adoption, which took place at the Working Group’s December 2017 plenary session. Canada will also serve as co-lead examiner (along with Switzerland) with respect to France’s phase 4 review, which is scheduled to be presented to the Working Group in June of 2020. Preparatory work towards the report is expected to start in early 2019.

Although it was completed in June 2017, Canada continues to fulfill its co-lead examiner responsibilities (along with Norway) in relation to ongoing follow-up with respect to the Working Group’s Phase 3 evaluation of Japan.

Canada as Evaluated Country –The Working Group’s Phase 4 peer review of Canada is scheduled to be presented to the Working Group in June 2021. Preparatory work on the report can be expected to start in early 2020. Co-lead examiners will be Austria and the United Kingdom.

In addition to its ongoing participation in the mandatory peer review process, Canada continues to provide publicly-available information on its law enforcement efforts and on relevant legislative developments each December in the context of the Working Group’s “Tour de Table” exercise.

The Corruption of Foreign Public Officials Act

The CFPOA criminalizes the bribery of a foreign public official and the maintaining or destruction of books and records to facilitate or hide the bribing of a foreign public official. Canada also criminalizes a conspiracy or attempt to commit those offences, as well as aiding and abetting in committing those offences, an intention in common to commit those offences and counselling others to commit those offences. Laundering property and proceeds of such offences, as well as possession of property and proceeds, are offences under the Criminal Code.^{Footnote xvi}

There were relevant legislative developments during the reporting period. The “facilitation payments” exception was removed from the CFPOA by Bill S‑14: An Act to amend the Corruption of Foreign Public Officials Act. The repeal came into force on October 31, 2017 and such payments are now included under the foreign bribery offences listed in the CFPOA.
Also, the Government of Canada established a Remediation Agreement (RA) framework. The RA regime was enacted through the creation of a new Part (Part XXII.1) of the Criminal Code by way of Bill C-74, the Budget Implementation Act, 2018, No. 1, which received Royal Assent on June 21, 2018 and came into force on September 19, 2018.

An RA is a new tool available for use by prosecutorial authorities – at their discretion, in the public interest and in appropriate circumstances – to address corporate criminal wrongdoing. It is an agreement, between an organization accused of committing a listed offence and a prosecutor, to stay any proceedings related to that offence, if the organization complies with the terms of the agreement.
The regime features a set of objectives, including: denouncing wrongdoing; holding the organization to account through effective, proportionate and dissuasive penalties; promoting a culture of compliance; enhancing the detection of related crimes by encouraging the voluntary disclosure of wrongdoing and requiring that the organization help identify individuals so that they may be prosecuted; providing reparations for harm done to victims or the community; and reducing the negative consequences of prosecution and conviction of an organization for those who are innocent of the wrongdoing such as employees, customers and pensioners.
An RA must be approved by the court for it to enter into force. Before approving the agreement, the court must be satisfied that the organization is charged with a listed offence to which the agreement applies, the agreement is in the public interest and the terms of the agreement are fair, reasonable and proportionate to the gravity of the offence.
Offences under the CFPOA are included as listed offences. Under the regime, with respect to an offence under the CFPOA, a victim includes any person outside of Canada. As well, the prosecutor must not consider the national economic interest, the potential effect on relations with a state other than Canada or the identity of the organization of individual involved as a relevant factor in deciding whether to enter into negotiations for an RA with an organization alleged to have committed a CFPOA offence.
As described below, Canada continues to take significant steps to further deter Canadian companies and persons from paying bribes to foreign public officials in the course of business. As part of these efforts, the Government of Canada has been conducting outreach to enhance awareness and to encourage companies to adopt measures that can effectively implement their legal obligations with a zero-tolerance approach to the bribery of foreign public officials.

• Investigations and Prosecutions

There have been four convictions under the CFPOA to date and there are three ongoing cases in which charges have been laid but not yet concluded.^{Footnote xvii}

Ongoing Matters

SNC-Lavalin Group Inc. – On February 19, 2015, Groupe SNC-Lavalin Inc. and two of its subsidiaries, namely, SNC-Lavalin Construction Inc. and SNC-Lavalin International Inc., were charged with one count of bribery contrary to paragraph 3(1)(b) of the CFPOAand one count of fraud contrary to paragraph 380(1)(a) of the Criminal Code. The charges relate to the alleged payment of bribes to secure an advantage for the company in relation to major construction projects in Libya. In addition, the company and its subsidiaries are charged with defrauding the Great Socialist People’s Libyan Arab Jamahiriya, the Management and Implementation Authority of the Great Man Made River Project of Libya, the General People’s Committee for Transport Civil Aviation Authority of Libya, Lican Drilling Co. Ltd., and the Organization for Development of Administrative Centers of Benghazi in Libya in the amount of $129,832,830.

Sami Bebawi, Constantine Kyres and Stéphane Roy – On January 31, 2014, charges were laid against two former SNC Lavalin executives, Sami Bebawi and Stéphane Roy, with respect to allegations of bribes to foreign public officials in Libya. Sami Bebawi has been charged with one count of fraud over $5,000, two counts of possession of proceeds of crime, four counts of possession of stolen property, and one count of bribery of a foreign public official (pursuant to subsection 3(1) of the CFPOA). Sami Bebawi was subsequently charged on September 9, 2014 with one count of obstructing justice. Constantine Kyres, the lawyer of Sami Bebawi, was also charged on September 9, 2014, with one count of obstructing justice and one count of extortion. Stéphane Roy has been charged with one count of fraud over $5,000 and one count of bribery of a foreign public official pursuant to subsection 3(1) of the CFPOA.

Robert Barra, Dario Berini, and Shailesh Govindia – On June 4, 2014, U.S. nationals Robert Barra (former Cryptometrics Chief Executive Officer (CEO)) and Dario Berini (former Cryptometrics Chief Operating Officer (COO)) and U.K. national Shailesh Govindia (an agent for Cryptometrics) were charged with agreeing to pay bribes to Indian officials in violation of the CFPOA.  Mr. Govindia is also charged with one count of fraud under section 380 of the Criminal Code. On January 13, 2015, a new information was sworn to replace the fraud charge against Mr. Govindia with a charge of theft under section 334 of the Criminal Code. The charges against these individuals flow from the same events that led to the conviction of Nazir Karigar (see under Matters Concluded below). In 2006, Cryptometrics Canada Inc. tendered a contract with Air India for a Biometric Passenger Security System valued at approximately $100 million USD. Evidence gathered and later presented at trial revealed an agreement by Nazir Karigar, an agent for Cryptometrics, to pay millions of dollars in bribes to Indian public officials for the purpose of securing a contract with Air India. While the initial investigation led to a conviction of Nazir Karigar, the second phase of the investigation focused on the activities of the former CEO and COO of the company. All three accused are currently before the courts.

Matters Concluded

Larry Kushniruk – In December 2016, Larry Kushniruk, president of Canadian General Aircraft in Calgary, was charged with agreeing to offer a bribe to Thai officials in order to secure the sale of a commercial jet from Thailand’s national airline, in violation of subsection 3(1) of the CFPOA. Charges against Mr. Kushniruk were stayed in November 2017.

Kevin Wallace, Zulfiquar Ali Bhuiyan, and Abul Hasan Chowdhury – On September 16, 2013, charges were laid against Kevin Wallace, Zulfiquar Ali Bhuiyan and Abul Hasan Chowdhury. It was alleged that the three individuals agreed, with others, to pay bribes to officials in Bangladesh in relation to the construction of the Padma Multipurpose Bridge Project. The prosecution against Abul Hasan Chowdhury was stayed on April 28, 2014. Several delays were encountered pending the 2016 decision by the Supreme Court of Canada on the World Bank’s privileges and immunities in relation to information it had referred to the RCMP about the foreign bribery allegations.^{Footnote xviii}  In January 2017, the Ontario Superior Court of Justice ruled that wiretap evidence obtained in this case was not admissible. As a result, the prosecution elected to call no evidence and Kevin Wallace and Ali Bhuiyan were acquitted.

Ramesh Shah and Mohammad Ismail – On February 29, 2012, the RCMP arrested, and on April 11, 2012, jointly charged, two former employees of SNC Lavalin, Ramesh Shah of Oakville, Ontario, and Mohammad Ismail of Mississauga, Ontario, for allegedly paying bribes in relation to the awarding of a contract for supervision and consultancy services for the construction of the Padma Multipurpose Bridge Project in Bangladesh and thereby committing an indictable offence contrary to paragraph 3(1)(b) of the CFPOA. A preliminary inquiry took place in April 2013, and both accused were committed to stand trial. The charge against Mohammad Ismail was stayed on November 27, 2015. In January 2017, the Ontario Superior Court of Justice ruled that wiretap evidence obtained in this case was not admissible. As a result, the prosecution elected to call no evidence and Ramesh Shah was acquitted.

Nazir Karigar – On August 15, 2013, Nazir Karigar was convicted by the Ontario Superior Court of Justice for agreeing with others to offer bribes to foreign public officials contrary to paragraph 3(1)(b) of the CFPOA. The RCMP laid charges against Nazir Karigar under the CFPOA, on May 28, 2010, for making a payment to Indian government officials to facilitate the execution of a multi-million dollar contract for the supply of a security system by Cryptometrics, a Canadian high-tech firm. On May 23, 2014, Nazir Karigar was sentenced to three years imprisonment. The conviction marked the first time that an individual was convicted under the CFPOA, and the first time that a matter had gone to trial under the CFPOA.

On July 6, 2017, the Ontario Court of Appeal in R. v. Karigar dismissed the appellant’s appeal from his 2013 conviction for agreeing to offer a bribe to a foreign public official contrary to section 3 of the CFPOA. The Court recalled the Supreme Court of Canada’s comments on the significance of corruption in international business practices (in World Bank Group v. Wallace). It found that the trial judge was clearly entitled to look at the OECD Convention and the anti-corruption policy that it represents as part of the context for interpretation of the CFPOA and that to read in the statutory limitations that were urged by the appellant would have constrained the ability of the Crown to enforce the policy of the CFPOA in accordance with Canada’s international obligations.

The Court agreed with the trial judge’s application of the common law “real and substantial link” test in finding that Canada had jurisdiction over the offence (the conduct having occurred prior to the 2014 enactment of jurisdiction over CFPOA offences on the basis of nationality). The Court did not agree with the appellant that “agreeing” to offer a loan, reward, advantage or benefit requires proof of an agreement between the accused and the foreign public official. It further rejected the notion that there must be evidence that the foreign public official had the ability to influence decision-making, holding that the foreign bribery offence only requires proof of an agreement to bribe a foreign public official, and does not require proof that the official has any particular power or authority. The Court held that the foreign bribery offence is clearly committed when a person agrees with a foreign public official to give that official a benefit, but, equally clearly, when there is an indirect agreement to give or offer an advantage. In other words, there is no limiting language on who must “agree”; the offence requires only that the loan, reward, advantage or benefit that is the subject of the agreement be made to, or to another person for the benefit of, a foreign public official.

Mr. Karigar sought leave to appeal to the Supreme Court of Canada, which was denied in March 2018.

Griffiths Energy International Inc. – Griffiths Energy International Inc., a privately-held oil and gas company based in Calgary, pleaded guilty on January 22, 2013 to one count of bribery under the CFPOA and was sentenced on January 25, 2013 to pay a $9,000,000 fine with a 15% victim surcharge, for a total financial penalty of $10,350,000, the largest to date under the CFPOA, in relation to its dealings in Chad.

Niko Resources Ltd. – Niko Resources Ltd. is a publicly-traded company based in Calgary, Alberta. On June 24, 2011, the company entered a guilty plea in the Court of Queen’s Bench in Calgary for one count of bribery, contrary to paragraph 3(1)(b) of the CFPOA, covering the period from February 1, 2005 to June 30, 2005, in relation to its dealings in Bangladesh. As a result of the conviction, Niko Resources Ltd. was fined $8.26 million plus a 15% victim fine surcharge, for a total of $9,499,000.00. In addition, the company was placed under a probation order, which put the company under the Court’s supervision for three years to ensure that audits were completed to examine the company’s compliance with the CFPOA.

Hydro-Kleen Group Inc. – Hydro Kleen Group Inc., based in Red Deer, Alberta, entered a guilty plea in the Court of Queen’s Bench in Red Deer, on January 10, 2005, to one count of bribery, contrary to paragraph 3(1)(a) of the CFPOA and was ordered to pay a fine of $25,000. Along with its president and an employee, the company had been charged under the CFPOA with, among other things, two counts of bribing a U.S. immigration officer who worked at the Calgary International Airport. The charges against the director and the officer of the company were stayed. The U.S. immigration officer pleaded guilty in July 2002 to accepting secret commissions, contrary to subparagraph 426(1)(a)(ii) of the Criminal Code. He received a six-month sentence and was subsequently deported to the U.S.

Canada and the Fight against Foreign Bribery

A number of federal departments, agencies and Crown corporations play key roles in Canada’s fight against foreign bribery. They work in close cooperation in Canada’s two-pronged approach to foreign bribery, which focuses on enforcement and prevention.

• The Royal Canadian Mounted Police (RCMP)

Enforcement – The International Anti-Corruption Program is managed under the umbrella of the RCMP Federal Policing Criminal Operations (FPCO) directorate. The FCPO provides subject matter expertise internally and externally to national and international partners, including government departments. The RCMP has the capability to track all CFPOA cases and, aided by its exclusive authority (since 2014) to lay an information in respect of CFPOA offences, expects that all credible foreign bribery allegations, including those initially reported to Canadian law enforcement agencies or to other government officials (such as those in foreign missions), will be referred to the RCMP for evaluation and investigation if deemed appropriate.

Among other responsibilities, RCMP investigators in both National Division (Ottawa) and K Division (Calgary) are responsible for investigating offences under the CFPOA. They are tasked with:

• investigating allegations that a Canadian person or business has bribed, offered or agreed to bribe a foreign public official;
• investigating allegations that a foreign person has bribed a Canadian public official;
• investigating allegations that a foreign public official has secreted or laundered money in, or through, Canada;
• providing assistance on international assistance requests; and
• developing and delivering outreach activities to various target groups.

Allegations of corruption can have serious repercussions in relation to business transactions and international relations. They are taken very seriously by the RCMP and treated with the utmost confidence for reasons of privacy and ensuring the integrity of investigations.

Integrated Approach – Through a tip-line partnership launched in April 2017, the RCMP receives triaged information from the Competition Bureau regarding allegations of bid-rigging, bribery, price fixing, conflict of interest, false invoicing and product switching. This information is analyzed to determine whether or not an investigation is warranted.

The RCMP Headquarters has an established point of contact within the Department of Justice’s International Assistance Group to ensure that priority is given to requests for mutual legal assistance in foreign bribery matters.

Training and Outreach – The RCMP remains firmly committed to its awareness and outreach activities, which it views as a critical component of its anti-corruption efforts. To this end, the RCMP ensures that all corruption-related material on its internal and external websites is kept up to date on an ongoing basis.

The RCMP has been proactive in reaching out to key stakeholders and in developing partnerships with various organizations and institutions to promote its prevention efforts and initiatives. The RCMP continuously seeks to leverage available opportunities, such as International Anti-Corruption Day, media requests, conferences and selected anti-corruption workshops to promote the force’s efforts to prevent corruption-related offences.

An orientation manual which provides information regarding foreign bribery, various international anti-corruption conventions (OECD Convention, United Nations Convention against Corruption (UNCAC)) and legislation under the CFPOA, including up-to-date contact information, is available to all members.

The RCMP is engaged on a regular basis by partners and stakeholders to provide training and give lectures on anti-corruption. From presenting at conferences and workshops that target various industry groups to providing training to other government departments such as Global Affairs Canada (GAC), non-governmental organizations and professional associations, the RCMP remains very engaged in its outreach efforts and continues to seek new opportunities to raise anti-corruption awareness, and awareness of the CFPOA, specifically. One of the RCMP’s most progressive initiatives has been the Global Anti-Corruption University Project. The Project now involves students working with real Small and Medium-sized Enterprises to develop compliance-related programs and tools. Internally, the RCMP ensures that its Liaison Officers are well-versed in criminal matters involving corruption and money laundering and actively encourages them to engage with the Canadian business community abroad to enhance the community’s awareness of its legal obligations, in particular those under the CFPOA.

During this reporting period, the RCMP gave over 75 anti-corruption-related training sessions and/or lectures to a wide variety of target groups. These sessions are very well-received, as evidenced by GAC’s invitations for the RCMP to give anti-corruption presentations in Asia and South America.

• Public Prosecution Service of Canada (PPSC)

Prosecutions – The PPSC prosecutes criminal offences under federal statutes, including the CFPOA, on behalf of the Attorney General of Canada. To ensure a standard approach to the prosecution of offences under the CFPOA, the PPSC has established a subject-matter expert position located in Ottawa for international corruption cases. The subject-matter expert has developed linkages with the RCMP FCPO and with other key government interlocutors involved with the enforcement and development of the CFPOA.

Training and Outreach – Internally, training in relation to the CFPOA has been provided to designated contacts in each of the PPSC’s regional offices. These contacts, who are generally senior prosecutors, will act as local points of contact and coordinators in relation to CFPOA matters as they arise for prosecution. In addition, presentations have been made to the PPSC’s Regional Directors in order to increase awareness of the OECD Convention, the CFPOA and the current activities of the RCMP and the PPSC in this area. The PPSC has also made presentations on, and actively participated on panels raising awareness of, Canada’s anti-corruption activities.

• Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

As Canada’s Financial Intelligence Unit, FINTRAC facilitates the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.

Compliance – In accordance with the first of its two operational mandates, FINTRAC is responsible for ensuring that all persons and entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations (“reporting entities” (REs)) comply with their legal obligations related to client identification, record keeping and reporting. These include obligations related to determining whether an individual is a domestic Politically Exposed Person (PEP), a foreign PEP, a Head of an International Organization, or a family member or close associate of one of these people^{Footnote 1}. Once an RE has made this determination, it must assess whether that person poses a high risk for committing a money laundering (ML) offence or a terrorist financing (TF) offence, and undertake other specific measures.

FINTRAC provides comprehensive guidance on risk-mitigating measures for high-risk clients to build awareness and ensure consistent internal and external communication of regulatory compliance requirements.

Actionable Intelligence – In accordance with its second operational mandate, FINTRAC, on the basis of its analysis and assessment, produces actionable financial intelligence that it must disclose to police, and to other domestic recipients listed in the PCMLTFA, when specific legal thresholds are met. Prior to disclosing tactical financial intelligence, FINTRAC must have reasonable grounds to suspect that the information it is authorized to disclose would be relevant to investigating or prosecuting a ML offence or a TF offence. In addition to disclosing financial intelligence to domestic recipients, FINTRAC also maintains over 100 Memoranda of Understanding (MOUs) with foreign financial intelligence units, to which it is authorized to disclose financial intelligence relevant to ML and TF. During the reporting period FINTRAC produced 38 disclosures relevant to ML and TF which also included information related to bribery and corruption. Of these, 10 were disseminated to foreign recipients. Furthermore, as part of FINTRAC’s commitment to being a centre of excellence on ML/TF matters, intelligence analysts from the Centre attended training sessions specific to bribery and corruption in 2017.

Raising Awareness – FINTRAC engages in a variety of means to enhance public awareness and understanding of ML/TF. These include Operational Alerts and Public-Private Partnerships (PPPs).  FINTRAC also produces strategic financial intelligence, including specialized research reports and trends analysis on ML and TF, which can be used by police, the Canadian security and intelligence community, federal policy and decision-makers, REs across the country, and other stakeholders.

• Global Affairs Canada (GAC)

In Canada and Beyond –GAC plays a lead role in representing Canada at international anti-corruption fora, such as the Working Group, in outreach efforts with emerging economies regarding corruption and in coordinating Canada’s whole-of-government approach to meeting its international anti-corruption obligations.

In addition, GAC’s personnel at Canadian missions work closely with Canadian companies that do business abroad through the provision of a range of services and support, including making the Canadian business community abroad aware of the CFPOA and promoting responsible business practices and in the management of Canada’s NCP, established under the OECD Guidelines for Multinational Enterprises.^{Footnote xix}

Trade, Development, Risk Management, and Reporting Obligations – GAC continues to apply the 2010 Policy and Procedure for Reporting Allegations of Bribery abroad by Canadians or Canadian Companies, which instructs Canadian missions on the steps that must be taken when allegations arise that a Canadian company or individual has bribed a foreign public official or committed other bribery-related offences. Information is conveyed to law enforcement in accordance with Canadian law and established procedures. As noted in the previous annual report, in September 2014, a Standard Operating Procedure was implemented that relates to Integrity Declarations (previously known as Declarations Regarding Corruption) made in the context of advocacy support sought by Canadian businesses abroad. At the end of this reporting period, approximately 1,400 Declarations signed by Canadian companies were in force.

Canada’s International Assistance – In June 2017, Canada launched the Feminist International Assistance Policy, which recognizes that supporting gender equality and the empowerment of women and girls is the best way to build a more peaceful, more inclusive and more prosperous world. Inclusive Governance was identified as one of six Action Area priorities for Canada’s international assistance. Canada is working to help address corruption with our developing country partners through our inclusive governance programs that engage women and girls in decision-making on budgets and public service delivery in local communities. By improving accountability and transparency in the delivery of public services, Canada is helping to address the challenges associated with corruption through the programs and services that matter to people in their communities. Improving the quality of public services is an important entry point to help confront petty corruption (i.e. bribery), and sheds light on instances of grand corruption where these challenges persist.

Canada’s anti-corruption efforts can include: strengthening the capacity of all levels of government and service providers to deliver services through, for example, improved decentralization, improved accountability and transparency arrangements and institutions, stronger local governments; improved citizen engagement in budget processes, including through gender-responsive budgeting, and social accountability initiatives that engage people as the end-users of public services in the design, monitoring, and oversight of public services and initiatives; improved public financial management systems and processes; and, strengthened statistical capacity, including analyzing and publishing open data to foster greater transparency.

For example, the International Governance, Accountability, and Performance Initiative, to be implemented by the Canadian Audit and Accountability Foundation, began in March 2018 and will be implemented over 7 years, with a GAC contribution of up to $14.95 million. In partnerships with the Office of the Auditor General of Canada, this project will ensure more accountable and effective governance by strengthening the capacity of Auditors' General Offices and parliamentary oversight bodies in Rwanda, Burkina Faso, Vietnam, and Guyana. This project will, in particular, empower women by building the skills and leadership capacity of female auditors, helping to position them for senior management roles in audit institutions, and will incorporate a gender lens on audit functions in these partner countries. The project also leverages Canadian expertise and value-added from provincial Auditors' General offices.

To advance policy objectives related to inclusive governance and anti-corruption, Canada is engaged with important international organizations and initiatives, such as the OECD Development Assistance Committee (DAC) Network on Governance (GovNet), the GovNet’s the Effective Institutions Platform, and the Addis Tax Initiative, among others.

May 2016 saw the launch of the development of a harmonized and integrated risk management tool for all GAC grants and contributions. The framework for this tool is anticipated to be available by September 1, 2018. Several internal consultations on the framework were held with key stakeholders (at Headquarters and in the field) in 2016. To ensure broad participation, the corporate committee, known as the Risk Management Advisory Group (previously the Fiduciary Risk Advisory Group), held several meetings throughout the past year. GAC is currently working with the IT team to develop business requirements and work on building the tool.

Since June 2015, Canada has been actively engaged in the revision of the Methodology for Assessment of Procurement Systems (MAPS), a universal tool used to evaluate the quality of public procurement systems, including specific anti-corruption measures.^{Footnote xx} The core tool features enhanced accountability, integrity and transparency assessment criteria. Specialized modules developed on Entity Level Assessment, e-procurement, and PPPs, for example, are currently being tested. For the Development portfolio, MAPS assessments are used as part of fiduciary risk due diligence when considering programming approaches that rely on the use of country systems. Links to MAPS and other key complementary resources on anti-corruption in public procurement, such as the OECD Checklist for Enhancing Integrity in Public Procurement, are integrated into GAC’s corporate guidance.  In 2018, Canada is supporting the establishment of an independent Secretariat, hosted by the OECD, which will maintain MAPS, ensure quality control, and certify compliance of assessments when requested by countries.

Training and Outreach – During the reporting period, GAC personnel, including Heads of Mission, Senior Trade Commissioners, and Trade Commissioners, received specialized pre-posting training which includes modules on Canada’s international obligations to prevent and combat corruption, promoting CSR, officials’ responsibilities pursuant to the CFPOA, corruption concerns in specific markets, as well as facilitated case studies. An online CSR training course is also available. GAC also continued to deliver mandatory, trade-specific core training, which includes coverage of anti-corruption efforts, tools and resources. Between September 2017 and August 2018, over 180 Trade Commissioners participated in eight offerings of the four-day Core Training Program for Trade Commissioners Workshop, while the annual five-day Core Training Program for Senior Trade Commissioners had over 40 participants.

In May/June 2018, GAC ran a two-day course on responsible business conduct, which focussed heavily on combatting foreign corruption and featured experts from GAC and the RCMP.  GAC officers from the trade, political, and development streams from across Canada participated. The fight against corruption, including mentions of the CFPOA and its implications while doing business abroad, were included as references in close to 30 CSR training sessions including: one Head of Mission (HoM) training session, one Senior Trade Commissioners (STC) training session, eight Core Training Program sessions for Trade Commissioners, and more than 10 presentations made by the Responsible Business Unit at signature events or directly to missions abroad. Further, GAC partnered with Global Compact Network Canada (GCNC) to leverage both the GCNC and TCS networks for delivery of anti-corruption webinars to industry members across Canada.

GAC continues supporting Global Compact Network Canada on a Certificate in Regional Anti-Corruption Management. Four e-sessions took place during this period, each focussing on a specific region of the world (Middle East, Latin America, Africa and Eastern Europe).

As part of Canada's CSR Strategy, missions abroad and regional offices in Canada developed multiple initiatives in their respective regions and participated in various anti-corruption activities organized by local and bilateral chambers of commerce, government organizations (local, national, international) and multilateral organizations, such as Global Compact. Trade Commissioners’ participation has reinforced key messaging on CSR and anti-corruption, with particular emphasis on the CFPOA and how it directly and indirectly affects Canadian companies doing business abroad.

As an example, the Embassy of Canada in the Dominican Republic organized an anti-corruption event in collaboration with one of its main Canadian business clients in the country.  Canadian, local and regional participants from the private sector and civil society shared their experiences and best practices on combating corruption.  Participants recognized that Canada benefits from a sturdy legal framework and effective enforcement - Canada and Canadian companies enjoy a very good reputation on corporate governance, business integrity, CSR and transparency in the Dominican Republic. A key message that transcended the event was that global companies that want to remain competitive must answer to shareholders and clients on compliance issues. 

Trade Commissioners regularly brief clients on the CFPOA and its implications while doing business abroad. GAC continues to work closely with the Centre of Excellence for Anti-Corruption (CCEAC) of the University of Ottawa to advance in the signing of a MOU focused on anti-corruption training with Universidad del Rosario in Colombia and the creation of an Anti-Corruption unit in Indonesia. GAC is also working with CCEAC to develop a user-friendly online tool-box that allows visitors to easily view and submit anti-corruption tools and/or best practices for sharing.  The multilingual tool box will include content from industry, civil society, governments and multilateral organizations, as well as virtual training options on a range of anti-corruption and governance challenges.

• Export Development Canada (EDC)

Combating Corruption – As set out in the EDC Code of Conduct, EDC does not support transactions or activities that involve the offer or giving of a bribe, and it exercises reasonable diligence and care not to support such transactions and activities.^{Footnote xxi} EDC’s Anti-Corruption Policy Guidelines^{Footnote xxii} outline measures that EDC will apply to combat corruption, including (i) possible notification to law enforcement authorities, and (ii) refusal to provide support where, in EDC’s opinion, there is credible evidence that bribery was involved in a transaction. Further to this, EDC’s Anti-Corruption Program consists of processes and documentary safeguards, such as the requirement for customers to submit anti-corruption declarations and/or accept relevant provisions in their contracts, to help ensure that EDC upholds its commitments. EDC underwriting and business development staff conduct up-front corruption screening on transactions. If screening reveals concerns, enhanced due diligence is then undertaken by a specialized team.^{Footnote xxiii}  EDC works closely with Canadian government departments to ensure proper due diligence and alignment in its approach to companies facing corruption-related issues.

In addition to the above, EDC is working on strengthening its controls, not only as they relate to bribery and corruption but also as they relate to financial crime risks generally. EDC’s Board of Directors approved EDC’s Financial Crime Policy, requiring more robust standard due diligence for all counterparties and transactions, enhanced due diligence for higher risk counterparties and transactions as well as training, program oversight and other control enhancements that will support EDC’s ability to detect and deter bribery and corruption among other financial crime risks.

During this reporting period, EDC has also been actively engaged in the review of the OECD Recommendation on Bribery and Officially Supported Export Credits with a view to modernizing and strengthening these guidelines. At the time of this report, the OECD Members have yet to adopt the newly enhanced Recommendation, however, in anticipation of its adoption, EDC has commenced the process of considering the impacts on its internal procedures.

EDC supports the proposed enhancements and will continue to provide support for a conclusion that results in a strengthened Recommendation.  

Raising Awareness – As EDC assists customers in pursuit of international opportunities, it informs them about conducting business in a socially responsible and ethical manner. This includes providing information to customers on: a) the risks of bribery and corruption and mitigating practices; b) responsible business conduct; c) the strength of anti-corruption policies and best practices and setting the proper “tone from the top”; d) how to make improvements in corporate governance and compliance practices; and e) how to educate employees about the CFPOA and other legal frameworks that aim to combat bribery in international business transactions.^{Footnote xxiv}

EDC continues to promote ethical business practices through its participation in anti-corruption events and initiatives, as well as by providing customers with information and resources on financial crime risks^{Footnote xxv} and EDC’s risk management approach. Twice annually, EDC sends out a letter to new customers advising them of EDC’s anti-corruption practices.

In this reporting period, EDC outreach with external partners included promotion of International Anti-Corruption Day and participation in Transparency International’s Annual Day of Dialogue in September 2017 and May 2018. In December 2017, EDC partnered with Start Up Canada, an industry association focused on supporting small businesses, to produce a podcast aimed at educating Canadian companies about corruption and bribery risks. In June and July 2018, EDC created blog content and hosted a webinar about anti-corruption policies and managing corruption risk. EDC has also renewed its partnerships with Transparency International Canada and the Ethics Centre.  Through ongoing efforts to educate and promote sound ethical conduct, EDC seeks to support companies as they manage risks in existing operations and as they enter into new markets.

• Canada Revenue Agency (CRA)

The CRA has had a large network of international partners for many years with 93 tax treaties and 24 Tax Information Exchange Agreements. Since Canada is a Party to the Convention on Mutual Administrative Assistance in Tax Matters, the number of partners will include 139 jurisdictions as of September 2018. These instruments facilitate the exchange of information to detect and combat tax avoidance, including ways which may deter the bribery of foreign officials. Starting this year, the CRA will be exchanging non-residents’ financial account information with over 80 jurisdictions under the Common Reporting Standard with account holders’ countries of residence. In return, the CRA will receive financial account information from other jurisdictions in respect of accounts owned by Canadian residents.

On September 1, 2017, the CRA changed its policy on serious crime information sharing. The CRA may now entertain requests from police organizations when they are investigating (pre-charge) financial crime, such as major frauds, proceeds of crime, money laundering and corruption. These requests that CRA will entertain will be limited to instances where it would be in CRA’s interests in the administration or enforcement of the Income Tax Act or Excise Tax Act (i.e., CRA may undertake an audit or investigation of the targets identified by the police).

Prior to sharing client information, the CRA will ensure that the requirements of the serious crimes provisions are satisfied. The CRA will independently review the information received from the police to determine if there are reasonable grounds to believe that the CRA has information that will afford evidence of a listed serious offence. In such cases, the CRA may release information; however, CRA would continue to be responsible to determine if and what client information would be provided.

In addition, the CRA continues to be committed to the exchange of information through specific, spontaneous and automatic exchange mechanisms that facilitate cooperation and transparency. This includes engaging with Canada’s treaty partners and collaborating with other administrations in numerous OECD Working Parties and bodies, such as the Global Forum on Transparency and Exchange of Information. The CRA is very involved in numerous capacity building efforts, such as the OECD’s Global Relations Programme and the International Academy for Tax Crime Investigation, which assist other countries in developing their tax administration expertise.  The CRA also participates in the OECD’s Task Force on Tax Crime and other Crimes and is one of five founding members of the newly-established Joint Chiefs of Global Tax Enforcement (J5), a multi-national group formed to increase collaboration in the fight against international and transnational tax crime and money ML.

• Department of Justice Canada

International Anti-Corruption Activity – Department of Justice officials participate in international anti-corruption fora, including in meetings of the Working Group.

Mutual Legal Assistance – The Department of Justice’s International Assistance Group (IAG), which is Canada’s central authority for mutual legal assistance in criminal matters, has designated a legal counsel to deal with all incoming and outgoing corruption-related mutual legal assistance requests. This legal counsel works closely with the RCMP and other relevant law enforcement officials and prosecutors. Given the ever-increasing numbers of incoming requests for assistance, the responsibility for corruption-related requests is being shared with other counsel within the IAG, under the supervision of the designated legal counsel, who remains the point of contact for corruption-related requests.

Training and Outreach – The IAG regularly liaises with the central authorities from other countries to educate foreign officials with respect to the Canadian legal requirements to obtain effective assistance in criminal matters. The IAG works closely with foreign officials to provide assistance in drafting requests for legal assistance, which allows them to make more effective requests to Canada in the fight against corruption.  The IAG regularly hosts and attends consultations with foreign authorities to discuss ways to improve the efficiency and effectiveness of the mutual legal assistance process.

Moreover, the IAG provides advice and training to Canadian prosecutors and law enforcement and foreign officials regarding assistance that can be provided to foreign law enforcement and prosecution authorities without the requirement of a formal request.

In terms of outgoing Canadian requests on corruption matters, the IAG also provides advice and training to Canadian prosecutors and law enforcement officials on the legal requirements for seeking assistance from other countries.

• Canadian Commercial Corporation (CCC)

Combating Corruption – Anti-bribery and corruption is a key component of CCC’s CSR Framework, with the Code of Conduct and Business Ethics forming the basis for CCC’s approach to fighting bribery and corruption.The Code, and the Integrity Compliance Instructions and Guidelines, provide specific guidance and direction to CCC’s employees and clients with regard to ethicalbehaviour in all of its business activities. All employees have access to a copy of the Code and are obligated to sign a yearly acknowledgement confirming their understanding of, and responsibility to comply with it. The Code is also available to CCC clients on its external website.^{Footnote xxvi}

CCC utilizes external resources to bolster its internal anti-corruption expertise and practices. During this reporting period, CCC renewed its membership with Trace International, a non-profit organization founded to provide members with anti-bribery compliance support and to provide training assistance. CCC regularly consults with its Portfolio partners and with other Crown corporations to ensure alignment of policies and procedures.

As a result of CCC’s collaboration with the NCP for the OECD Guidelines on Multinational Enterprises, CCC revised its practices to combat bribery to include specific references to the NCP and the OECD Guidelines and to promote principles and standards developed on the basis of the OECD Guidelines and the UN Guiding Principles.   CCC works closely with GAC in coordinating Canada’s whole-of-government approach to meeting its international anti-corruption obligations.

In addition, CCC’s personnel work closely with Canadian exporters and make Canadian businesses aware of the need for responsible business practices, especially in the area of corruption of foreign public officials.

CCC is committed to ensuring ethical conduct in its business dealings. Prior to CCC entering into a binding service agreement with an exporter, a completed due diligence questionnaire (DDQ) and supporting documentation must be provided to CCC so that it can analyse the integrity profile of the company in question and of the intended project. The DDQ provides a preliminary assessment of the exporter’s business integrity profile and enhances the ability of CCC’s internal project assessment procedures to flag potential problem areas. Further assessments, in the form of an Enhanced Managerial Review, are completed on those exporters and/or projects that raise unanswered red flags. Project monitoring and annual training complete the complement of activity in this area.

• Public Services and Procurement Canada (PSPC)

Combating Corruption – PSPC administers the government-wide Integrity Regime, introduced in July 2015, to ensure that Canada conducts business with ethical suppliers. The Regime is a policy-based instrument (i.e., the Ineligibility and Suspension Policy), enforced through corresponding contractual clauses that incorporate the Policy by reference. Under the Regime, Canada may suspend a supplier or declare them ineligible from being awarded a contract or real property agreement if they have been convicted of, or charged with, an applicable listed offence (e.g., corruption, fraud, bribery, etc.) within the past three years, in Canada or a similar offence abroad. The names of all ineligible and suspended companies are published on the PSPC website, as well as those who have entered into an administrative agreement with PSPC.^{Footnote xxvii}  To date, three companies have been declared ineligible and one company has signed an Administrative Agreement with PSPC in lieu of suspension.

Since its introduction, all departments or agencies identified in schedules I, I.1 and II of the Financial Administration Act have signed MOUs with PSPC to obtain supplier integrity verification services. This allows organizations to verify that a supplier is not ineligible to conduct business with the government, under the Regime, prior to awarding a contract or real property agreement. Additionally, two Crown Corporations have voluntarily adopted the Policy and have signed MOUs with PSPC for verification services.

Based upon the feedback from public consultation from the Fall of 2017, a revised Ineligibility and Suspension Policy that incorporates enhancements to the Integrity Regime will come into effect in early 2019. The enhancements to the Integrity Regime will incorporate greater flexibility in debarment decisions that render suppliers ineligible to do business with the Government of Canada; increase the number of triggers for possible debarment; and broaden the scope to define business ethics. These changes are designed to strengthen the Integrity Regime by making it more robust, while at the same time increase consideration of proportionality within debarment decisions and greater emphasis on corporate compliance within the marketplace.

Raising Awareness – PSPC works closely with the private sector, industry partners and civil society organizations to promote ethical business culture and integrity in public procurement. Senior PSPC officials participate as guest speakers and deliver presentations in a range of events on Canada’s approach to combat fraud and corruption in procurement and real property transactions, the government-wide Integrity Regime, and the department’s framework to manage wrongdoing and fraud risk.

The department collaborates with federal partners on measures to prevent, mitigate and address unethical business practices within public procurement and real property. This includes participating in working groups, committees and bilateral meetings.

• Competition Bureau of Canada (CB)

Combating Corruption – In recent years, the CB has observed a close relationship between collusive behaviour and corruption. Given this connection, the CB has, in recent years, taken steps to maintain and improve its relationships with police forces, other anti-corruption officials, and procurement authorities in order to complement each organization’s efforts to promote competition and combat corruption.

In April 2017, Canada launched the Federal Contracting Fraud Tip Line, a dedicated telephone line and online form, to accept anonymous tips from Canadians who suspect fraud, collusion or corruption in federal government contracts and real property agreements. The Tip Line is a joint initiative of the CB, PSPC, and the RCMP, and complements measures already in place to ensure that federal contracts are lawful, ethical and fair.

The information received may be used to conduct investigations, gather intelligence and introduce due diligence measures, where warranted, to protect the integrity of federal government contracts and real property agreements.

Procurement and competition authorities around the world are developing “screens” to detect bid-rigging. The CB and PSPC are developing a pilot project to analyze bidding data for this purpose. A “Certificate of Independent Bid Determination” has proven to be effective at deterring bid-rigging conduct around the world, by encouraging ethical decision-making by potential suppliers at the point of bid-submission. The CB continues to promote the use of this tool by tendering authorities throughout Canada.

In the past few years, the CB has signed MOUs with several domestic law enforcement partners including: the RCMP, which routinely assists the CB with the investigative powers, including search warrants and wire taps; the Ontario Provincial Police, which has worked closely with the CB’s Ontario Regional Office on a number of matters; and the Bureau de l’inspecteur général de la Ville de Montréal, which has referred cases of suspected collusion in the City of Montreal to the CB.

Raising Awareness – Providing outreach presentations to public procurement organizations at all levels of government has been, and continues to be, a priority for the Cartels Directorate of the CB. The goal of these presentations is to provide procurement officials with the knowledge necessary to detect, prevent and report bid-rigging to the CB. In particular, these presentations cover topics, including the bid-rigging provisions of the Competition Act, common forms of bid-rigging, characteristics that can make an industry particularly susceptible to bid-rigging, and techniques that can be used to prevent bid-rigging.

• Treasury Board Secretariat (TBS)

Enabling the mechanism for disclosure of acts of corruption and the bribery of foreign public officials has assisted in promoting a culture of accountability and integrity. During the reporting period, Canada continued to serve as a member on the OECD Working Party of Senior Public Integrity Officials (SPIO), a sub-group of the Public Governance Committee, which is responsible for designing and implementing policies to strengthen public governance and public sector institutions. The SPIO aims to strengthen public sector governance and institutions involved in policy making related to safeguarding integrity and preventing corruption and the underlying conditions that shape the policy-making process. Recent activities have involved the drafting of papers and recommendations for combating corruption and enhancing public integrity.

In addition to contributing to the SPIO, Canada continues to engage with other countries on an ad hoc basis through on-site visits and providing technical guidance on the promotion of integrity frameworks related to public governance.

In 2017, a statutory review of the Canada’s disclosure regime took place. Canada is placing a special focus on strengthening awareness activities and training for federal public servants, as well as continuous improvements to guidance and reporting related to the internal disclosure process.