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Ottawa businessman convicted of foreign corruption

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By Michael G. Osborne

Ottawa businessman Nazir Karigar has been convicted of agreeing to offer bribes to public officials in India in order to obtain preferential treatment for a bid submitted by Cryptometrics to supply facial recognition software and related equipment to Air India.

Karigar was charged under the  Act (CFPOA). The CFPOA makes it an offence in Canada to bribe foreign officials in order to obtain an advantage in the course of business. The Act is drafted broadly, and includes offering a bribe or agreeing to offer a bribe in the prohibition.

Regional Senior Justice Hackland held that Karigar conspired with two individuals representing Cryptometrics Inc. (a U.S. company) and Cryptometrics Canada Inc. to offer bribes to certain Air India officials and India’s Minister of Civil Aviation.

Karigar defended the case on two bases, both of which Hackland RSJ rejected.

The meaning of “agree”

First, Karigar argued that the CFPOA only applies to actual bribes paid to foreign public officials, and not to conspiracies or agreements to bribe a foreign public official. There was no evidence that two payments that ended up in Karigar’s bank account in Mumbai were ever used to pay bribes.

Hackland RSJ rejected this contention. He accepted that a conspiracy or agreement to bribe a foreign public official is a violation of the CFPOA: the CFPOA uses the word “agrees”, which imports the concept of a conspiracy into the Act. He noted that in so doing, the CFPOA meets Canada’s obligation under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) to make conspiracy to bribe a foreign public official an offence.

As well, adopting Karigar’s interpretation would restrict the scope of the CFPOA and defeat its objectives. Requiring proof of the offer or receipt of a bribe would also require evidence from foreign jurisdictions, which would make the CFPOA difficult or impossible to enforce, Hackland RSJ noted.

Canada has jurisdiction

Karigar’s second contention was that Canada lacked jurisdiction over the offence because it did not occur in Canada. Indeed, the payments in question were made from the U.S.

Hackland RSJ applied the real and substantial connection test from the decision of LaForest J in R. v. Libman. He stated:

The substantial connection test is not limited to the essential elements of the offence as submitted by the accused. Moreover, one cannot segregate or otherwise deal with the bribery as a separate and discrete issue thereby excluding the legitimate aspects of the transaction from consideration in applying the substantial connection test.

In holding that there was a real and substantial connection to Canada, Hackland RSJ cited a number of facts showing a connection between the transaction and Canada, including that it involved a Canadian company, that Karigar is a Canadian, employed by a Canadian company, and that had the contract been awarded to Cryptometrics, a great deal of the work would have been done by Cryptometrics Canada employees in Ottawa.

Impact on future CFPOA enforcement

As the first decision to interpret the provisions of the CFPOA, Karigar’s case will undoubtedly have an impact on future CFPOA enforcement.

Hackland RSJ’s refusal to narrow the meaning of the word “agree” in the CFPOA is particularly important. Had he accepted Karigar’s contention that “agree” applied only to the agreement between the person offering the bribe and the foreign public official, the CFPOA would have become largely toothless, as it would have required to investigators to prove an agreement with a foreign government official, or to trace money all the way to the foreign government official. Since it is unlikely that foreign officials who accept bribes would cooperate with Canadian anti-bribery enforcers, CFPOA enforcement would have ground to a halt.

Perhaps equally important is Hackland RSJ’s resort to the Anti-Bribery Convention to assist him in interpreting the provisions of the CFPOA. Since the CFPOA implements the Anti-Bribery Convention in Canada, the convention and its travaux préparatoires are in principle available to assist the interpretation the provisions of the CFPOA.

Hackland RSJ’s conclusion on jurisdiction is unlikely to have much impact on future CFPOA enforcement, as the CFPOA has recently been amended to deem foreign corruption offences committed by Canadian citizens, residents, and corporations to have been committed in Canada (see our summary.)

That being said, Hackland RSJ’s application of the real and substantial connection test is less than satisfactory. In Libman, LaForest J was dealing with the doctrine of territoriality, which is codified in subsection 6(2) of the Criminal Code, which provides that

Subject to this Act or any other Act of Parliament, no person shall be convicted or discharged under section 730 of an offence committed outside Canada.

In Libman, LaForest J held that

As I see it, all that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada. As it is put by modern academics, it is sufficient that there be a “real and substantial link” between an offence and this country, a test well known in public and private international law;

In other words, LaForest J contemplated that the “real and substantial link” would be established by showing that “a significant portion of the activities constituting [the] offence took place in Canada”. The concept of “activities constituting the offence” may be broader than just the elements of the offence, since other portions of the decision suggest other relevant factors or activities, including where the offence was planned, where the fruits of the offence were obtained, and where the effects of the offence were felt. But, on the facts recited by Hackland RSJ, Karigar’s case appears to test the outer boundaries of this concept. Hackland RSJ was correct in considering more than just the bare elements of the offence. But the connection between Canada and the offence was mainly founded on facts of the underlying transaction. Hackland RSJ did not make any finding that any element of the offence had occurred in Canada. It is at least questionable whether LaForest J’s test can be stretched to encompass a case where all of the elements of the offence occur outside of Canada, given that subsection 6(2) of the Criminal Code says that no one can be convicted of an offence committed outside of Canada.

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