¶¶ÒùÊÓƵ

Canada’s Fight against Foreign Bribery

Sixteenth Annual Report to Parliament

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

(September 2014 – August 2015)

Table of Contents

• Highlights – September 2014 to August 2015
• Background
• The OECD Convention
• The Corruption of Foreign Public Officials Act (CFPOA)
• Canada and the Fight against Foreign Bribery

Highlights – September 2014 to August 2015

• On July 3, 2015, Public Services and Procurement Canada (formerly Public Works and Government Services Canada) announced the implementation of the new government-wide Integrity Regime for procurement and real property transactions to help foster ethical business practices, ensure due process and uphold the public trust. It is transparent, rigorous and consistent with best practices in Canada and abroad, while supporting transparent competition and an ethical Canadian marketplace.
• 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 Corruption of Foreign Public Officials Act (CFPOA)and 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.
• In November 2014, Canada announced its enhanced Corporate Social Responsibility (CSR) Strategy for the Canadian extractive sector abroad, Doing Business the Canadian Way. It includes Canada’s contributions to the global fight against corruption, such as support to the Extractive Industries Transparency Initiative (EITI), and adoption in December 2014 of new legislation, the Extractive Sector Transparency Measures Act (ESTMA),whichrelates to transparent reporting. Effective June 1, 2015, all extractive companies subject to the ESTMA will be required to report payments including taxes, royalties, fees, and production entitlements of $100,000 or more to all levels of government in Canada and abroad.

Background

On December 17, 1997, Canada signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (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.^{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. The OECD Convention came into force on February 15, 1999, following Canada’s ratification.

To date, 41 states have ratified the OECD Convention, including all 34 member states of the and seven non-member states: Argentina, Brazil, Bulgaria, Colombia, Latvia, Russia, and South Africa.^{Footnote iv} Since the OECD Convention entered into force in 1999, over 300 individuals and over 100 entities have been sanctioned under criminal proceedings for foreign bribery in over one-third of these States Parties. Of those, over 80 of the sanctioned individuals were sentenced to prison for foreign bribery in one-third of these States Parties. Almost 400 investigations are ongoing in over half of these States Parties.

• 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 v} (2009 Recommendation) was adopted by the OECD Council^{Footnote vi} on November 26, 2009, and released on December 9, 2009 on the tenth anniversary of the OECD Convention.

Guidelines for Multinational Enterprises – Section VII of the OECD Guidelines for Multinational Enterprises contains recommendations regarding CSR aimed at multinational enterprises investing abroad. The Guidelines were updated in May 2011.

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

• The Peer Review Process

The OECD Convention provides for peer evaluation by members of the OECD Working Group on Bribery in International Business Transactions (Working Group) on the enforcement and implementation, by States Parties, of the OECD Convention and companion instruments. The Working Group is comprised of representatives from the States Parties to the OECD Convention.^{Footnote x} 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 xi} Phase 2 studies and assesses the structures put into place to enforce national laws and determine their practical application.^{Footnote xii} Phase 3 is intended to be more focused than the Phase 2 evaluation, concentrating on progress made by the Parties on the recommendations made during Phase 2, on issues raised by changes in domestic legislation or institutional frameworks of the Parties, and on enforcement efforts, results and other horizontal issues.

The Phase 3 cycle of evaluations began in 2010 and is scheduled for completion in 2017. Discussions regarding the scope and procedures of Phase 4 commenced March 2014 and remain ongoing. Phase 4 is expected to start in 2016.

• 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 peer reviewer, evaluated country, and member of the Working Group. Between September 2014 and August 2015, Canada’s participation included the following:

Canada as Lead Examiner – A Phase 3 Two-Year Written Follow-up Report and an Additional Phase 3 Written Follow-up Report on Australia, for which Canada and Japan were lead examiners, were discussed by the Working Group during its plenary meeting in December 2014 and June 2015, respectively. The Working Group’s peer review of Australia will move on to Phase 4.

Japan provided additional oral and written follow-up reports in respect of its Phase 3 review to the Working Group in October and December 2014, respectively. A High-Level Mission to Japan in 2016 is being planned by the Working Group. Canada remains co-Lead Examiner for this assessment, along with Norway, until the completion of the Phase 3 evaluation.

Canada’s Phase 3 Evaluation Follow-Up – The final stages of the Working Group’s Phase 3 peer review of Canada were completed in March 2014.^{Footnote xiii} Its peer review of Canada has moved on to Phase 4, which is not yet scheduled.

The Corruption of Foreign Public Officials Act (CFPOA)

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. The CFPOA 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 xiv}. 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 are currently 12 active investigations, four convictions and four cases in which charges have been laid but not yet concluded under the CFPOA.^{Footnote xv}

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 corruption 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, one count of corruption of a foreign public official pursuant to subsection 3(1) of the CFPOA, and one count under paragraph 7(2)(a) of the Special Economic Measures Act acting under article 41 of the Charter of the United Nations.

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.^{Footnote xvi} 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 Chief Executive Officer and Chief Operating Officer of the company. Canada-wide warrants have been issued for all three accused.

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 is 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.

Ramesh Shah and Mohammad Ismail – On February 29, 2012, the Royal Canadian Mounted Policy (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 did thereby commit 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 matter remains before a Canadian court.

Matters Concluded

Nazir Karigar – On August 15, 2013, Nazir Karigar was convicted by the Ontario Superior Court of Justice 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 marks the first time that an individual has been convicted under the CFPOA, and the first time that a matter has gone to trial under the CFPOA.

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 Special Services, Federal Coordination Centre (FCC). The FCC 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 expects that credible allegations reported to Canadian law enforcement agencies or government officials, including those in foreign missions, will continue to be reported to the RCMP.

The RCMP investigates international corruption using International Anti-Corruption Teams located in Ottawa (National Division) and in Calgary (K Division). National Division currently has 40 investigators working on major international corruption cases. K Division has 3 investigators working on anti-corruption cases. Both locations have a pool of over 100 investigators who can be drawn upon for major priority investigations, should the need arise. With regard to corruption, the investigative teams 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.

Training and Cooperation – The RCMP includes the issue of foreign bribery and the CFPOA in its training of all RCMP liaison officers prior to departure for overseas assignments. The RCMP has participated in numerous international anti-corruption awareness programs and training. In addition, orientation manuals have been completed, which cover the CFPOA including contact information for the investigative teams and a description of their roles.

RCMP Headquarters and investigative teams have 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. The RCMP continues to prioritize the establishment of procedures and mechanisms for information sharing within the Government about suspected cases of corruption.

Outreach – Awareness and outreach are recognized as critical elements of the RCMP’s anti-corruption efforts. The RCMP has been proactive in reaching out to various stakeholders and developing partnerships with various organizations and institutions to promote the RCMP’s effort on anti-corruption and to provide information and tools on preventing corruption. Internal and external websites have been updated and an information sheet has been created to support the general efforts of reaching out to Canadian industry, universities, partners, stakeholders and the general public, in order to get the anti-corruption message out to as wide an audience as possible. The RCMP seeks to leverage available opportunities, such as International Anti-Corruption Day, media requests, conferences and selected anti-corruption workshops to promote the force’s anti-corruption efforts to prevent corruption-related offences.

The RCMP is engaged on a regular basis by partners and stakeholders to provide training and lectures on anti-corruption. From presenting at conferences and workshops targeting various industry groups to providing training to ¶¶ÒùÊÓƵ Trade Commissioners, non-governmental organizations and professional associations, the RCMP is very active in its outreach efforts. The RCMP has also been proactive and innovative in developing partnerships with universities that involve reaching out and engaging students who will be the next business leaders. The RCMP has also been involved in the development of applied projects where students develop anti-corruption compliance tools for businesses. During this reporting period, the RCMP has provided 43 anti-corruption training and lecture sessions to various target groups.

• Public Prosecution Service 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 International Anti-Corruption Teams 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, including for a gathering of international enforcement officials in Washington, D.C. and the Canadian Bar Association.

• ¶¶ÒùÊÓƵ (GAC)

In Canada and Beyond –GAC plays a lead role in representing Canada at international anti-corruption forums, such as the Working Group, and 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 Trade Commissioners and other personnel at Canadian missions work closely with Canadian companies doing business abroad through the provision of a range of services and support.^{Footnote xvii} In this respect, Trade Commissioners play a key role in the prevention of foreign bribery by making Canadian clients aware of their obligations under the CFPOA, and through the active promotion of CSR.

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 in the possession of GAC officials is sent to GAC Headquarters and passed on to law enforcement in accordance with established procedures.

Canada is a secure, responsible and reliable producer and supplier of natural resources to the world. The Extractive Sector Transparency Measures Act (ESTMA) is a new development related to Canada’s fight against corruption.^{Footnote xviii} It contributes to global efforts to deter corruption and promote transparency in the extractive sector, and speaks to Canada’s international commitments related to the fight against corruption through the imposition of measures applicable to the extractive sector. The ESTMA received Royal Assent on December 16, 2014, and came into force on June 1, 2015. All extractive companies subject to the ESTMA will be required to report payments including taxes, royalties, fees, and production entitlements of $100,000 or more to all levels of government in Canada and abroad. This mandatory reporting initiative will help to ensure that Canada's resource industries continue to prosper and to provide the broad economic benefits that are fundamental to Canada’s success.^{Footnote xix} The ESTMA also provides for the imposition of fines of up to $250,000 per day on companies that fail to adhere to its reporting requirements, knowingly make false or misleading statements in their disclosure reports, or who structure their payments with the intention of avoiding disclosure under the ESTMA. The implementation of the ESTMA ensures that Canada remains at the forefront of international standards of transparency and accountability of payments made by the extractive industry to all levels of government.^{Footnote xx}

Trade Commissioner Service (TCS) – In September 2014, the TCS implemented its Standard Operating Procedure (SOP) for TCS clients seeking advocacy support. This requires all qualified Canadian companies requesting advocacy support from the TCS to sign a declaration regarding corruption attesting that they have not been charged, convicted or sanctioned for bribery or corruption in Canada or abroad. The SOP also provides for withdrawal of TCS services from companies that have been convicted in Canada or sanctioned for bribery or corruption. Any such company may request a review by the TCS to examine the corrective measures it has taken since the conviction or sanction. A positive review could lead to resumption of TCS support.

Training – GAC personnel, including Heads of Mission, Senior Trade Commissioners, and Trade Commissioners, receive specialized pre-posting training. Amongst other topics, the training covers Canada’s international obligations to prevent and combat corruption, CSR, officials’ responsibilities with respect to the CFPOA, as well as facilitated case studies on how to respond to allegations of corruption. During the reporting period, GAC (formerly the Department of Foreign Affairs, Trade and Development Canada) continued to deliver a mandatory, comprehensive five-day core training program, both for Trade Commissioners (180 participants in the reporting period) and Senior Trade Commissioners
(29 participants) ^{Footnote xxi}. Both programs include training on GAC’s anti-corruption SOP and also cover Trade Commissioners’ responsibilities pursuant to the CFPOA, such as informing client companies about the CFPOA and the corruption possibilities in certain markets. Additionally, GAC runs several related courses for Trade Commissioners, including Combating Corruption Abroad, which is attended by officers from the trade, political, and development streams from across Canada and which is available to missions abroad. There is also an online CSR training course available to all staff which includes a CFPOA component detailing employee obligations and reporting procedures.

Outreach – In November 2014, Canada announced its enhanced CSR strategy for the Canadian extractive sector abroad, Doing Business the Canadian Way. It includes activities Canada undertakes with interlocutors at international, bilateral and organizational levels to strengthen the environment affecting business activities abroad in a way that advances CSR performance and benefits on the ground. Among these activities are a number of Canada’s contributions to the global fight against corruption, such as support to the EITI, and adoption of new legislation on transparent reporting (the ESTMA).

GAC continues to organize CSR seminars in various regions of the world. In addition, GAC’s CSR
E-Bulletin provides regular updates to government partners on the Government’s CSR efforts, some of which include activities that build awareness of the CFPOA. GAC legal experts also made presentations and actively participated on panels raising awareness of Canada’s anti-corruption activities, including about legal mechanisms for freezing assets of corrupt foreign officials and combating the bribery of foreign public officials.

International Assistance and Development – The international assistance protocol for dealing with allegations of corruption associated with funding by GAC includes specific internal procedures for a thorough assessment of the allegations so that senior management can ascertain whether corrupt practices have occurred and decide on corrective measures, including referral to the RCMP and legal termination of a contract or an agreement due to default.

In addition, GAC requires entities to certify that, in the three years prior to signing a contract or contribution agreement, they have not been convicted of, and are not under sanction for, any corruption-related offence. If an entity has been convicted or is under sanction, it will not be eligible to seek or receive project funding, until its eligibility status changes. However, GAC always reserves the right to do business (conditionally or without condition), or to refuse to do business, with an entity convicted of, or sanctioned for, a corruption-related offence.

Furthermore, Canada requires that all GAC international assistance programming incorporate a governance perspective, which reinforces Canada’s commitment to strengthening governance and fighting corruption through its international development assistance, and emphasises Canada’s views on linkages between governance and sustainable development. Canada is also engaged in anti-corruption reforms through partnerships with other donors and in joint donor funding mechanisms to prevent conflict and corruption, and to enable citizens to hold their governments accountable.

Managing Corruption as a Key Risk in International Assistance and Development – Under the Corporate Risk Profile, corruption risks are identified under three areas: Fiduciary Risk, Human Resources Risk, and Socio-Political Risk. The Corporate Risk Profile establishes methods to analyze and mitigate these risks, and harmonizes them with Internal Audit and Financial Risk Management Unit procedures.

Canada also actively supports the ongoing work of the OECD Development Assistance Committee (DAC) that is related to the Methodology for Assessment of Procurement Systems (MAPS), a common tool used to establish the quality of country procurement systems, including specific anti-corruption measures.^{Footnote xxii} For international development assistance, such 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 addition, Canada has helped to raise awareness globally by supporting audit, transparency and anti-corruption work in partner countries and regions. In its international assistance, Canada supports awareness-raising work of international bodies such as the OECD DAC GOVNET, as well as international organizations. In April 2015, Canada reinforced its partnership with the International Organization of Supreme Audit Institutions (INTOSAI) through an $8 million grant to the INTOSAI Development Initiative for a five-year project (2015-2020) that will, among other activities, seek to strengthen the capacity of Supreme Audit Institutions to detect and report on fraud and corruption.

• Export Development Canada (EDC)

Combating Corruption – EDC’s policy statement with respect to bribery as set out in the EDC Code of Business Ethics and Code of Conduct^{Footnote xxiii} places the onus on EDC employees to “ensure that EDC does not knowingly support a transaction that involves the offer or giving of a bribe, and that EDC exercises reasonable diligence and care not to support such a transaction unknowingly.” It further provides that “[e]mployees are responsible for exercising reasonable due diligence in transactions, and for complying with EDC’s Anti-Corruption Policy Guidelines, including provisions regarding identification of persons associated with transactions who have been convicted of bribery.”

EDC’s Anti-Corruption Policy Guidelines^{Footnote xxiv} 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.

At EDC, exporters are required to sign anti-corruption declarations. In general, the anti-corruption declarations state, with respect to the transaction(s) being supported by EDC, that the exporter has not been and will not knowingly be party to any action which is prohibited by any applicable criminal law dealing with the bribery of foreign public officials, including the CFPOA. Exporters are also required to declare whether they are currently charged with or, within the previous five years, have been convicted of, bribing a foreign public official. Transaction documentation also generally includes exclusions, representations, warranties and covenants, as applicable, dealing with bribery of foreign public officials, or compliance with laws generally.

In 2014, after growing its anti-corruption measures progressively for more than 10 years, EDC undertook an external review of its efforts. Led by a business law firm, the purpose of the review was to assess and confirm whether EDC’s anti-corruption policies, systems, practices and procedures are sound, appropriate, and reflect global best practices, and to provide recommendations for further improvement. The review also opined on EDC’s performance against its obligations under the OECD Recommendation on Bribery and Officially Supported Export Credits, which found that EDC was complying with the obligations and, in some areas, exceeding the requirements. A plan to implement measures that reflect the review’s recommendations is underway and will continue through 2016.
Anti-Corruption Due Diligence – EDC continued its engagement with some of its clients, both Canadian and foreign, on corruption issues. Through this dialogue, EDC provided feedback to customers on the strength of their anti-corruption policies, and provided expertise on how to set the proper tone at the top, how to encourage companies to make improvements in their corporate governance and how to educate employees about the CFPOA.

In cases where companies are facing allegations of bribery or corruption in any jurisdiction, EDC undertakes enhanced due diligence which can include, among other things, an interview with the company and a request for a more detailed anti-corruption declaration. EDC also takes into consideration the positions of other Canadian government departments on companies that face corruption issues. The outcome of the due diligence exercise will determine whether or not EDC will provide support. As reported in EDC’s 2014 CSR Annual Report^{Footnote xxv} released in June 2015, enhanced anti-corruption due diligence was carried out on 58 transactions in calendar year 2014. In several cases, changes in corporate governance and compliance regimes were recommended, such as third-party audits, continued monitoring of higher-risk business, and implementation of facilities for anonymous disclosure of suspected wrongdoing. In certain cases, these were necessary conditions for EDC support.

Raising Awareness – Through direct engagement with its customers, EDC was able to raise awareness and provide information on the risks of bribery and corruption, and best practices to protect businesses against such risks.

EDC also offers information and tools on combating corruption and bribery on its website, including links to the CFPOA, the OECD Convention, and the OECD Recommendation on Bribery and Officially Supported Export Credits.^{Footnote xxvi} In 2014, EDC added a checklist^{Footnote xxvii} to help small and medium-size businesses assess their corruption risk. EDC also has an anti-corruption brochure that is systematically distributed to its new customers with a cover letter from EDC’s President and CEO to inform them of the potential risks they face if exposed to corrupt business practices, and to encourage the development of corporate best practices in this area. The brochure encourages Canadian exporters to develop, apply and document appropriate management control systems that combat bribery.

EDC continues to seek opportunities to educate customers about corruption. During this reporting period, a number of sessions were convened across Canada to raise awareness with EDC customers and other stakeholders of the risks of bribery in international business, including EDC sponsorship of events such as, the Global Organization for Parliamentarians Against Corruption luncheon on “The Fight Against Corruption and Transparency in the Mining Sector,” Transparency International’s Day of Dialogue, and a presentation on the importance of ethics in business made to the industry leaders in Quebec.

• Canada Revenue Agency (CRA)

Tax Deductibility – The Government of Canada and all provinces deny the tax deductibility of outlays made or expenses incurred in the bribery of foreign public officials. As noted in the Eleventh Annual Report, the CRA has revised its Audit Manual and its Criminal Investigations Manual to address the tax non-deductibility of bribe payments to foreign public officials.

Information Sharing – In 2004, Canada signed the Convention on Mutual Administrative Assistance in Tax Matters (Convention), to enable Canada, subject to its domestic laws, to share with law enforcement authorities the information that it receives under this Convention, from tax authorities of other States Parties. On November 4, 2011, Canada also signed a Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters (Protocol). The Protocol updates this Conventionto enhance its effectiveness in combating international tax evasion. Legislative amendments to give full effect to this Convention and its Protocol were contained in Bill C-48, which received Royal Assent on June 26, 2013. This Conventionwas ratified by Canada on November 21, 2013, and is in effect, in respect of Canada, as of March 1, 2014. Further, Economic Action Plan 2014 Act, No. 1 (Bill C-31), which was tabled in the House of Commons on March 28, 2014 and received Royal Assent on June 19, 2014, contains an amendment to section 241 of the Income Tax Act, section 211 of the Excise Act, 2001 and section 295 of the Excise Tax Act to permit the disclosure of taxpayer information by a government official to a law enforcement officer of an appropriate police force (domestic or foreign) where there are reasonable grounds to believe that the information will afford evidence of a listed serious offence. The listed serious offences specifically include section 3 of the CFPOA.

Training and Outreach – Following Canada’s Phase 3 Evaluation under the OECD Convention and Canada’s evaluation under the Inter-American Convention against Corruption, the CRA created an awareness course (HQ1314-000 Raising Corruption Awareness) to better prepare its auditors, examiners and investigators in detecting illegal payments, for example, bribes. The CRA recently updated the course to include the relevant changes to the CFPOA and to include text from the revised OECD Bribery Awareness Handbook for Tax Examiners (Handbook), which was released and made available on the OECD website on November 7, 2013. The Handbook was also made available to all CRA employees through its internal website. The updated awareness course was released in January 2015, as an online, self-study course, and has been completed by 884 employees.

• Department of Justice Canada

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.

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. Moreover, the IAG provides advice to Canadian prosecutors and law enforcement and foreign officials regarding assistance that can be provided without the requirement of a formal request.
Awareness Raising – Department of Justice officials participate in international anti-corruption fora and continue to raise awareness of the CFPOA and of international anti-corruption activities, including with the provinces and territories. The DOJ met with the Canadian Bar Association in October, 2014 to discuss Canada’s anti-corruption efforts, which include raising awareness of the CFPOA.

• Canadian Commercial Corporation (CCC)

Combating Corruption – The Code of Conduct and Business Ethics Policy (Code)forms the basis for CCC’s approach to fighting bribery and corruption.The Code provides specific guidance and direction to CCC’s employees and clients with regard to ethicalbehavior 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 available to CCC clients on its external website^{Footnote xxviii}.

CCC utilizes external resources to bolster its internal anti-corruption expertise and practices. CCC joined Trace International, a non-profit organization founded to provide practical and cost-effective anti-bribery compliance services for multinational companies and their commercial intermediaries. CCC, through its membership in Trace International, offers a training module designed especially for those who work directly with Canadian exporters and foreign government buyers. The anti-bribery module is mandatory for all employees to complete.

Raising Awareness – CCC is committed to ensuring ethical conduct in its business dealings. Prior to a services agreement being signed with CCC, suppliers must complete a due diligence questionnaire (DDQ), which, among other things, assesses how a particular opportunity became known to the exporter, and whether there are any third parties or agents involved at any point. 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.

• Public Services and Procurement Canada (PSPC)

PSPC is committed to protecting taxpayers from fraudulent companies which seek to do business with the Government of Canada. In accordance with the Government of Canada’s commitment to strengthening accountability in procurement and real property transactions, PSPC has implemented new measures, through its government-wide Integrity Regime, that restrict suppliers convicted of a list of offences from doing business with PSPC and many other government departments.

Until recently, anyone convicted under the Criminal Code or the Financial Administration Act of fraud against the Government and anyone found making a payment of a contingency fee to a person to whom the Lobbying Act applies, was ineligible to receive a Government contract.

On July 3, 2015, the Government implemented a government-wide Integrity Regime^{Footnote xxix} for procurement and real property transactions to help foster ethical business practices, ensure due process and uphold the public trust. It is transparent, rigorous and consistent with best practices in Canada and abroad, while supporting transparent competition and an ethical Canadian marketplace.

Under the regime, a bidder is ineligible, for ten years after the date of conviction or discharge, to enter into contract with the Government if they, or members of their board of directors, have been convicted or absolutely/conditionally discharged, in the previous three years, of one of the following offences (or a similar foreign offence):

• payment of a contingency fee to a person to whom the Lobbying Act applies;
• corruption, collusion, bid-rigging or any other anti-competitive activity under the Competition Act;
• money laundering;
• participation in activities of criminal organizations;
• income and excise tax evasion;
• bribing a foreign public official;
• offences in relation to drug trafficking;
• extortion;
• bribery of judicial officers;
• bribery of officers;
• secret commissions;
• criminal breach of contracts;
• fraudulent manipulation of stock exchange transactions;
• prohibited insider trading;
• forgery and other offences resembling forgery; and
• falsification of books and documents.

Key features of the regime are:

• PSPC will administer the regime on behalf of the Government of Canada.
• The ineligibility period can be reduced by five years if the supplier has cooperated with legal authorities or addressed the causes of the misconduct that lead to their ineligibility.
• Suppliers will no longer be automatically ineligible for the actions of affiliates, unless it can be demonstrated that the supplier had a degree of control over the convicted affiliate.
• The Government of Canada will have the ability to suspend a supplier for up to 18 months if the supplier has been charged with or has admitted guilt to a listed offence.
• Provides new tools such as independent expert third-party assessments, and administrative agreements that will specify required corrective actions and ensure their effectiveness.

• Treasury Board Secretariat

Canada amended its Government Contracts Regulations in September 2011 to improve the fairness, openness and transparency of government contracting by deeming certain integrity clauses in all federal government bid solicitation documents and procurement contracts. The deemed terms:

• prohibit the payment of contingency fees to consultant lobbyists;
• declare that the bidder has not been convicted under section 121, 124 or 418 of the Criminal Code;
• provide the contractor’s consent to publicly disclose basic information about a procurement contract; and,
• require a contractor to return any advance payments and provide the contractor’s consent that the government may cancel the contract in the event of non-compliance with a deemed term.

• Innovation, Science and Economic Development Canada

In its Economic Action Plan 2013 and G8 Action Plan on the Transparency of Corporations and Trusts, Canada committed to improve corporate transparency. In addition, Canada further committed in its Economic Action Plan 2014 to consider options to further strengthen corporate transparency in Canada, including an explicit ban on bearer instruments. Public consultations^{Footnote xxx} on the Canada Business Corporations Act^{Footnote xxxi} (CBCA) concluded on May 15, 2014. The consultations were undertaken to ensure that the governance framework for CBCA corporations remains effective, supports investment, and instills investor and business confidence. Information received from the consultation relating to corporate transparency and anti-bribery was shared within government. As part of Economic Action Plan 2015, the Government proposed to modernize Canada’s federal corporate governance frameworks by introducing several amendments to the CBCA, including amendments to strengthen corporate transparency through an explicit ban on bearer instruments. Officials will continue to review other issues of corporate transparency consulted on, such as the adequacy of corporate governance legislation in preventing bribery and corruption and the ability of authorities to access information on corporate beneficial ownership.