The Ontario Court of Appeal’s decision in this case injects new life into anti-corruption pursuits under the CFPOA and is a reminder that individuals may be personally liable for illegal conduct undertaken for a company’s benefit.
On July 6, 2017, the Ontario Court of Appeal upheld Canada’s first court-imposed conviction under the Corruption of Foreign Public Officials Act (the “CFPOA” or the “Act”) for agreeing to offer a bribe to Air India officials in order to secure a contract.
In the first trial of a bribery charge under the CFPOA, Nazir Karigar – a paid agent of Cryptometrics Canada hired to assist in getting business in India – was found guilty of conspiring with other persons to pay bribes to Air India officials and the Indian Minister of Civil Aviation to secure a major facial recognition software contract. Analogizing the bribery offence to a sophisticated scheme to commit fraud, the lower court convicted Karigar and imposed a sentence of three years jail time. Karigar appealed on three grounds: (i) that there was no sufficient connection to Canada to give the court territorial jurisdiction over what occurred; (ii) that the Crown must prove an agreement between the accused and the foreign public official and that it is not sufficient to prove a conspiracy to offer a bribe to a foreign public official; and (iii) that the trial judge erred in his application of the co-conspirators’ exception to the hearsay rule and misapprehended some of the evidence.
The Court’s decision should serve as a warning to Canadian businesses in that it clarifies that an internal agreement to pay a bribe to a foreign public official will constitute a CFPOA violation even if no bribe is ultimately paid, or even offered, to the official. Subject to any appeal sought to the Supreme Court of Canada, this constitutes a very broad interpretation of the bribery offence under the Act which companies and individuals should take into careful account in considering dealings with foreign public officials.
Notably, the offence was committed prior to enactment of section 5 of the CFPOA, which provides that any offence under the Act committed outside Canada by a Canadian citizen or permanent resident is deemed to have been committed in Canada. Karigar submitted that the essential elements of the offence had taken place outside of Canada – discussions having taken place primarily in India and New York – such that there was no sufficient connection to Canada to give the court territorial jurisdiction.
The Court rejected this argument, holding that the substantial link test is not limited to the essential elements of the offence and that bribery could not be hived off from the legitimate aspects of the transaction. The Court found territorial jurisdiction had correctly been established since Karigar was a Canadian businessman who approached a Canadian company. It also found that Karigar’s Canadian citizenship had been invoked by the trial judge not as an improper (i.e. pre-enactment) application of section 5, but rather as one of the factors that linked the offence to Canada.
The territorial jurisdiction portion of the decision will likely be irrelevant to future cases following the enactment of section 5, but maintains jurisdiction over any cases where the impugned conduct occurred before 2013.
Interpretation of section 3
Based on “overwhelming” evidence obtained through the testimony of an unindicted co-conspirator and from Karigar himself in emails and a statement to the RCMP, the trial judge was satisfied beyond a reasonable doubt that Karigar was involved in a conspiracy to offer bribes to Air India officials in order to win the contract. However, the trial judge did not conclude that Karigar actually paid a bribe, or directly agreed with Air India official to do so. As such, Karigar submitted that the Crown must prove an agreement between the accused and the foreign public official, and that it was not sufficient to simply prove a conspiracy to offer a bribe.
The Court rejected this argument, finding that the language “gives, offers or agrees to give or offer” a bribe under the Act was not limited to an agreement between the accused an a foreign public official. Rather, the court found nothing in the statute placed any limitation on who must be the parties to the agreement, and that an agreement between the accused and a third party to pay a bribe to a foreign public official satisfied the elements of the offence. As such, the fact that Karigar never actually offered to bribe Air India officials – certain co-conspirators later did, but on their own having lost trust in Karigar – was irrelevant. The mere agreement between the co-conspirators to do so was enough to constitute an offence.
Karigar claimed the trial judge erred in his application of the co-conspirators’ exception to the hearsay rule and misapprehended some of the evidence. The Court found the trial judge had properly applied and interpreted the evidence.
The decision serves as a reminder that individuals may be personally liable under the CFPOA for illegal conduct undertaken for the company’s benefit. Karigar represents the first individual conviction under the Act, but will likely not be the most severe. Notably, while Karigar was sentenced under the pre-amendment penalty of a maximum of five years, the Act has since been amended to increase the maximum jail time for an offence to 14 years, meaning similar conduct would likely be met with heavier punishment were it to occur to today. At the same time, the fact that this is the first conviction in a contested trial under the 1999 Act suggests that Canada’s record as promptly addressing corruption matters requires enhancing.
By Lawrence E. Ritchie and Malcolm Aboud, Osler
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