Ontario’s highest court, the Ontario Court of Appeal, issued a decision on July 6, 2017 in R. v. Karigar, which takes enforcement of foreign bribery to another level in Canada. In 2013, Mr. Karigar was convicted of offering to bribe a foreign public official contrary to paragraph 3(1)(b) of the Corruption of Foreign Public Officials Act (“CFPOA”). Mr. Karigar appealled the conviction on three grounds:
- There was no sufficient connection to Canada to give the Ontario Court territorial jurisdiction over what occurred (the bribery);
- The Crown must prove an agreement between the accused and the foreign public official; and
- The trial judge erred in his application of the co-conspirators’ exception to the hearsay rule and misapprehended some of the evidence.
The Ontario Court of Appeal dismissed the appeal.
Jurisdiction of Canadian Courts
The Ontario Court of Appeal agreed with the trial judge that Canada has territorial jurisdiction over foreign bribery. The appropriate test is whether there is a real and substantial link between the offense and Canada. Canadian courts frequently take jurisdiction over transnational offences that occur partly in Canada, especially where Canada has a legitimate interest in doing so. The Ontario Court of Appeal agreed with the trial judge “that the substantial link test is not limited to the essential elements of the offence, and that the bribery could not be hived off from the legitimate aspects of the transaction for the purposes of the territorial connection analysis.”
In the Karigar case, Mr. Karigar was a Canadian businessman who approached a Canadian company with a business proposal that ultimately involved a bribery scheme in India. Mr. Karigar acted as an agent of the Canadian company in his negotiations with Air India officials (who received bribes or were to receive bribes) to sell Cryptometric Canada’s facial recognition technology. If the contract was to be awarded, much of the work was to be performed in Canada to fulfill obligations under the contract (there were four pages of summarizing the evidence before the trial judge). Most of the emails and documents seized as evidence were seized from offices in Canada. Most of the witnesses in the court proceedings were from Canada. Mr. Karigar made admissions in Canada to the RCMP.
The Ontario Court of Appeal agreed with the trial judge that there was substantial evidence of a substantial connection to Canada. The trial judge was satisfied beyond a reasonable doubt and the Ontario Court of Appeal could not find fault with that. The Ontario Court of Appeal did not need new Section 5(1) of the CFPOA, which came into effect after the offences at issue were committed.
Interpretation of Subsection 3(1) of the CFPOA
The Ontario Court of Appeal reviewed subsection 3(1) of the CFPOA, which provides:
3(1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official
(a) as consideration for an act or omission by the official in connection with the performance of the official’s duties or functions; or
(b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.
The Appellant argued that the word “agrees” required evidence of an agreement between the party charged and the foreign public official. The Ontario Court of Appeal disagreed and held that the context is important. The context is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“the Convention”). The Convention requires Canada and other signatories to criminalize attempts and conspiracy to bribe a foreign public official to the same extent as such prohibitions apply to domestic public officials. The Convention seeks to promote a level playing field for the pursuit of international business among member states.
Furthermore, the Supreme Court of Canada recently commented on the significance of corruption in international business practices in World Bank Group v. Wallace, 2016 SCC 15,  1 S.C.R. 207, at para. 1:
“Corruption is a significant obstacle to international development. It undermines confidence in public institutions, diverts funds from those who are in great need of financial support, and violates business integrity. Corruption often transcends borders. In order to tackle this global problem, worldwide cooperation is needed.”
Then the Ontario Court of Appeal ensured that subsection 3(1) of the CFPOA has sharp teeth. The Court wrote:
“In s. 3, the offence is committed when a person “directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official.” As the appellant submits, the offence is clearly committed when a person agrees with a foreign public official to give that official a benefit. But equally clearly, the offence is not limited to that scenario. It includes both a direct and an indirect agreement to give or to offer an advantage. There is no limiting language on who must “agree”, prescribing the parties to the agreement. It does not say that the agreement must be with the foreign official, only that the loan, reward, advantage or benefit that is the subject of the agreement must be a loan, reward, advantage or benefit to (or for the benefit of) a public official. On the language alone, there is no basis to read in a limitation on who must be parties to an agreement.” (Emphasis Added)
The Ontario Court of Appeal was clear – “to read in such a limitation would constrain the ability of the Crown to enforce the policy of the Act in accordance with Canada’s obligations under the Convention. Article 1 of the Convention includes conspiracies to bribe as well as actual bribes of foreign officials.”
The Ontario Court of Appeal quickly dismissed the arguments about the trial judge’s alleged errors.
Importance of Ontario Court of Appeal Decision
This case is important because an individual was convicted of agreeing to bribe a foreign public official – it was not a case against a corporation. Mr. Karigar was sentenced to three years in jail. There have been three other convictions of corporations:
- Hydro Kleen Systems paid a fine of $25,000 for bribing a U.S. customs official;
- Niko Resources was fined $9.1 million for bribing a foreign public official in Bangladesh; and
- Griffiths Energy paid $10.4 million for bribing the wife of a foreign public official from Chad.
While there was a case against officials from SNC-Lavalin, that case was was dismissed earlier this year. See Canada’s Big Anti-Bribery Case Ends in Dismissed Charges.
Individuals must carefully consider their activities. Facts are important. This means that compliance programs are important. While Mr. Karigar had a central role in the bribery activities, the rules that come out of this decision could apply to others within a corporation who are involved in the foreign bribery activities. The decision should be read carefully by Canadian companies who operate in jurisdictions where bribery is prevalent. The long arm of Canadian law should cause companies to re-evaluate their compliance programs.
Also, Cryptometrics Canada could have had the best facial recognition technology – now their name is associated with a bribery case. The lost opportunities are likely significant.
For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at firstname.lastname@example.org.