Wednesday, June 29, 2011

A Cold Wind Blows in from Canada: Niko Pleads Guilty to Bribery

As companies prepare for the upcoming effective date of the UK Bribery Act, a new shot was heard around the world -- Canada has now entered into the global anti-corruption world with an enforcement action of its own.

Canada has been the subject of international criticism for failing to enforce its Corruption of Foreign Public Officials Act (CFPOA) since its enactment in 1991.  The CFPOA is modeled after the FCPA with the exception of a books and records requirement.

On Friday June 24, 2011, Niko Resources Ltd. entered a guilty plea of guilty to a single charge under the CFPOA, the first major enforcement action Canada has taken.

In light of this action, Canada's eaarlier announcement that it has 23 ongoing corruption investigations signals that more are to come.

Niko admitted that between February 1, 2005 and June 30, 2005, it provided a Toyota Land Cruiser SUV valued at $190,000 ($Cdn) to the Bangladesh State Minister for Energy and Mineral Resources in order to influence him in dealings with its Bangladesh affiliate. Niko also paid travel and accommodation expenses (valued at $5000) for that official to travel to Calgary and New York and Chicago, to attend a conference and visit family. The recommended fine of $8.26 million (plus mandated fine surcharges of an additional 15%) was agreed to on the basis of the Company’s co-operative stance with Royal Canadian Mounted Police.  The Company also agreed to a three-year corporate probationary term, during which it must take steps to improve compliance in this area.

In the Niko case, no individuals were charged. Under Canadian law, individual executives (and their companies) may be liable for prosecution not only where they engage in deliberate intentional conduct, but also where they may be “willfully blind” to corrupt conduct.   

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