Report finds enforcement against foreign bribery shockingly low among half of G20 countries including Canada
Toronto, 13 October 2020 –With its limited level of enforcement in matters of foreign corruption, bribery and fraud almost unchanged since 2018, Canada ranks among the worst global exporters according to a new report released today by Transparency International. In an increasingly worrisome trend, Canada is slipping further behind key OECD peers, such as the US, UK, Germany, France and Australia.
Exporting Corruption 2020: Assessing Enforcement of the OECD Anti-Bribery Convention, finds that active enforcement against foreign bribery significantly decreased since 2018 in OECD countries and other major exporters.
As a major exporting country, Canada compares unfavourably to peer economies in the 2016-2019 period covered by the Report. It opened two new investigations, commenced one new case and concluded four cases with sanctions. This is based on the limited information available, as there are no official publicly available statistics on the number of investigations commenced.
The most significant development during the Report timeframe was the introduction, in September 2018, of a new non-trial resolution mechanism into the Criminal Code called a remediation agreement – also known as a deferred prosecution agreement (or DPA) in other jurisdictions.
In December 2019, the Public Prosecution Service also settled long-standing charges against engineering firm SNC-Lavalin Group Inc and two of its subsidiaries for fraud and corruption in Libya. In the settlement, one subsidiary, SNC-Lavalin Construction Inc, pled guilty to fraud charges and received Canada’s largest monetary penalty ever for a fraud conviction: $280 million. The subsidiary is also subject to a 3 year probation period, under the supervision of third-party monitor. Prosecutors declined to use the new remediation agreement in the SNC-Lavalin case as they concluded it was not in the public interest nor appropriate in the circumstances. To date, no case has been resolved through a remediation agreement, a development of some concern.
“There is a lot to learn from the SNC case, how remediation agreements came into law, and where we go from here” said Professor Jennifer Quaid who provided research for the report. “Going forward, Canadians need greater transparency on how cases are decided and greater guidance is needed for prosecutors and companies on how remediation agreements should work[1].”
Canada’s limited enforcement of the CFPOA and of money laundering were in the national spotlight in 2019 due to the SNC-Lavalin case and the revelations of the extent of money laundering in British Columbia. These cases highlighted the gaps in Canada’s anti-corruption toolkit and enforcement.
Remediation agreements were introduced as one tool to help address Canada’s legislative gaps, but more needs to be done including introducing a public registry of beneficial ownership transparency and exploring tools such as a ‘Failure to Prevent’ offence and the establishment of permanent, specialized law enforcement units.
“There’s unfortunately a persistent belief that corruption is not something Canadian companies need to think about, either because some companies just don’t understand the risk, or worse, some companies think they won’t get caught” said TI Canada Executive Director, James Cohen. “The truth is that Canada needs to drastically step up its efforts in ensuring we are not the source of corruption, or the place to hide the money from corruption.”
Additional Highlights from the Exporting Corruption Report
Only four out of 47 countries, which make up 16.5 per cent of global exports, actively enforced legislation against foreign bribery, compared to seven countries and 27 per cent of global exports in 2018.
According to the report, the biggest global exporters with the worst track records are China, Japan, the Netherlands, South Korea, Hong Kong, Canada, India and Mexico.
The US, UK, Switzerland and Israel are the only countries assessed that continue to actively enforce against foreign bribery.
Large non-OECD exporters, China,Hong Kong, and India failed to open a single foreign bribery investigation from 2016 to 2019.
Since 2018, four countries, accounting for 12.4 per cent of global exports, declined in performance, while six countries, accounting for 6.8 per cent of world exports, improved.
Germany, which is the third largest exporter (with 7.6 per centof global exports) pursued fewer investigations and closed fewer cases against graft overseas. Similarly, Italy, a top-10 exporter (2.6 per cent), also declined, as did Norway.
Conversely, France and Spain, which account for 3.5 per cent and two per cent of global exports respectively, improved their performance.
Recommendations
Transparency International Canada calls on all countries that are signatories to the OECD Anti-Bribery Convention, as well as the other major global exporters to do more to enforce against foreign bribery, including:
Increase transparency of court decisions in corruption matters;
Create a publicly accessible centralised register of beneficial ownership information;
Promptly enact and publish the detailed regulations and administrative guidance needed to support full implementation of the remediation agreement regime;
Increase transparency about how prosecutors evaluate the public-interest criteria when assessing whether it is appropriate to invite an organisation to negotiate a remediation agreement;
Consider the merits of creating a “Failure to Prevent” offence as an additional enforcement tool;
Increase current funding and resources to support and expand existing permanent, specialized enforcement teams dedicated to the investigation of corruption cases;
Develop alternatives to criminal enforcement as a way of expediting the resolution of corruption cases, where appropriate;
Publish detailed, publicly available guidance that sets out: (1) clear standards of what constitutes an appropriate corporate compliance programme, and (2) what kind of cooperation with enforcement authorities is expected from businesses .
For a full list of recommendations, read the report: https://www.transparency.org/en/exporting-corruption
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About Transparency International Canada
Transparency International Canada (TI Canada), established in 1996, is Canada’s leading anti-corruption organization. We are the Canadian chapter of the global Transparency International (TI) movement that has chapters working in more than 100 countries and an unparalleled global understanding and expertise of the challenges.
About Transparency International
Through chapters in more than 100 countries and an international secretariat in Berlin, Transparency International has been leading the fight against corruption for the last 27 years.
About Exporting Corruption
Since 2005, the Exporting Corruptionseries by Transparency International places countries into four categories of foreign bribery enforcement according to the number of investigations and cases the authorities open and conclude with sanctions over a four-year period. Different weights are assigned according to the stages of enforcement and the significance of cases. Countries’ share of world exports also factors into their placement.
For Media Inquiries please contact:
James Cohen
Executive Director
Transparency International Canada
Phone: 416-488-3939
E-mail: ti-can@transparencycanada.ca
[1]For more information on RAs, please consult TI Canada’s report Overview of Remediation Agreements in Canadahttps://static1.squarespace.com/static/5df7c3de2e4d3d3fce16c185/t/5f73e45e5c383345fa626237/1601430625022/Overview+of+Remediation+Agreements+in+Canada+%286%29.pdf