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Bribery risks heighten after law changes

The risks for Canadian businesses who pay bribes abroad are higher than ever following recent changes to the law, Toronto forensic accountant and investigator Dave Oswald tells AdvocateDaily.com.

Amendments to the Corruption of Foreign Public Officials Act removed the exception built into the law allowing facilitation, or “grease payments.”

These amendments were built on previous changes that boosted penalties and created a new “books and records” offence.

Oswald, the founder and owner of the Oakville-based white-collar crime investigation boutique Forensic Restitution, says the new rules will require considerable attention since statistics collected by international bodies show Canadian companies are among the most prolific payers of bribes in areas of the world where corruption is rife.

“They need to be very careful in future to avoid paying bribes of any kind, or the consequences could be quite nasty,” he says.

Although the number of convictions under the Act can so far be counted on the fingers of one hand, Oswald says that could soon change.  

“It’s getting more and more difficult to legitimately pay bribes, and if cases do start to proceed, many companies are going to be at risk,” he says.

“The ramifications for being caught in a breach are huge, especially for a larger business,” Oswald adds, noting that companies found in contravention of the Act can face lengthy bans from working on government contracts. Individuals meanwhile, could expose themselves to as many as 14 years in prison on conviction.   

He says the facilitation payment ban removed most of the remaining grey areas in Canadian law over what constitutes a bribe.

“Facilitation payments weren’t very well defined. They were essentially smaller bribes paid for routine government actions, such as obtaining permits and processing, but it was hard to know what was acceptable. Is $100 small enough? What about $1,000, or a company car?” Oswald says. “Now that’s been taken out, and any bribe paid to a foreign official can get you into trouble.

“The only way you can still pay one is if you’re in personal danger,” Oswald adds.

He says the books and record offence is particularly troublesome for accountants in businesses that become aware of a bribery payment made by a company official overseas and go along with its concealment under another, apparently legitimate expense label.

“If you’re caught, then not only will the person who paid the bribe be guilty, but the one who hid it will also be liable for up to 14 years in jail,” Oswald explains.

The law also allows for deferred prosecution under the Act, where legal action can be suspended for a period of time, as long as the company can produce a senior figure responsible for the breaches.

“They’re not interested in junior clerks, but if a financial director or someone like that is thrown under the bus and sent to jail, the company might escape prosecution,” Oswald says.

He says the changes bring Canada into line with first-world international anti-corruption standards, mimicking language in similar U.S. and U.K. laws.

“Still, the law can be problematic for some companies because not every country is operating under the same rules. In nations such as Russia, India and China, they don’t really subscribe to the same philosophy when it comes to paying bribes, so the playing field is anything but fair,” Oswald says.

When he’s called in to investigate suspected bribery payments, Oswald says they’re often easy to identify, even if disguised in the books.

“Most people take bribes in round amounts, either in the local currency or U.S. dollars. They stand out in the invoice books because if you’re really buying something from the stationery shop, it’s rarely going to cost exactly $100 on the dot,” Oswald explains.  

He says it also helps to have someone on the investigation team who understands the lay of the land in local offices where bribery is suspected.

“If you see repeated entries for around $100 for window-washing in South Africa, that’s going to raise red flags, because the average wage is closer to $20 per day,” Oswald says.

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