Taking a bite out of corruption, one bribe at a time

Arguably, Canada is playing the ‘catch-up’ game when it comes to implementing—and enforcing-laws with ‘teeth’ that are needed to take a ‘bite’ out of corruption.

Greetings and salutations from the exciting world of forensic accounting! We had a great Canadian (and U.S.) representation at the recent AICPA Forensic & Valuation Conference held in Las Vegas, NV, where my co-blogger Brad and I moderated a riveting panel comprised of seasoned lawyers and a computer forensic professional.  For those of you who attended our session-thank you!

As we enter 2014, I want to review one of the big stories from 2013-at least from the perspective of forensic and investigative accounting-is the first trial and conviction that occurred under the Canadian Corruption of Foreign Public Officials Act (“CFPOA”).  The case which is known as R. v. Karigar 2013 ONSC 5199, involved Mr. Nazir Karigar, who in his capacity as an agent for an Ottawa-based technology company, Cryptometrics Canada, was convicted of conspiring to bribe foreign public officials at Air India and India’s Minister of Civil Aviation.

Most Canadians are likely familiar with the SNC-Lavalin matter, which dates back to early 2012, when an internal investigation of the Canadian engineering company revealed evidence of questionable payments made totalling approximately $56 million.  Since that time, the RCMP has been involved and several charges have been made under the CFPOA, to both employees and non-employees of SNC-Lavalin, in connection with a $12 million bridge contract in Bangladesh.

Another Canadian case to add to the list is the Niko Resources Ltd. matter, a company that pled guilty to a charge of bribery under Canada’s CFPOA, following an explosion that occurred at Niko’s natural gas field in Bangladesh.  Niko was in the midst of negotiating a gas pricing contract with the Bangladesh government, when things started ‘heating up’.

Arguably, Canada is playing the ‘catch-up’ game when it comes to implementing—and enforcing-laws with ‘teeth’ that are needed to take a ‘bite’ out of corruption.  Other similar legislation used in the fight against bribery and corruption has been in place for some time and proven to be effective, including the Foreign Corrupt Practices Act in the United States and United Kingdom’s Bribery Act 2010.

When it comes to corruption, it’s not a new concept by any stretch, particularly when we are talking about developing countries.  According to a report released by a Washington-based group called Global Financial Integrity that exposes financial corruption, it found that developing countries are losing an estimated $1 trillion to fraud, corruption and shady business transactions in 2011.

Now, accountants are fairly comfortable talking about numbers, even big numbers for that matter.  But even to the most seasoned bean counter, $1 trillion sounds like a big-and perhaps scary-number!  So, what does that look like when you show all those zero’s? $1,000,000,000,000!!! But I digress.

When it comes to international politics (aka getting into other people’s business), some would argue that Canada does a great job at staying behind the scenes and maintaining a low profile.  In fact, our economy has shown some tremendous resilience during recent economic downturns, particularly when we stand next to our American neighbours.  I would like to think that has something to do with keeping our ‘political noses’ clean…

Notwithstanding, it may come as a shock to our readers that of the more than 600 companies and individuals listed in the World Bank’s ‘Blacklist’ for fraudulent or corrupt conduct, at least 117 or approximately 20 per cent are Canadian companies!! 

For a country that professes to keep a low profile, it’s interesting to point out that we are actually the country with the highest number of companies that have head offices in Canada on that list (excluding overseas subsidiaries), only to be followed by the U.S. (44 companies), Indonesia (43) and the U.K. (40).

Now before you start packing up your minivan and heading to Norway or to some other country that has not yet been ‘blacklisted’, keep in mind that 115 out of the 117 represent SNC-Lavalin and its subsidiaries!

Unlike the ‘50 Best Employers in Canada’ compiled by Aon Hewitt, getting on the World Bank’s ‘blacklist’ is not necessarily something you want to have prominently displayed on your website or on your letterhead.

Apparently the criteria to get on the World Bank’s ‘blacklist’ includes (but is not necessarily limited to): Bribery, fraud, collusion, coercion or obstruction, either in bidding for contracts or carrying them out.

In closing, it’s encouraging to see that Canada is undoubtedly taking bribery and corruption very seriously and sending a strong message to those would-be ‘bribers’ and ‘corrupters’ and their respective organizations who collectively believe that they are above the law when it comes to securing international contracts. 

As we traverse into 2014 and beyond, we will undoubtedly see more prosecutions and charges, as Canada continues to takes a bite out of corruption, one bribe at time.


About the Author

Edward Nagel, CPA, CA•IFA, CBV

Forensic accountant