Does Canada need a deferred prosecution agreement process?

  


An allegation of bribery or corruption is one of the fastest ways for a company to tarnish its reputation and cause stakeholder damage. In Canada, the Canadian Corruption of Foreign Public Officials Act (CFPOA) makes it a criminal offence to bribe foreign public officials to obtain an unfair business advantage. This act is similar to the United States’ Foreign Corrupt Practices Act (FCPA) and the United Kingdom’s Bribery Act.

Can Canadian companies benefit from the government and legal system having another tool to deal with bribery and corruption issues rather than simply guilty pleas or convictions? A recent report from Transparency International Canada (TI Canada) says yes, and is strongly encouraging the implementation of a deferred prosecution agreement (DPA) scheme here in Canada. At PwC Canada, we agree. Such DPA scheme would be a way to encourage compliance with the CFPOA by providing prosecutors a tool to negotiate with the accused under judicial supervision—and avoid long, costly trials.

TI Canada’s July 2017 report, “Consideration of a Deferred Prosecution Agreement Scheme in Canada,” outlines the pros and cons of DPAs, looks into both the US and UK approaches to DPAs and highlights key differences. Canada doesn’t currently have the legal framework to allow DPAs, leaving prosecutors with only two stark alternatives: prosecute and charge alleged offenders, or decide not to prosecute alleged offenders.

A middle-ground solution

With DPAs, proceedings may be suspended, the accused will agree to certain penalties, including conducting robust remediation, in order to reduce the risk of corruption reoccurring. In exchange, the prosecutor could drop all charges—if the accused fulfills all required agreed upon commitments.

“In the Canadian context, DPAs, if properly designed and implemented, have the potential to support increased enforcement of anti-corruption laws and increased self-disclosure and compliance by corporations,” the TI Canada report said. What’s more, a DPA regime may also help to prevent unintended consequences associated with a criminal conviction, such as significant job losses and wider negative implications to the economy. For example, companies charged under the CFPOA are ineligible to bid on government contracts for 10 years. Overall, DPAs are intended to make sure bribery and corruption are subject to appropriate penalties and to help the government improve detection and compliance.

In September 2017, the Government of Canada announced it was taking action against corporate wrongdoing by seeking input on potential enhancements to the recently implemented Integrity Regime and on whether UK-style DPAs should be used in Canada. This consultation period closed on November 17, 2017.

TI Canada’s recent white paper states that a successful DPA framework within Canada’s legal system should require:

  • financial reparations
  • effective compliance reforms
  • accountability of individual wrongdoers

Strengthening trust

As Canadian organizations continue operating in an environment without DPAs, it’s still important to take proactive steps to enhance trust across your network and know what could put your business at risk. Whether or not Canada ever adopts DPAs within its legal framework, organizations should still consider the following in their compliance programs:

  1. Test your books and records. (There are certain provisions within the CFPOA which requires the accurate keeping of books and records. For example, concealing a bribery offence in the books and records may result in 14 years imprisonment.)
  2. Establish strong and appropriate anti-corruption policies and procedures.
  3. Train staff on the anti-bribery and corruption program.
  4. Conduct appropriate due diligence investigations on third parties to make sure they’re not affiliated to politically exposed persons or involved in criminal activities (e.g. money laundering, drug trafficking or terrorist activities).
  5. Conduct internal investigations when subjected to regulatory investigations or to any potential risk involving violations of the CFPOA, FCPA or Bribery Act.
  6. Assist with remediation after being exposed to any type of investigation.

More guidance

While the US and UK regulators have issued detailed guidance documents to help organizations and individuals with legal requirements to comply with their corruption acts, Canadian authorities have yet to issue similar documents. The result can then be that companies have no clear guidance and perhaps a limited ability to quickly detect bribery and corruption issues and an increased risk may be found CFPOA non-compliant.

If the government decides to adopt a DPA process in Canada, it’s key for regulators to provide the proper guidance to help organizations prepare for a new model—while companies should seek support with newly-introduced frameworks to ensure compliance and avoid hurdles already seen abroad.

Our Canadian forensic team has a depth of experience in both helping companies by developing and establishing anti-bribery compliance programs to mitigate organizations under the scrutinies of the CFPOA, the FCPA or the UK’s Bribery Act and conducting corruption investigations. We can help you proactively decrease risks, setting you on the path to greater trust.
 

Contact us

Frederic Miller
Managing Director
Tel: +1 416 814 5886
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