tag:theconversation.com,2011:/us/topics/anti-bribery-act-27685/articlesAnti-Bribery Act – The Conversation2023-11-01T20:32:36Ztag:theconversation.com,2011:article/2138412023-11-01T20:32:36Z2023-11-01T20:32:36ZCanada needs to move beyond poorly enforced bribery laws and tackle corruption’s root causes<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canada-needs-to-move-beyond-poorly-enforced-bribery-laws-and-tackle-corruptions-root-causes" width="100%" height="400"></iframe>
<p>Canada’s enforcement of laws against foreign bribery is weak, according to <a href="https://www.oecd.org/corruption/canada-must-boost-its-efforts-to-fight-foreign-bribery-says-the-oecd-working-group-on-bribery.htm">a recent report from the Organization for Economic Co-operation and Development</a> (OECD). </p>
<p>A working group from the OECD has found that, in the nearly 25 years since Canada passed the <a href="https://laws-lois.justice.gc.ca/eng/acts/c-45.2">Corruption of Foreign Public Officials Act</a> and <a href="https://www.oecd.org/corruption/oecdantibriberyconvention.htm">signed onto the OECD Anti-Bribery Convention</a>, only two people have been convicted of foreign bribery and four companies have been sanctioned.</p>
<p>Corruption is a serious issue and a very costly threat to Canada’s foreign trade and international reputation. Although there are no reliable statistics on the exact amounts lost to global corruption, <a href="https://www.un.org/press/en/2018/sc13493.doc.htm">estimates range in the trillions of dollars</a>. The OECD said Canada must do more to deter foreign bribery and other corruption offences. </p>
<p>Our recent research sheds light on both Canada’s slow rate of progress in combating corruption and the OECD’s failure to get to the root causes of corruption.</p>
<h2>SNC-Lavalin controversy</h2>
<p>In the past, Canada has had difficulty passing and enforcing laws against powerful multinational corporations. Nowhere is this more clear than in the SNC-Lavalin controversy.</p>
<p>In 2018, Parliament <a href="https://laws-lois.justice.gc.ca/eng/acts/c-46/section-715.32.html">added remediation agreements to the Criminal Code of Canada</a> in a budget bill. These agreements offer a new way to settle criminal charges for crimes like corruption. Unlike plea bargains, they provide a means to resolve cases without convictions. This mitigates the negative effects on those not involved in crime, like employees and pensioners, while still imposing consequences.</p>
<p>Remediation agreements attracted little attention until news broke that Kathleen Roussel, the head of the Public Prosecution Service of Canada, <a href="https://www.cbc.ca/news/politics/snc-lavalin-federal-court-appeal-1.5086604">refused to invite engineering and construction giant SNC-Lavalin to negotiate such an agreement</a> in 2018.</p>
<p>SNC-Lavalin had hoped to use a remediation agreement to settle criminal charges relating to a <a href="https://www.cbc.ca/news/canada/montreal/snc-lavalin-trading-court-libya-charges-1.5400542">multi-year scheme of foreign bribery and corruption</a> in obtaining government contracts in Libya. It made no secret of being unhappy with the decision of prosecutors, <a href="https://www.canlii.org/en/ca/fct/doc/2019/2019fc282/2019fc282.html">which it tried unsuccessfully to challenge in court</a>.</p>
<p>A few months later, another political scandal erupted when the media reported Prime Minister Justin Trudeau and his staff had <a href="https://theconversation.com/saying-no-to-power-the-resignations-of-women-cabinet-members-112693">pressured then-attorney general Jody Wilson-Raybould to overrule Roussel’s decision</a>, leading to Wilson-Raybould’s resignation. It was later determined <a href="https://ciec-ccie.parl.gc.ca/en/investigations-enquetes/Pages/TrudeauIIReport-RapportTrudeauII.aspx">the prime minister’s actions violated the Conflict of Interest Act</a>.</p>
<h2>The state of affairs</h2>
<p>In 2022, we conducted a survey asking how lawyers, consultants, government officials and academics felt about the state of anti-corruption laws in Canada. We asked their opinions on what corruption is, what acts are most serious, what countries are most corrupt and what remedies they would recommend. </p>
<p>The majority of participants accepted the standard legal definition of corruption, which involves bribery offered by a private agent to a public official.</p>
<p>While acknowledging the existence of corruption in Canada, participants believed it was most severe and widespread in non-western or developing nations, and less prevalent among fellow middle-class professionals. While toxic corporate cultures were identified as contributing to corruption, weak individuals were seen as the primary issue rather than built-in incentives to maximize profit.</p>
<p>They all criticized the federal government’s enforcement record but saw the introduction of the <a href="https://www.canada.ca/en/innovation-science-economic-development/news/2023/03/government-of-canada-tables-new-legislation-to-create-a-beneficial-ownership-registry.html">Beneficial Ownership Registries in the 2023 budget</a> as promising if enforced. This registry requires companies to reveal the true owners behind shell companies.</p>
<p>One corruption professional said:</p>
<blockquote>
<p>“There is no central government agency that is responsible to co-ordinate corruption at the federal level. It is a patchwork or Swiss cheese [model] with lots of holes in it. The federal government needs…to develop a national anti-corruption policy.”</p>
</blockquote>
<p>Another corruption professional said:</p>
<blockquote>
<p>“Sentences are not enforced and the criminal system is not up to date to deal with long and complex corruption cases…police agencies must possess sufficient tools to battle corruption in an efficient manner.”</p>
</blockquote>
<p>These findings reflect what we already know. Laws that sanction the crimes of the powerful are often poorly drafted and there are insufficient resources to ensure proper enforcement. Too many are willing to break the rules because they know governments will do little about it.</p>
<h2>Neoliberalism and corruption</h2>
<p>Our findings reveal that current anti-corruption efforts and debates often mask the role globalization plays in enabling corporate misconduct. The prevailing belief is that minimal government regulation is a good thing, as exemplified by <a href="https://www.canada.ca/en/government/system/laws/developing-improving-federal-regulations/modernizing-regulations/red-tape-reduction-act.html">Canada’s “one-for-one” rule</a> that dictates if a new regulation is introduced, an existing one must be removed.</p>
<p>The role globalization plays in corruption, which originally led to demands for new laws in the first place, often gets lost in endless technocratic discussions about what laws are most effective for catching corporate cheats. This includes the OECD’s convention and their evaluations of Canada’s anti-bribery efforts.<br>
In the 1980s, <a href="https://theconversation.com/what-exactly-is-neoliberalism-84755">neoliberal economic doctrines</a> swept through capitalist nations worldwide. Their central message was that maximum efficiency and productivity required that corporations be freed from government interference. </p>
<p>What followed was a period of unchecked globalization and massive privatization of public sector operations. Regulations were removed, regulatory agencies were downsized and funding was cut. Tariffs and currency restrictions were jettisoned, allowing corporations to expand their operations globally. </p>
<p>The surge in globalized free trade created mammoth increases in corporate wealth, size and power, and corresponding increases in inequality within and across nations. Many transnational corporations now have <a href="https://www.visualcapitalist.com/the-tech-giants-worth-compared-economies-countries">annual sales and profits greater than the GDP of nations</a>.</p>
<h2>Lasting effects of deregulation</h2>
<p>The <a href="https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot">impact of neoliberal policies has been profound</a>. The destruction of regulation, regulatory agencies and regulatory agents through downsizing, defunding and deregulation removed many of those responsible for passing and enforcing laws punishing corporate wrongdoing. While deregulation in the United States <a href="https://www.econlib.org/library/Enc/Reaganomics.html">started with the election of Ronald Reagan</a> in 1980, <a href="https://www.politico.com/sory/2017/01/trump-signs-executive-order-requiring-that-for-every-one-new-regulation-two-must-be-revoked-234365">Donald Trump carried it to an extreme</a>. </p>
<p>While successive Canadian governments have never directly copied their U.S. counterparts, we, too, have witnessed the <a href="https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/canlemj21&section=17">negative outcomes associated with globalization</a>.</p>
<p>Because multinational corporations have been allowed to grow so large and powerful, and are now so central to our economic and cultural lives, governments lack the ability to curb or punish their unlawful acts. As the SNC-Lavalin debacle illustrated, our governments frequently lack the motivation to do so as well.</p>
<p>Given all this, serious action against corruption, in Canada and abroad, must include moving beyond the narrow and reactive confines of bribery law and policy, as espoused by the OECD and woefully mishandled by the Canadian government, to confront the harms associated with globalization and bring multinational corporations under democratic control.</p><img src="https://counter.theconversation.com/content/213841/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laureen Snider receives funding from the Social Sciences and Humanities Research Council of Canada.</span></em></p><p class="fine-print"><em><span>Jennifer Quaid holds research grants from the Social Sciences and Humanities Research Council of Canada. She is a member of Transparency International Canada and the chair of its Legal Committee. She is also a Senior Fellow at the Centre for International Governance Innovation (CIGI). </span></em></p><p class="fine-print"><em><span>Jon Frauley receives funding from the Social Sciences and Humanities Research Council of Canada.</span></em></p><p class="fine-print"><em><span>Steven Bittle receives funding from the Social Sciences and Humanities Research Council of Canada. </span></em></p>If Canada wants to fix its reputation for being weak on corruption, it needs to confront the harms associated with globalization and bring multinational corporations under democratic control.Laureen Snider, Professor Emerita, Department of Sociology, Queen's University, OntarioJennifer Quaid, Associate Professor & Vice-Dean Research, Civil Law Section, Faculty of Law, L’Université d’Ottawa/University of OttawaJon Frauley, Professor of Criminology, L’Université d’Ottawa/University of OttawaSteven Bittle, Professor, Department of Criminology, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1317112020-06-17T16:56:30Z2020-06-17T16:56:30ZAirbus: flying high on the wings of corruption<figure><img src="https://images.theconversation.com/files/342466/original/file-20200617-94078-17enfs0.jpg?ixlib=rb-1.1.0&rect=0%2C6%2C1497%2C997&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cockpit of the Airbus A330-900.</span> <span class="attribution"><a class="source" href="https://www.airbus.com/aircraft/passenger-aircraft/a330-family/a330-900.html">P. Pigeyre/Airbus</a></span></figcaption></figure><p>On January 31, 2020, the European aerospace manufacturer Airbus agreed to pay nearly <a href="https://www.nytimes.com/2020/01/31/business/airbus-corruption-settlement.html">3.7 billion euros in fines to settle bribery charges</a> stemming from a four-year investigation by French, British, and US authorities. The investigations found that for more than a decade the firm bribed officials in 16 countries through intermediaries to buy its aircraft and satellites. France will receive the largest settlement, 2.1 billion euros, while the UK will receive nearly 1 billion, and the United States more than 500 million.</p>
<p>The case shows that European authorities have finally decided to make credible justice decisions against firms that use bribery and other forms of corruption to maintain and develop their business. It is also a learning opportunity for anyone interested in white-collar crime, and a number of theories developed by criminology researchers allow us to better understand how Airbus was able to operate so long with such impunity.</p>
<h2>Globe-spanning corruption</h2>
<p>Headquarters in Netherlands, Airbus has key operations in France, Germany, Spain and the United Kingdom. It’s one of the world’s largest manufacturers of commercial aircraft, helicopters and other high-tech products in the defence and space sectors. According to documents from the US Department of Justice, from 2008 to 2015 Airbus used its Strategy and Marketing Organization (SMO) branch to funnel <a href="https://www.justice.gov/opa/pr/airbus-agrees-pay-over-39-billion-global-penalties-resolve-foreign-bribery-and-itar-case">millions of bribes to decision-makers and influencers to obtain business deals</a>. Countries involved included the United Arab Emirates, China, South Korea, Nepal, India, Taiwan, Russia, Saudi Arabia, Vietnam, Japan, Turkey, Mexico, Thailand, Brazil, Kuwait, Colombia, South Korea, Indonesia, Sri Lanka, Malaysia, Taiwan, Ghana and Mexico.</p>
<p>When categorising white-collar crimes, a key factor is the separation between those involving individuals or a few people, and corporate cases. Given the SMO’s role, the Airbus case was clearly one of an organisational crime. SMO was a significant business unit for Airbus, with around 150 employees and an initial annual budget of 300 million US dollars. The branch was created to compile and appraise applications from potential business partners for the purpose of <a href="https://www.sfo.gov.uk/download/airbus-se-deferred-prosecution-agreement-statement-of-facts/">compliance risk assessment</a>. As a corruption machine SMO operated from 2008 to 2015, and long-term fraud implies internal learning systems in the fraudulent firm, with former employees transmitting fraud techniques to new recruits. </p>
<p>Indeed, Donald Sutherland’s <a href="https://www.thoughtco.com/differential-association-theory-4689191">theory of differential association</a> shows that certain crimes are not innate at all, but learned through contact with experienced criminals. The individuals involved in white-collar crimes are nominally respectable, or at least respected, making the crimes themselves ones that are committed by elites. That was the case with the Airbus case: the documents involve behaviour by senior executives, government and foreign officials, a board of directors, businessmen, an international-compliance officer and a general counsel.</p>
<p>A particularity of economic crime is its technical difficulty. Criminals in organisations are experts in developing systems to conceal their frauds. The techniques used by SMO could be easily included in a manual for how to pay bribes: </p>
<ul>
<li><p>Acquisition of a company belonging to an airlines executive at inflated price.</p></li>
<li><p>Acquisition of luxury estate properties for the use of an influential individual.</p></li>
<li><p>Purchase by a subsidiary based in a foreign country of shares in an entity belonging to the son of a commercial intermediary through money transferred via another country.</p></li>
<li><p>Sponsoring a sport team belonging to an airline executive.</p></li>
<li><p>Recruitment of the spouse of a key executive as a business partner using a straw company (despite the fact that the spouse had no relevant expertise).</p></li>
</ul>
<p>To cite a specific example, Chinese officials were invited to a business trip to Hawaii in 2013 with a 30-minute daily briefing about business information followed by “more important” activities such as <a href="https://www.justice.gov/opa/press-release/file/1241491/download">golf, scuba diving, horseback riding, and surfing lessons</a>.</p>
<h2>SMO: the corruption machine</h2>
<p>In addition, the criminologist <a href="https://www.journals.uchicago.edu/doi/abs/10.1086/221475">Donald Cressey</a> explained the emergence of of organisational crime by the existence of an opportunity. A typical opportunity was further described by <a href="https://www.jstor.org/stable/2094589?seq=1">Cohen and Felton</a> as the insufficient surveillance system. Thus, SMO produced fake documents and invented stories to fit international compliance requirements. SMO executives developed different techniques to look like following the best due-diligence practices without actually doing them. In a Russian case, SMO instructed an external company to conduct due diligence to evaluate the quality of a potential business partner, which in fact was in charge of paying approximately 9 million euros of bribes. To prepare the audit, the SMO International manager <a href="https://www.agence-francaise-anticorruption.gouv.fr/files/files/CJIP%20AIRBUS_English%20version.pdf">wrote to the commercial intermediary in charge of paying bribes</a>:</p>
<blockquote>
<p>“Compliance is buying the story, we now only need to ‘justify’ your past experience”, to which the commercial intermediary replied: “Sir, Yes Sir! […] I am going to try to find something to write for you ;-)”</p>
</blockquote>
<p>The external audit raised red flags about the Russian business partner: no registered office, no financial account, no ability to provide the services offered to SMO. Still, a contract was signed and money transferred.</p>
<p>In his <a href="https://www.simonandschuster.com/books/The-Division-of-Labor-in-Society/Emile-Durkheim/9781439118245">“anomie” theory</a>, French sociologist Emile Durkheim explained the importance of punishment in fixing norms of behaviour for a society. The fines Airbus paid are a “stick” that will teach the aircraft manufacturer that compliance must be respected, and they will follow now the best compliance practices. </p>
<p>In a press release, Guillaume Faury, chief executive officer of Airbus, <a href="https://www.airbus.com/newsroom/press-releases/en/2020/01/airbus-reaches-agreements-with-french-uk-and-us-authorities.html">stated</a>: </p>
<blockquote>
<p>“The agreements approved… with the French, UK, and US authorities represent a very important milestone for us, allowing Airbus to move forward and further grow in a sustainable and responsible way. The lessons learned enable Airbus to position itself as the trusted and reliable partner we want to be.”</p>
</blockquote>
<p>At the same time, Durkheim explained that a penalty is particularly important for all members of a society, who become aware of what is admissible or not. In the case of the competitors of Airbus, they too are aware that engaging in corrupt practices can have extremely painful consequences.</p><img src="https://counter.theconversation.com/content/131711/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bertrand Venard, professor at Audencia (France) and the University of Oxford (UK) is conducting several research projects about frauds such as cybersecurity and corruption. He is doing a major research project about cybersecurity behaviour, funded by the European Union (Project Number : 792137). He received funding from Anti-Corruption Commission of Bhutan. Indeed, he directed two major research projects to fight corruption in the mining industry and human resource management in the civil services of Bhutan. </span></em></p>In January Airbus agreed to pay nearly 4 billions euros to settle bribery charges. Theories developed by criminology researchers explain how the firm was able to operate so long with such impunity.Bertrand Venard, Professor, AudenciaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1122802019-02-26T22:34:13Z2019-02-26T22:34:13ZSNC-Lavalin case shows why we should review Canada’s foreign corruption laws<figure><img src="https://images.theconversation.com/files/260710/original/file-20190225-26174-v9ew0c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Former SNC-Lavalin vice-president Stephane Roy leaves a Quebec courtroom after fraud and bribery charges against him were thrown out due to trial delays. Roy had been charged with bribing a foreign public official in connection with the company's dealings with Libya.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Ryan Remiorz</span></span></figcaption></figure><p>The <a href="https://www.cbc.ca/news/politics/rcmp-bribery-snc-lavalin-case-1.5031712">controversy in Canada</a> involving Québec-based corporate giant <a href="http://www.snclavalin.com/en/">SNC-Lavalin</a> highlights the need for a parliamentary review of the legal scheme for fighting foreign corruption.</p>
<p>Underpinning the scandal is a corporate criminal prosecution for the alleged bribery of Libyan officials by SNC-Lavalin officials and the question of a plea deal. Since corporations cannot do jail time, a fine is the obvious punishment. But how large should the fine be, and with what consequences? Should SNC-Lavalin be <a href="https://www.tpsgc-pwgsc.gc.ca/ci-if/politique-policy-eng.html">barred from consideration</a> for future government contracts?</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=363&fit=crop&dpr=1 600w, https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=363&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=363&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=456&fit=crop&dpr=1 754w, https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=456&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/260721/original/file-20190225-26174-ln1zms.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=456&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The SNC-Lavalin headquarters in Montreal.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Paul Chiasson</span></span>
</figcaption>
</figure>
<p>It was only in 1999 — almost 20 years to the day of the <a href="https://www.theglobeandmail.com/politics/article-conservatives-ndp-seek-to-launch-investigation-into-allegations-of/"><em>Globe and Mail</em>‘s</a> report about allegations that Canada’s former attorney general felt pressured to help SNC-Lavalin — that the bribery of a foreign public official became a crime under Canadian law. </p>
<p>Until then, paying a bribe or kickback to secure a contract abroad was seen as the cost of doing business in a foreign land.</p>
<p>Pushed as a fast-tracked initiative, with all-party support, passage of the <a href="https://laws-lois.justice.gc.ca/eng/acts/C-45.2/index.html">Corruption of Foreign Public Officials Act</a> was a foregone conclusion. Introduced in the Senate in <a href="https://sencanada.ca/en/content/sen/chamber/361/debates/098db_1998-12-01-e">December 1998</a>, the law received <a href="https://sencanada.ca/en/Content/Sen/Chamber/361/Debates/100db_1998-12-03-e">only two days</a> of <a href="https://www.ourcommons.ca/Content/House/361/Debates/167/han167-e.pdf">parliamentary consideration</a>, before it was brought into force in February 1999.</p>
<p>Speedy passage, however, meant that Parliament had not set aside any time to consider the more delicate details, such as the role of plea deals to save court time. And parliamentarians had failed to consider the question of who are the victims of foreign corruption, because plea deals are likely to involve the payment of a victim surcharge to fund victims assistance programs.</p>
<p>Why was Canada so keen to rush this new law into place? The answer lies in international pressure.</p>
<h2>The OECD Anti-Bribery Convention</h2>
<p>In mid-1998, Canada and other G8 states made <a href="http://www.g8.utoronto.ca/summit/1998birmingham/finalcom.htm">a commitment</a> to ratify the <a href="https://www.oecd.org/corruption/oecdantibriberyconvention.htm">Organisation for Economic Co-operation and Development’s (OECD) Anti-Bribery Convention</a> before the year’s end. The <a href="https://www.oecd.org/about/">OECD is the international club</a> of countries with advanced economies.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/debate-getting-real-about-foreign-bribery-107937">Debate: Getting real about foreign bribery</a>
</strong>
</em>
</p>
<hr>
<p>It was this keenness to join that led Canadian parliamentarians to accept the Corruption of Foreign Public Officials Act, the legislation that put into motion the OECD convention’s terms. Those terms include a provision that the investigation and prosecution of foreign bribery “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”</p>
<p>Canada also accepted the supply-side focus of the OECD’s approach — often called <em>active bribery</em> — as it focuses on the conduct of the one offering the bribes. But the demand side of foreign bribery isn’t always passive if an individual recipient encourages a corporate payment, and so the demand-side aspect is worthy of further parliamentary review in Canada.</p>
<p>Indeed, after a study in 2008, the <a href="https://www.lawcom.gov.uk/project/bribery/">Law Commission of England and Wales</a> concluded there should be two general offences of bribery, one for the conduct of the payer and the other for the conduct of the recipient.</p>
<h2>Illegal to offer rewards to foreign officials</h2>
<p>Corruption takes a variety of forms, with bribery being the standard offence for addressing corruption in the public sphere.</p>
<p>With the Canadian Corruption of Foreign Public Officials Act in place, it is illegal to offer undue rewards to foreign public officials to obtain improper advantages in the conduct of international business. The act has created work for business lawyers offering compliance advice.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/261112/original/file-20190226-150718-usoouq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">There have been few convictions under Canada’s foreign bribery law.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>But the act has also fostered disappointment. In 20 years, there have only been four convictions. Three convictions, secured by <a href="https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/corr-19.aspx?lang=eng">guilty pleas</a>, have involved Alberta-based companies in the oil-and-gas sector, while the fourth concerned an <a href="https://www.canlii.org/en/on/onca/doc/2017/2017onca576/2017onca576.html">Ottawa-based individual</a> in the technology sector.</p>
<p>There’s rarely any mention of the tally of closed investigations, acquittals and stayed proceedings. That tally includes the 2017 <a href="https://www.canlii.org/en/on/onsc/doc/2017/2017onsc132/2017onsc132.html">acquittal of several people</a> associated with SNC-Lavalin and a bridge development project in Bangladesh; the same bridge project that led to SNC-Lavalin’s negotiated acceptance of <a href="http://www.worldbank.org/en/news/press-release/2013/04/17/world-bank-debars-snc-lavalin-inc-and-its-affiliates-for-ten-years">World Bank debarment</a> in 2013.</p>
<h2>Critiques lead to amendments</h2>
<p>Criticism of Canada’s <a href="https://www.oecd.org/canada/canada-oecdanti-briberyconvention.htm">performance under the act</a> has resulted in <a href="https://laws-lois.justice.gc.ca/eng/AnnualStatutes/2013_26/">amendments in 2013</a>. And in 2014, <a href="https://laws-lois.justice.gc.ca/eng/acts/E-22.7/page-1.html">new transparency measures</a> were imposed on the natural resources sector.</p>
<p>In 2017, the law’s reach was extended, at last, <a href="https://www.canada.ca/en/global-affairs/news/2017/10/canada_repeals_facilitationpaymentsexceptionincorruptionofforeig.html">to cover all forms of bribes</a>, and in 2018, <a href="https://www.canada.ca/en/department-justice/news/2018/03/remediation-agreements-to-address-corporate-crime.html">a Canadian version of the deferred prosecution agreement</a>, pioneered in the United States, was added to prosecutors’ toolboxes.</p>
<p>But Canada’s legislative scheme has not kept pace with the multi-jurisdictional realities of fighting foreign corruption.</p>
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Read more:
<a href="https://theconversation.com/how-can-companies-doing-business-overseas-reduce-the-risk-of-corrupt-practices-83673">How can companies doing business overseas reduce the risk of corrupt practices?</a>
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<p>In its <a href="https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/corr-19.aspx?lang=eng">2018 annual report to Parliament</a>, Global Affairs Canada continued to hail the $10.3 million fine paid by Griffiths Energy International as “the largest to date under the CFPOA.” But no mention is made of the <a href="http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2017/18.html">English Court of Appeal’s assessment</a> that this was a “relatively modest sum” given the surge in share value for the successor company in the United Kingdom.</p>
<h2>Corruption violates integrity</h2>
<p>It is often said that “corruption is not a victimless crime.”</p>
<p>And no less a body than the <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/15915/index.do">Supreme Court of Canada</a> has opined that: “Corruption … undermines confidence in public institutions, diverts funds from those who are in great need of financial support, and violates business integrity.”</p>
<p>But more work is needed from Parliament on the definition of a victim. Past plea deals have included the payment of sizeable victim surcharge fees into provincial victims-of-crime funds. </p>
<p>But how do these funds offer assistance to the victims of foreign bribery in, say, Bangadesh or Chad, or to a company’s employees in Canada?</p>
<p>Lastly, there is the larger question, now ripe for review, about the hope placed on using criminal law to secure the often-stated goal of securing a level playing field for Canadian companies operating abroad.</p><img src="https://counter.theconversation.com/content/112280/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joanna Harrington has in the past provided advice to both government and defence counsel in international and transnational criminal matters. Her work as an academic receives funding from Canada’s Social Sciences and Humanities Research Council.</span></em></p>Until recently, paying a bribe or kickback to secure a contract abroad was seen as the cost of doing business in a foreign land. The SNC-Lavalin case has underscored the need to rethink the approach.Joanna Harrington, Professor, Faculty of Law, University of AlbertaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1079372019-02-04T20:39:01Z2019-02-04T20:39:01ZDebate: Getting real about foreign bribery<figure><img src="https://images.theconversation.com/files/256906/original/file-20190202-103164-p3t63o.jpg?ixlib=rb-1.1.0&rect=0%2C36%2C6016%2C3971&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/751470997?src=Ju71F-EK1W_qZsq2teGySA-2-8&size=huge_jpg">Shutterstock</a></span></figcaption></figure><p>Foreign bribery is widely prohibited, and even <a href="http://foreignpolicy.com/2016/12/01/global-bribery-corruption-scandal-worldwide-index-infographic/">more widely practiced</a>. It’s also big business – some estimates put the value of corporate bribery at more than <a href="http://www.worldbank.org/en/topic/governance/brief/anti-corruption">$1 trillion annually</a>.</p>
<h2>Origins of the ban on foreign bribery</h2>
<p>After Watergate-era investigations in the 1970s revealed hundreds of American firms were engaging in <a href="https://www.sec.gov/spotlight/fcpa/sec-report-questionable-illegal-corporate-payments-practices-1976.pdf">foreign bribery</a>, the United States acted to prohibit this conduct in 1977 with the <a href="https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act">Foreign Corrupt Practices Act</a> (FCPA).</p>
<p>The rationale for the FCPA had little to do with economics, and less to do with American “moral leadership” – it was enacted for US foreign policy reasons. After hundreds of American multinationals admitted to bribing officials from friendly and allied states, these disclosures provoked severe foreign policy problems for the United States.</p>
<p>Senior officials and heads of state in <a href="https://www.washingtonpost.com/archive/politics/1981/06/30/tanaka-tainted-by-bribery-charge-remains-key-figure-in-japan/572108f6-8693-4375-b12f-e8e1212ae04d/?utm_term=.a43baacadf9b">Japan</a>, <a href="https://www.nytimes.com/1975/06/09/archives/gulf-case-marks-latest-incident-in-koreas-bribery-atmosphere-gulf.html">South Korea</a>, <a href="http://www.raistoria.rai.it/articoli/caso-lockheed-il-grande-scandalo-degli-anni-70/12217/default.aspx">Italy</a>, the <a href="https://www.washingtonpost.com/archive/business/1977/05/27/lockheed-paid-38-million-in-bribes-abroad/800c355c-ddc2-4145-b430-0ae24afd6648/?utm_term=.dab0a37f66df">Netherlands</a>, and <a href="http://cmr.berkeley.edu/search/articleDetail.aspx?article=4224">Honduras</a> were ousted, and some jailed.</p>
<h2>The FCPA goes abroad: a campaign is born</h2>
<p>After the end of the Cold War, the 1990s ushered in the apogee of American power, with Fukuyama’s <a href="https://www.jstor.org/stable/24027184?seq=1#page_scan_tab_contents"><em>End of History</em></a> providing the ideological narrative for an American-led neoliberal world order. In 1993, President Clinton was eager to increase US exports, and his Secretary of State, Warren Christopher, argued that American firms were <a href="https://web-archive-2017.ait.org.tw/en/officialtext-bg9640.html">losing out</a> to their international rivals who bribed freely. Christopher pushed to internationalise the FCPA at the <a href="http://www.oecd.org/">OECD</a>.</p>
<p>When the big exporters objected to American proposals, US officials leaked <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=520265">embarrassing information</a>. When they delayed, the US trade representative <a href="https://www.washingtonpost.com/archive/business/1996/03/07/kantor-weighs-sanctions-to-fight-overseas-bribes/6b965c7a-05fd-4b53-bc9b-564cd705c165/?utm_term=.7f05f876be02">promised sanctions</a>. When they resisted, US diplomats <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2023138">coerced</a> them with threats to expose alleged domestic corruption.</p>
<p>After several years of heavy-handed American diplomacy, the <a href="http://www.oecd.org/corruption/oecdantibriberyconvention.htm">OECD Anti-Bribery Convention</a> was ratified in 1997. It was a big victory for the United States – it had “levelled the playing field”. But while a superpower may successfully persuade weaker states into signing a treaty, implementation is another thing.</p>
<p>Even America’s most loyal friends, the British, <a href="http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/oecdgroupdemandsrapidukactiontoenactadequateanti-briberylaws.htm">mocked them</a> by retaining absurd, Victorian-era anti-corruption laws. France, America’s oldest ally, was as <a href="http://www.oecd.org/corruption/oecdseriouslyconcernedatlackofforeignbriberyconvictionsinfrancebutrecognisesrecenteffortstoensureindependenceofprosecutors.htm">uninterested</a> in prosecuting foreign bribery as it was in following the US into Iraq in 2003. Germany did little to prevent the country’s firms from engaging in <a href="http://www.spiegel.de/international/siemens-bribery-saga-new-report-details-far-reaching-corruption-a-462954.html">massive</a> foreign bribery.</p>
<p>The United States anticipated this risk, and <a href="https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/11/14/antibribe.pdf">expanded</a> the FCPA to capture more foreign firms. If others wouldn’t play by the “rules of the road”, the US would act as the global cop. US authorities have issued more than $20 billion of sanctions for FCPA violations, much of this against <a href="http://fcpa.stanford.edu/statistics-top-ten.html">non-US firms</a>. Top executives are next, the <a href="https://www.justice.gov/archives/dag/file/769036/download">DOJ has threatened</a>.</p>
<p>In 2017, a senior executive from France’s Alstom was <a href="https://www.lesechos.fr/17/11/2017/lesechos.fr/030880034224_quand-un-cadre-d-alstom-se-retrouve-en-prison.htm">sentenced</a> to 30 months in prison for FCPA offenses. Tellingly, the judge <a href="https://www.lexisnexis.com/legalnewsroom/litigation/b/newsheadlines/posts/judge-sends-39-message-39-in-ex-alstom-exec-39-s-bribery-sentence">noted</a>:</p>
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<p>“[US] efforts to install and nurture democracy in these countries is thwarted if international businesspeople take the view that you can’t compete without bribes.”</p>
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<p>Along the way, the FCPA had been transformed from a tool to prevent American firms from undermining US foreign policy into an instrument of neoliberal hegemony. But the limits of this campaign are fast coming into view as American power fades, as multi-polarity re-emerges, and as states return to their realist roots.</p>
<h2>The primacy of national interests</h2>
<p>Why don’t states enforce robustly laws against foreign bribery? In short, national interests. Card-carrying liberals may not appreciate how their “anti-bribery values” can come up against a state’s countervailing national interests, and lose. Realists have no such problem; examples abound.</p>
<p>In 2003, American oil consultant James Giffen was accused of funnelling more than $84 million from several American oil firms to bank accounts benefitting Kazakhstan President Nazarbayev and associates. This case began with a bang as <a href="https://www.nytimes.com/2003/04/01/world/us-businessman-is-accused-of-oil-bribes-to-kazakhstan.html">“the biggest FCPA case ever”</a>, but ended with a whimper. It turns out that vital US foreign policy interests were at stake.</p>
<p>Giffen’s lawyers argued several US agencies knew about and approved of their client’s activities. The case fell apart. Giffen pleaded guilty to a misdemeanour tax charge and paid a penalty of $25; the judge <a href="http://www.boston.com/news/nation/articles/2010/11/19/ny_judge_kazakh_bribe_defendant_is_cold_war_hero/">remarked</a> that Giffen was a Cold War hero “whose service to American national interests deserved to be acknowledged”.</p>
<p>When the jewel in the UK’s industrial crown, BAE, was caught bribing Saudi Royals as part of its £43 billion “biggest defence deal ever”, how did the UK respond? It investigated. Then the Saudi government sent a <a href="https://www.theguardian.com/world/2008/feb/15/bae.armstrade">menacing letter</a> to UK officials, warning that they would cut off intelligence sharing if the investigation continued. <a href="http://www.oecd.org/daf/anti-bribery/anti-briberyconvention/oecdtoconductafurtherexaminationofukeffortsagainstbribery.htm">Attorney-General Lord Goldsmith</a> promptly shut down the probe, and the biggest bribery scandal ever simply disappeared.</p>
<p>Even in the US and UK, the neoliberal campaign against foreign bribery was no match against national interests.</p>
<h2>Quo vadis?</h2>
<p>Today, Mr. Trump appears to be quickening the demise of the neoliberal order. Setting aside <a href="https://www.npr.org/2017/11/08/561059555/trump-used-to-disparage-an-anti-bribery-law-will-he-enforce-it-now">his views</a> on the FCPA as a candidate for president, US trade policy <a href="https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-administrations-policy-toward-china/">statements</a> now omit the common traits of neoliberalism.</p>
<p>Instead, the US now seeks only <a href="https://www.nytimes.com/2018/09/27/world/asia/japan-trump-trade-talks-auto-tariffs.html">bilateral</a> agreements, and speaks of <a href="https://www.nytimes.com/2018/10/06/upshot/trump-trade-strategy-coming-into-focus.html">relative gains</a> and <a href="https://www.cnbc.com/2018/07/19/peter-navarro-zero-sum-game-between-china-and-the-rest-of-the-world.html">zero-sum</a> strategies to defend American interests.</p>
<p>In Europe too, France’s President Macron and Germany’s Chancellor Angela Merkel have seen the writing on the wall. Despite their liberal credentials, both leaders are gearing up for strategic and economic contests with the US, China and others. They rely on concepts like <a href="https://www.lepoint.fr/economie/l-ue-doit-passer-des-paroles-aux-actes-en-matiere-de-souverainete-economique-11-05-2018-2217523_28.php">“souveraineté économique”</a> and <a href="https://www.ifri.org/sites/default/files/atoms/files/ndc_141_kempin_kunz_france_germany_european_strategic_autonomy_dec_2017.pdf">“strategic autonomy”</a> to do the rhetorical work.</p>
<p>It was British international relations theorist E.H. Carr who remarked that Anglo-Saxons are “masters in the art of concealing their selfish national interests in the guise of the general good”. As states return to their realist roots, the US campaign against foreign bribery should be revealed for what it is: an tool of this state’s selfish national interests.</p><img src="https://counter.theconversation.com/content/107937/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matt has previously received funding for research from the EU Centre for Global Affairs, University of Adelaide (Australia). He is affiliated with the Institut des Hautes Études sur la Justice, Paris.</span></em></p>In a return to realism, geopolitical headwinds challenge the US-led campaign against international corporate corruption.Matt R. Lady, Doctorant en droit / chercheur associé, Université de StrasbourgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/598122016-05-23T19:36:44Z2016-05-23T19:36:44ZFighting income inequality: the role business can play<p>In recent months, debates about global economic inequality have reached boiling point. In Britain, voters will soon decide whether to exit the European Union against the backdrop of a growing Brexit movement fuelled by perceptions of an unfair European trading system. </p>
<p>In the US, maverick political candidates of the left and right have garnered outsized attention, each attacking the adverse effects of global trade, especially with Asia. Almost three decades after the collapse of the Soviet Union ushered in an era of globalisation, critics are demanding a reconsideration of that model. At the centre of these debates are global businesses that have assumed outsized influence and power over the last 30 years.</p>
<p>Before focusing on what large companies need do differently, it is instructive to acknowledge the progress they have helped engender. Since the early 1980s, a globalised economy has lifted literally billions of people out of extreme poverty. According to the World Bank, in 1980 77% of East Asians were living below the extreme poverty level. </p>
<p>Today that number has shrunk to 14%. The major driver of this change has been the private sector, which has created hundreds of millions of new jobs. When the UN adopted the Sustainable Development Goals last year, the reduction of extreme poverty continued to be at the core of its agenda, and multinational companies will have a vital role to play.</p>
<p>Given this progress, what is driving the intense and growing political backlash against the global trading system? There are at least three overlapping forces are at play. First, the richest people on our planet now control extraordinary wealth and power. In January Oxfam reported that the 62 richest people in the world are worth US$1.7 trillion dollars, equal to the collective wealth of the bottom half of the world’s population, 3.5 billion people. </p>
<p>According to Oxfam, the income of these 3.5 billion people has fallen by a trillion dollars (American) since 2010, a drop of 38%. Women are disproportionately affected by this growing inequality. The root of the problem, says the Ford Foundation, is that “around the world, billions of people are excluded from full participation in the political, economic, and cultural systems that shape their lives.”</p>
<p>Second, in too many places local governments are weak and getting weaker, lacking the will or capacity to protect their own people. This has created a governance gap leaving those at the bottom end of the economic ladder susceptible to environmental and labour harms. </p>
<p>Expanding global supply chains has exacerbated these problems, allowing consumer demands for cheap goods and services to drive down wages and dilute local regulatory controls. In a highly competitive global economy, weak governments are inclined to compete with one another to maintain their market share rather than prioritise basic protections of their own people.</p>
<p>Third, most global companies, insulated from reality by buyers and sourcing agents, have not stepped up to make sustainable human rights and environmental practices central to their business operations. And the relatively few CEOs that embrace this agenda do so at the risk of alienating the investment community, especially in the US, with its singular focus on short-term earnings.</p>
<p>So what to do? First, it is time for large global companies to acknowledge the centrality of investing in long-term sustainable business models. These investments will not be cost free but over time, companies that make these human rights and environmental investments will succeed in attracting the best people to work for their companies, increase efficiency, reduce turnover, and reduce risks to their brand reputation. It is smart business to take this longer-term perspective.</p>
<p>Second, governments in industrial states need to ramp up their efforts to apply appropriate reporting and regulatory muscle to encourage these efforts. Over the last 30 years, laws like the US Foreign Corrupt Practices Act and the UK’s Anti-Bribery Act have provided powerful tools to combating the scourge of corruption. Early efforts to apply this model to labour are beginning to emerge, for example with Western restrictions on the import of goods that are the product of forced or child labour. </p>
<p>In places like the US, Germany and now in Australia, government purchasing practices are the logical place to now focus attention and begin to implement these controls. These commitments should be included in National Action Plans on Business and Human Rights.</p>
<p>Third, global companies need to develop industry-wide standards and performance metrics that reward best business practices and motivate collective action. And when faced with chronic problems like labour violations in Thai fishing, security challenges for Australian mining operating in Africa or Bangladesh factory safety, they should lead in implementing a model of shared responsibility, calling on governments, international financial institutions and philanthropy to share the cost of remediation.</p>
<p>Recently the Ford Foundation announced a new strategic focus on global income inequality which it calls “the defining challenge of our time.” The foundation’s President Darren Walker has promised that “addressing inequality is at the centre of everything we do.” For Ford and other philanthropic agencies to succeed, the private sector needs to go beyond corporate charity and traditional social responsibility models, and embrace human rights as a fundamental business priority, that is fully integrated into their daily business operations.</p>
<p><em>Professor Michael Posner will deliver the Australian Human Rights Annual Lecture at UNSW on Wednesday, May 25, 2016.</em></p><img src="https://counter.theconversation.com/content/59812/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Posner is the co-director of the NYU Center for Business and Human Rights and the Jerome Kohlberg Professor of Ethics and Finance at NYU Stern. From 2009 until March 2013, he served in the Obama Administration as Assistant Secretary of State for Democracy, Human Rights and Labor at the US State Department. . </span></em></p>The corporate world must embrace human rights as a fundamental business priority.Michael Posner, Co-director of the NYU Center for Business and Human Rights and the Jerome Kohlberg Professor of Ethics and Finance at NYU Stern, New York UniversityLicensed as Creative Commons – attribution, no derivatives.