On Tuesday, November 8, 2016 France passed its new anti-corruption legislation, to improve its commitment to business ethics, the prevention of fraud and prohibiting the bribery of foreign public official. The new anti-corruption law, which has taken over a year to revise and implement, is intended to reach the same standards and levels of enforcement as the United Kingdom’s Bribery Act (“BA”) and the American Foreign Corrupt Practices Act (“FCPA”). The most interesting aspect of the new law is that it permits corporate defendants to enter into negotiated resolutions, in a form that is commonly known as Deferred Prosecution Agreements (“DPAs”).
France has long been criticized for its weak anti-corruption law and enforcement activities. The Organization for Economic Cooperation and Development (“OECD”) working group on bribery said recently that about 24 new corruption cases were opened in the past two years by French authorities yet no French corporation had been convicted of any foreign bribery offence. In 2014, however, the United States Department of Justice (“DOJ”) secured three of the ten biggest Foreign Corrupt Practices Act (“FCPA”) enforcement actions against French companies by means of DPAs. French corporate giants Alston paid $772 million, Total SA, paid $398 million and Technip SA, paid $338 million. France is the only country whose corporations have appeared on the DOJ’s FCPA top ten list, three times.
In 2006 through to at least 2011, the Las Vegas Sands hotel and casino corporation transferred funds totaling more than $62 million to a “consultant” in China to promote their interests.
Lacking supporting documentation for appropriate authorization and identity, the money trail raised a red flag for the Department of Justice (DOJ) in the United States. This led to an investigation under the authority of Foreign Corrupt Practices Act (FCPA), as well as an investigation carried out by the U.S. Securities and Exchange Commission (SEC), since the Sands is traded on the New York Stock Exchange.
Since the Sands management could not account for the funds transferred to the consultant, bribery was inferred. This lack of controls extended to other transactions, including gifts and entertainment to foreign officials, employee and vendor expense reimbursement, and customer complimentary services.
Recent trends have seen legislative penalties increase, prosecutors cracking down, and more individuals going to jail. We have entered a new era of white collar crime enforcement in Canada.
In mid-2013, the Corruption Foreign Public Officials Act (CFPOA) was amended by the Federal Government. It introduced a “new books and records” offence, increased the maximum jail time to 14 years for individuals, and promised to phase out the legality of facilitation payments. The Royal Canadian Mounted Police (RCMP) was assigned the exclusive jurisdiction over investigation and laying charges under the CFPOA and given an enhanced increase in their mandate to investigate and prosecute more corporations and individuals, which it is doing.
Following this, the RCMP prosecuted Nazir Karigar, a Canadian-Indian business man, under the CFPOA. At his lengthy trial it was never proven that he gave a bribe to an Air India (foreign) official, as alleged; the Crown did prove, to the court’s satisfaction, that he intended to pay a bribe to secure business with Air India for an American company. That was enough to convict and send him inside for 3 years.
There were three FCPA enforcement actions brought or announced in August 2015.
BNY Mellon became the first – of what is expected to be several financial services companies – to pay millions ($14.8 million to be precise) in an SEC enforcement action based on its alleged internship practices. This flagged various issues to consider from the enforcement action including that it was the first SEC FCPA enforcement ever not to include allegations or findings of books and records violations. This recent BNY Mellon enforcement action highlight why the meaning of “foreign official” matters.