On October 31, 2017, the Government of Canada eliminated the facilitation payment exception from the Corruption of Foreign Public Officials Act (the “CFPOA”). The elimination of this exception was the final component of significant and high profile amendments to the CFPOA enacted over four years ago, which also:
- Expanded the jurisdiction for corruption offences based on nationality.
- Increased the maximum penalty for an individual convicted under the legislation to 14 years.
- Created a books and records offence.
- Provided the RCMP with exclusive authority to lay charges under the CFPOA.
The government delayed implementation of the provision of the 2013 amendments removing the facilitation payment exception from the CFPOA to provide companies with sufficient time to modify business practices and adapt their internal controls. Despite the length of notice, it is critical for companies conducting business abroad to be mindful of this major change to the legislation.
Introduction: The Bill C-45 Initiative
Effective corporate compliance to prevent regulatory risk requires a foundation of legal understanding. While corporate accountability and criminal liability has been a recent focus of legislation, law enforcement and regulatory agencies, the modern legislative framework for holding corporations criminally responsible for the wrongdoing was enacted over a decade ago with the passing of Bill C-45 – An Act to Amend the Criminal Code (Criminal Liability of Organizations).
These amendments to the Criminal Code (“Code”) expanded the range of individuals whose acts and omissions could result in corporate criminal liability from those who were “directing minds” to the current standard descried in the Code as “senior officers”. Somewhat surprisingly, there have been few cases interpreting the new Code provisions and considering the scope of individuals that may be “senior officers” for the purposes of the Code. The limited jurisprudence does affirm the increased risk of criminal liability for corporations arising from the Bill C-45 amendments. Decisions from the Courts of Appeal for Ontario and Quebec indicate that courts will interpret the term “senior officer” broadly, encompassing certain lower level managers as well as those employees who manage an important aspect of the corporation’s business.
Replacement of “Directing Mind” with Statutory Formula
The historical and political impetus for Bill C-45 was the 1992 Westray mine disaster, where 26 miners were killed in Pictou County, Nova Scotia. No individuals or corporate employer was ever convicted of a criminal or occupational health and safety regulatory offence. In response to a public inquiry, failed legal proceedings and union lobbying, Bill C-45 was passed to amend the Code to facilitate the conviction of organizations for criminal offences.
Under the former identification theory, a corporation faced criminal liability for the criminal acts of a “directing mind” of the corporation. At common law, the directing mind was defined as a person with:
authority to design and supervise the implementation of corporate policy rather than simply to carry out such policy. In other words, the courts must consider who has been left with the decision making power in a relevant sphere of corporate activity.
The amendments were designed to remedy the inherent limitations of the attached to the “directing mind” paradigm and to better align the Code with the reality of modern, large corporations. As a result, Bill C-45 introduced the defined term “senior officer”. Under the Code, “senior officer” is:
- a representative who plays an important role in the establishment of an organization’s policies; or
- is responsible for managing an important aspect of the organization’s activities; and,
- in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer.