Take Note: Facilitation Payments Are Now Illegal Under the CFPOA

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.

A facilitation payment (or “grease payment”) is a payment made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the foreign public official’s regular duties (i.e. something the official is already required to do), such as the granting of a license or permit, mail delivery, providing police protection and power/water supply . Such payments have historically been a routine cost of doing business in many parts of the world.

Nevertheless, the removal of the facilitation payment exception from the CFPOA bribery offence brings Canada in-line with the majority of developed countries, including the U.K. (Bribery Act). Notably, the United States Foreign Corrupt Practices Act continues to contain an exception for “facilitating or expediting payments”.

While it remains to be seen whether the prohibition on facilitation payments will lead to increased prosecutions under the CFPOA, companies with significant foreign operations may face greater scrutiny over the effectiveness of their internal control and compliance systems. The potentially catastrophic reputational, business and legal risks arising from a prosecution, or even an investigation, for a suspected contravention under the CFPOA underscores the need to ensure that companies with foreign operations maintain robust anti-bribery compliance programs.