Thursday, May 29, 2014

Executive Receives Prison Term For Bribery Of Foreign Official


In 1998, the Canadian Parliament enacted the Corruption of Foreign Public Officials Act (“Act”) in order to implement Canada’s obligations under the Convention on Combating Bribery in International Business Transactions as a signatory to the Organization for Economic Cooperation and Development.   Sixteen years later, on May 23, 2014, the first person convicted under the Act was sentenced to a three year penitentiary prison term.  In that time, only three other prosecutions were initiated under the Act, all involving corporations and all being resolved by way of guilty pleas.  The case of R. v. Nazir Karigar (2014) ONSC3093 was the first to proceed to trial. 

 

In this case, Mr. Karigar was convicted on a single count indictment of offering a bribe to a foreign public official.  He had conspired with several individuals employed by or associated with Cryptometrics Canada Limited of Ottawa, Ontario to offer bribes to officials of Air India and to an Indian cabinet minister.  The purpose of the conspiracy was to win a tender for a multi-million dollar contract to sell facial recognition software and related products to Air India.   However, Air India awarded the contract to another corporation. 

 

In his sentencing decision, Justice Hackland of the Ontario Superior Court of Justice took into account the following factors:

 

Aggravating Factors

 

  1. The bribery scheme was sophisticated, carefully planned and intended to involve senior public officials at Air India and an Indian cabinet minister.  If successful, it would have involved the payment of millions of dollars in bribes and stock benefits over time;
  2. Mr. Karigar’s participation in the bidding process involved other circumstances of dishonesty such as entering a fake competitive bid to create the illusion of a competitive bidding process and receiving confidential insider information in preparing the bid;
  3. Mr. Karigar behaved throughout with a complete sense of entitlement, candidly relating to a Canadian Trade Commissioner that bribes had been paid and then urging the Canadian government’s assistance in closing the transaction; and
  4. Mr. Karigar personally conceived of and orchestrated the bribery proposal and created financial spread sheets concerning the amounts he proposed be paid.   

 

Mitigating Factors

 

  1. There was a high level of cooperation on Mr. Karigar’s part.  He exposed the bribery scheme to the authorities following a falling out with his co-conspirators.  He unsuccessfully sought an immunity agreement but avoided a great deal of trial time as a result of his extensive admissions;
  2. Mr. Karigar had been a respectable business man all his working life prior to his involvement in the matter.  He had no prior criminal involvement.  He was in his late sixties and not in the best of health;
  3. The bribery scheme was a complete failure.  Mr. Karigar and his co-conspirators failed to obtain the contract or any other benefits.  Accordingly, the harm resulting from the scheme was likely restricted to the promotion of corruption among a limited group of foreign public officials.

 

Jurisprudence Under The Act

 

Justice Hackland considered the relevant jurisprudence, i.e. the only three other prosecutions that have come before the courts:

 

  1. In R. v. Watts [Hydro Kleen] (2005), Hydro Kleen pleaded guilty to bribing a foreign official.  It operated in Canada and the United States and its employees travelled between the two countries for work.  At times its employees experienced difficulties entering the United States.  Hydro Kleen hired a US immigration officer as a “consultant” and paid him $28,300 to facilitate the passage of its employees into the US.  Unknown to Hydro Kleen, the immigration officer also made it more difficult for employees of its competitors to enter the US.  A joint submission with respect to sentencing was accepted by the court which imposed a fine of only $25,000;
  2. In R. v. Niko Resources Ltd. (2011), Niko Resources pleaded guilty to providing improper benefits ($195,984) to a foreign public official in Bangladesh in order to further business objectives.  The court accepted the parties joint submission on penalty which involved a fine in the amount of $9.49 million.  The court considered the seriousness of the crime and the principle sentencing objective of denunciation and deterrence;
  3. In R. v. Griffiths Energy International (2013), Griffiths Energy pleaded guilty for paying a $2 million bribe and shares to a corporation owned by the wife of a foreign ambassador.  A new management team at Griffiths discovered that the bribe had been paid by their predecessors.  Current management acted quickly to fully investigate the matter and self-report the crime to authorities and pleaded guilty, saving the cost of a lengthy and complex trial.  A joint submission as to a penalty($10.35 million) was accepted by the court.

 

Justice Hackland held that in light of these decisions, it is clear that the bribery of foreign officials must be viewed as a serious crime and the primary objectives of sentencing must be denunciation and deterrence.  The more recent cases, Griffiths Energy and Niko Resources, clearly demonstrated that a substantial penalty is to be imposed by the courts even in circumstances where a guilty plea was entered and the accused has cooperated with authorities. 

 

Cases Of Fraud Under Section 380 Of The Criminal Code

 

Justice Hackland reviewed a number of cases in which the courts discussed the principles of general deterrence and noted that a fraud against a government agency is not a victimless crime as it results in a reduction in resources available to people who rely on government services.  Where the need for general deterrence is particularly pressing, incarceration would normally be preferable and to be effective, usually a conditional sentence must be punitive.

 

Justice Hackland considered the recent Court of Appeal case in R. v. Drabinski where the court allowed sentence appeal reducing the jail time imposed by the trial judge.  The court held that:

 

“The deterrent value of any sentence is a matter of controversy and speculation.  However, it would seem that if the prospect of a long jail sentence will deter anyone from planning on committing a crime, it would deter people like the appellants who are intelligent individuals, well aware of potential consequences, and accustomed to weighing potential future risks against potential benefits before taking action.”

 

Of note in Drabinski, the court held that in fraud cases, traditional mitigating factors such as an accused’s prior good character and the personal consequences of the fraud cannot alone justify departure from the sentencing range. 

 

Cases Of Bribery/Corruption Under The Criminal Code

 

Finally, Justice Hackland considered a number of cases where accused were sentenced under such sections where the courts held that due to the serious public nature of the offences the overwhelming consideration in sentencing is that the sentence be a deterrent to others. 

 

Weighing all of the factors listed above, Justice Hackland sentenced Mr. Karigar to a 3 year prison term in penitentiary.  Commentators argue that such a sentence "sets a clear precedent for future convictions". 

Regards,

Blair   

 

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