The document discusses corruption of foreign public officials and domestic corruption laws. It provides an overview of international anti-corruption laws and enforcement developments in Canada, the US, and UK. It then analyzes the Griffiths Energy case, where a Canadian energy company paid bribes to Chad's ambassador, as a lesson for in-house counsel on addressing corruption risks from third parties.

1. In-House Counsel Alert:
Foreign and Domestic Corruption
Kristine Robidoux, QC
Glen Jennings

2. Agenda
1. Corruption generally
2. Legislative framework
3. The Corruption of Foreign Public Officials Act
4. Enforcement Developments
5. Analysis of the Griffiths Energy Case – Lessons for In-House
Counsel
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3. 3
International Corruption: The Problem
• Global “cultures of corruption”
• In some countries bribery has been accepted as a necessary
evil of doing business
• In other countries bribes were tax deductible business
expenses – creating an uneven playing field for
international businesses
• Global anti-corruption movement – level the playing field

4. Corruption Around the World Today
4

5. Assessing Risk Country-by-Country
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6. 6
So why do we care?
• Companies want principled and ethical business
• Conduct operations in compliance with international and
local law
• It protects a company’s reputation
• It minimizes the risk of regulatory fines, penalties and lost
licenses
• It promotes growth. It’s a competitive advantage with
clients
• It “raises the bar”
• It provides a “safety net” for when formal controls may
turn out to be weak or absent
• In the war for talent, it’s a retention tool
• It promotes the rule of law in the countries where
companies operate
Increased Focus on Anti-Corruption

7. Closer to Home
• Quebec’s Charbonneau Commission inquiry – no sign of
ending anytime soon
• SNC-Lavalin
• McGill University Hospital contract
• Pierre Duhaime (ex-CEO)
• ORNGE Air Ambulance (Ontario)
• Chris Mazza (ex-CEO)
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8. 1. Legislative Framework
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9. Domestically
• Criminal Code of Canada
• Section 426 – “secret commissions”
• Sections 119-125 – corruption of government employees,
judges, peace officers etc
• Breach of trust by public officer
• New Quebec laws addressing integrity of public
contracting
• Integrity in Public Contracts Act
• Anti-Corruption Act
• Creates systems to audit entities entering into contracts
with public bodies as well as impose conditions and a
requirement for such entities to obtain and maintain
authorization
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10. Evolution of Foreign Corruption Laws
• First, the U.S. Foreign Corrupt Practices Act (“FCPA”) – 1977
• SEC investigation: 400 American companies admit to bribing
foreign public officials
• Could bribe foreign officials with impunity, but not domestic
• Global anti-corruption movement
• Leveling the playing field (tax deductible bribes)
• OECD Anti-Bribery Convention – 1997
• Signatories required to criminalize bribery of foreign public
officials
• Canada’s Corruption of Foreign Public Officials Act (“CFPOA”)
– 1998
• Canada’s foreign anti-bribery law (response to Convention)
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11. 11
Canada: Corruption of Foreign Public Officials Act
• Applies to any business, profession, trade, undertaking of
any kind carried on in Canada or elsewhere
• Criminalizes the act of giving a reward, advantage or
benefit of any kind to a foreign public official
• in exchange for an act or omission to act in connection with the
performance of that official’s duties, or
• to induce the official to use his or her position to influence acts or
decisions of the foreign state
• Recent amendments
• eventual elimination/phase-out of facilitation payments exception
• broad jurisdiction
• books and records requirements
• increased penalties

12. CFPOA – The Offence
Bribing a foreign public official
1. making, offering or promising
2. a payment, reward, advantage or benefit of any kind
3. directly or indirectly
4. to a foreign public official
5. or to any person for the benefit of a foreign public official
6. for the purpose of obtaining or retaining an advantage in the course
of business
7. where no defence applies
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13. CFPOA – Some Examples
The “obvious bribe”
• clandestine transfer of suitcase full of cash
• typically reserved for Hollywood!
The “less obvious bribe”
• retention of certain government-friendly agents and contractors
• kickbacks
• fees, commissions, “fines” when payable to an individual
• gifts
• hospitality/entertainment
• travel
• employment
• favours or other services
• charitable or political contributions
13

14. CFPOA - Defences
No person is guilty of bribery:
1. If the payment is permitted or required under the written local
laws, or
2. If the payment represents reasonable expenses incurred in
good faith relating directly to the promotion, demonstration
or explanation of products or services, or to the execution or
performance of a contract between the person and the foreign
state for which the public official performs duties or functions
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15. 15
CFPOA – Facilitating Payments
• Small (“grease”) payments
• They are not payments made to obtain discretionary,
exceptional or other improper business advantage but
rather to expedite or secure the performance of routine,
non-discretionary governmental action
• Ex., obtaining permits, licenses, visas, work orders to allow a person
to do business in a foreign country, providing police protection, mail
delivery or phone service, scheduling inspections or the loading or
unloading of cargo, etc.
• Illegal under UK law
• Historically legal under CFPOA, but recent amendments call
for their elimination over time
• Legal under US law

16. CFPOA - Penalties
• Corporations:
• Unlimited fines
• Corporate probation
• Debarment from government contracting
• Criminal forfeiture
• Individuals:
• Up to 14 years’ imprisonment
• Probation
• Debarment from government contracting
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17. 17
US FCPA
1. “US Issuers”
2. “Domestic concerns”
3. Any person who, while within the territory of the U.S., uses
means or instrumentality of interstate commerce to take
any act in furtherance of a corrupt payment:
• Mail (including email and other electronic communications)
• U.S. banking system, including wire transfers to/from US bank, US
dollar-denominated wire transfer between foreign banks that clear
through correspondent accounts in the US and currency conversion
• Telephone and other communication devices
• Interstate transportation, including travel on US-registered air carriers,
or travel in, to or through the US
• Etc.

18. 18
UKBA
• Most broadly applicable and greatest jurisdictional reach
• Criminalizes bribery of public officials and commercial bribery
• In addition, creates the strict liability corporate offence of failing
to prevent bribery, rebuttable with proof of “adequate
procedures” to prevent the violation, in 6 areas:
1. Proportionate Procedures
2. Top-level Commitment
3. Risk Assessment
4. Due Diligence
5. Communication and Training
6. Monitoring and Review
• Few indications yet as to how UK courts will interpret its
provisions

19. 2. CFPOA Enforcement
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20. 20
Canadian Enforcement Activity
• RCMP – sole enforcement body under CFPOA
• RCMP – recent re-alignment to allow for greater
integration between specialized investigators across the
country
• One team located in Calgary, the other located in Ottawa
• Canadian enforcement activity to date – subject of much
international criticism
• 2013: RCMP announced it has 34 open investigations

21. 21
CFPOA Convictions
2005 – HydroKleen
• $25,000 fine (less than the amount of the bribe)
• Payments to US Customs and Immigration official to ease entry of
Canadian employees to the US
2011 – Niko Resources Ltd.
• Exclusive use of luxury SUV to Minister of Energy, plus a non-business trip
from Calgary to New York
• $9.5M fine
• Three years corporate probation

22. 22
CFPOA Convictions
2013 – Griffiths Energy International Inc.
• First, a $2M consulting agreement with Ambassade du Tchad LLC
• Next, identical consulting agreement with Chad Oil Consulting Ltd.
• Troubling facts: the role of legal counsel and the absence of due diligence
• Voluntary disclosure and full cooperation
• $10.35M fine, but no corporate probation
2013 – Nazir Karigar
• Bribes paid by the company’s sales agent to the Indian Minister of Civil
Aviation and employees of Air India to influence sale of facial recognition
software
• First individual to be convicted under CFPOA; sentencing TBA

23. By Comparison: US FCPA Enforcement
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• Hundreds of investigations and settlements:
1. Siemens (Germany): $800 million in 2008
2. KBR / Halliburton (USA): $579 million in 2009
3. BAE (UK): $400 million in 2010
4. Snamprogetti / ENI (Holland/Italy): $365 million in 2010
5. Technip (France): $338 million in 2010
6. JGC Corporation (Japan) $218.8 million in 2011
7. Daimler AG (Germany): $185 million in 2010
8. Alcatel-Lucent (France): $137 million in 2010
9. Magyar Telekom / Deutsche Telekom (Hungary /Germany): $95 million in
2011
10. Panalpina (Switzerland): $81.8 million in 2010

24. Recent Enforcement Developments
1. Increased enforcement
2. Voluntary disclosure & cooperation
• Griffiths Energy International
• Cardero Resources
• Nordion
3. Charges against individuals
• Nazir KARIGAR (CryptoMetrics)
• Kevin Wallace, Ramesh SHAH & Mohammad ISMAIL (SNC-Lavalin)
4. Intersection of Domestic & Foreign Corruption
• SNC-Lavalin
• ORNGE air ambulance/AgustaWestland
5. Extraterritorial Reach
• CFPOA/FCPA/UKBA
• FCPA implications on negotiations with First Nations
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25. 3. Analysis of the Griffiths Energy Case
– Lessons For In-House Counsel
25

26. Griffiths Energy International Inc. (“GEI”)
• Calgary-based energy company operating in Chad
• New management discovered questionable consulting
agreements in October 2011 as underwriters conducting
due diligence in anticipation of IPO
• IPO withdrawn while Gowlings conducts robust internal
investigation
• Stand-still by Canadian and US authorities
26

27. GEI - 2009
• GEI retains legal counsel to assist its entry into Chad
• Several attempts to engage with Chadian Ambassador to
Canada in order to be introduced to President of Chad
and other decision-makers
• Legal counsel travels with former company director to
Chad
27

28. GEI - 2009
• Consulting agreement #1
• Multiple versions drafted by legal counsel
• Multiple revisions by client
• No counterparty name or other identifying details
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29. GEI - 2009
• Services to be provided under the agreement were
generally described as providing advisory, logistics,
operational and other assistance with respect to
implementing GEI's oil and gas projects in Chad
• Compensation of USD $2 million payable upon successful
negotiation and execution of PSC in Chad
• Term: August 30, 2009 - December 31, 2009
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30. GEI - 2009
• Counsel advised client that it was illegal to contract with
the Ambassador
• Agreement dated August 30, 2009 between GEI and
Ambassade du Tchad LLC
• Sole director and shareholder is Mahamoud Adam
Bechir, Chad's Ambassador to Canada, US and three
other countries ("the Ambassador")
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31. GEI - 2009
• Letter dated September 2, 2009 terminating Ambassade
du Tchad agreement
• September 10, 2009 new company Chad Oil Consulting
Ltd. ("COCL") incorporated, with sole director and
shareholder being Nouracham Bechir Niam, the wife of
the Ambassador
• Consulting agreement #2 dated September 15, 2009
between GEI and COCL
• Identical terms and compensation
31

32. GEI - 2011
• Company moves to Calgary, new legal counsel appointed
• First task assigned, "extend or re-do (this) consulting
agreement", using the name of COCL as the counterparty
• Attached in PDF: signed Ambassade du Tchad LLC
agreement
• Reminder email one week later, again attaching PDF of
signed Ambassade du Tchad LLC agreement
• Third email attaches, in Word version, COCL agreement
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33. GEI - 2011
• Consulting agreement #3 drafted by new counsel
• Latest drafts dated mid-January 2011, with agreement
set to expire February 28, 2011
• Compensation to be USD $2 million if PSC successfully
negotiated and executed
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34. GEI - 2011
• COCL's banking details are forwarded to new counsel by
the Deputy Chadian Ambassador to Canada
• Counsel requested to hold the $2 million in escrow, and
subsequently disburses the funds from its trust account
to COCL's bank account in Washington DC
• Wire confirmations also exchanged between new counsel
and the Deputy Ambassador
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35. 35
Addressing High Risk Areas – Third Parties
• Address high-risk areas
• Third parties represent disproportionately high risk
• Due diligence of agents and contractors:
• Companies may be held criminally liable for the improper
payments made or promised by its agents, contractors and
other third party intermediaries.
• The purpose of due diligence is to develop a reasonable,
objective basis upon which management can proceed with a
contract in the good faith belief that a third party will not
make improper payments in the performance of company
business.

36. 36
Addressing High Risk Areas – Third Parties
Recommended due diligence steps to include (as appropriate):
1. Gathering factual information about the potential agent:
• Ownership
• Government Relationships
• Qualifications
• Reputation
2. Assessing compensation terms and bank account information
3. Checking references from previous relationships
4. Contacting trade organisations and embassies
5. Keeping good documentation of due diligence and references

37. 37
Addressing High Risk Areas – Third Parties
• Include prescribed anti-corruption clauses and
protections as appropriate for the degree of risk
presented by that particular relationship
• Commitment to comply
• Right to audit
• Expense reimbursement controls
• Compensation must be appropriate
• Maintain record of all sub-agents and sub-contractors
• Annual certification of compliance

38. Thank You
montréal · ottawa · toronto · hamilton · waterloo region · calgary · vancouver · beijing · moscow · london
Kristine Robidoux, QC
Leader, Global Business Integrity
403.298.1817
kristine.robidoux@gowlings.com
Glen Jennings
Partner
416.862.3537
glen.jennings@gowlings.com