Royal Canadian Mounted Police Foreign Bribery Investigations. Kevin Duggan, E Division Financial Integrity Federal and Serious Organized Crime

Transcription

1 Royal Canadian Mounted Police Foreign Bribery Investigations Kevin Duggan, E Division Financial Integrity Federal and Serious Organized Crime

2 Overview Corruption: The Global Problem Global Response Canada s Response Canada s Investigations

3 What is Corruption? Behaviour on the part of officials in the public sector, whether politicians or civil servants, in which they improperly and unlawfully enrich themselves, or those close to them, by the misuse of the public power entrusted to them. Includes bribery, extortion or influence peddling. embezzlement of funds, theft of corporate or public property Transparency International (TI)

4 Examples of Corruption Paying cash to a Public Official Using an AGENT to funnel bribes to the Public Official. Treat Agent like an employee Hiring the Public Official s unqualified relative to get the contract. Paying for the Public Official not to do their job. Giving the Public Official extravagant gifts. Paying for the Public Official s holidays. Red Flags Joint Venture Agreements

5 Results of Corruption Rana Plaza

6 Results of Corruption

7 Results of Corruption

8 International Corruption the Problem In some countries bribery has been accepted as a necessary part of doing business In other countries bribes were tax deductible business expenses creating an uneven playing field for international businesses. In some countries, the entire bureaucratic apparatus is controlled by corrupt politicians, which allows officials to rubber-stamp bribes.

9 International Corruption the Problem

10 Oil & Gas and Corruption Major Petroleum Basins Perceived Corrupt Regions Most of World s Oil and Gas Reserves are found in Countries with a high degree of perceived corruption

11 The Scale of Corruption The World Bank estimates more than $1 trillion is paid in bribes each year. No trust in Government/Law Poor materials used = dangerous buildings Environmental laws are not respected Theft / depletion of national resources Not a level playing field People, communities and businesses suffer

12 Corruption: The Global Response 1977, U.S. made bribery of foreign public officials a crime under the Foreign Corrupt Practices Act (FCPA) 1997, Organization for Economic Cooperation and Development (OECD) called for a convention to address the bribery of foreign public officials. 1999, Canada passed the Corruption of Foreign Public Officials Act (CFPOA)

13 Global Response: continued 2000, United Nations Convention Against Corruption (UNCAC) passed. 2007, Canada ratified the UNCAC, bringing the convention to life. Over 140 Signatories

14 CANADA S RESPONSE

15 Canada s Response In 2006 Treasury Board identified three partners to combat corruption: Department of Justice DFAIT RCMP

16 Canada s Response: RCMP Creation of two seven person anti-corruption teams, located in Ottawa and Calgary. Strategically placed because of the high concentration of Government agencies in Ottawa and oil and gas companies in the west. RCMP Mandate (CFPOA and Criminal Code): Detection Investigation Prosecution Prevention

17 Corruption of Foreign Public Officials Act Offence of Bribing a Foreign Public Official Is a serious (indictable) offence No statute of limitations Punishments Persons: Liable to imprisonment not exceeding five years. Corporations: Fines only, unlimited. Jurisdiction R v. Libman

18 Corruption of Foreign Public Officials Act The Original Act allowed facilitation payments These are generally defined as: Payments made to expedite or secure an act of a routine nature that is part of the foreign public officials duties or functions. Should be small in monetary value, and infrequent. Should be documented.

19 Corruption of Foreign Public Officials Act As soon as you mark yourself as a company that s willing to play along, the demands usually increase both in number and in value Once you are in bed with these guys you lose control of the situation very quickly Alexandra Wrage Trace International Seek Legal Advice

20 The Act Fighting Foreign Corruption Act Assented Key Provisions: Establish nationality jurisdiction; Books and Records provision (criminal); Eventual elimination of facilitation payments; Business redefined to eliminate need for profit; Increase maximum jail term to 14 years (no CSO);

21 Sources of Information Google/Open Source Competitors DFAIT Trade Journals International partners NGO s Informants/Whistleblowers Media Due diligence is performed in order to verify the legitimacy of the source of information.

22 Investigational Techniques Search Warrants Special Investigative Techniques Production Orders Fintrac Publicly Available information Joint Investigations Mutual Legal Assistance/Treaty Requests Witness Statements

23 Related Offences Laundering/Possession of Proceeds of Crime Fraud Securities Offences Secret Commissions Foreign Jurisdictions

24 Section 22.2 C.C. Other Offences/Organizations In respect of an offence that requires the prosecution to prove fault an organization is a party to the offence if, with the intent at least in part to benefit the organization, one of its senior officers A) acting within the scope of their authority, is a party to the offence; B) having the mental state required to be a party to the offence and acting within the scope of their authority, directs the work of other representatives of the organization so that they do the act or make the omission specified in the offence; or C) knowing that the representative of the organization is or is about to be a party to the offence, does not take all reasonable measures to stop them from being a party to the offence.

25 CANADA S INVESTIGATIONS

26 Hydro-Kleen (Calgary, 2002) Niko Resources Ltd. (Calgary, 2011) Griffiths Energy (Calgary, 2013) Cryptometrics & Nazir KARIGAR (Ottawa,

27 Hydro Kleen First CFPOA case in Canada: Alberta company Charged for bribing a US customs officer Company convicted of 3(1)(a) CFPOA Fined $25,000

28 PROJECT KOIN: NIKO RESOURCES LTD.

29 Project KOIN: Niko Resources Ltd Canadian Oil & Gas company Niko Resources started work in Bangladesh in 1997

30 Niko Resources Ltd. January 7, 2005: Gas well blowout in Chattak January 28, 2005: Enquiry blames Niko Niko vilified in Bangladeshi press

31 Niko Resources Ltd. In June 2005, story broke in a Dhaka newspaper, The Daily Star, that Niko Resources had given a luxury vehicle to Energy Minister AKM Mosharraf Hossain

32 Niko Resources Ltd. Canada s High Commissioner to Bangladesh alerted the RCMP. Calgary RCMP start gathering information in Canada. In 2005, investigators asked to travel to Bangladesh to interview witnesses on a Police to Police basis Request denied.

33 Niko Resources Ltd. Investigators continue gathering information in Canada Privacy Act Request to DFAIT: Paydirt!

34 Niko Resources Ltd. Military Caretaker Government took over Bangladesh in In 2008, RCMP were allowed to travel to Bangladesh under a Mutual Legal Assistance Request to gather documents and conduct interviews.

35 NIKO Investigation Assistance received from Bangladesh, Japan, Switzerland, Barbados, United States, United Kingdom 8 Mutual Legal Requests completed 16 Production Orders 20 people interviewed in 6 different countries

36 NIKO Investigation Assistance from international partners; FBI, City of London Police, World Bank, USDOJ, ACC Bangladesh, AFP Assistance from domestic partners; DFAIT, Passport Office, CBSA, FINTRAC

37 NIKO - Court June 24, 2011 Niko pleads guilty to having bribed government officials in Bangladesh Section 3(1)(b) of the CFPOA The Bribe Toyota Landcruiser valued at $194,000 Trip to New York/Chicago Penalty Fine $8.2 Million + 15% Victim Surcharge = $9.5 Million 3 years probation with extensive monitoring conditions

38 GRIFFITHS ENERGY

39 Griffiths Energy In 2008, Griffiths Energy International (GEI) attempted to secure rights to oil & gas blocks in Chad. Offer rebuffed by the Government of Chad Proposed payment deemed too low. In August 2009, a $2 million consulting contract was prepared with the company, Ambassade du Tchad LLC Outside counsel pointed out that you can t sign a contract with a serving Ambassador

40 Griffiths Energy On September 15, 2009, a contract was signed with the innocuous sounding COCL Chad Oil Consulting LLC. $2 Million consulting fee to be paid if Griffiths was successful in its bid for oil & gas blocks in Chad in 2009 Sole Proprietor of COCL? Nouracham NIAM, the wife of the Chadian Ambassador

41 Griffiths Energy In 2010, GEI made another MOU bid this time they were successful. In January 2011, a renewed version of the COCL-GEI contract was signed. In February 2011, $2 million was paid to COCL.

42 Griffiths Energy New Management Team hired July 2011 Brad Griffiths passes away on July 18, 2011 New board members appointed Company begins preparing for launch of an IPO Audit is ordered The IPO Audit discovers the Ambassade du Tchad and COCL Contracts

43 Griffiths Energy Special Committee formed by the board to investigate Outside Counsel and Audit firm brought in to conduct internal investigation and confirm the bad news November 2011, GEI notified PPSC (Public Prosecution Service Canada), Alberta Justice, and the US DOJ of their discovery RCMP began independent investigation

44 Griffiths Energy Solicitor-Client Privilege waived by employees and counsel. RCMP access to their internal investigation Access given to: communications Financial records Witness statements including some the RCMP would not have been able to get

45 Griffiths Energy Case resolved in January 2013 Negotiated Resolution resulted in GEI pleading guilty to one count under 3(1)(b) of the CFPOA Fined $9 million plus a 15% victim surcharge: Total $10.35 million No Probation Order Ongoing international process to recover Proceeds of Crime.

46 CRYPTOMETRICS: R. v. NAZIR KARIGAR

47 Cryptometrics/Karigar CRYPTOMETRICS- US based Biometric Screening Company with Subsidiary office in Ottawa. Investigation confirmed in excess of $500,000. U.S. was paid to an Agent (KARIGAR)- intended for high ranking Indian Government officials and officials of Air India. CRYPTOMETRICS lost the bid anyway. Investigation came to light though DFAIT, when the bribe was divulged to a Trade Minister in Mumbai (KARIGAR complained) DFAIT notified the RCMP.

48 R v. Karigar Convicted August 2013 under S. 3 of the CFPOA for agreeing to offer a bribe in order to secure a contract with Air India in relation to biometric passenger screening software. First trial of an individual and first proceeding in which legislation was interpreted. No evidence that the bribe was actually paid. Payment or offer of payment to an official is not required to establish a violation of the Act. An agreement to bribe a public official is a violation of CFPOA and that evidence of involvement, or even awareness of a public official is not required.

49 R v. Karigar Karigar argued that the court did not have jurisdiction over the offence on the basis that two of the principle conspirators were located in the U.S. and that a number of actions in further of the offence occurred in India. The Court rejected this interpretation holding that establishing a substantial connection to Canada, as required under Libman is not limited to the essential elements of the offence. The Court went on to say that the act of bribery cannot be separated from the legitimate aspects of a related transaction.

50 R v. Karigar In other words, the fact that the accused was employed by a Canadian company, acting on its behalf and attempting to obtain a contract that would bring economic benefit to Canada were all factors that resulted in a substantial connection to Canada sufficient to establish jurisdiction. SENTENCING: On May 23, 2014, Nazir KARIGAR was sentenced to 3 years in prison.

51 Questions?