Last week, we covered the topic of facilitation payments and discussed some implications should the exception of facilitation payments be officially repealed in the Corruption of Foreign Public Officials Act (CFPOA). The repeal has now come to fruition. Global Affairs Canada has announced the removal of the facilitation payments exception from the CFPOA, with the repeal to come into force October 31, 2017. This exception was repealed by Bill S-14: An Act to amend the Corruption of Foreign Public Officials Act.
What was the exception?
The following is the facilitation payments exception in the CFPOA that has been repealed:
Facilitation payments
(4) For the purpose of subsection (1), a payment is not a loan, reward, advantage or benefit to obtain or retain an advantage in the course of business, if it is 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 duties or functions, including
(a) the issuance of a permit, licence or other document to qualify a person to do business;
(b) the processing of official documents, such as visas and work permits;
(c) the provision of services normally offered to the public, such as mail pick-up and delivery, telecommunication services and power and water supply; and
(d) the provision of services normally provided as required, such as police protection, loading and unloading of cargo, the protection of perishable products or commodities from deterioration or the scheduling of inspections related to contract performance or transit of goods.
Greater certainty
(5) For greater certainty, an "act of a routine nature" does not include a decision to award new business or to continue business with a particular party, including a decision on the terms of that business, or encouraging another person to make any such decision.
How will facilitation payments be treated?
Facilitation payments are no longer legal in Canada and will now be considered bribes under the CFPOA, which carry high maximum penalties. As a reminder, the following is the bribery offence provision:
Bribing a foreign public official
3 (1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official
(a) as consideration for an act or omission by the official in connection with the performance of the official's duties or functions; or
(b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.
Compliance policies
As mentioned in our previous post, while compliance policies are not mandatory under the CFPOA, they can be of great importance to fighting corruption within your business, as well as avoiding hefty penalties and possible reputational damage. In addition to ensuring your business has policies in place that prohibit facilitation payments, it would be prudent to make sure any business you seek an international partnership with also abides by these policies. By doing so you can help reduce the risk of contravening the CFPOA.
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