As we have previously written, Canada's spotty record of white-collar crime enforcement has been the subject of criticism inside and outside of this country. A recent decision of the Québec Court of Appeal may provide at least a small boost.
On February 14, 2023, the Québec Court of Appeal released its decision in Bebawi c. R., 2023 QCCA 212, dismissing the appeal of Sami Bebawi to overturn his 2019 conviction for fraud, corruption of foreign officials and laundering proceeds of crime. Bebawi argued the trial court erred in respect of: (a) its reliance on certain evidence from the RCMP's investigation; (b) the evidentiary requirements for conviction under the Criminal Code; and (c) the previously issued order against him for a replacement fine in lieu of forfeiture.
The Court's analysis in relation to the criminal fraud offence provides useful guidance regarding the constituent elements of — and evidentiary basis required for establishing a conviction for — fraud in respect of corrupt conduct.
Bebawi's initial conviction
On January 10, 2020, Bebawi was sentenced to eight years in prison for fraud, corruption and proceeds of crime offences in connection with alleged fraudulent activities in North Africa between 2001 and 2011. The Crown alleged Bebawi was one of the key actors behind a complex scheme of kickbacks and payoffs made to foreign agents to secure contracts beginning in the late 1990s, which involved funnelling money to two shell companies, subsequently used to reward public officials in exchange for assisting the company in securing competitive contracts. On December 15, 2019, Bebawi was convicted by jury on five separate counts relating to fraud, corruption of foreign officials and laundering the proceeds of crime.
The appeal
Bebawi appealed the Québec Superior Court's decision on a number of bases.
First, Bebawi argued that evidence gathered through the RCMP's undercover operation targeting his former lawyer should not have been admitted. The Court rejected Bebawi's argument, finding that while police should have obtained judicial authorization earlier in their investigation, the evidence collected was highly relevant and necessary and therefore remained admissible.
Second, Bebawi argued that some acts for which he was convicted should not have been considered fraud as they did not jeopardize his victims' financial interests. The Court rejected this argument, ruling that the jury's inferences based on circumstantial evidence were reasonable and that a risk of economic prejudice to an accused's victims provided a sufficient basis for a criminal fraud charge under the Criminal Code.
Third, Bebawi requested leave to appeal the order for a replacement fine in lieu of forfeiture. The Court ultimately agreed that Bebawi was awarded a short period of time to pay the ordered fine and granted an extension period of two years.
The Court's analysis on Bebawi's criminal fraud charges
Corruption is prohibited under Canadian law primarily by two separate pieces of legislation. Extra-territorially, anti-corruption charges fall under the Corruption of Foreign Public Officials Act, which prohibits directly or indirectly giving, offering or agreeing to give or offer any form of a loan, reward, advantage or benefit to a foreign public official, or to any person for the benefit of a foreign public official, in order to obtain or retain an advantage in the course of business. Domestically, anti-corruption charges are governed by the Criminal Code, which contains various public and private corruption offences, including frauds on the government, breach of trust by a public officer, breach of trust, fraud and secret commissions. Charges under the Criminal Code for corruption-related offences are often prosecuted under the section 380 fraud offence.
In upholding the convictions on appeal, the Court's finding in Bebawi provides helpful clarity on both the necessary elements of fraud-related offences under the Criminal Code in respect of corrupt conduct and what constitutes sufficient evidence in establishing the offence.
Bebawi relied on language in section 380 of the Criminal Code (i.e., the criminal fraud provision) — requiring a deprivation to the public or any person of property, money, valuable security or any service — to argue that the offence had not been established because the corrupt conduct did not jeopardize the victims' financial interests. The Court held that it was for the jury, as the trier of fact, to make the determination as to whether the risk of deprivation existed in light of the available evidence.
In instances such as this where the evidence available is largely circumstantial, the Court stated that the trier of fact must make their decision based on reasonable inferences. The Court determined that it was not its place to interfere in the assessment of such evidence, but rather that it could only consider the reasonableness of the inferences drawn by the jury in the first instance. The Court found that the artificial increase in price, failure to disclose relevant information, use of a front company and embezzlement undertaken at the behest of Bebawi provided a sufficient and reasonable basis for the jury to conclude the required deprivation existed.
Clarity regarding offences of fraud for corrupt conduct
The Court's decision in Bebawi provides helpful insight into what constitutes sufficient evidence to support a fraud charge under the Criminal Code for corruption-related offences. It clarifies that circumstances where the corrupt conduct could have led to economic prejudice — or at least a risk of economic prejudice — are sufficient to ground a section 360 offence under the Criminal Code. This charge may properly be established on the basis of circumstantial evidence, so long as that evidence can generate reasonable inferences when considered synchronously.
This decision also further emphasizes the availability of the fraud offence under section 380 of the Criminal Code as an effective enforcement tool used by authorities and prosecutors in prosecuting corruption and economic crime. The Court's decision suggests companies may be held criminally responsible for such conduct in the absence of direct financial loss resulting from the corrupt conduct.
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