Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 23 - Evidence - Meeting of March 6, 2013
OTTAWA, Wednesday, March 6, 2013
The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill S-14, An Act to amend the Corruption of Foreign Public Officials Act, met this day at 4:15 p.m. to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, today the Standing Senate Committee on Foreign Affairs and International Trade is continuing its examination of Bill S-14, An Act to amend the Corruption of Foreign Public Officials Act, the fighting foreign corruption act. Appearing before us today, on behalf of the Canadian Bar Association, are Tamra Thomson, Director, Legislation and Law Reform; and Michael Osborne, a member of the Anti-Corruption Team.
Welcome to the committee. You requested to appear before us to comment on behalf of the Canadian Bar Association. Please proceed with your presentation.
Tamra Thomson, Director, Legislation and Law Reform, Canadian Bar Association: Thank you, Madam Chair and honourable senators. We are pleased to appear before you on behalf of the Canadian Bar Association today to talk about this important legislation. As most of you know, we are a national association with over 37,000 members across Canada. Among our primary objectives are improvement of the law and improvement of the administration of justice, and it is with that lens that we have analyzed this bill and make our comments to you today.
I want honourable senators to know that the CBA is taking a very proactive role to support the implementation and enforcement of anti-corruption legislation. Mr. Osborne is a member of our Anti-Corruption Team, which was put together with lawyers in private practice and in-house counsel to look at anti-corruption laws, to respond to any matters relating to anti-corruption, and to provide a resource centre for Canadian lawyers to learn about anti- corruption legislation and the compliance requirements.
That is the role that the CBA has taken in this area. I will ask Mr. Osborne to speak to the submission you have before.
[Translation]
Michael Osborne, member, Canadian Bar Association Anti-Corruption Team: Honourable senators, hello. The Canadian Bar Association's Anti-Corruption Team shares the same convictions that are expressed in Bill S-14. The Convention makes the following statement:
Bribery in international business transactions raises serious moral and political concerns, undermines good governance and sustainable economic development, and distorts international competitive conditions.
That is why the Anti-Corruption Team supports Bill S-14.
[English]
We do, however, have two concerns to bring to your attention today. The first is difficulties associated with repealing the facilitation exception at this time, and the second is difficulties created by increasing the maximum sentence to 14 years. I will turn to the first, facilitation payments.
Facilitation payments are small payments made to officials to get them to do their jobs. The classic facilitation payment is the $10 or $20 that you have to pay in some countries to get your exit visa stamped. The current international consensus seems to be that they should be discouraged, that we do not like them, but that the time is not yet ripe to require the criminalization of facilitation payments made to foreign officials. In a way, we interpret Bill S-14 as reflecting this consensus because it provides for the repeal of the facilitation payments exception, but not yet, since this repeal will come into force on a date to be fixed by the Governor-in-Council.
In the view of the CBA Anti-Corruption Team, or ACT, this is not an optimal way of dealing with facilitation payments. Parliament, not the cabinet, should determine when the time is right, and it should do so after a fuller consultation with Canadians who do business abroad. Some of the considerations that need to be addressed are, for example, impact on disaster relief. Charities that deliver humanitarian relief need to be authorized to do whatever it takes to save lives, and if you have to bribe the guy to get the shipment off the boat to save lives, you likely have to do it. No one wants to do it; it is not optimal, but saving lives would take priority.
Another exception is that sometimes people have no choice but to pay. For example, in some countries exit visas are routinely held up until money is paid. There are even reports of cases where officials threaten the health or safety of people. I think most people would agree that in those circumstances, where payment is effectively forced, it should not be a crime in Canada. Indeed, in Britain they have taken the view, as a matter of prosecutorial discretion, that in those circumstances they would not prosecute.
On penalties, as Bill S-14 stands, slipping a $20 bill inside a passport to get through customs would become an indictable offence punishable by up to 14 years in jail. In other words, it would be among the most serious offences on the books in Canada. One should question whether that is the appropriate penalty for offences that would be at the very low end of the spectrum — namely, the $20.
For these reasons, CBA ACT recommends not proceeding with the repeal of facilitation payments exception in this bill. We remain opposed to facilitation payments; we do not like them. We want to see them eliminated, but the question is how and when as opposed to the overall ultimate goal.
[Translation]
The current maximum prison sentence is set at five years. Bill S-14 proposes increasing that penalty to 14 years.
[English]
This will make the corruption offence one of the most serious offences on the books in Canada. By way of comparison, this 14-year maximum is higher than the maximum sentence for domestic corruption. The penalty for the corruption that we have been reading about in the papers is generally speaking five years in jail, except for certain very highly placed officials. The penalty would also be higher than for offences that we would consider very serious.
Another offence very much in public discourse these days is child pornography. The penalty for that is 10 years. Abandoning a child, criminal negligence causing death using a firearm, and assault causing bodily harm all have lesser penalties than 14 years in jail.
The increase in penalty from 5 years to 14 years has some important effects. Fourteen years is a magic number in Canadian criminal law, and you need to be aware of this. Offences that carry a maximum sentence of 14 years are not eligible for discharges, either absolute or conditional, or for conditional sentences, that is to say, sentences served in the community. They do remain eligible for certain other things, probation being one.
This will severely constrain the range of remedial options available to prosecutors, defence counsel and the courts. Put simply, it will be difficult to make the punishment fit the crime. Take my example of the Canadian business person paying $20 to get an exit visa. One would think that a Canadian court would deal with that relatively lightly, perhaps saying that although the accused should not have done that, they will give an absolute discharge. With this 14-year maximum, that penalty would not be available. That person would get a criminal record.
The question that needs to be asked is whether that person has committed one of the most serious offences on the books in Canada, whether that person deserves a criminal record. If the answer is no, in my submission the penalty in this bill is too high. In the alternative, you need to set out in the Criminal Code somehow that discharges and conditional sentences remain available for an offence under this legislation.
Subject to your questions, those are our submissions.
The Chair: Thank you, Mr. Osborne. For clarification, are you against the enactment provision in here? Do you want it taken out?
Mr. Osborne: No. The enactment or coming-into-force provision in the bill for the repeal of facilitation payments suggests that the government has in mind bringing it into force when the time is ripe. This law is based on an international convention. The commentary for that still recognizes a facilitation payments exception. Many but not all of our major trading partners recognize a facilitation payments exception, most notably the United States. There is a developing international consensus that we should, at a minimum, discourage them, and there are various tools to do that. One is by forcing companies to report on them. However, it is probably premature to say that the consensus is that they should be made criminal offences in the same way as bribes are. They are similar but of a slightly different nature. A bribe is when you are in a smoke-filled room and offering a lot of money, usually, to someone to give you a contract that you might not deserve. A facilitation payment — and the exception is relatively narrow in the act — is when you are at the counter trying to get out of the country and the customs official says, ``You can pay $20 now or you can go in that room and wait for a while.'' There is a bit of a difference in quality as well as quantity to these things.
I want to stress that we do not like facilitation payments; we do not think people should have to pay them, but the unfortunate reality is that there are countries in the world where they are necessary. For example, I was told recently that in one country you cannot report a crime to the police unless you pay the police to take your report. The time is not yet ripe.
The Chair: I am still confused. If you are saying that you do not think that there should be a delay in bringing it in line with everyone else, how would we comply with the OECD recommendation and how do we recognize that there still needs to be time for implementation to allow companies to understand the difference between a bribe and a necessary facilitation payment and what might be a facilitation increase because you would avoid the technical old bribe and find new and innovative ways to slip yourself under the facilitation rubric? I am very mindful of what has happened with piracy. Once you start making a payment and allowing it, it burgeons.
I am trying to figure out what the Canadian Bar Association is recommending that that we do here. You usually come with amendments, I must say, or something. I am trying to figure out what it is you are asking us to do here, other than point out a conundrum that all countries are living with, which is how we attack bribery.
Mr. Osborne: The amendment that we would recommend at this time deals with clause 3(2) of the bill, which repeals subsections 3(4) and 3(5) of the act. Those provisions in the bill come into force on a date to be fixed by order of the Governor-in-Council pursuant to clause 5 of this bill. We would recommend that that clause be removed from the bill at this time.
In other words, we are recommending that the facilitation payments exception remain in Canadian law for the moment. The OECD recommendation is that Canada study it, and we think that it should be studied, and studied properly. There should be the appropriate consultations. There should be an opportunity to determine the appropriate way of dealing with it.
As matters stand right now, this provision actually introduces some potential complexity into the area because the Corruption of Foreign Public Officials Act is expressly the implementation of a treaty, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. You see that at the very beginning of the current act, and that, by and large, is what it does. The central prohibition in the act makes it an offence — of course, it is complicated, as these things are — to provide consideration or advantage or what have you in the course of business as consideration for an act or omission by the official or to induce the official to use his or her influence. This does not mirror exactly the words of the convention, but it is reasonably close.
The convention handles facilitation payments by way of an interpretation, which basically says that small facilitation payments are not considered bribes. It will be open to be argued in a prosecution that a small facilitation payment is not, in fact, a bribe pursuant to the act. Just removing the exception is not an optimal way of dealing with it. I recognize that the facilitation payments exception itself has been criticized. It has some interpretive problems. It is difficult to find the right statutory language to distinguish between facilitation payments and bribes.
I would also suggest that it is important to make that distinction not only in the way we treat it but also in the way we punish it. It is disproportionate to have a 14-year sentence for the proverbial $20 facilitation payment. It strikes me that, for instance, a hybrid offence where you would have a summary conviction option for the lesser cases would make sense.
As well, it may be open to question whether or not criminalizing facilitation payments is a realistic objective at this time. The way they are handling it in the U.K., for instance, is hardly optimal. They have not included a facilitation payment exception in their law, so they handle it as a matter of prosecutorial discretion. In other words, if it is not such a big bribe or a facilitation payment, then we are not going to worry about it. The problem, of course, is that a company that wants to be compliant cannot really have an internal de minimis standard. You do not know what the de minimis standard is. The law is very reluctant to recognize a de minimis standard. You are left, frankly, with people making it up as they go along.
I regret that I do not have a new section for you. It will take time; it will take a lot of thought, and it may well be advisable to do it in consultation with our economic trading partners through the convention process, through the OECD.
The Chair: I have more questions, but I will go to my list and then perhaps I will have time to ask more. Thank you, Mr. Osborne.
Senator Johnson: Thank you, chair, and thank you for your excellent questions.
Welcome. It is very nice to see you today. In your brief, on page 3, you have the proposed new section 5(1)(b). Can you elaborate on the critique of 5(1)(b) concerning permanent residents? It is relevant to understanding the way the charges are laid.
Mr. Osborne: Yes. It is an odd paradox that we noticed in the bill. Let me just pull it up to make sure that I have the provisions straight.
Senator Johnson: I was trying to understand it by looking at the bill and also at what you said. Give me your interpretation, please.
Mr. Osborne: The proposed new section 5(1)(b) of the bill, in enacting section 4, applies the nationality jurisdiction to a permanent resident, as defined in the Immigration and Refugee Protection Act, who, after the commission of the act or omission, is present in Canada. That means that if you have the status of being a permanent resident of Canada but are outside of the country and you pay a bribe, oddly enough you have not quite yet committed the offence in Canada. The offence is kind of inchoate. It is up there in the clouds. It will follow you around. As soon as you land in Canada, all of a sudden, it is in Canada. It is an odd situation. I am not saying it is wrong. It is difficult to get these kinds of nationality clauses right, but it is somewhat paradoxical that you have a sort of inchoate offence following the person around and ultimately landing in Canada as soon as they arrive at Pearson or wherever.
Senator Johnson: How would you suggest it be done, then?
Mr. Osborne: If you want to avoid the paradox, then you simply make it a crime for a person who has the status of being a permanent resident of Canada to commit to pay a bribe outside of Canada, and then it just is an offence.
Senator Johnson: Is that what the U.K. does when you say they term it ``ordinarily resident''?
Mr. Osborne: They use the term ``ordinarily resident,'' which I would take to mean someone whose ordinary residence would be in Canada as opposed to someone who came here, got a permanent resident card, took off and now lives somewhere else.
Senator Johnson: You think they should pay it once they are charged, or when they get back.
Mr. Osborne: The practical effect is that it is not a big deal because you cannot really charge them until they come into the country anyway, because you cannot serve them with criminal process outside of the country. I am not saying this is something that need occupy a lot of your attention, but it is a kind of weird paradox in the language.
Senator Johnson: There is a caveat there.
Tell us about other countries. You mentioned that the U.K. maintained an exception to facilitation payments.
Mr. Osborne: It is a good thing I brought the Transparency International report. They have a list. I will try to find it for you. It is quite a lot of them, actually. The U.K. does not.
Senator Johnson: The United States?
Mr. Osborne: The United States does. So as to not waste time, Ms. Thomson will look for that.
Senator Johnson: Fine. I have one more question regarding corruption. Let us talk about Canada and the U.K. Where do they stand on the maximum sentences for foreign corruption? You mentioned 14 years. We have gone from 5 to 14.
Mr. Osborne: It is not the 14 per se. It is the effects in the Criminal Code sentencing provisions. As to whether it is 10, 14 or 15 years, these numbers are guidelines in the courts. They are signals that it is a serious offence. However, if we look at other provisions that have potentially high sentences like that, you do not see sentences in that range typically coming out of the courts. It is more about the impact on the range of remedies available to both the prosecution and the defence. You will get into a negotiation with the prosecution, if you are a defence lawyer, and the availability of penalties on the lesser end of the scale creates incentive to potentially self-report, to plead, to not waste everybody's time, forcing them to prove the crime and in exchange for that to accept a lighter sentence.
Senator Johnson: I will stop now. Like you, I could go on but I will end there.
Senator D. Smith: I am assuming — I hope not naively — that there was consultation with Canadian foreign officials who have been in countries where these things are patterns regarding how to deal with this. I might even point out that our distinguished chair has served as an ambassador in a couple of countries, one in Europe and one in Africa, and would have insights on this.
Do you think that our officials who might have been comfortable with this and recommended this are naive about the on-the-ground realities, or do you think that they feel this is warranted, justified and not going to create outrageous situations? Do you have a view on that?
Mr. Osborne: I have no view about the officials. I do not know who they are, and I am sure they have proposed this language to you in good faith. I do not know the extent of the consultations that were carried out, nor do I for a moment suggest that they are naive. However, there is occasionally a temptation to want to rely on prosecutorial discretion in writing legislation.
Sometimes we will see legislation written very strictly on the understanding that in the lesser cases, prosecutorial discretion will apply, and there is certainly room for that. Prosecutorial discretion is a very important part of our system, but we want to have guidance for companies that will help them navigate what are sometimes very troubling situations. Having guidance that says that facilitation payments are to be discouraged is certainly something we are in favour of. However, a situation where you are forced into making that payment and when you get back to Canada you are told it is an indictable offence punishable by 14 years in jail seems a bit on the high side.
Senator D. Smith: It is up to 14 years. It is not automatic.
Mr. Osborne: Correct, but it is an indictable offence and on the serious side of the two kinds of offences we have in Canada. The 14 years creates the inability of the court to apply a discharge or conditional sentence to those cases where there may be strong mitigating factors.
Senator D. Smith: Are you basically saying that you prefer the status quo over the implementation of this bill, or is there some middle ground you are advocating?
Mr. Osborne: Between the repeal of the facilitation payments exception and maintaining it for the present, we prefer to maintain it for the present — not forever but for the present.
On the middle ground, there would be a couple of possibilities. One would be to require corporations to report. We will give you an exception for facilitation payment, but you must report on it. I must caution that the committee did not have a full discussion about this, so I am somewhat out on my own on this. One reason I was not inclined to push for that is that it adds to red tape and creates another reporting obligation for companies. I am not sure we want to do that, but it is an option.
Another might be, either through legislation or government action, to push companies to adopt the OECD guidelines for multinational enterprises, to push companies to adopt strong guidelines to discourage facilitation payments and to target the eventual elimination of the exception, but with appropriate penalties for smaller facilitation payment cases.
In our view it is a question of the process and not so much the end result.
Senator D. Smith: If the government puts this legislation on the back burner and thinks about it again in several years, are we not failing to live up to our commitments with regard to the OECD undertaking?
Mr. Osborne: With the legislation as a whole, that should not be put on the back burner. The nationality jurisdiction is important. Canada has been criticized three times by the OECD for failure to enact that. It is high time we did it, and we are supportive of that. It is only the facilitation payments issue. As far as the facilitation payments are concerned, the current recommendation from the OECD is that it be studied. The convention does not, at this point, include banning facilitation payments in the same way we ban bribes.
Senator D. Smith: I think you are saying two things: facilitation payments and increasing from 5 years to 14 years, but I will leave that for now.
Senator Dawson: The good news is that this bill is starting in the Senate, and if you have recommendations on amendments you can count on the other place to submit them.
You are the only people who have come forward to criticize the bill. We believe that it has taken a very long time to bring this forward and we are certainly hoping it will go forward. That being said, the minister committed himself in committee last week that if reasonable substantive amendments are submitted to him, he will be ready to support them. You do not have amendments to put forward to us clearly today, and we will be going forward over the next while on this bill.
There are other issues. One of the bills tabled in the other place — which I bring to your attention because you might want to comment on that eventually — is Bill C-474, which says you have to register these payments. I know you do not like red tape and do not want to have people to have to register. However, one of the provisions is that, in compliance with our international commitments, if people are in the grey zone of being away, register the payments they have made and someone comes back years later and says they have abused or committed a felony, they will oblige themselves to register those payments. I know you do not like the notion of registers, but do you not think that would give them the opportunity to continue to do business while at the same time trying to comply with our commitments internationally?
Mr. Osborne: The registry option has some attractiveness. I am wary about red tape, but you could make an argument that it is a fair trade-off that we will not make it an offence provided that you disclose the payment. That has certain attractive features. For instance, the Canadian government could collect the figures and have a word with some of the less developed countries. They could say, ``There were a total of so many thousand facilitation payments made to your customs agents last year. What are you going to do about it?'' That would be a good tool for Canada to use to work with other countries to eradicate these.
Please do not take me as coming out strongly against a disclosure obligation, because it actually has some interesting advantages to it.
Senator Dawson: It is going to be called ``the sunshine bill'' because the objective is transparency, and it is trying to put light on things that we all know are happening. We understand the reality of international competitiveness, but we also understand our commitment. For your reference, it is Bill C-474 and is called ``the sunshine bill'' in the other place.
[Translation]
Senator Fortin-Duplessis: I listened closely to your presentation. Well done.
My first question is this: A report published last September by Transparency International, an anti-corruption group, indicated that laws prohibiting companies from using bribes overseas to win contracts or to skirt local regulations have led to an increase in lawsuits. With 144 new cases in 2001, the total number of cases prosecuted by 37 major exporters rose from 564 in 2010 to 708 in 2011.
In Canada, only three lawsuits were launched during the last year we have statistics for, which is 2011.
When Bill S-14 comes into force, do you believe that it will be easier for Canada to launch lawsuits against those who have committed offences involving the corruption of foreign officials?
Mr. Osborne: Yes, Senator. Absolutely. Because the bill establishes nationality jurisdiction in the act, it will no longer be necessary to prove that the corruption is somehow linked to Canada. Currently, subsection 6(2) of the Criminal Code states that the offence must be committed in Canada.
According to some interpretations, the only requirement is that part of the offence be committed in Canada and that the offence must somehow be connected with Canada. However, that connection must be proven. By establishing nationality jurisdiction, the Crown prosecutor will no longer have to prove that there is a link between the offence, the bribery, and Canada. We simply need to prove the bribery — the fact that payment was made or that the foreign official received some sort of benefit — and that the corporation or individual who committed the offence is Canadian. Lawsuits will be much easier.
Senator Fortin-Duplessis: My second question: What is to become section 4 of the new Corruption of Foreign Public Officials Act will create a new offence related to books and records, the bribing of foreign public officials and hiding that bribery.
Why do you think we need to create an offence related to falsifying books and records and bribing public officials given that similar provisions already exist in section 155 of the Canada Business Corporations Act and in sections 360, 380 and 397 of the Criminal Code?
Is it because section 155 and the three sections of the Criminal Code do not go far enough or are not effective enough?
Mr. Osborne: The Government of Canada took this position when the OECD was reporting on Canada. The OECD studies mentioned the fact that Canada did not have an offence related to falsifying books and records, so the Canadian government responded by putting these offences in the Criminal Code and so on.
Perhaps that was an adequate response, but the fact that the offence is included in the Corruption of Foreign Public Officials Act makes it clear that falsifying books and records in order to hide corruption is a crime.
I believe that even though those provisions are set out in other laws, Canada is making this principle even clearer.
That is why we are supporting it.
[English]
Senator Wallace: Mr. Osborne, I was a bit confused about your comments regarding facilitation payments. Senator Smith clarified some of it for me, but I thought from your comments that your concern was one of timing, that the time is not appropriate to implement that change. Now it is my understanding that it is really not timing but the substance of how the bill would impact facilitation payments. I sensed as you went on that even when the timing is right you would be advocating for a graduated sentencing approach that would address in some way the magnitude of the facilitation payment. That is what I understood you to say. If any of that is incorrect, I will give you a chance to respond.
You went on to say that a possible way of addressing that would be to have, as you referred to it, guidelines to discourage. The purpose of the bill is certainly to discourage and to make it clear nationally and internationally that in Canada bribery, corruption and facilitation payments are not acceptable, and that has to be done in a very strong and forceful way.
When you speak about guidelines to discourage as a way of addressing the facilitation payments issue, what stronger guideline to discourage could there be than a 14-year sentence? That is pretty strong stuff. It may be over the top in certain circumstances, but is that not where judicial discretion comes in? As Senator Smith points out, it is a maximum sentence. It may well be that, having heard all the facts, a judge exercising discretion may impose no jail time or may give a suspended sentence.
I agree that conditional and absolute sentences would come off the table with this indictable offence. However, other than that is there not the full range of judicial discretion available so that someone who has paid $20 would not serve many years in prison? That is not what the bill would do, is it?
Mr. Osborne: No, it would not force a judge to put someone who had paid a $20 bribe into jail for 14 years. However, as you put it, it would take conditional and absolute discharges off the table, which are actually very useful tools for enforcers, particularly with individuals who are willing to take responsibility for behaviour that is not at the high end of the scale. It is a useful tool in certain rare cases. We have used it in the competition field. I practise competition law, and there are two or three cases on the books of absolute discharges.
It is an important tool and it bothers me that it will not be available. A $20 facilitation payment offence would be subject to exactly the same offence-creating regime as would the several-million-dollar bribe to which Griffiths Energy pleaded guilty recently. Exactly the same offence would apply to those two situations under this bill, and that does not seem right somehow. There is a very large range of behaviour that is caught here.
Senator Wallace: As a matter of policy, the purpose of the legislation is, in a very strong way, to discourage this type of behaviour, to discourage bribery. Would you not think that leaving the door open within this legislation so that conditional and absolute sentences could be part of the penalty would go against the whole approach and purpose of the bill in a very significant way? Would that not undercut, in the eyes of many, the importance and the significance of the issues this bill seeks to address?
Mr. Osborne: With respect, I do not think so. Having a high maximum sentence, whether it is 14 years less a day or 10 years, or whether you somehow explicitly allow discharges to be there, there is nevertheless a very strong statement by a large number there.
When we are talking about real bribery, I am less fussed about it than when we are talking about facilitation payments, which are different from bribes in ways that are subtle but real. The bribe is something where it is more voluntary. It is, ``Hey, I would like the contract.'' ``Okay, what would you give me?'' ``Okay, a contract, a few million dollars, and it is a deal.'' The facilitation payment is where you are basically being held up for ransom by some low- level functionary who is trying to supplement his or her salary by extorting a few bucks from people who happen to end up at his desk. It is a different kind of situation. It is harder to control. It is easier for developing countries to control the higher-up officials who might be asking for the $2-million bribes than it is, I would think, for them to control the individual customs agents and individual police officers whose salaries may, frankly, not be enough for them to live on. I think it is a more complex problem, frankly, and it needs to be dealt with in a more nuanced way.
Again, that is why we say the time is not right. We are not saying that we should maintain this exception forever. I regret that we do not have a regime to propose to you that would be a better one, and I apologize. However, at the same time, as you are aware, this bill came on quite quickly, and we moved very quickly to produce a submission on it for you. All we are really saying is that more study is required.
Senator Wallace: Thank you for your comments, Mr. Osborne.
The Chair: Thank you. I should act as a senator, not a lawyer, but I cannot resist. Are you not creating a conundrum for us internationally that we struggle with inside Canada but have not made exceptions to? You can go into a store and steal, and it can be a minor offence and you are charged with theft, or you can steal millions of dollars, but you still go under the same Criminal Code section, and the difference is summary conviction or indictable.
Something troubles me in the reasoning that you have given me, that facilitation is okay but bribery is not, when you can move what is bribery into facilitation. The joke that goes around is that you call it commission and I call it bribery. You call it facilitation, and I call it commission. You can put all sorts of labels on things.
We want to clean up societies. If they have problems and the wages for the police are not enough, we should be part of the work with the police. We should not say you are at a lower level and you cannot afford to live, so bribery is okay and we will be part of it, because then where do you draw the line? The line will keep going and going.
If you are delivering food to Somalia and you know children on the other end are dying, you want to do what you can to get it there, and that kind of facilitation is an exception, but I keep wondering whether we would charge somebody under that. If one is talking about ease of business, to give $20 to that person, then you will see the pattern is that everyone is doing it because it is only $20 and you pass it on and say, ``By the way, if you want to get your phone hooked up, you have to pay $20.'' Are we not then part of that whole process that we are trying to break down, and should the Canadian government not be put under the gun to do other things to help overcome the issues of poverty and necessity and not saying, ``Well, some bribes are okay because we call them facilitation?''
Mr. Osborne: I am not sure we would ever want to go so far as to say that they are okay. What we would do is say they are not punishable as a criminal offence in Canada, which is a little bit different.
The funny thing about how this regime works, if you think about it, is that it is attacking corruption in other countries by creating an offence in Canada. On the face of it, it is paradoxical because, in theory, it would be preferable that those other countries would have robust judicial systems and robust governance and would, in fact, themselves criminalize corruption properly, as we do domestically here in Canada. If someone bribes someone in Canada, they will ultimately be held to account and go to jail because we have a good, robust system. These paradoxes create problems when one talks about facilitation payments. The interesting part of this paradox is that we make Canadian businesses become the agents of enforcing this prohibition. I am not objecting to it. That is a good thing. It also helps those businesses, because if someone hits them up for a bribe, they can say, ``Look, I am sorry; I cannot pay it. If I do pay it, I will go to jail in Canada.''
It is a little bit harder for someone at the border trying to get out, trying to get the exit visa, and being asked for a few dollars to make that same argument. ``Look, I cannot do it; I will be put into jail in Canada.'' One person told me that in some of these countries, if you are asked for the money to get the exit visa and you say, ``Well, I would like a receipt for that, please,'' the response may well be a gun to the head. These are situations that are not nice, polite Canadian customs officers. These are nasty situations in some cases. We are not saying it is right. It is wrong. It is very wrong. However, is it wrong for someone caught up in that situation to get out of it by handing over $20? I have trouble seeing that as being on the same scale of wrongs as someone who pays a $2-million bribe to get a contract in Chad. It is a different situation.
The Chair: I could go on. There is the defence of necessity if you are at the exit and the gun may be to your head. We are back to criminal law and standards that we are trying to adhere to.
Mr. Osborne: I agree.
The Chair: I have many more questions, but Senator De Bané has been waiting very patiently. I do not want to intrude on his time.
[Translation]
Senator De Bané: Mr. Osborne, after having experienced something similar, companies such as PCL in Alberta and Lépine in Montreal have said that they will never again do business in certain countries. Transparency International has said that corruption is widespread in many countries.
I am trying to imagine what a Canadian lawyer, a member of the bar, who wants to interpret the legislation correctly, would say to a client who wants to bid on a large contract in a given country and who is legally required to hire a local representative. The client has been to the country and has found a well-known agent who can connect with the person awarding the contract. Because the agent is so well-known, he can ask for a kickback. What will he do? No one knows.
What would a good lawyer, a member of the Canadian Bar Association, say to his client in this real-life example?
In light of this this problem, which causes so much turmoil, I also think about other laws that would, say, protect marijuana use in Canada, where hardly anyone is arrested because it is impossible to do so.
I agree with you on the question of facilitation payments. However, in terms of large contracts, what would a conscientious lawyer say to his client?
[English]
I must have a representative in a country. It is mandatory according to the law, and of course that guy is asking me for 1 per cent, 2 per cent or 3 per cent to be my agent. Should I pay him or not?
[Translation]
Mr. Osborne: Under the current law, if the foreign country's legislation allows or requires payment, there is no issue. If, for example, a foreign country's laws require hiring a representative, then having a representative poses no problem. And, in theory, the fact that the representative wishes to be compensated does not pose a problem either. It becomes a problem if the representative seems to be asking for 10 per cent, for example, because some goes to this minister and some goes to that minister or deputy commissioner. In that case, it is illegal to try and skirt the law by making a bribe via a representative.
As you said, this is a real-life example. This is a problem that businesses are facing on a daily basis. How far should an investigation go? In criminal law, there is this idea that an investigation should be carried out as soon as suspicions are grounded; otherwise, there is a chance of being guilty of not having investigated a case of probable corruption. In such a case, the contract would have to be turned down.
[English]
Senator D. Smith: I know you are in private practice and you referred to competition law. I do not know if you do export and import stuff. I am not asking for names or companies or anything like that, but are you personally aware of situations that have occurred with Canadians where something like this would really result in justice occurring? You keep referring to a $20 bill. Well, at what point does it kick in? Is it a $50, a $100, a $500 bill? Have you experienced or heard of situations where the end result would be injustice, rather than helping to see a culture of honesty and decency and normal practice occur?
Mr. Osborne: I have heard from clients whom I cannot name, obviously.
Senator D. Smith: No one is asking you to name anybody.
Mr. Osborne: I have heard of cases where employees have been asked for money to leave a country. I have also been told of cases in certain countries where it is simply known that if you want to make a report to the police you must pay money, so the answer is yes.
Senator D. Smith: You would still favour some things being done, but not the full monty here?
Mr. Osborne: That is a good way of putting it, senator.
Senator D. Smith: Okay.
The Chair: To follow up on that, I do not think this committee, nor you, Mr. Osborne, would want to leave the impression that everyone in another country is ready to be bribed and asked for facilitation. Businesses can deal in other countries. My concern is that I worked in countries where one immigration officer is not asking for the $20; the other one is. Their comment is if you are going to allow facilitation payments, you are not supporting me. You are not building the culture, as Senator Smith says. I hope I am not hearing you say that facilitation is a good thing. We are trying to eradicate facilitation, but we know it is going on, and how do we get to that point of zero tolerance?
Mr. Osborne: We share the same goal, senator.
The Chair: Thank you.
Mr. Osborne: I have travelled a fair bit. I have yet to be asked for a facilitation payment, luckily, but I am aware that it exists. I honestly do not know what I would do if I were in a country where I did not know the language, I was tired, wanted to get home to my family and was scared. I do not know what I would do, to be honest. I do not know that any of us knows what we would do in that circumstance. It is not right; it is wrong. However, it happens, and the question is how we ultimately eradicate it and what the best way to do that is.
The Chair: Are you agreeing with the approach the OECD is taking?
Mr. Osborne: As I understand it, the current approach is to recommend countries study it. They also have guidance for enterprises to assist them in refusing to pay these payments. In other words, it is a slightly softer approach than the approach in this bill. I would tend to favour the eventual criminalization of it in Canada. Again, it is a question of the time not being right, and subject to what I said before about the range of penalties being broader for the lesser offences.
The Chair: There are two approaches. One was that the government could have said no, we will not touch it in the bill. We will continue to work on it until the time is right and we have some consensus amongst our colleagues. However, we have been faulted that legislation takes a long time to get to fruition. Therefore, it seemed to me the compromise is put here — and I hope we get a chance to talk to the officials again tomorrow — that it will not be enacted until the government enacts it. That gives the government time to continue to negotiate, review, study, do everything to see where the competitors, the United States, the Australians are.
Mr. Osborne: I take your point, senator. It has some attractions. It creates flexibility, but it effectively represents Parliament giving the decision to the Governor-in-Council about an important piece of Canadian law.
As a bit of a purist in these things, I tend to be of the view that Parliament should pass the law when it is seen to be time to have that law, and the law should come into force more or less right away. I recognize that in the real world that may not be an achievable goal; nevertheless, that would be the preferred way of doing it.
One problem with something like that is what if, as a result of all these studies and discussions with our trading partners and so forth, we realize that we actually need to tweak it? Then we are into another process, another bill, and we are back here before you again anyway. I am not sure that that, in the end, will actually help.
The Chair: Thank you. I certainly do not know this law, but on extraterritoriality, I read proposed section 5(1)(b) where it talks about a permanent resident, as defined in section 2(1) of the Immigration and Refugee Protection Act, who, after the commission of an act or an omission, is present in Canada. My understanding of that last phrase ``is present in Canada'' is that we cannot reach into another country to lay charges. We have been moving towards extraterritoriality for some time. In my purist days, when I was in law school, we did not do that at all. Now we are, and we are into something new internationally. I took that to mean that we are only going to lay a charge against a permanent resident after the commission of an act or an offence, and I would take that as meaning anywhere, who is present in Canada, because that is when we can get our hands on it, in layman's language. Could you give me the law? I am not clear on that.
Mr. Osborne: The law in this area is in a bit of ferment, and the implications of Libman are still being worked out by our courts. In the area that I do a lot of my work in, competition law, it is still an open question.
Section 5 is a deeming provision. It deems something that was done over there to have been effectively done in Canada. It gets around the problem of subsection 6(2) of the Criminal Code by deeming it into Canada.
If you are a Canadian citizen and you are abroad and you bribe somebody, it is right away deemed to have been in Canada. However, if you are a permanent resident and you are abroad and you bribe someone, it is not yet deemed to be in Canada. It is still in that country, and it only becomes deemed to be in Canada once you come back to Canada, cross the border or enter Canada at a port of entry. That is why I described it as a kind of inchoate or floating offence, because its territoriality suddenly becomes fixed in Canada upon the permanent resident's returning.
The same concern you voiced would apply to the citizen. Many Canadian citizens work and live abroad. We cannot serve them with criminal process abroad, and that is well established. Yet, this bill, correctly in my view, would deem their offence to have been committed in Canada. As a practical matter, we cannot charge them unless and until they come back to Canada. That is why the paradox we have identified is not necessarily something that need preoccupy you for a great deal of time. It is the kind of thing that, as a lawyer, I enjoy noticing, and I hope you will forgive my having brought it to your attention.
The Chair: No, I thank you, because it is an evolving field, and Canadians should be aware of the difference. If it is an offence committed in Mexico, it was in Mexico, but we have moved beyond that. I think we need to catch up with the understanding of how law internationally is developing, including the fact that technology is evolving and the offences involved with that.
Mr. Osborne: The territoriality of offences and other things will be one of the big concerns going forward in law. It will be an issue for the future, yes.
The Chair: Thank you.
[Translation]
Senator Robichaud: You are saying that the bill we are currently studying goes beyond what the OECD convention requires in terms of facilitation payments?
Mr. Osborne: Yes, because remarks being made at this time reflect the fact that the convention does not apply to facilitation payments.
Senator Robichaud: But you said that it would be relatively difficult for you to draw up an amendment to address that issue, because I believe the committee will proceed to clause-by-clause consideration of the bill tomorrow.
[English]
The Chair: Subject to the wishes of the committee.
[Translation]
Senator Robichaud: If it does not happen tomorrow, it will happen soon enough. Next, the bill will be studied at third reading in the Senate and then it will return to the House of Commons.
Will you be proposing an amendment that addresses the issue and submitting it to the department? Because the minister has said that he is open to considering amendments that would benefit the bill.
Mr. Osborne: I believe that is something I could discuss with the Anti-Corruption Team. I would like to point out that the law already contains a definition that is addressing some of the problems, but at least it attempts to make a distinction between bribes and small payments. This definition can be found in sections 3, 4, and 5 of the current Corruption of Foreign Public Officials Act.
If you look at this definition, you will see that payment exceptions are made for the issuance of a permit or other document that qualifies a person to do business, for example.
Exceptions are also made for payment related to the issuance or processing of official documents — such as visas and work permits — or provision of public services or as-required services such as police protection. An important clarification of this definition is set out in subsection 5, and I quote:
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.
So, in a situation where a company wants to enter into a contract with a country that refers to it as a ``facilitation payment'' when, in reality, it is a $2 million bribe, it is clear that with the law, as it is currently written, the exception for facilitation payments would not apply. It would be a crime, period.
I am not saying that the exception is perfect; I would say that it is adequate. There are options to consider. One option would be keeping the exception so it would not be considered a crime. Or, in the case of a facilitation payment, it could be determined if it is a summary offence and therefore warrants a lesser sentence. Or, it could be considered a crime unless the company somehow reports it, in its annual report or in a report to government for statistical purposes, for example. There are options.
Senator Robichaud: But it is still complicated.
Mr. Osborne: It is complicated.
[English]
The Chair: Ms. Thomson and Mr. Osborne, thank you for sharing with us some perspectives on the evolving law in this area and the concerns that you have raised. If you do wish to reflect on this and provide any further information in any form, please do so to the clerk. We will be deliberating on this bill. It is complex. It is a simple bill in paragraphs, but it is a complex issue. I think it raises a lot of issues about what signals Canada wants to send as a country. We started in 1998 with this legislation. We sent some strong signals, whether we are doing it correctly or not, and it will be for this committee to determine whether the government has chosen the right mechanism to proceed to answer the criticisms of OECD. Thank you for coming. I think this has made us be much more reflective on many of the details and the applications of the criminal law.
Honourable senators, we will take a short break, and then we will meet in camera.
(The committee continued in camera.)