Leigh Beijer*, CA | CFE | CAMS – MNP Investigative and Forensic Services
Earlier this month, privately owned Griffiths Energy pled guilty to bribery charges and offered to pay a substantial fine. On Friday, January 25, 2013 Court of Queen’s Bench Justice Scott Booker agreed with the terms of the charges and penalty.
The fine and charges are in relation to bribes made to a Chad Government Official via payments to a company owned by the official’s wife for consulting contracts. This is the largest fine paid to date for charges under the Canadian Corruption of Foreign Public Officials Act (CCFPOA) and, perhaps more importantly, was the result of a voluntary disclosure. In addition to the fine and the investigation costs, company management put the brakes on an IPO that was being planned.
This case highlights a number of things that Canadian private and public companies doing business in foreign jurisdictions need to be aware of, including:
- The risk of organizational distraction. If a company is involved in an ongoing investigation into illicit payments, the focus on earning income and managing costs suffers. This could prove detrimental for public companies in particular if quarterly or annual projections are not met.
- The risk of negative news or publicity. Unfavourable news, if not managed appropriately, can have a number of adverse effects, not only economically but reputationally. Consider the ramifications if a company’s ethical conduct comes into question: the results could include loss of shareholder confidence and indifference by employees to ethical behaviours.
- The significant costs associated with allegations. Companies should consider not only the cost of the bribe, but also the potential for disgorgement of profits, penalties imposed by the courts, the restriction or prohibition of conducting business in the jurisdiction of the bribe and the cost of investigation and remediation.
Avoiding the situation all together
The best way to avoid this situation altogether is to develop a meaningful risk-based corruption compliance program which includes, but is not limited to;
- Proper policies and procedures
- A code of conduct
- Commitment from senior management
- A whistleblower program
- Ongoing training
- A due diligence program for third party payments or contracts
- A risk assessment to pinpoint the specific areas of risk
This last point is particularly useful if your organization operates in one of the more vulnerable sectors such as mining, oil and gas or international construction, or in one of the jurisdictions considered to be high risk or highly corrupt as identified by Transparency International. Those jurisdictions are listed at: https://www.transparency.org/cpi2012/results
* Leigh Beijer, CA | CFE | CAMS, is the Senior Manager – Forensics at MNP Investigative and Forensic Services in Toronto