The Corruption of Foreign Public Act (Canada) has been in effect since 1999 and prohibits Canadian companies and individuals from giving or offering a benefit of any kind to a foreign public official with the ultimate purpose of obtaining or retaining a business advantage.
Effective October 31, 2017, it is now illegal for Canadians to make what’s known as “facilitation payments” to foreign public officials in other countries. Facilitation payments are, generally, the direct or indirect giving or offering a loan, reward, advantage or benefit of any kind to foreign public officials to expedite or secure non-discretionary decisions that is part of the foreign public official’s duties or function or performance of an act of a routine nature such as the issuing of permits or licenses, processing visas and work permits, providing public utility services such as power and water supply.
Canadians who have conducted business or lived in a country where corruption is common have likely had to deal with government employees expecting handouts. Facilitation payments, sometimes known as “grease payments” (or as spintarella or “pulling strings.” in Italian; baksheesh in the Middle East; fakelaki or a “little envelope” in Greek; a request for algo para el refresco “something for a beverage” in Latin America; or chaqian or “tea money” in Chinese) are small payments made to government officials to get them to perform routine tasks or to expedite processes within the scope of their duties.
Facilitation payments had been originally exempted from the prohibitions of the Corruption of Foreign Public Act (Canada) in part to provide Canadian companies and individuals with some comfort when interacting with foreign public officials in other countries. Technically, this exemption was repealed in 2013 albeit the effective date for that repeal was deferred. The repeal of the facilitation payment exception means potential compliance issues for Canadian companies and individuals operating in other countries and creates an inconsistency between Canadian law and the U.S. Foreign Corrupt Practices Act which still has an exception for facilitation payments.
Canadian companies operating in other countries should: (a) ensure all of their employees and representatives are fully aware that even small facilitation payments are illegal and could lead to criminal charges in Canada: (b) establish effective compliance policies and training and monitoring programs to minimize the risk of illegal conduct by their employees or other representatives; and (c) be sure to include thorough anti-corruption due diligence when carrying out future M&A transactions in order to avoid liability based on the conduct of the acquired business.
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