Foreign Affairs Committee on June 13th, 2013

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

That raises an important issue. I suppose on the one hand you may have corrupt governments. On the other hand, you may have governments that really want to participate and make this a reality.

Ultimately, first of all, I think corruption has to cease for a number of reasons, but one of the most important reasons, I suppose, is that these countries where development is taking place are able to reap the benefits.

Will this legislation force those governments that possibly aren't too interested in participating in getting on board themselves so that we reach our desired objective?

[Joseph K. Ingram]

It may or it may not. I think the absence.... What you don't want is a situation where they can point to Canada, for example, or to other G-8 countries, and say “We're going to follow their example”.

In other words, if there is no legislation—and that's why we welcome this legislation—you don't want them to point to a G-8 government and say, “They're not adopting this kind of legislation. They're not prepared to require mandatory reporting requirements. Why should we? Why should we move in that direction?” You don't want that.

To answer more directly your question, the answer is that in some instances, yes, it is a question of political will. I think you hit the nail on the head.

That said, I've worked in countries where the political will is there but there's a lack of resources, and the government is not prepared to finance the building up of that capacity.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We'll now turn it over to Mr. Rae.

Seven minutes, please, sir.

[Bob Rae, Liberal, Toronto Centre, ON]

Thank you very much to our guest who's joining us by video conference.

Previously you described the position of the Government of Canada as only moderately enforcing the existing law. As I understand it, there are different categories that you've described—active, moderate, little, or no.

We're not at the top of the heap in terms of actively enforcing the law, is that right?

[Janet Keeping]

Well, historically that's certainly been correct, and that's been noted by the OECD and the other organizations that monitor these things. Of course, the OECD is particularly interested in how we do vis-à-vis the OECD's anti-corruption convention, but yes, in the past, quite frankly, we've been seen as a laggard. There's nothing sensational in saying that. It has been well documented.

But ever since we signed the United Nations Convention against Corruption and the RCMP was mandated to create specialized teams to enforce the Corruption of Foreign Public Officials Act, we've been doing a lot better. I've heard RCMP officers speak several times over the last few years on their involvement in enforcing the CFPOA. They're working hard at it. It's very convincing. I think they're very committed to the objectives.

I'm glad to be asked this question, because I did want to have an opportunity to say that good law on the books is really important and essential, and Transparency International Canada is behind the adoption of Bill S-14. But just as in any other country of the world, legislation is only as good as it is enforced, especially in the criminal law area.

I know that's not the mandate of this committee today—you're looking at a piece of legislation—but keep in mind that we must have the RCMP and the prosecution services adequately resourced to enforce the legislation.

[Bob Rae, Liberal, Toronto Centre, ON]

I'm glad you said that, because I think that's a critical issue, and you're right, it's not one that we can discuss right now, but it does speak a lot to how we root out these problems. It's not only the culture in a number of countries; it's also the culture in a number of corporations.

We do clearly now have a problem. We have to recognize that we have a problem, and it isn't going to be changed simply by passing new laws. It's going to be changed by how we enforce them—

[Janet Keeping]

Yes.

[Bob Rae, Liberal, Toronto Centre, ON]

—so thank you very much.

I'm also concerned about the discrepancy between the 14-year number and the Canadian number. Again, Ms. Keeping said she was holding back any comments with respect to what else we should be doing on this issue within the country, but it does strike me as really kind of crazy to say that it's only five years if you bribe a Canadian official, but it's 14 years if you bribe somebody overseas.

That's preposterous. Why would we accept that as a standard?

[Michael Osborne]

I assume that's directed at me.

[Bob Rae, Liberal, Toronto Centre, ON]

It's for whoever wants to answer it. Mr. Ingram was nodding, and I'm happy to hear from him, but I'm happy to hear from you, Mr. Osborne.

[Michael Osborne]

It is a discrepancy. It could be resolved in one of two ways. One would be to increase the penalty for domestic corruption to 14 years, which would involve the same issues I've described that reduce the discretion of judges in sentencing, or it could be resolved by having some lower number for both sets of offences.

There's a fairly big range of domestic corruption offences in the Criminal Code. I don't propose to go through all of them, but there's a bunch of them, and the sentences are not all the same for each one. For instance, if my memory is correct, corrupting a judge would attract a 14-year sentence, whereas for a lesser government official it would be a lesser maximum.

[Bob Rae, Liberal, Toronto Centre, ON]

But my concern is that we often do these things and governments even introduce them for largely symbolic reasons, in wanting to say that “it's not just that we don't like this, but we really don't like this”. Then we're left with this situation now where we are facing legislation, which I expect all of us will end up supporting, and we have this illogical relationship between this particular set of standards and the standards that we set for ourselves within the country.

I would hesitate to put words in Ms. Keeping's mouth, but in many of the publications of Transparency International, Canada is slowly slipping down in terms of where we stand now compared to other countries on this issue of corruption domestically, as well as how it affects foreign.... We can see from the behaviour of certain companies that the practices they thought were acceptable in other countries, they've imported back into Canada, and we're now watching this disease spread in our own country.

Mr. Ingram, do you have a comment on that?

Ms. Keeping? Go ahead, please.

[Janet Keeping]

If I might make a comment there, I'll be frank that at TI Canada we have not paid explicit attention to the fact that there is this discrepancy between what's proposed by way of penalties in Bill S-14 and what we have in our current criminal law.

But I'd have to say that anybody connected with Transparency International wants to see greater attention paid to the problem of corruption. Therefore, if we're going to find consistency, it ought to be consistency at the more serious level...not to think that foreign corruption should be necessarily reduced to the penalties in our Criminal Code, which may indeed be inadequate.

[Bob Rae, Liberal, Toronto Centre, ON]

The final question, if I may, Mr. Chairman, is on the issue of the so-called facilitation exception that is now being phased out. I'm a lawyer, too. If you're advising clients now, you're in an almost impossible situation. You don't know when the law is going to be changed; you don't know exactly how it's going to be interpreted; you're left with a real sense of uncertainty. You either end facilitation payments, period, or you don't. I'm not quite clear on why this is something that's being phased in. Obviously, it's not being made retroactive. You're not going to go back and say, “Well, something you paid yesterday you're going to have to pay a penalty on”, but we now are entering into a cloudy area.

Is that a fair comment, or am I overdoing it?

[The Chair, Conservative, Dean Allison]

Mr. Osborne, just a quick response, if you could.

[Michael Osborne]

Right.

Well, I think it's fair to allow some time to phase in to allow companies to adopt appropriate compliance programs. That aspect of it is fair. But even once it comes into force there will be ambiguities because there's a real issue as to whether or not a facilitation payment fits within the central offence-creating provision in the act at all. It might be that removing the facilitation payments exception doesn't change the law at all. But that's what we lawyers do: we advise our clients. It will make it harder to advise clients.

[The Chair, Conservative, Dean Allison]

Thank you.

Thank you, Mr. Rae.

We're now going to start our second round. We're going to have time for two quick interventions, Mr. Dechert for five minutes, and then we'll finish with Madame Laverdière for five minutes.

Mr. Dechert.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you to each of our guests for being here today.

I'd like to start with a question for both Ms. Keeping and Mr. Osborne.

Ms. Keeping, I just want to start by saying that I thought the conference that Transparency International Canada organized a couple of weeks ago was very good. I thought you had a very broad range of people representing government, academia, NGOs, and business. We heard a wide range of views on these issues with respect to Bill S-14 and, certainly, they were generally very supportive. I commend Transparency International Canada for holding that conference. I thought you did a superb job.

[Janet Keeping]

Thank you.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you for that.

I'd like to go directly to the issue of facilitation payments, and we've had a lot of discussion about it here today.

My understanding is that Canada is responding to the OECD report that included interventions by the United States in a peer-reviewed report that pointed out a number of areas of the current Corruption of Foreign Public Officials Act that needed, in their view, to be amended and updated to reflect the OECD convention. One of those criticisms was the fact that our legislation currently does not prohibit facilitation payments.

We all know that there is a provision in Bill S-14 allowing a delay in enforcement to give Canadian companies time to change their policies and procedures to ensure that they don't run afoul of this, which will be a new prohibition on Canadian companies.

There's some misunderstanding as to whether or not American companies are allowed to make these kinds of payments. When I asked that question of our officials—of Mr. Kessel—he pointed out that under the Securities Exchange Act these kinds of payments are in fact illegal and that administrative proceedings can be brought against public companies in the United States that are governed by the Securities Exchange Act.

I wonder if you could, Ms. Keeping, tell us, in your view, is the facilitation payments provision of Bill S-14 a response to the criticisms that were made of Canada by the United States and other countries in the OECD report? Do you think that it puts Canadian companies at any kind of a disadvantage versus American companies in doing business around the world?

Maybe I could ask the same questions of you, Mr. Osborne. Do you agree with Mr. Kessel's view of American provisions that prohibit some American companies from making these kinds of payments?

[The Chair, Conservative, Dean Allison]

Ms. Keeping.

[Janet Keeping]

Speaking on behalf of TI Canada, I'll just say that it is, of course, our understanding, too, that this provision regarding removing the facilitation payments exemption is a response to criticism of us in the past.

I'll have to tell you that the question of how facilitation payments should be treated under the law has been one that has given rise to the most vigorous debates I have heard around the board table in three years at TI Canada, and also in some of our events for the public. I would have to say as well that, on balance, the position of TI Canada is that this is the way of the world. The world is taking corruption more seriously. We encourage that, of course. At the end of the day, facilitation payments are bribes and have to go.

So we are content with what we see in Bill S-14.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you.

Sorry, did you have something else to add, Ms. Keeping?

[Janet Keeping]

We reached the conclusion that we did regardless of the question of competitive advantage or disadvantage vis-à-vis American companies.