Foreign Affairs Committee on June 13th, 2013

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

At your conference, I had a discussion with a well-known legal counsel. I won't name him because he's not here to defend himself. He said that he thought it would put Canadian companies at a disadvantage. At the same conference I met another individual who was a university professor. Again, I won't name him because he's not here to defend himself. He said it's absolutely the right thing to do, and he thought we were on the right track and should continue doing it. I put the two of them together, and they had a bit of a discussion.

Mr. Osborne, we'd like to hear your views.

[The Chair, Conservative, Dean Allison]

Mr. Osborne, you have about 30 seconds left.

[Michael Osborne]

All right. The commentaries to the OECD treaty that are still in force say that small facilitation payments do not fall within the prohibition in the treaty. The most recent guidance—

[A voice]

[Inaudible--Editor]

[Michael Osborne]

It's not defined. Paragraph 9 of the 1997 commentaries says “small 'facilitation' payments do not constitute payments to obtain or retain business or other improper advantage”. That is the reason I said earlier that it's not clear whether or not those payments would be prohibited by the central prohibition in the CFPOA. And the OECD guidance as it currently stands is to encourage countries to take measures to encourage companies to ban them.

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

In terms of the penalties, when a member of the opposition asked the question of Mr. Kessel the other day, about the 5- to 14-year penalties for domestic corruption, his answer was: What I can confirm to you is that the sentencing that will be applied now to foreign bribes—Canadians who are bribing foreigners—will be the same as Canadians bribing Canadians. So what we are doing with this legislation is ensuring that there isn't a double standard, that when Canadians go overseas and bribe others, they will be suffering the same penalty as Canadians bribing other Canadians.

Do you disagree with his statement?

[Michael Osborne]

Section 121 of the Criminal Code establishes an offence for bribing a broad range of government officials. Subsection 121(3) says that the imprisonment is five years.

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

So in your view should that Criminal Code provision for the bribing of Canadian officials be amended as well?

[The Chair, Conservative, Dean Allison]

Sorry, Mr. Dechert. That's all the time we have. We've got to move on.

Madame Laverdière, you have five minutes.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much.

Thank you for your presentation. I'll try to go rapidly because I think there are quite a lot of issues to discuss.

Mr. Osborne, if I understand you well, bribing an official in Canada carries a five-year max?

[Michael Osborne]

In some cases, it's more. Generally, it's five years.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

So then we would not be talking of the same treatment for bribing abroad as bribing in Canada. Is that what it means?

[Michael Osborne]

That's correct. The penalty will be less after this legislation. I don't know what the plans are with the Criminal Code. You'd have to ask....

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much. I think it's a very important comment.

On another issue, just to clarify, when we were comparing the U.S. procedures last Tuesday, we were not comparing procedures for businesses. The issue was for NGOs, because in the U.S., facilitation payments are treated under the Securities Exchange Act and, therefore, presumably non-governmental organizations are not covered by the U.S. regime, if I may say so.

[Michael Osborne]

I'm not an American lawyer, but my understanding is, first of all, that the FCPA contains an express facilitation payments exception. Guidance that I downloaded from the U.S. DOJ, I think it was, last night confirms this.

As far as the SEC is concerned, my understanding is that they effectively have a books and records provision that says you can't track a facilitation payment as though it were entertainment. But it doesn't make it unlawful to make a facilitation payment; it simply establishes that you can't falsify it in your books and records. But again, I'm getting it second-hand from people I've consulted. I'm not an American lawyer.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Furthermore, it would apply essentially to companies, and it would not apply to non-governmental organizations, whatever the Securities Exchange Act does.

[Michael Osborne]

I would assume it would apply to companies publicly listed in the United States, as opposed to private companies or NGOs.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Therefore, what we're to implement in Canada is going to be stronger than what is being done in the U.S. I underline that, because I think it's a very important point. We want to make sure that humanitarian organizations are not prevented by this law from delivering urgently needed food or supplies.

You yourself raised this issue. Did you have an opportunity to talk with non-governmental organizations working in humanitarian work?

[Michael Osborne]

What happened at the CBA was that our charities law section was given the ability to provide input to other briefs that we prepared. We have not consulted very widely, however. The timelines for this bill were very narrow when it first appeared in the Senate. We did what we could in the time available. The feedback we got was that there were concerns. That's all I can really say. We haven't done....

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much.

I concur with you, with the fact that, unfortunately, we don't have sufficient time, because there are a lot of unanswered questions. We also haven't been able, as a committee, to hear from non-governmental organizations. Given what's at stake, it would have been worth it to have more time to really study this bill in depth.

Mr. Ingram and Ms. Keeping, I have a question for you both. I'd like to come back to Mr. Ingram’s comment that we badly need to enhance our brand abroad. You talked about capacity building, providing resources for revenue management and going after income tax and things like that. There's a very good example recently. The U.K. helped Ethiopia with its tax collection system, and the tax revenue in that country multiplied by seven as a result. We often hear the government say that Canadian businesses will bring in taxes, but helping revenue agencies in developing countries is key too.

What the Prime Minister announced yesterday, in terms of transparency, is a good step. What are the next steps that Canada could take to help enhance, reshape our brand a bit?

[The Chair, Conservative, Dean Allison]

Mr. Ingram, we're over time. So I'll allow you a quick response to it.

[Joseph K. Ingram]

Thank you, Mr. Chair.

As I said earlier, with more strategically targeted development assistance, as a byproduct of our supporting revenue- or resource-rich states, we also want to help Canadian investors in mining. I think it's important that we think about the win/win. In other words, we need to ensure that the host government is in a position to mobilize resources that are domestically more effective. Clearly with former CIDA, helping a government develop the capacity to do so was a very positive step, and I would hope that in addition to the Prime Minister's announcement, we would think strategically about how we could best do that.

The downside risk—and we're seeing this with the rise in resource nationalism—is that you have governments now on both sides of the political spectrum, not only in Africa but also in Latin America, that are increasingly renegotiating revenue-sharing agreements. You've got retroactive liability suits being filed. You've got partial nationalizations taking place. You've got changes in fiscal and royalty payments taking place. Those are not good things necessarily.

As I said earlier, if they feel that a particular company is from a country where they're not applying the same standards, then the company might become a target. There's that downside risk as well. Canadian companies could become a target. I think it's important to—

[The Chair, Conservative, Dean Allison]

Thank you very much. That's all the time we have, as we have to go to clause by clause.

I want to thank our witnesses once again for your flexibility in your schedules over the last couple of days. Thank you very much.

With that, we're going to suspend for a couple of minutes just to bring the officials back to the table and then look into clause by clause.

[The Chair, Conservative, Dean Allison]

We'll start clause by clause. If you would like to grab your sheet of paper with the orders of the day, we've got the clause by clause that we'll be moving forward with.

Pursuant to Standing Order 75(1), consideration of clause 1, the short title, is postponed. So the chair will call clause 2 to 5.

(Clauses 2 to 5 inclusive agreed to)

Shall the short title carry?

Mr. Dewar.

[Paul Dewar, NDP, Ottawa Centre, ON]

Before we get to that, I just wanted to propose an additional amendment before we get to the.... You're at 6 right now, right?