Strengthening Canada’s Fight Against Foreign Bribery

February 5, 2013 from  Foreign Affairs and International Trade Canada

February 5, 2013 Foreign Affairs Minister John Baird today announced that the Harper government is taking further steps to combat corruption and bribery by tabling amendments to the Corruption of Foreign Public Officials Act in the Senate. He delivered the following remarks in Ottawa:

“Our government’s top priority is securing jobs, growth and long-term prosperity. In our international dealings, this takes many forms.

“It involves positioning Canada as a reliable supplier of the resources emerging markets need to grow.

“It involves pursuing an aggressive, pro-trade agenda.

“It involves creating the conditions for Canadian businesses to succeed.

“But our government also expects Canadian business to play by the rules.

“Canadian companies can compete with the best and win fairly.

“To signal our commitment and our expectation that other countries do the same, I am pleased to announce that our government is redoubling our fight against bribery and corruption.

“Today, reforms are being introduced in the Senate that will further deter and prevent Canadian companies from bribing foreign public officials. These amendments will help ensure that Canadian companies continue to act in good faith in the pursuit of freer markets and expanded global trade.

“Canada is a trading nation. Our economy and future prosperity depend upon expanding our trade ties with the world. This, we hope, is a good faith sign that Canada’s good name retains its currency.”

Backgrounder – The Corruption of Foreign Public Officials Act

The Corruption of Foreign Public Officials Act (CFPOA) makes it a criminal offence in Canada for persons or companies to bribe foreign public officials to obtain or retain an advantage in the course of international business. The act was created as a result of Canada’s obligations under the Organization of Economic Co-operation and Development’s (OECD’s) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which Canada ratified in 1998. The CFPOA is also the implementing legislation for Canada’s anti-corruption obligations under the United Nations Convention against Corruption and Inter-American Convention against Corruption.

In 2008, the Royal Canadian Mounted Police (RCMP) established the International Anti-Corruption Unit, which is dedicated to raising awareness about and enforcing the CFPOA. To date, three companies have been convicted under the act, two cases are pending and there are 35 ongoing investigations under the CFPOA.

The proposed amendments to the act include the following:

• Nationality jurisdiction: This amendment will make it easier for Canada to prosecute Canadians or Canadian companies for bribery in other countries, insofar as it will allow the Government of Canada to exercise jurisdiction over all persons or companies that have Canadian nationality, regardless of where the alleged bribery has taken place.
• Eventual elimination of facilitation payments: The act currently states that payments made to expedite or secure the performance by a foreign public official of any act of a routine nature that is part of the foreign public official’s duties or functions do not constitute bribes. This amendment will eliminate the exception for facilitation payments and will come into effect at a later date to be set by Cabinet.
• Exclusive ability to lay charges: This amendment will provide exclusive authority to the RCMP to lay charges under the act.
• Clarifying the definition of “business”: This amendment removes the words “for profit” in the definition of business to ensure that the act applies to all business, regardless of whether profit is made.
• Increasing the maximum penalty: Under the act, the foreign bribery offence is currently punishable by a maximum of five years’ imprisonment and unlimited fines. This amendment will increase the maximum jail term to 14 years.

• Books and records offence: This amendment adds a new books and records of account offence into the act that is restricted in scope to the bribery of foreign public officials or hiding such bribery. This offence will now be punishable by a maximum of 14 years’ imprisonment and unlimited fines.

To date, there have been three convictions under the CFPOA:

• Griffiths Energy International Inc. – Griffiths Energy International Inc., based in Calgary, Alberta, pleaded guilty on January 22, 2013, to a charge under the CFPOA related to securing an oil and gas contract in Chad. Griffiths acknowledged having committed to paying $2 million in cash and millions in shares in exchange for exclusive access to resources in two regions. After providing the Chad government with a $40 million signing bonus, Griffiths was awarded the resources rights. Griffiths will pay a total penalty of $10.35 million.
• Niko Resources Ltd. – Niko Resources Ltd. is a publicly traded company based in Calgary, Alberta. On June 24, 2011, the company entered a guilty plea for one count of bribery. The company admitted that, through its subsidiary Niko Bangladesh, it provided the use of a vehicle (valued at $190,984) in May 2005 to AKM Mosharraf Hossain, then the Bangladeshi State Minister for Energy and Mineral Resources, in order to influence the minister in his dealings with Niko Bangladesh. In June 2005, Niko Resources Ltd. paid travel and accommodation expenses for the same minister to travel from Bangladesh to Calgary to attend the GO EXPO oil and gas exposition, and paid approximately $5,000 for the minister to travel to New York and Chicago to visit his family.
• As a result of the conviction, Niko Resources Ltd. was fined $9.5 million and placed under a probation order, which puts the company under the court’s supervision for three years to ensure that audits are completed to examine the company’s compliance with the CFPOA. The Canadian Trade Commissioner Service has placed a hold on providing services to Niko during the period of court supervision.
• Hydro-Kleen Group Inc. – Hydro-Kleen Group Inc., based out of Red Deer, Alberta, entered a guilty plea on January 10, 2005, to one count of bribery and was ordered to pay a fine of $25,000. Along with its president and an employee, the company had been charged with two counts of bribing a U.S. immigration officer who worked at the Calgary International Airport. The charges against the director and the officer of the company were stayed. The U.S. immigration officer pleaded guilty in July 2002 to accepting secret commissions. He received a six-month sentence and was subsequently deported to the United States.

For more information, see the Corruption of Foreign Public Officials Act and Canada’s Fight against Foreign Bribery.

Source: Foreign Affairs and International Trade Canada sugestão de Gabriela Alves Guimarães

Picture source: Google Picture search

Brazil: Breaking the Crime Backbone with a New Anti-Money Laundering Act

KYC360º 24/01/2013

Before the new Anti-money Laundering Act, criminal minds could create many schemes to launder money without being caught by the justice system.

 

(Jersey) On July 9^th 2012, the Brazilian President, Dilma Housseff approved the new Anti-Money Laundering Act entitled Law 12.683 (the 'AML Act') following its approval by the Brazilian Congress that amends the previous AML Law number 9.613 approved on March 3^rd, 1998. The objective of the new Act is to strengthen the mechanism of combating financial crimes, such as money laundering, hiding assets, rights and values, as well as combating the financing of terrorism in Brazil.

The changes took place in a year which saw the most important judgment in recent Brazilian history in the trial known as Mensalão, in which a former minister of the Lula government, José Dirceu, and other members of the Government, as well as entrepreneurs of marketing companies and high ranking members of the Brazilian bank called Banco Rural were found guilty by the Supreme Court for a massive scheme of corruption, money laundering, and bribery amongst other charges, which involved the use of campaign funding for their own benefit and the buying of Congressmen’s votes to approve projects which directly benefited the allied government.

One of the main changes of the new Brazil AML Act applies to the re-classification of crimes that before only related to eight predicate offenses: drug dealing, terrorism, kidnapping, financial crimes, traffic of weapons, and corruption of national and foreign officials, which was present in the first article of Act 9.613. The new Act, now includes all money and resources arising from any criminal offenses included in the Penal Code .

Before the new Anti-money Laundering Act, criminal minds could create many schemes to launder money without being caught by the justice system. Many cases where there was consistent proof of money laundering could not be taken to trial because of the existence of gaps in the 9.613 Act, as the previous piece of legislation did not cover a range of predicate crimes. The old Act could even be used as a defense by guilty parties; They could argue the fact that money laundering could only be considered and sentenced as a crime if the existence of the crime that gave rise to the suspicion was proven. In other words, the prosecutors had to prove that the suspect money came from crimes listed in the first article of the 9.613 Act. It meant that, many cases of money laundering deriving from fraud in political activities such as bribery or corruption were virtually impossible to prosecute.

In Brazil the majority of money laundering schemes arise from crimes against public order such as fraud, bribery and corruption as opposed to Mexico, for example where the majority of cases arise from narcotics, drug smuggling and arms trafficking. To launder the funds derived from corruption the perpetrators and fraud-sters often send their illicit funds offshore, “structuring” the proceeds, and then reinvesting the money as foreign investment represented by attorneys or the fraud-sters and the corrupt themselves. This hampers the investigative procedures because once the money is integrated as investment in Brazilian companies or into in the financial system, it falls under the protection of the Brazilian Secrecy Act. Once this happens, it is impossibly hard to prove the origin of the funds.

Another important change brought in by the new Brazilian AML Act is that the law now covers different industry sectors, which were not encompassed by the previous AML Law. The new AML Law now classifies and holds accountable a wider range of industries with the requirement to control suspect activities with due diligence procedures. This means that a wider range of companies and business activities that involve large transactions must report suspicious activities to the Brazilian FIU (Financial Intelligence Unit), the COAF, using SARS (Suspect Activity Reports) about their customers and partners.

The new Brazilian AML Act now includes different kinds of businesses that could be used by criminals for Money Laundering, such as industry sectors where activities involve a considerable amount of money in their transactions, in luxury goods such as jewelry or high value goods such as cattle breeding [editor's note: cattle is an important industry in Brazil], lotteries, real estate agencies, art dealers, attorneys, soccer players and those involved in their transfers etc. police officers and others. According to the new Act, all of them must report suspect activities to the Brazilian Financial Intelligence Unit within 24 hours.

With the new 12.683 AML Act, Brazil has significantly strengthened its regime to combat money laundering and the financing of terrorism by promoting a strong task force that involves the co-operation of new sectors in the fight to break the crime back bone. Companies will need to prepare and comply with the new law by March 2013. 

 

About the Author:

Fabio de Freitas runs Lumturo Strigo Compliance Consultinghttp://lumturo.blogspot.com/in Brazil. He majored in economics from PUC-SP. He has extensive experience in AML Compliance, KYC procedures, enhanced due diligence, corporate governance and the prevention of fraud and money laundering.

Source: KYC360º

Estratégia Nacional de Combate à Corrupção e à Lavagem de Dinheiro completa 10 anos

Por José Eduardo Cardozo e Paulo Abrão do Correio Braziliense (3/02/2013

Este mês de janeiro entrou em funcionamento um mecanismo coordenado pelo Conselho Nacional de Justiça para a interligação dos cartórios de notas informatizados com a possibilidade de acesso direto de órgãos do poder público a informações e dados correspondentes ao serviço notarial. Trata-se de mais uma ação prioritária da Estratégia Nacional de Combate à Corrupção e à Lavagem de Dinheiro (ENCCLA) que inaugura este ano o ciclo comemorativo de 10 anos de existência como um dos instrumentos mais relevantes de que dispõem o Estado e a sociedade brasileira no enfrentamento a estes crimes.

Concebida em 2003 durante o Governo Lula, a ENCCLA inseriu o tema da lavagem de dinheiro na agenda nacional e, passada uma década, a matéria se mantém como objeto de preocupação das autoridades nacionais e estrangeiras.

Não poderia ser diferente. É realmente espantoso observar o poder econômico acumulado pelas organizações criminosas, que, em decorrência da alta margem de lucro que envolve suas atividades, conseguem se perpetuar no tempo e se capilarizar geográfica e institucionalmente.

Graças, contudo, a uma nova cultura institucional que se difundiu a partir da criação da ENCCLA, hoje se tem maior consciência de que o verdadeiro combate ao crime organizado e à corrupção passa necessariamente por uma atuação do Estado focada no estrangulamento dos ativos ilícitos que financiam o crime organizado e, que, além de tudo, são extremamente nocivos ao sistema financeiro, ao comércio internacional e à economia mundial.

A corrupção impossibilita a igualdade efetiva de participação dos cidadãos nas decisões públicas e, sob o ponto de vista da Administração, enfraquece a força institucional do Estado na medida em que promove o desvio da capacidade pública para atender a interesses privados. Ainda, como efeito mais nefasto, a corrupção afeta a legitimidade do regime democrático perante a sociedade, que deixa de apoiar as instituições por identificar nestas a prática de condutas ilícitas.

Através da formação de uma rede de atores multidisciplinares composta por mais de sessenta órgãos a ENCCLA compreende todas as fases de atuação do Estado, desde a prevenção, fiscalização, controle, investigação e persecução. E a Estratégia tem gerado um modelo bem sucedido de articulação estatal e constituição de um espaço permanente de integração para o Brasil formular políticas públicas de cunho verdadeiramente estratégico, afastando as atuações isoladas ou casuísticas, muitas vezes duplicadas ou incoerentes, as quais têm lugar quando o país não está organizado no enfrentamento a esses crimes.

São inúmeras as conquistas articuladas pela ENCCLA neste tempo, para muito além das operações repressivas como por exemplo: a criação do Programa Nacional de Capacitação e Treinamento para o Combate à Corrupção e à Lavagem de Dinheiro, a implementação do Cadastro Nacional de Clientes do Sistema Financeiro, a criação do Laboratório de Tecnologia contra a Lavagem de Dinheiro viabilizando a interrupção do fluxo financeiro das organizações criminosas, a criação das Delegacias Especializadas em Crimes Financeiros, a estruturação do Grupo Nacional de Combate às Organizações Criminosas, no âmbito dos Ministérios Públicos Estaduais, a recuperação de ativos e o ressarcimento ao erário; a criação de diversas bases de dados tais como o Cadastro Nacional de Entidades, o Cadastro de Entidades Inidôneas e Suspeitas, o Cadastro Nacional de Condenações Cíveis por Ato de Improbidade Administrativa, o Sistema Nacional de Bens Apreendidos, além de diversas propostas legislativas, merecendo destaque a recente mudança da Lei de Lavagem de Dinheiro, que colocou o Brasil no mesmo patamar de legislação dos países que melhor combatem esse tipo de crime em questão.

As conquistas da ENCCLA foram objeto de reconhecimento internacional por parte do Grupo de Ação Financeira Contra a Lavagem de Dinheiro e o Financiamento do Terrorismo – GAFI, organismo que avalia os países e formula recomendações com vista à prevenção e repressão da lavagem de dinheiro e do financiamento do terrorismo, cujos padrões, inclusive, são reconhecidos pelo Banco Mundial e Fundo Monetário Internacional.

A ENCCLA assim, renova-se neste instante como um espaço para o estabelecimento e difusão de boas práticas, bem como para o firmamento de padrões mínimos no que diz respeito à erradicação da corrupção e da lavagem de dinheiro. Cria-se e dissemina-se uma cultura de repúdio a estas condutas a qual se vê refletida nas instituições e em toda a sociedade brasileira.

Fonte: Ministério do Planejamento