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

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Austrian count cleared of arms deal money laundering

By Michael Shields 17/01/2013

VIENNA (Reuters) - An Austrian count was acquitted on Thursday of charges he covertly helped Britain's biggest arms group distribute millions of euros to win weapons deals in central and eastern Europe.

 

Austrian Count Alfons Eduard Alexander Antonius Maria Andreas Hubertus Christoph Graf von Mensdorff-Pouilly arrives at court for the proceedings of his trial in Vienna January 17, 2013. REUTERS/Heinz-Peter Bader

Alfons Mensdorff-Pouilly, who had insisted during his trial that he served only as a well-connected adviser who had nothing to do with bribes, instead got a two-month suspended sentence on a lesser charge of falsifying evidence.

"This is not a clean bill of health. The whole thing stinks," Judge Stefan Apostol told the count.

But prosecutors had been unable to prove charges of money laundering and perjury that carried penalties of up to five years in jail, he said.

BAE Systems, Europe's biggest defence company, was fined $450 million by the United States and Britain in 2010, following corruption investigations at home and abroad into arms deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary.

It was not a defendant in the Vienna trial and said it was not asked by Austrian authorities to take part in any inquiry.

The case occurred as Austrian courts and prosecutors are taking an increasingly tough line on corruption that has fuelled perceptions of a cosy interplay of business and political power in Austria.

Former Interior Minister and European lawmaker Ernst Strasser got a four-year prison term for bribery this week after being caught on camera offering to amend European legislation in exchange for cash. He will lodge an appeal.

Mensdorff-Pouilly, 59, had painted himself as a man whose acumen and family ties propelled him from struggling poultry farmer to prosperity.

Prosecutor Michael Radasztics had accused him of using 12.6 million euros ($16.8 million) he got from BAE Systems via shell companies to influence weapons deals in eastern Europe a decade ago after the fall of the Iron Curtain.

THE WHITE SULTAN

Radasztics had told the court he did not bring bribery charges because he could not prove who may have been paid off.

Defence attorney Harald Schuster seized on that to paint the accusations as a desperate attempt to salvage a 10-year investigation that had identified not a single bribe recipient.

Radasztics said he would lodge an appeal while Mensdorff-Pouilly said he would not fight the verdict.

Mensdorff-Pouilly is a flamboyant figure who had hosted lavish hunts at his castles in Scotland and Austria, hobnobbed with the glamour set and wed a government minister.

He had testified of his beginnings trading game, poultry and snails from his inherited estate in southeastern Austria, now a successful hunting lodge.

It was not until his cousin married Tim Landon - a BAE executive and former British secret agent known as the White Sultan who once organised a coup in Oman - that the down-at-heel aristocrat began to see fortune smile on him.

Landon, who died five years ago, introduced him to BAE, which hired the count to advise on why it had lost out on a fighter jet deal in Austria. It eventually broadened his remit to include a potentially vast new market in the former communist countries of eastern Europe that opened after 1990.

"If you have a bit of a feel for politics and many relatives and friends in these countries, then you have the right connections," Mensdorff-Pouilly had told the court. "I got information that was not so easy to get." ($1 = 0.7521 euros)

Copyright © 2013 Reuters according Lumturo Policy

 

Brasil é 45º entre 139 em ranking de preparo contra crises

BBC BRASIL 08/012012

O Brasil aparece em 45º lugar em um ranking que avalia o preparo de 139 países para enfrentar riscos globais como crise financeira, desastres naturais e mudanças climáticas.

Em uma pesquisa feita com mais de 14 mil líderes globais, o Fórum Econômico Mundial perguntou como os entrevistados avaliavam a eficácia dos governos no monitoramento, preparo, capacidade de resposta e mitigação dos maiores riscos globais.

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Os países receberam notas de 1 (não eficazes) a 7.

Com nota de 4,16, o Brasil aparece atrás de outros países dos Brics. A China ocupa o 30º lugar (nota de 4,51), a África do Sul aparece em 34º (4,42) e a Índia em 38º (4,31). Apenas a Rússia fica atrás, em 73º (3,60).

O ranking é liderado por Cingapura, com nota de 6,08. Entre os países sul-americanos, a melhor colocação é do Chile, em 10º (5,20). O penúltimo lugar da relação coube à Argentina, com nota de 2,08, e o último, à Venezuela (1,68).

Os países também são agrupados por estágio de desenvolvimento. O Brasil aparece como um país em transição do estágio 2 (economias que começam a desenvolver processos de produção mais eficazes e aumentar a qualidade dos produtos) para o 3 (economias orientadas para inovação e capazes de competir com novos produtos, serviços, modelos e processos).

Mundo mais perigoso

O relatório Riscos Globais 2013 também procurou questionar se o planeta Terra chega a 2013 como um lugar mais seguro ou mais perigoso para se viver. Para isso, foram consultados mil líderes empresariais, políticos e acadêmicos sobre 50 ameaças globais.

Os resultados apontam para um mundo mais perigoso que em 2012 na percepção desse grupo, sendo a acentuada diferença entre ricos e pobres que habitam o planeta a principal preocupação dos consultados.

"A natureza dos riscos globais está mudando constantemente. Trinta anos atrás, os clorofluorcarbonetos (CFCs) eram vistos como um risco planetário, enquanto a ameaça de um ciberataque era tratada por muitos como ficção científica", diz o relatório.

"No mesmo período, a proliferação das armas nucleares ocupava a mente dos cientistas e políticos, mas a proliferação de detritos orbitais não."

Os "riscos" avaliados na pesquisa são de quatro variedades: econômicos, ambientais, geopolíticos e sociais.

Vão desde "terrorismo", até "falta de alimentos", "disseminação de armas de destruição em massa" e "inflação ou deflação".

Economia e clima

Em um ano de acirramento da crise financeira global, não é de se surpreender que os dois riscos que aparecem no topo das preocupações dos especialistas, empresários e autoridades são de natureza econômica: além das severas desigualdades de renda do planeta, os desequilíbrios fiscais crônicos de alguns países.

Em terceiro lugar na percepção dos consultados ficou um risco de natureza ambiental: o aumento das emissões de gases de efeito estufa.

Outro risco ambiental também foi apontado pelo painel como o que pode ter maior "efeito de contágio" sobre a próxima década: a incapacidade de adaptação do planeta às mudanças climáticas.

Entre os destaques da pesquisa em 2013 também estão o aumento das preocupações com as consequências imprevistas do uso de novas tecnologias, a desaceleração brusca de economias emergentes, os desequilíbrios no mercado de trabalho e o anúncio de nacionalizações unilaterais de recursos e ativos em alguns países.

"As pessoas que responderam a pesquisa neste ano não só acreditam que essas ameaças são mais prováveis, mas também que teriam um impacto maior se comparado aos que responderam no ano passado", diz o relatório.

Picture Source: dutch-national-ballet by Erwin Alof

Risk Management Resolutions for 2013

Susan Palm DEC 28, 2012 9:00am ET AMRICAN BANKER

In the last few years, this notion of risk has taken center stage.

Today, risk is marked by increasing complexity and velocity, and in light of our mobile, social and big-data landscape, there is urgency around proactively identifying and managing risk. As such, organizations are reassessing fundamental risk management strategies and best practices needed to create and sustain a thriving business.

Risks today are interconnected and horizontal, running across departments and business units. In conversations with CEOs, board members and banking executives, there are a few key overlapping risk areas that are most top of mind going into 2013.

Strategic risk is more connected to compliance risk. New regulations are impacting how banks make money and develop products. There are complexities resulting from the Durbin Amendment, new capital requirements under Basel III and increasing costs associated with understanding and adhering to the expansive Dodd-Frank rules. The demand for mobile payment products exists, but the uncertainty around consumer compliance and vendor governance creates additional hurdles and costs. Product development lifecycles expand as banks take time to review and understand existing and expected rules.

Compliance risk is complex. "Fair lending" requirements seem to impact most products offered by banks. Every loan, every overdraft and every mortgage default resolution requires a fresh eye.

Reputational risks are increasingly linked to operational missteps and compliance violations, civil money penalties and fines. Thanks to social media, pervasive content sharing and strong opinions are the new norm. Smartphones, real-time newsfeeds and geo-located review sites enable stakeholders to publish content that can put entire organizations – or individual employees – in the hot seat. Compliance violations are headline news and penalties can impact earnings.

Operational risk is unavoidable. A greater reliance on vendors and third-parties, and a vulnerable IT environment (as witnessed by recent distributed denial-of-service attacks), means that banks no longer have complete control of their business operations.

Prior to the financial crisis, banks were encouraged to take risks and the government promised to insure their deposits and act as the last resort lender. Elijah Brewer, professor of Finance at DePaul University and former economist at the Federal Reserve of Chicago shared with me some facts he presented at Lawrence University in October 2012: Research shows that roughly 60% of financial firms' liabilities worth an estimated $25 trillion had access to some type (explicit or implicit) of government safety net at the end of 2009. This kind of support for bankers can distort their incentives, and could cause banks to take excessive risks in their loan portfolios. It is this type of behavior that resulted in the probability of default among subprime lenders reaching alarmingly high levels from 2007-2009.

Since then, the government has responded swiftly, raising lending standards and capital requirements. Furthermore, banks have broadened their focus to assess the quality of a customer's underlying assets before approving loans. According to a 2012 research paper written by Minh Nguyen, macroeconomic researcher at Lawrence University, "Lending standards and the corresponding screening process have gotten stricter, and therefore credit risk is likely on the decline." As a result of scrutiny from their boards, a tighter review process and more frequent loan reviews, most banks have a better handle on their credit risk going into 2013.

When it comes to New Year's resolutions, there are plenty of best practices to consider. Some of the most successful banks are rethinking their approach to risk management and have defined their business processes and linked them to risks, controls, policies and even their vendors. This helps ensure that stakeholders can collaborate to assess the impact of key risks on broader business objectives. Successful banks are also focusing on education and employee training courses.

Additionally, successful banks are establishing a formal enterprise risk management department that creates frameworks and processes to routinely assess risk, ensure continuous monitoring and provide "enterprise-level" reporting to management and the board. The EVP of Enterprise Risk is emerging as a key role, but more than ever, banks are looking to every single employee as a risk owner acting as the first line of defense.

Audit departments are also tying resources to real risk exposures, and audit plans themselves are becoming risk-based, not calendar-based. Auditors are also moving away from merely executing audit-related tasks to analyzing trends and connecting the dots.

Lastly, successful banks are tying compensation to risk management by establishing performance scorecards that allocate 10%+ of variable compensation to metrics around audit findings, repeat findings, closed issues, risk self-assessments and scheduled control testing.

No doubt the uncertainties facing banks will continue, and risk management will continue to require more innovation, more resources and more qualified people. 

Susan Palm is vice president of industry solutions for MetricStream, a provider of enterprisewide governance, risk, compliance and quality management solutions.

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