Nazir Karigar, an Ottawa man who sought to negotiate bribes on behalf of an Ontario technology company, has been convicted of violating the law that prohibits Canadian firms from engaging in corrupt practices in overseas operations. The much-anticipated ruling, handed down last week by Ontario Superior Court Justice R.S. Hackland, marks the first time an individual has been found guilty under the Corruption of Foreign Public Officials Act (CFPOA).
While the U.S. and European governments have aggressively prosecuted similar cases in recent years, Ottawa has been criticized internationally for failing to crack down on attempts by Canadian firms to use bribes to win lucrative contracts abroad. Recent revelations about SNC Lavalin’s use of bribes in Libya and elsewhere have forced the issue to the foreground, and prompted the federal government to pass amendments that strengthened the rules around conducting business in other countries.
John Boscariol, an international trade lawyer at McCarthy TÃ©trault, says the ruling sends several key messages to Canadian firms that are considering doing business abroad.
“I think it’s important that the message gets out there that [the RCMP] are going after individuals,” he says, noting that the handful of previous prosecutions under CFPOA targeted corporations, not individual executives.
The other relevant detail in the decision, Boscariol adds, is that the conviction occurred even though the planned bribes were never paid out; indeed, the Kanata, Ont.-based firm involved in the plot, Cryptometrics Canada, didn’t even win the contract that it was trying to win with Air India. The takeaway: “Even if you don’t pay the bribe, you’re still liable.”
According to court documents, the case traces back to 2005, when Karigar approached Cryptometrics officials and offered to serve as a go-between with Air India which, he said, was looking to procure facial recognition technology. Karigar claimed he had good connections with Air India, which is a state-owned company.
As the firm prepared to respond to a request for proposals, Karigar established an Indian subsidiary, and began meeting with government officials. During meetings at a Mumbai hotel in 2006, according to testimony provided by a Cryptometrics executive, Karigar and his associates began talking about dispensing bribes to various Air India officials. Later that year, the company transferred $200,000 into the bank accounts of the Indian subsidiary, with the funds to be used to pay off a key executive to ensure Cryptometrics would be shortlisted.
In the end, the scheme didn’t deliver a contract. In fact, company managers eventually notified the RCMP and other government officials about Karigar’s activities.
A last, important point for an SME with overseas operations is that the judge rejected the arguments of Karigar’s lawyers, who tried to show that the crime took place beyond the jurisdiction of Canadian law enforcement officials.
The new CFPOA amendments state that the law does extend past Canada’s borders, and the outcome of this case affirms that. Karigar has not yet been sentenced, but could face up to five years in prison and fines. The amendments have increased maximum jail time to 15 years.