Failure to launch

MADELAINE DROHAN

Globe and Mail Update

January 24, 2008 at 5:54 PM EST

OTTAWA — To hear our federal politicians talk, Canada is in the vanguard of international efforts to fight the global scourge of corruption. We've signed and ratified all the major global conventions and our politicians talk convincingly of the damage that corruption does to democracy, human rights and the rule of law.

So it was a bit of a surprise when a group of global prosecutors speaking at a Transparency International conference in Washington late last year criticized Canada as a laggard when it came to fulfilling its obligations under the OECD Convention on Combatting Bribery of Foreign Public Officials. In their eyes, Canada, Britain and Japan made up the “coalition of the unwilling” in the war against corruption.

Britain won its place in the group in 2006 after the Blair government stopped a bribery investigation into arms sales by BAE Systems to Saudi Arabia on grounds it would damage bilateral relations. Japan was included because it was not moving fast enough to investigate and prosecute offenders. Bribes paid to foreign officials were tax deductible until 2006.

And Canada? We were included for our pitiful enforcement record. It has been almost 10 years since Canada ratified the OECD anti-bribery convention and in all that time we have managed a grand total of one successful prosecution. In 2002, Hydro Kleen Group of Alberta pleaded guilty to bribing a U.S. immigration officer and was fined $25,000. This sole example is trotted out year after year when the Minister of Foreign Affairs reports to Parliament on progress in fighting corruption under the Corruption of Foreign Public Officials Act.

Optimists will see this as proof that Canadians really are the Boy Scouts that we profess to be in our dealings with the world. But pessimists will note that our anti-corruption law is written in such a way to perpetuate failure. This is not the only reason why our enforcement efforts are poor, but it is the most significant one.

Under the current law, Canadian authorities will only investigate possible corruption if the act takes place in whole or in part in Canada. This means that if you represent a Canadian company seeking a mining contract in the Democratic Republic of Congo, to take a hypothetical example, and you hand over a suitcase of cash to a Congolese government official in Canada, the authorities will be on your tail. Do the same thing in the DRC and that's no longer Canada's affair. As far as Canada is concerned, it's up to the Congolese government to investigate and prosecute, no matter how unlikely it is that any action will be taken.

Canada is the only one of the 37 signatories to the OECD convention to take the position that its corruption laws do not apply beyond its borders. The OECD working group on bribery, which monitors members' compliance, has noted in vain that Canada has established such extraterritorial jurisdiction when it comes to air piracy, the sexual exploitation of children, terrorist acts, offences against internationally protected persons, the protection of nuclear material, torture, war crimes, murder and bigamy. Why will it not do the same for corruption?

The final report of the National Roundtables on Corporate Social Responsibility, which was supported by business and non-governmental organizations, made the same recommendation to government early last year. There has been no response to date.

Canada's reluctance may be tied to its opposition to the frequent application by the U.S. of its laws beyond its borders. However, this reluctance has its limits, as noted above.

Our continued failure to get serious about corruption abroad has both national and international implications. Unscrupulous Canadian companies know that for the price of a plane ticket they can bribe or otherwise corrupt foreign officials with impunity. This undermines confidence in the justice system. It also makes the current government's frequent statements in support of more accountability sound hollow.

It is also at odds with the government's desire that Canadian companies increase their links with Latin America, China and India. These are all areas where corruption is endemic. Yet the law as it stands does not allow Canada to police the activities of its companies in those markets. Is no one connecting the dots?

Internationally, our sorry record has sullied Canada's image and is undermining global efforts, which are at a delicate stage. Since the OECD convention was agreed in 1997, momentum has been building to fight corruption globally. In 2003, a UN convention on corruption was reached, which will bring an expanded number of governments into the fold.

Business has also begun to take action, with many of the largest global corporations implementing anti-corruption programs, having been persuaded that the risk to their reputation and to the bottom line warranted the time and expense involved. The fallout from high-profile corruption scandals, such as the one that engulfed Siemens Electronics in Germany, costing the CEO his job, has also caught the corporate world's attention. There are several sessions on corruption at the World Economic Forum taking place in Davos this week.

However, business efforts will have significantly less impact if governments do not do their bit to investigate and prosecute cases. There is already concern that the efforts made by governments through the OECD may come undone if the new economic powerhouses of India and China, and other emerging economies do not climb on board. If anti-corruption rules are not uniformly enforced across much of the world, there is less incentive for business to do its part.

There is a real sense that the global fight against corruption is at a crossroads. It could surge ahead if more governments and companies take up the challenge. Or, it could lose steam if laggard governments fall behind, the emerging economies do not join and companies lose heart as they see competitors win business through corruption.

Which brings us back to Canada. If Canada doesn't do its part to ensure success, it must shoulder some of the blame for the failure.