Liability for Conduct of Affiliates As the principal CFPOA offence prohibits anyone from directly or indirectly giving, offering or agreeing to a prohibited type of benefit, in certain cases, a parent company may be considered to indirectly give a prohibited benefit actually paid by its subsidiary. Individual persons who hold positions with more than one affiliate may also incur multiple liabilities in respect of the same conduct. In addition, a parent company might also be liable for aiding and abetting or counselling a CFPOA offence committed by a subsidiary. Risk Assessment, Due Diligence and Compliance Measures CFPOA issues should be considered by a purchaser contemplating a merger or acquisition in Canada. Breaches of the CFPOA by the target may result in significant fines, damage claims and investigation, and other costs that arise only after closing. Identification of a possible CFPOA liability prior to closing may affect the price the purchaser is willing to pay for the target. Anti-corruption due diligence may include reviewing the target’s anti-corruption policies and procedures, interviewing key personnel, and, in particularly sensitive cases, performing background checks and reviewing emails. When undertaking CFPOA due diligence, consideration should be given to whether the target
Scope of Application of the CFPOA The CFPOA expressly applies to conduct outside Canada by Canadian citizens and Canadian corporations. Canadian courts have also generally applied Canadian criminal sanctions to conduct that has a real and substantial connection to Canada, whether or not the offenders are Canadian. A court has held that the CFPOA does not give the Canadian government the right to prosecute a foreign citizen who is accused of having received unlawful payments, who has never been in Canada and whose alleged conduct in violation of the CFPOA took place outside Canada. However, the individual could be charged if and when that person enters, or is extradited to, Canada. Penalties and Sanctions A violation of the CFPOA is punishable by a fine at the discretion of the court and imprisonment for up to 14 years. CFPOA offences are not subject to any limitation period. The CFPOA is a federal government enforcement priority to demonstrate compliance with Canada’s international treaty obligations. Resolutions of charges against corporations have included ongoing probation and audits, as well as remediation agreements (discussed below). Property obtained or derived from a CFPOA offence may in some circumstances be forfeited. Civil actions for economic torts based on unlawful acts, such as unlawful interference with economic relations, are also possible.
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Doing Business in Canada
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