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corruption are increasingly complex, with a wide interpretation. Fines are steep — along with jail sentences and losing the ability to do business in the country where the bribe took place. The U.S. led the vanguard with the For- eign Corrupt Practices Act, which came into effect in 1977, making the bribery of foreign officials a crime. The statute is construed broadly. Kristine Robidoux, a partner at Gowlings Lafleur Henderson LLP, says, "If a client operates anywhere in the U.S., employs Americans, trades on a U.S. stock exchange, if there are U.S. vehicles of commerce, currencies, bank- ing, mail, the FCPA will apply to their operations. It's still an area where a great deal of awareness and communication are needed. Clients may simply assume because they don't operate in the U.S., the FCPA doesn't ap- ply, but it requires a very small nexus to the U.S." In Canada, the Cor- ruption of Foreign Public Officials Act came into effect in 1991; s. 3(1) of the act says, "Every person commits an offence who, in order to obtain or retain an ad- vantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or ben- efit of any kind to a foreign public official or to any person for the benefit of a for- eign public official." To date, there have been no big charges under the act, but there's a sense of expectation as interna- tional lawyers wait for a leading case. Unlike the U.S. Justice Department, Canada, along with the U.K., has received much criticism for not doing enough to fight international corruption. In 2008, however, the RCMP's commercial crime division established the international anti-corruption unit, a team of 14 in- vestigators whose mandate is to uncover corruption internationally. Canada is a signatory to the Organisation for Eco- nomic Co-operation and Development's Convention on Combating Bribery of Foreign Public Officials, and ratified the United Nations' Convention against Corruption in 2007. The upshot is that Canadian compa- nies can no longer afford to turn a blind eye, hoping for the best, or rely on the maxim of "everyone does it." Even when innocent of wrongdoing, a company or its agents can still be vicariously liable. A long-standing principle of interna- tional law holds that bribery, defined as a "benefit" to a foreign official, is contrary to sound public policy — bad for coun- tries, the rule of law, and companies' rep- utations. Since it's not always easy to rec- ognize a bribe, how then can executives and their counsel protect themselves? Robidoux says a risk assessment is the first step. "You need to look at where that client is operating and where that client a compliance program with a code of conduct referencing bribery, establishes and manages a whistleblower line with a prohibition against false allegations, and, finally, has a rigorous training pro- gram with constant communications about integrity. Will a compliance pol- icy and due diligence be enough? Will there still be gaps between domestic policies and the reality of doing busi- ness in other cultures? James M. Klotz, a partner with Miller "The biggest challenge is making your clients understand what they ought not to do, and see they take the appropriate steps to protect themselves." — JOHN IREDALE, GOWLINGS intends to operate. If there has been an audit or an [FCPA] investigation. If your client is making use of intermediaries or third parties or agents." Having agents is a popular way of doing business in for- eign countries, but can be a huge grey area, fraught with risk. "There is a rather extensive due diligence that you need to do. A rigorous enquiry into that agent's business, familial relationships, reputa- tion, everything from the manner of re- muneration to the way you monitor any payments that the agent may make on your behalf," she explains. John Iredale, another partner with Gowlings, whose clients do business in Russia and Pakistan, agrees. "The biggest challenge is making your clients under- stand what they ought not to do, and see they take the appropriate steps to protect themselves." Suppose a client does all the right things: makes a risk assessment, creates Thomson LLP and vice chairman of Transparency International, doesn't think they're sufficient to escape liabil- ity. "The fact that companies have robust programs doesn't mean they don't get into trouble, in my experience. You can have a program but you can still have a legacy problem, and corruption can be very difficult to spot." Milos Barutciski, a partner at Ben- nett Jones LLP, says: "Gulf is probably the best way to de- scribe it, not gap. What the law on paper today expects of companies and what companies believe the law expects of them. A surprising number of Cana- dian companies are not even aware of the law's existence. And the astonishing lack of commitment to enforcing the law by the government of Canada. The percep- tion is it's either [make a bribe] or don't do the business." Another problematic area is that there aren't really any clear guidelines on how far a company must go in its research. Take facilitation or "grease" payments. A facilitation payment is considered to be a payment of a small amount of money to expedite such government services as phone installations and visas. "But how do you define minor? $10? $100? $10,000 for a phone? If you're dealing with a $100-million-dollar contract, $10,000 could be a minor payment," says Klotz. "Typically, it's gussied up to make it look like it's official. It's anything that's a ben- efit to the official. Who knows what that www. C ANADIAN Law ye rmag.com OC T OBER 2008 49