Legal news and trends for Canadian in-house counsel and c-suite executives
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organization's operations are located abroad. Particular attention should be paid to countries with a reputation for rampant corrup- tion, and where the company's touch point is with government officials in that country. It's also essential for in-house counsel to canvass the com- pany's use of foreign agents abroad, which was the link that prompted the Niko Resources Ltd. prosecution. Counsel should read up on the contract arrangements the company has developed with any such agents, and investigate the level of due diligence conducted prior to hiring the agent. The level of accounting of pay- ments made to the agents should be determined, and find out how next few years. Klotz points out that the directive in Niko follows — essen- tially word-for-word — an order in a U.S. case involving Panalpina World Transport, a Switzerland-based freight company that admitted to paying $27 million in bribes to officials in Angola, Azerbaijan, Brazil, Kazakhstan, Nige- ria, Russia, and Turkmenistan. In 2010, it agreed to pay a fine of more than $70 million for the transgressions. Klotz suggests the use of the Pan- alpina directive in Niko's prosecution indicates Canadian authorities were in closely agents' activities have been monitored. After this initial screening, Morrison advises in-house counsel to create a robust compliance program. "It's prudent practice for any company to have an anti-corruption policy, especially for companies conducting business overseas," he says. "It shouldn't be a cookie-cutter policy, but rather it should focus specifically on the company's operations." Morrison suggests, however, that it may be difficult for in- house counsel to make the creation of such a policy a top priority for the company's top decision-makers. — RT close contact with their U.S. counter- parts during the proceedings. "What that says to me is, that's what a compli- ance program is supposed to look like," he says. "And most Canadian companies don't have compliance programs. There are a few countries in the world where corruption takes place. If you're operat- ing in those countries without a really good compliance program, you actu- ally may be at risk that corruption has already taken place on your watch." Moreover, companies that fail to do so are potentially diminishing their abil- ity to find a suitor should they become engaged in a merger or takeover. Of course the threat of class action lawsuits also lingers. Meanwhile, he believes too many Canadian companies continue to avoid taking the steps necessary to adequately protect themselves from exposure to for- eign corruption prosecutions. He believes this miscalculation will continue until a criminal prosecution takes place. "There's not going to be a real change until we see an executive being taken away in handcuffs," Klotz says. IH Employment and Labour Lawyers Experience Counts. Referrals respected and appreciated. Shields O'Donnell MacKillop LLP 416.304.6400 65 Queen Street W, Suite 1800, Toronto, Ontario Canada M5H 2M5 Shields_IH_Apr_11.indd 1 INHOUSE OCTOBER 2011 • 3/1/11 10:04:56 AM 27