Professionals encouraged to proactively identify situations that could lead to bribery
The corruption of government officials is as old as health, safety and environmental (HSE) laws themselves. HSE government inspectors, officials and regulators may affect the starting, operation and disruption of business more than any other governmental authority. They may expedite business operation or they may circumvent HSE laws in exchange for bribes and other benefits. This raises serious challenges for corporations in Canada and internationally.
A number of developed countries, including Canada, the United States and the United Kingdom, have passed legislation to prohibit corrupt activity domestically and abroad.
Canada was one of the early adopters of the OEDC Anti-Bribery Convention, which passed the Corruption of Foreign Public Officials Act (CFPOA) in 1998 and ratified the Convention on Dec. 17, 1999. However, this was more than 20 years after the passing of the Foreign Corrupt Practices Act (FCPA) in the U.S. Significantly shorter and narrower than its U.S. counterpart, the Canadian legislation does not purport to apply to foreign companies or foreign nationals. In order to be prosecuted under the CFPOA, the actions of the offender must have a “real and substantial” link to Canada.
Similar to the FCPA, and as encouraged by the Convention, the CFPOA contains defences if:
• the payment is made to expedite or secure the performance of an act of a routine nature that is part of the foreign public official’s duties or functions
• the benefit is permitted or required under the written laws and regulations of the foreign country with whom the foreign official is affiliated
• the benefit was to compensate for reasonable expenses incurred in good faith by the foreign public official.
The increased attention that international business anti-corruption law has received, at both a political and a law enforcement level, has resulted in increased resources being given to the RCMP in Canada. There are currently more than 35 active investigations under the CFPOA. The RCMP and federal prosecutors have been encouraged by two recent guilty pleas entered by Niko Resources and Griffiths Energy. In both cases, the corporations were subject to a total of penalties and fines in the range of $10 million.
In the case of Niko Resources, the bribes were a reaction to a health, safety and environmental disaster when a gas well exploded in Bangladesh. The bribes were confirmed in court to be a high-end SUV, valued at $250,000 to a Bangladeshi public official and a complimentary trip to New York City for a Bangladeshi government official and family member.
To minimize the likelihood of corrupt practices among health and safety professionals, licensing bodies have implemented strenuous ethical obligations upon their membership.
For example, the Code of Ethics of the Board of Canadian Registered Safety Professionals requires its members to “provide sound judgment in pursuance of their professional duties; maintain the highest standards of integrity and professional competence; and uphold the honour and prestige of the profession.” It also states they must “avoid circumstances where compromise of professional conduct or conflict of interest may arise.”
Failure to comply with these obligations may result in disciplinary measures, including the revocation of the Canadian Registered Safety Professional (CRSP) designation.
HSE regulatory corruption
One of the earliest examples of HSE corruption involves the investigation by the U.S. Federal Bureau of Investigation into a complex bribery scheme involving the federal Occupational Safety and Health Administration’s (OSHA) regional offices in Philadelphia in 1986. This case involved allegations of an OSHA director accepting cash payments from union officials to dispatch OSHA inspectors to non-union construction sites to look for violations of federal health and safety rules.
In another case in 1995, a factory manager was charged after attempting to bribe officers of the federal Occupational Safety and Health Department to encourage them not to take any action against the factory for using machinery without valid certification. And in 2005 a former assistant director of the same department was charged with accepting a bribe from a factory manager in exchange for rendering a favourable report following a repeat inspection of the factory.
In Canada a 2008 exposé by the Toronto Star entitled “Hiding injuries rewards companies: Star investigation reveals job safety numbers are under-reported, cutting employer costs” said the workers’ compensation regime in Ontario provided an incentive to companies who pressure or bribe workers not to report major injuries at all. In fact, the newspaper suggested it had been able to identify 3,000 serious injuries in a four-year period from 2004-08 where affected workers did not get a single day off work.
In light of the recent emphasis on international anti-corruption laws, health, safety and environment professionals should take note of the legislative requirements associated with each of these initiatives. They should evaluate the potential impact these obligations may have on their employers’ global operations and implement measures to mitigate risk of liability. By proactively identifying situations that have the potential to lead to corruption or bribery, HSE professionals can assist their employers in mitigating risk and avoiding significant legal liability. Furthermore, HSE professionals can help their employers to ensure that situations of corruption or bribery are identified and addressed by designing and implementing reporting protocol to encourage employees to inform the organization of prohibited or questionable conduct and take action to address it.
Norm Keith is a partner at Toronto-based law firm Fasken Martineau DuMoulin LLP. He specializes in employment, health and safety, environmental, workers’ compensation and white-collar crime litigation. He can be reached at (416) 868-7824 or [email protected].
The corruption of government officials is as old as health, safety and environmental (HSE) laws themselves. HSE government inspectors, officials and regulators may affect the starting, operation and disruption of business more than any other governmental authority. They may expedite business operation or they may circumvent HSE laws in exchange for bribes and other benefits. This raises serious challenges for corporations in Canada and internationally.
A number of developed countries, including Canada, the United States and the United Kingdom, have passed legislation to prohibit corrupt activity domestically and abroad.
Canada was one of the early adopters of the OEDC Anti-Bribery Convention, which passed the Corruption of Foreign Public Officials Act (CFPOA) in 1998 and ratified the Convention on Dec. 17, 1999. However, this was more than 20 years after the passing of the Foreign Corrupt Practices Act (FCPA) in the U.S. Significantly shorter and narrower than its U.S. counterpart, the Canadian legislation does not purport to apply to foreign companies or foreign nationals. In order to be prosecuted under the CFPOA, the actions of the offender must have a “real and substantial” link to Canada.
Similar to the FCPA, and as encouraged by the Convention, the CFPOA contains defences if:
• the payment is made to expedite or secure the performance of an act of a routine nature that is part of the foreign public official’s duties or functions
• the benefit is permitted or required under the written laws and regulations of the foreign country with whom the foreign official is affiliated
• the benefit was to compensate for reasonable expenses incurred in good faith by the foreign public official.
The increased attention that international business anti-corruption law has received, at both a political and a law enforcement level, has resulted in increased resources being given to the RCMP in Canada. There are currently more than 35 active investigations under the CFPOA. The RCMP and federal prosecutors have been encouraged by two recent guilty pleas entered by Niko Resources and Griffiths Energy. In both cases, the corporations were subject to a total of penalties and fines in the range of $10 million.
In the case of Niko Resources, the bribes were a reaction to a health, safety and environmental disaster when a gas well exploded in Bangladesh. The bribes were confirmed in court to be a high-end SUV, valued at $250,000 to a Bangladeshi public official and a complimentary trip to New York City for a Bangladeshi government official and family member.
To minimize the likelihood of corrupt practices among health and safety professionals, licensing bodies have implemented strenuous ethical obligations upon their membership.
For example, the Code of Ethics of the Board of Canadian Registered Safety Professionals requires its members to “provide sound judgment in pursuance of their professional duties; maintain the highest standards of integrity and professional competence; and uphold the honour and prestige of the profession.” It also states they must “avoid circumstances where compromise of professional conduct or conflict of interest may arise.”
Failure to comply with these obligations may result in disciplinary measures, including the revocation of the Canadian Registered Safety Professional (CRSP) designation.
HSE regulatory corruption
One of the earliest examples of HSE corruption involves the investigation by the U.S. Federal Bureau of Investigation into a complex bribery scheme involving the federal Occupational Safety and Health Administration’s (OSHA) regional offices in Philadelphia in 1986. This case involved allegations of an OSHA director accepting cash payments from union officials to dispatch OSHA inspectors to non-union construction sites to look for violations of federal health and safety rules.
In another case in 1995, a factory manager was charged after attempting to bribe officers of the federal Occupational Safety and Health Department to encourage them not to take any action against the factory for using machinery without valid certification. And in 2005 a former assistant director of the same department was charged with accepting a bribe from a factory manager in exchange for rendering a favourable report following a repeat inspection of the factory.
In Canada a 2008 exposé by the Toronto Star entitled “Hiding injuries rewards companies: Star investigation reveals job safety numbers are under-reported, cutting employer costs” said the workers’ compensation regime in Ontario provided an incentive to companies who pressure or bribe workers not to report major injuries at all. In fact, the newspaper suggested it had been able to identify 3,000 serious injuries in a four-year period from 2004-08 where affected workers did not get a single day off work.
In light of the recent emphasis on international anti-corruption laws, health, safety and environment professionals should take note of the legislative requirements associated with each of these initiatives. They should evaluate the potential impact these obligations may have on their employers’ global operations and implement measures to mitigate risk of liability. By proactively identifying situations that have the potential to lead to corruption or bribery, HSE professionals can assist their employers in mitigating risk and avoiding significant legal liability. Furthermore, HSE professionals can help their employers to ensure that situations of corruption or bribery are identified and addressed by designing and implementing reporting protocol to encourage employees to inform the organization of prohibited or questionable conduct and take action to address it.
Norm Keith is a partner at Toronto-based law firm Fasken Martineau DuMoulin LLP. He specializes in employment, health and safety, environmental, workers’ compensation and white-collar crime litigation. He can be reached at (416) 868-7824 or [email protected].
