Canadians Urged to Prioritize Due Diligence in Anti-Corruption Efforts
The Importance of Due Diligence in Preventing Bribery and Corruption
As Canada navigates a complex global business landscape, experts emphasize the importance of thorough due diligence practices to prevent bribery and corruption. With no specific law mandating due diligence on third parties, companies are urged to adopt a risk-based approach to ensure compliance with anti-corruption laws.
Legal Obligation Looms
While there is no federal law requiring due diligence on third parties, the Corruption of Foreign Public Officials Act (CFPOA) creates a de facto obligation for Canadian companies and individuals to prevent bribery of foreign public officials. Failure to conduct adequate due diligence can result in legal liability if those third parties engage in corrupt practices on behalf of the company.
A Risk-Based Approach is Crucial
Canadian businesses are encouraged to adopt a risk-based approach to due diligence, assessing the bribery and corruption risks associated with each third party. High-risk third parties, such as agents operating in countries with a history of corruption, require more extensive due diligence.
The Due Diligence Process
The due diligence process typically involves:
- Gathering information about the third party’s ownership, reputation, business practices, and any prior involvement in corrupt activities
- Conducting background checks, reference checks, and reviewing financial records
Monitoring and Ongoing Assessment
Companies are advised to establish mechanisms for ongoing monitoring and assessment of their relationships with third parties, helping to detect changes in risk over time.
Whistleblower Protection is Key
To encourage employees and stakeholders to report any suspicions of corruption involving third parties, companies should have whistleblower protection mechanisms in place. This ensures that individuals who come forward are protected from retaliation.
Documentation is Crucial
It is essential for companies to maintain thorough documentation of their due diligence efforts, providing evidence of compliance and demonstrating a commitment to preventing bribery and corruption.
Aligning with International Standards
Canadian businesses conducting international transactions should align their due diligence practices with international standards, including those outlined in the OECD Anti-Bribery Convention.
Penalties for Non-Compliance
Non-compliance with anti-corruption due diligence obligations can lead to:
- Legal consequences
- Reputational damage
- Financial penalties if the third party engages in corrupt activities that implicate the Canadian company
International Cooperation
Canada places a strong emphasis on international cooperation in the fight against bribery and corruption. The country is a signatory to several notable treaties and agreements aimed at combating corruption globally.
Notable Treaties and Agreements
These include:
- OECD Anti-Bribery Convention
- United Nations Convention against Corruption (UNCAC)
- Mutual Legal Assistance Treaties (MLATs)
- Extradition treaties
- International anti-corruption organizations
- Bilateral agreements
- Support for developing countries
Whistleblower Protections in Canada
Canada has established protections for whistleblowers who report acts of bribery and corruption, primarily governed by the Public Servants Disclosure Protection Act (PSDPA) and various provincial laws. Whistleblowers are protected when they disclose information related to wrongdoing within the federal public sector or private companies.
Experts Urge Action
As the global business landscape continues to evolve, experts urge Canadian companies to prioritize due diligence practices to prevent bribery and corruption. By adopting a risk-based approach, implementing robust due diligence processes, and providing whistleblower protections, businesses can mitigate the risks associated with corrupt activities and maintain a positive reputation in the international community.