ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-G30208
DATE: 20130815
B E T W E E N:
HER MAJESTY THE QUEEN
Moray Welch and Mark Seebaran for Her Majesty the Queen
- and -
NAZIR KARIGAR
Israel Gencher and Martin Reesink for Nazir Karigar
HEARD: September 24, 25, October 1, 9, 10, 11, 16, November 13, 14, 15, 19, 2012 and March 27, 2013 (Ottawa)
HACKLAND R.S.J. (Orally)
REASONS FOR JUDGMENT
Introduction
[1] The accused Nazir Karigar (Mr. Karigar or the accused) is charged under the Corruption of Foreign Public Officials Act (S.C. 1998 c. 34), (“CFPOA”), with offering or agreeing to give or offer bribes to Air India officials and India’s then Minister of Civil Aviation, in order to secure a major contract from Air India for the provision of facial recognition software and related equipment. At the material times Mr. Karigar was acting as a paid agent for Cryptometrics Canada of Ottawa, Ontario and certain related companies.
[2] The one count Indictment, as amended, reads as follows:
That he the said Nazir Karigar between June 1, 2005 and January 1, 2008, inclusively at the city of Ottawa in the said region and elsewhere in Canada and in the United States and in India, in order to obtain or retain an advantage in the course of business directly or indirectly give, offer or agree to give or offer, a loan, reward advantage or benefit to a foreign public official, to induce the official to use his position to influence an act or decision of the foreign state for which the official performs duties or functions, contrary to section 3(1)(b) of the Corruption of Foreign Public Officials Act (S.C. 1998 c.34) and did thereby commit an indictable offence pursuant to section 3(2) of that Act.
[3] The Crown’s theory is that Mr. Karigar assumed a leading role in a conspiracy with several persons associated with Cryptometrics Canada and persons in India to bribe officials administering the bidding process on a tender issued by Air India, for the purpose of influencing them to award the contract to Cryptometrics Canada. As events transpired, the contract was never awarded to Cryptometrics Canada or any entity represented by the accused. However, there is a significant body of evidence that Mr. Karigar and certain others agreed to offer bribes to a targeted group of Air India officials and the Indian Minister of Civil Aviation. The evidence establishes that Air India is a corporation owned and controlled by the Government of India and that the targeted officials fall within the definition of Foreign Public Officials under the CFPOA.
[4] This case was defended primarily on the basis that the Crown failed to prove the existence of an agreement or conspiracy involving Mr. Karigar, particularly a conspiracy or agreement by which a particular foreign public official agreed to accept or receive a bribe in order to influence the award of this proposed contract. The accused also argues that Canada lacks territorial jurisdiction over the offence charged herein.
The Evidence
[5] The Crown’s case was substantially based on the testimony of Robert Bell, who is an engineer and who at the material times was Vice-President, Business Development, for Cryptometrics Canada as well as on voluminous documentation, particularly e-mail communications, seized from computer hard drives situate at Cryptometrics Canada’s offices in Kanata, a suburb of Ottawa. Many of the e-mails were authored by the accused himself. Certain other communications are dependant for their admissibility on the co-conspirator exception to the hearsay rule which, as discussed below, I find to be applicable in this case. Mr. Karigar also made statements to a Canadian Trade Commissioner in Mumbai acknowledging the payment of bribes and made similar admissions in a statement he gave to the RCMP, which is acknowledged by him to have been provided voluntarily, as well as in correspondence he sent to the United States Justice Department. The accused did not call evidence in this case.
[6] I accept and rely on the evidence of Mr. Bell who was an unindicted co-conspirator and intimately involved in virtually the entire course of events. He acknowledged that he was testifying under promise of immunity from prosecution. He gave his evidence in a careful and under-stated manner and he was apparently on good terms with Mr. Karigar throughout these events and certainly displayed no animus toward him in his recital of events. He was able to explain the documentation and the course of events in relation to the accused’s participation in Cryptometrics Canada’s efforts to win this contract. The documentation largely served to corroborate what Mr. Bell had to say. In essence, Mr. Bell handled the technical and some financial aspects of Cryptometrics Canada’s bid on the Air India project, while the accused handled or advised on strategy to win the contract, including communications with Air India officials and in particular the offering of bribes as a means of winning the contract. The two executives who were apparently making the ultimate strategic decisions throughout were Mario Berini, the Chief Operating Officer for Cryptometrics Canada and its parent company Cryptometrics Corporation and Robert Barra, who was Chief Executive Officer of these two related corporate entities.
[7] Mr. Bell testified that in June of 2005 he was contacted by Mr. Karigar who indicated that he was President of IPCON, a firm that had done business in India. Mr. Karigar said that he had good contacts with certain Air India officials and advised that the airline was looking to acquire technology to deal with airline security issues, particularly passenger identification fraud and possibly other related matters such as no-fly lists. Discussion ensued as to whether Cryptometrics’ facial recognition technology, based on a science known as biometrics, could provide a solution to the airline. Subsequently, in September of 2005 Mr. Karigar and his colleague Mehul Shah met with Mr. Bell in Ottawa to discuss a passenger identification solution for Air India using Cryptometrics’ technology. The concept discussed was that Mr. Karigar and Mr. Shah would help Cryptometrics obtain this work from Air India in return for 30% of the expected revenue stream.
[8] In September 2005 Mr. Bell travelled to Mumbai to explore this potential project. While there he met the accused and his associates Mr. Shah, a Mr. Mehta and a Mr. Harish. Mr. Karigar reiterated to Mr. Bell that he and his contacts had the necessary connections with Air India management and politicians to win the contract. Mr. Karigar and Mr. Bell also met with Annie Dube, Canadian Assistant Trade Commissioner in Mumbai, to discuss doing business in India. Mr. Karigar introduced Mr. Bell to senior Air India officials, in particular Mr. Gafoor, Air India’s Director of Security and his Deputy, Captain Mascarenhas. He gave a presentation on Cryptometrics Canada’s facial recognition technology to 40-50 people in the Air India offices.
[9] Over the course of the fall of 2005 Mr. Karigar forwarded to Mr. Bell considerable information pertaining to the expected requirements of Air India, including what might be characterized as inside information about proposed tender terms and competitors. By December 28, 2005 Mr. Bell and Cryptometrics Canada had been provided with a copy of the draft tender, which had not yet been issued by Air India.
[10] On January 19, 2006 Mr. Gafoor and Captain Mascarenhas travelled with Mr. Karigar to visit Cryptometrics Canada in Kanata. Subsequently, a company named Cryptometrics India was established under the direction of the accused, with Mr. Shah as his assistant. Mr. Bell drew a contract officially hiring the accused as Executive Director of Cryptometrics India. Then, on February 24, 2006 Air India released its official Request for Proposal (RFP) to supply a biometric facial passenger ID security system. Shortly afterwards a revised RFP was issued by Air India extending the implementation period for the contract from 3 to 5 years and indicating that the lowest price bidder would receive the contract. Mr. Bell and Cryptometrics Canada then began to prepare a proposal in answer to the RFP. The evidence establishes that this was done under the executive direction of Mario Berini and with the guidance and strategic advice of the accused Mr. Karigar.
[11] Mr. Bell testified that on April 16, 2006 he, Mr. Barini, Mr. Karigar and Messrs. Shah and Mehta met in a hotel room in India to discuss submission of the Cryptometrics’ bid. At that time Mr. Shah raised the point that Indian officials would have to be paid in order to obtain the contract. This appears to be the first time that the payment of bribes was openly discussed in front of Mr. Bell. Shortly afterwards Mr. Bell was provided with financial spreadsheets which listed Air India officials who would be paid bribes and the amount of money and Cryptometrics’ shares to be offered these officials. The accused subsequently admitted in a statement to the RCMP that he furnished this information reflected in the spreadsheets.
[12] In the ensuing weeks Mr. Bell, in close contact with Mr. Barini, developed Cryptometrics Canada’s proposal in response to the RFP. During this period Mr. Karigar provided Mr. Bell with inside information pertaining to potential competitors for the contract. In June of 2006 Mr. Bell, the accused and other representatives of Cryptometrics Canada visited India, met with the Canadian Deputy Trade Commissioner, performed certain presentations to Air India technical committee members and generally attempted to advance Cryptometrics’ proposal.
[13] Subsequently, under Mr. Karigar’s direction and on his advice, the Cryptometrics team developed a second bid to be presented under the name IPCON (which was Mr. Karigar’s firm) to create the appearance of a separate competitive bidder using Cryptometrics Canada technology, but at a much higher price. This was designed to give the false impression that there existed a competitive bidding situation. In the minds of the Cryptometrics team a competitive bidding situation provided Cryptometrics with certain procedural advantages in the bidding process over a sole sourcing scenario which would involve a more complicated and closely scrutinized process.
[14] On June 19, 2006 Mr. Karigar e-mailed Mr. Bell and Mr. Barini in order to get $200,000 for Captain Mascarenhas, before he went to Italy to pick up certain shares which he was being issued. The evidence reveals that $200,000 was transferred from Cryptometrics U.S.A. to the accused’s bank account in Mumbai and there is strong circumstantial evidence which satisfies me that this money was intended for the purpose of bribing Captain Mascarenhas.
[15] I accept the Crown’s submission that a number of aspects of the evidence in this trial show that Mr. Karigar was an active and knowledgeable part of a conspiracy to offer bribes to Air India officials to obtain the Air India contract. I quote and adopt these evidentiary references and find that they establish beyond a reasonable doubt the accused Mr. Karigar’s involvement in a conspiracy to offer bribes to Air India officials in order to win this contract for Cryptometrics Canada.
• As noted previously in April, 2006, Bell, together with the accused Mr. Karigar and Berini, Shah & Mehta met in a hotel room in India to discuss the company’s proposal. Shah advised that SPI (firm controlled or operated by Shah and the accused) required more money because officials would have to be paid in order to obtain the contract.
• Also as noted, soon after this meeting, a spreadsheet budgeting intended bribes to identified officials was circulated between Berini, Bell, Barra and Shah. The accused Mr. Karigar admitted in his statement to RCMP Sergeant Bedard that he was the initial author of the list of persons to be offered bribes and the amounts.
• On June 16, 2006, via e-mail, Mr. Karigar asked that arrangements be made to pay funds in regards to the selection of two companies (Cryptometrics Canada and IPCON) as the only compliant bidders so that the deal would “not get blown".
• On June 19, 2006, Mr. Karigar e-mailed Berini & Bell to get $200,000 for “the Captain”, before he went to Italy to pick up his shares. The Captain figures on the spread-sheet as an individual who is to receive shares and “up front cash”. The Captain was the co-chair of the selection committee for the Air India project.
• On June 21, 2006, Mr. Karigar e-mailed Berini, stating that the Captain and MMD “need to see the money”, and that he needed it the following day. The same day $200,000 was transferred from Cryptometrics, U.S.A. to the bank account of Mr. Karigar in Mumbai.
• On July 18, 2006, Mr. Karigar told Berini and Bell that he was ready to push the short list but that MMD had problems with the valuation of the shares. The MMD is listed on the bribe spreadsheet as an individual who is to receive shares, as bribes.
• On or around August 3, 2006, IPCON and Cryptometrics were short-listed as the only two qualified bidders, as planned. Mr. Karigar informed Berini that the CMD was to be in New York and wanted $5000 spending money. He further stated that the Captain and the CMD were giving pressure about the “shares”.
• On August 7, 2006, Mr. Karigar wrote to Barra and Berini on SPI letterhead to say that the selection had been completed, that Cryptometrics and IPCON were the two companies qualified and that Cryptometrics would win the commercial round because its price was substantially lower than that of IPCON.
• On September 3, 2006, Berini e-mailed Mr. Bell a copy of the draft Air India/ Cryptometrics Canada agreement and the latest version of the spread sheet. Berini and Bell discussed via e-mail how the bribes were to be amortized in order to maintain the profitability of the project.
• On March 6, 2007, Robert Barra, CEO of Cryptometrics Inc. (USA), and Mr. Karigar entered into a Letter of Agreement. The agreement provided that $250,000 USD in Indian Rupees was to be transferred to Mr. Karigar’s bank account in Mumbai in order to secure the Air India contract (Tender # 42018). The agreement was entered into via e-mail correspondence. If the contract was not secured, the money was to be returned. The money was transferred from Cryptometrics to Mr. Karigar’s bank account on that date.
• On April 17, 2007, Robert Barra asked Berini the following question by e-mail: “Are we finally going to receive the letter today from A.I.? It has been over 6 weeks. I can not understand these delays on a continuous basis. {...}”.
• On April 19, 2007, Berini (via e-mail) criticized Mr. Karigar for transferring the money to one Dhoble. He asserts this was a breach of contract. He demands the funds were to be returned to Cryptometrics Inc. asap. Mr. Karigar responds that he put the money in a secure place, “in escrow with Dhoble” to prevent “Tabby” from dipping into the funds to pay for school fees. The money could be wired back to Cryptometrics Inc. (USA) anytime.
• On April 20, 2007, Mr. Karigar sent an e-mail saying that he had met with “PP”. (PP stands for Praful Patel, the Minister of Civil Aviation). Mr. Karigar stated that he and Patel discussed the “increments” and that the project would be cleared right away.
• On May 15, 2007, Mr. Karigar and Dario Berini met with Annie Dubé at the Consulate General for Canada in Mumbai. During the meeting, Mr. Karigar stated that Cryptometrics had paid a bribe to Praful Patel (Minister of Civil Aviation – India) through an agent in order to clear the process and obtain the Air India contract.
• On July 12, 2007, Mr. Karigar sent an e-mail to Berini containing the following comments: “After PP took the money, I thought all was done and went ahead {...}”.
• On July 28, 2007, Mr. Karigar sent an e-mail to Mr. Bell asking him to review a draft of an e-mail he was going to send to Dario Berini.
• On August 13, 2007, one “Buddy” sent an e-mail to the Fraud Section (FCPA) of the US Department of Justice stating he had information about US citizens paying bribes to foreign officers and inquired about reporting the matter.
• The accused Mr. Karigar ultimately described the scheme in an e-mail dated January 19, 2008, as follows:
There was a tender put out by Air India (Government of India enterprise) for a biometric security system, Cryptometrics bid on the system.
Cryptometrics Paid USD 200,000 to make sure that only 2 companies were technically qualifieds.
They paid $250,000 for the minister to ‘bless’ the system.
The People involved are mr. Robert Barra, US citizen, CEO of Cryptometrics and Dario Berini, COO of Cryptometrics, also US Citizen.
I am a Canadian Citizen on contract with the Canadian subsidiary of Cryptometrics.
What about my immunity?
• On September 4, 2007, Dario Berini sent an e-mail to Mr. Karigar, with a cc to Robert Barra.
• On November 2, 2007, Dario Berini and Robert Barra met with Shailesh Govindia, CEO of Emerging Markets Group (EMG) at the Cryptometrics Inc. office in New York, USA.
• On November 9, 2007, $650,000 USD was transferred from Cryptometrics Inc. (USA) bank account to the account of EMG.
[16] In my view, the foregoing events occurred as proven in the documentary evidence and lead to the inescapable conclusion, or proof beyond a reasonable doubt, that the accused conspired with Messrs. Berini and Barra representing Cryptometrics Inc. and Cryptometrics Canada Inc. and certain of his Mumbai based colleagues, to offer bribes to certain targeted Air India officials and the Minister of Civil Aviation for the purpose of obtaining the Air India contract.
Co-Conspirators (or Common Purpose) Exception
[19] The test for admissibility of hearsay evidence of co-conspirators is set out by the Supreme Court of Canada in R. v. Carter, 1982 35 (SCC), [1982] 1 S.C.R. 938.
[20] As noted, I am satisfied beyond a reasonable doubt that a conspiracy or agreement existed in this case to bribe Air India officials to obtain the contract in question.
“Agrees” to Give or Offer
[21] The accused argues that a contravention of s. 3(1) of the CFPOA has not been proven by the Crown.
[28] In any event, I am satisfied that a conspiracy or agreement to bribe foreign public officials is a violation of the Act.
[33] In summary, it is not necessary to establish a violation of s. 3 of the CFPOA, that a bribe be actually paid to a foreign official with the power to offer a business advantage.
Territorial Jurisdiction
[36] Under the CFPOA applicable at the time of the trial of the present case, in order for this court to exercise jurisdiction over the offence, the Crown must prove that there was a “real and substantial link” between the offence and Canada, based on the principles set out by the Supreme Court of Canada in Libman v. The Queen, 1985 51 (SCC).
[40] I accept the Crown’s submission that the facts show a real and substantial connection to Canada.
Disposition
[42] I am satisfied on the evidence beyond a reasonable doubt that the accused, Nazir Karigar, agreed with others to offer bribes to foreign public officials contrary to s. 3(1)(b) of the CFPOA and is therefore guilty of the offence charged.
Mr. Justice Charles T. Hackland
Released: August 15, 2013 (Orally)
COURT FILE NO.: 10-G30208
DATE: 20130815
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
– and –
NAZIR KARIGAR
REASONS FOR JUDGMENT
HACKLAND R.S.J.
Released: August 15, 2013 (Orally)