ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-G30208
DATE: 20140523
B E T W E E N:
HER MAJESTY THE QUEEN
Moray Welch for Her Majesty the Queen
- and -
NAZIR KARIGAR
Israel Gencher and Martin Reesink for Nazir Karigar
HEARD: April 1-3, 2014 (Ottawa)
HACKLAND J. (Orally)
SENTENCING DECISION
[1] The accused Nazir Karigar was convicted on a single count indictment of offering a bribe to a foreign public official contrary to section 3(1)(b) of the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34 (“CFPOA”). The court’s Reasons for Judgment are reported at R. v. Karigar [2013] O.J. No. 3661.
[2] Mr. Karigar conspired with several individuals employed by or associated with Cryptometrics Canada Limited of Ottawa, Ontario, to offer bribes to officials of Air India and to an Indian Cabinet Minister. This conspiracy had as its purpose the winning of a tender for a multi-million dollar contract to sell facial recognition software and related products to Air India. The products were to be supplied principally from Cryptometrics Limited’s operations in Ottawa utilizing the work force at that location.
[3] The CFPOA was enacted by Parliament in December of 1998 in order to implement Canada’s obligations under the Convention on Combating Bribery in International Business Transactions of the Organization for Economic Co-operation and Development (“the Convention”), to which Canada is a signatory. The CFPOA criminalizes the offering of bribes or other advantages to foreign public officials.
[4] The Convention contains the following interpretative provision concerning the obligations of signatories to implement a range of penalties comparable to those applicable to the criminal penalties applying to bribery of domestic public officials:
- The bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties. The range of penalties shall be comparable to that applicable to the bribery of the Party’s own public officials and shall, in the case of natural persons, include deprivation of liberty sufficient to enable effective mutual legal assistance and extradition.
[5] The over-arching principle here is that bribery of foreign public officials should be subject to similar sanctions as would be applied to the bribery of Canadian public officials occurring in Canada.
[6] The range of penalties for the offence of which Mr. Karigar has been convicted is imprisonment for up to five years. As a result of recent amendments contained in Bill S-14, Fighting Foreign Corruption Act, which received Royal Assent on June 19, 2013, and not yet proclaimed in force, this offence is now punishable by up to fourteen years imprisonment. Although that penalty cannot be retroactively applied to this case, it does illustrate Parliament’s recognition of the seriousness of this offence and of Canada’s obligation to implement appropriate sanctions.
[7] At the sentencing hearing the Crown called several government witnesses to say essentially that as a general proposition offences involving the bribery of foreign public officials are complex and challenging to investigate and prosecute. There was also evidence that the OECD Working Group on Bribery, which monitors Convention compliance, had expressed concerns with Canada’s enforcement efforts and with the leniency of one particular negotiated plea in another case. The opinion was also offered by a witness for the Department of Foreign Affairs that interest in the problem of bribery and corruption on the part of companies doing business in foreign countries was considerably enhanced when more significant penalties and prosecutions of individuals were identified as the likely outcome of future prosecutions.
[8] While helpful background, I am of the view that this information is not directly relevant to the sentencing issues at hand. Similarly, the evidence of U.S. sentencing guidelines based on tariffs and somewhat similar British guidelines are simply inapplicable in Canada. I do however take notice of the obvious reality that the corruption of foreign public officials, particularly in developing countries, is enormously harmful and is likely to undermine the rule of law. The idea that bribery is simply a cost of doing business in many countries, and should be treated as such by Canadian firms competing for business in those countries, must be disavowed. The need for sentences reflecting principles of general deterrence is clear.
Position of the Parties
[9] Mr. Welch, on behalf of the Crown, forcefully argued that the offence of which Mr. Karigar has been convicted, which he characterized as an elaborate and sophisticated fraud, should be treated in the same manner as a similar domestic fraud involving government officials, which he submitted required a general deterrence based penitentiary sentence in the range of three to five years.
[10] Defence counsel, relying primarily on the accused’s age (67), lack of any prior criminal involvement and the fact that the accused and Cryptometrics Limited were never in fact awarded the contract in question, submitted that a sentence in the reformatory range, preferably to be served in the community, would be appropriate.
Aggravating Factors
[11] I would identify the following aggravating factors in this case.
(a) This was a sophisticated and carefully planned bribery scheme intended to involve senior public officials at Air India and an Indian Cabinet Minister. If successful, it would have involved the payment of millions of dollars in bribes and stock benefits, over time. The sum of $450,000 was advanced for the purpose of bribery while Mr. Karigar remained involved with this scheme.
(b) In addition to the contemplated bribes, the accused’s participation in the bidding process involved other circumstances of dishonesty such as the entry of a fake competitive bid to create the illusion of a competitive bidding process and the receipt and use of confidential insider information in the bid preparation.
(c) The accused behaved throughout with a complete sense of entitlement, candidly relating to a Canadian trade commissioner that bribes had been paid and then urging the Canadian Government’s assistance in closing the transaction.
(d) Mr. Karigan personally conceived of and orchestrated the bribery proposal including providing the identity of the officials to be bribed and the amounts proposed to be paid as reflected in financial spreadsheets he helped to prepare.
Mitigating Factors
[12] I would identify the following mitigating factors:
(a) There was a high level of co-operation on the accused’s part concerning the conduct of this prosecution. Indeed he exposed the bribery scheme to the authorities following a falling out with his co-conspirators. He unsuccessfully sought an immunity agreement. A great deal of trial time was avoided as a result of the accused’s extensive admissions concerning the documentary evidence.
(b) Mr. Karigar appears to have been a respectable business man all of his working life, prior to his involvement in this matter. He has no prior criminal involvements. He is also in his late 60’s and not in the best of health.
(c) Of considerable importance is the fact that the entire bribery scheme was a complete failure. The accused and his co-conspirators failed to obtain the sought after contract with Air India, or any other benefits. The harm resulting from this scheme was likely restricted to the promotion of corruption among a limited group of foreign public officials.
Jurisprudence under the CFPOA
[13] The starting point of the court’s analysis must be the jurisprudence under the CFPOA itself. Such jurisprudence is minimal. The present case appears to be the first prosecution which has proceeded to trial. There appear to be only three other prosecutions initiated under the Act that have come before the court. These cases involved corporate accused and were resolved by way of guilty pleas.
[14] In R. v. Griffiths Energy International, [2013] A.J. No. 412 (Alta. Q.B.), Griffiths Energy pled guilty under s. 3(1) of the CFPOA for the payment of a $ 2 million bribe and shares to a corporate entity owned by the wife of a foreign ambassador. In this case, a new management team at Griffiths discovered that the bribe had been paid by their predecessors. Management then acted quickly to fully investigate the matter and self-reported the crime to authorities. Griffiths then fully cooperated with the authorities saving the cost of a lengthy and complex prosecution. Crown counsel and Griffiths made a joint submission as to penalty ($10.35 million) which the court accepted.
[15] In balancing the aggravating and mitigating factors, the court placed considerable emphasis on Griffiths’ cooperation with the prosecution. As a countervailing factor, the court, at paras. 8-9, explained the seriousness of such an offence as follows:
The bribing of a foreign official by a Canadian company is a serious matter… such bribes, besides being an embarrassment to all Canadians, prejudice Canada’s efforts to foster and promote effective governmental and commercial relations with other countries; and where, as here, the bribe is to an official of a developing nation, it undermines the bureaucratic or governmental infrastructure for which the bribed officials works.
Accordingly, the penalty imposed must be sufficient to show the Court’s denunciation of such conduct as well as provide deterrence to other potential offenders.
[16] In Griffiths, the court noted that the American cases provided as precedents of prosecutions for cases of bribery of foreign officials are of limited assistance given that the sentencing regime in the United States is significantly different and involves grids, offence levels, culpability scores and advisory ranges (at para. 23). As noted, in this case I have also been referred to a variety of American cases and sentencing guidelines and similarly, I do not view those cases as particularly helpful.
[17] In R. v. Niko Resources Ltd. (2011), 101 W.C.B. (2d) 118 (Alta. Q.B.), Niko Resources pled guilty to providing improper benefits (in the amount of $195,984.00) to a foreign public official in Bangladesh in order to further business objectives contrary to the CFPOA. The court accepted the parties’ joint submission on penalty which involved a fine in the amount of $9.49 million. In considering the appropriateness of the fine, the court considered the seriousness of the crime and the principle sentencing objective of denunciation and deterrence as well as factors such as: that there was no proof that influence was actually obtained as a result of the crime, that the fine would not impact the continued economic viability of the corporation, that the corporation took no steps to conceal assets to avoid a fine, that the corporation had already taken steps to reduce the likelihood of reoffending, that once the corporation became aware it was under investigation it cooperated fully with authorities, and that the corporation entered a guilty plea prior to charges being formally laid without the need for a preliminary hearing or a trial.
[18] Finally, in R. v. Watts [Hydro Kleen], [2005] A.J. No. 568 (Alta. Q.B.) the corporation Hydro Kleen pled guilty to bribing a foreign official contrary to the CFPOA. Hydro Kleen operated in Canada and the United States and its employees traveled between the two countries for work. At times Hydro Kleen’s employees experienced difficulties entering the United States. Hydro Kleen hired a United States immigration officer as a “consultant” and paid him the sum of $28,299.88 to facilitate the passage of Hydro Kleen’s employees into the United States. Unbeknownst to Hydro Kleen the immigration officer also made it more difficult for the employees of Hydro Kleen’s competitors to enter the United States. Like the other two cases, a joint submission with respect to sentence was made and the court accepted the imposition of a fine of $25,000. In coming to this conclusion the court considered the fact that a guilty plea was entered and that the individual responsible had taken responsibility. Furthermore, the court noted that the relevant sentencing principles to be considered under the CFPOA are akin to those under section 426 of the Criminal Code (secret commissions), namely specific and general deterrence. Finally, the court offered some words of explanation highlighting the seriousness of such an offence stating at para. 125 that “corruption distorts markets and harms overall economic, social, and political development. It is a pernicious disease and needs to be resisted by all citizens”.
[19] In light of these decisions, it is clear that the bribery of foreign officials must be viewed as a serious crime and the primary objectives of sentencing must be denunciation and deterrence. The more recent cases, Griffiths Energy and Niko Resources clearly demonstrate that a substantial penalty is to be imposed by the courts even in circumstances where a guilty plea was entered and the accused has cooperated with authorities.
Disposition
[35] Mr. Karigar would you please stand.
[36] The evidence in this case discloses that you had a leading role in a conspiracy to bribe Air India officials in what was undoubtedly a sophisticated scheme to win a tender for a Canadian based company. Canada’s Treaty Obligations as well as the domestic case law from our Court of Appeal requires, in my view, that a sentence be pronounced that reflects the principals of deterrence and denunciation of your conduct. Any person who proposes to enter into a sophisticated scheme to bribe foreign public officials to promote the commercial or other interests of a Canadian business abroad must appreciate that they will face a significant sentence of incarceration in a federal penitentiary.
[37] Mr. Karigar, I sentence you to be incarcerated for a period of three years in penitentiary.
Mr. Justice Charles T. Hackland
Released: May 23, 2014 (Orally)
COURT FILE NO.: 10-G30208
DATE: 20140523
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
– and –
NAZIR KARIGAR
SENTENCING DECISION
HACKLAND J.
Released: May 23, 2014 (Orally)