On May 23, 2014, Justice Charles Hackland of the Ontario Superior Court sentenced Nazir Karigar, a former executive, to three years imprisonment. Justice Hackland had previously found that Mr. Karigar had violated the Corruption of Foreign Public Officials Act (CFPOA) by agreeing to offer bribes to foreign public officials in India in order to secure a major contract from Air India.

Mr. Karigar worked for the Canadian subsidiary  of Cryptometrics, an American company that was attempting to win a lucrative contract with Air India for biometric security systems. Executives at Cryptometrics were found to have conspired with Mr. Karigar to bribe officials at Air India and the Indian government, including the then Minister of Civil Aviation.

Under the sentencing provisions of the CFPOA in force when Mr. Karigar committed an illegal act of bribery, the maximum sentence was 5 years. As reported in our previous Bulletin, in June of 2013 the maximum sentence for offences under the CFPOA was increased to 14 years. While Justice Hackland acknowledged that the increase in the maximum sentence for bribing a foreign public official could not retroactively apply to Mr. Karigar, his Honour observed that the increased tariff demonstrated “Parliament’s recognition of the seriousness of this offence and of Canada’s obligation to implement appropriate sanctions”. His Honour further noted that the sentence of the court must disavow any notion that bribery is “simply the cost of doing business” in many countries around the world.

Ultimately, Mr. Karigar received a penitentiary sentence of three years imprisonment.

The sentence is significant for several reasons. First, as all previous prosecutions brought under the CFPOA concluded in guilty pleas and involved charges against corporations, this is the first sentence imposed on an individual following a contested trial. This case therefore sets a noteworthy precedent for forthcoming cases involved allegations of CFPOA violations. Second, the sentence demonstrates that Canadian courts are inclined to impose penitentiary sentences under the CFPOA, even for those found guilty of only agreeing to offer bribes to foreign public officials. There was no evidence presented in this case that any bribe had actually been paid. In fact, the court noted that “the entire bribery scheme was a complete failure”. While Justice Hackland agreed that the scheme’s unsuccessful outcome was a mitigating factor, he rejected Mr. Karigar’s argument that a reformatory sentence, including community service, would be more appropriate. The court emphasized that denunciation and deterrence would be the primary objectives of any sentence handed down under the CFPOA.

Given the recent increase in investigations and prosecutions of Canadian companies and individuals for bribing or concealing bribes to foreign public officials, Canadian executives must carefully consider their potential exposure to CFPOA liability. The Karigar sentencing decision is a reminder that the CFPOA is a criminal statute and that courts will look to the traditional criminal sentencing principles of denunciation and deterrence in arriving at a fit sentence for future bribery cases.

Author

Nicolas Businger 
NBusinger@blg.com
416.367.6265

Expertise

White Collar Crime