Amidst the media and political storm engulfing the Prime Minister's Office over its handling of the ongoing SNC-Lavalin proceedings, the conviction of two businessmen on charges of bribing foreign public officials in India appears to have crept under the radar. Yet the judgment in question, that of the Ontario Superior Court of Justice in R. v. Barra and Govindia1 (Barra), is worthy of note in the context of enforcement of Canada's Corruption of Foreign Public Officials Act (CFPOA), because of the Court's views on who is a "foreign public official", and the requirement that the Crown prove the accused had knowledge of that status. While we highlight the most significant aspects of the judgment in this bulletin, a full copy can be reviewed here.

The background to the decision

The convictions in Barra arise from the same factual matrix addressed in the 2014 case, R. v. Karigar (Karigar).2 As discussed in our prior bulletin, Karigar was the first case in which an individual was sentenced to jail time for an offence under the CFPOA (the 67-year-old Mr. Karigar was sentenced to three years' imprisonment).

As in Karigar, the charges in Barra concerned agreements to pay bribes to two employees of Air India, and the Indian Minister of Civil Aviation, in order to secure a contract for Cryptometrics Canada Inc. (Cryptometrics) for the sale of facial recognition software. Robert Barra, the US-based CEO of the parent company of Cryptometrics, and Shailesh Govindia, a local agent in India, were both charged with an offence under section 3 of the CFPOA.

The Court found Messrs. Barra and Govindia guilty of agreeing to pay bribes to the Minister of Aviation. By itself, the fact that the Crown secured two convictions is worthy of attention, especially given that only a handful of CFPOA charges have been brought to date and even fewer have resulted in convictions. However, the most significant aspect of Smith J.'s decision is the acquittal of Mr. Barra on charges of bribing the two Air India employees.

The basis for the acquittal

As a starting point, Smith J. concluded that the two Air India employees were indeed "foreign public officials" within the meaning of the CFPOA, consistent with the finding of Justice Hackland in Karigar. Central to this conclusion was the fact that Air India was "directly owned by the Indian Government".3 However, Smith J. also found that the Crown was required to prove Mr. Barra knew the "official character" of the two Air India employees.

The requirement to prove an accused knew of the foreign public official's status

This requirement to prove the accused's knowledge of the status of the employees as "foreign public officials" was not addressed by either the trial or appeal court in Karigar, or in any other CFPOA case to date. Instead, Smith J. drew this element from a 1921 decision of the Ontario Court of Appeal in Rex v. Smith,4 a case relating to charges of domestic bribery under what is now section 120 of the Criminal Code. However, Smith J. did not conduct a detailed analysis of the statutory provisions; instead, he simply stated his conclusion that the knowledge requirement recognized in Rex v. Smith is equally applicable to a charge under section 3 of the CFPOA.

In any event, having found that the Crown needed to show "knowledge" of the "official status" of the Air India employees, Smith J. found that the Crown had failed to discharge their burden on this issue. Unfortunately, the judgment contains little analysis on precisely what relevant facts Smith J. felt the Crown had failed to establish. There appears to have been no dispute that Mr. Barra knew the two individuals in question were employees of Air India. However, somewhat cryptically (no pun intended), Smith J. at least appears to have regarded testimony by two of Mr. Barra's Cryptometrics colleagues that they (mistakenly) believed that Air India was a "Crown Corporation" as being important in the context of the acquittal. The reasoning behind this aspect of the decision is somewhat unclear; the relevant passage reads:

Mr. Bell and Mr. Berini both testified that they believed that the Captain and MMD were employees of Air India which they believed was a Crown Corporation. They were not aware that these employees of Air India were foreign public officials. This was a reasonable inference to make in the circumstances. Air India is not a Crown Corporation and is owned directly by the Indian government, which made the Captain and MMD foreign public officials as defined under the Act.5

A reasonable interpretation of the above passage is that Smith J. considered that employees of a "Crown Corporation", as Smith J. used the term in his judgment, are not necessarily "foreign public officials". However, Smith J. did not specify what Mr. Barra's co-conspirators actually understood the term "Crown Corporation" to mean. Nor did he provide his analysis of why employees of a "Crown Corporation" might fall outside of definition of "foreign public officials" under the CFPOA, or why a belief that an entity is a "Crown Corporation" would have a materially different consequence in the context of a CFPOA prosecution to a belief that the entity "directly owned" by a foreign government.

Furthermore, it is worth noting that at least as a matter of Canadian law, a Crown Corporation is defined under Canada's Financial Administration Act as "a corporation that is wholly owned directly by the Crown", subject to certain irrelevant exclusions.6 As such, the apparent distinction drawn by Smith J. between a "Crown Corporation" on the one hand, and a company "directly owned by the Indian government" on the other, is hard to follow.

It is also important to note that the definition of "foreign public official" under the CFPOA does not directly refer to the concept of state-ownership or control in any event. Instead, the CFPOA definition is more general and captures (among others) those who "perform public duties or functions for a foreign state, including a person employed by a ... corporation [that is] established to perform a duty or function on behalf of the foreign state, or is performing such a duty or function"7(emphasis added).

At the time of writing, the judgment in Barra remains within the appeal period. If the Crown does appeal the acquittal on the charges relating to the Air India employees, it is to be hoped that the Court of Appeal would provide much needed clarity as to:

  1. The specific factors that determine whether an employee of a state-owned or state-controlled entity (whether directly or indirectly) is, or is not, a "foreign public official" within the meaning of the CFPOA; and
  2. The elements the Crown must prove in relation to the accused's state of mind, including the extent of the accused's knowledge regarding the precise role or function of the relevant official(s), especially in cases involving employees of state-owned or controlled entities.

The test under American law

We note that the United States has some measure of judicial guidance on the application of the equivalent definition in the American Foreign Corrupt Practices Act (FCPA).8 Specifically, in United States v. Esquenazi, a federal appeals court established a highly-fact-specific test for determining whether an employee of a foreign state-owned or state-controlled entity is a "Foreign Official" within the meaning of the FCPA. The test requires an assessment of i) the degree of control the state has over the employer entity, and ii) whether the employer entity was performing a state function in the specific context of the bribery allegations. While the heavily fact-driven test established by the US appellate court has attracted significant criticism from some commentators for providing an insufficient degree of certainty, it is perhaps preferable to the situation created by the brief and somewhat elusive reasoning set out in the judgment in Barra.

Footnotes

1. R. v. Barra and Govindia, 2018 ONSC 57 (Barra). ↩

2. R. v. Karigar, 2013 ONSC 5199 (conviction), R v. Karigar, 2014 ONSC 3093 (sentencing), R v. Karigar, 2017 ONCA 576 (appeal of conviction).↩

3. R. v. Barra at para 45.↩

4. Rex v. Smith, 67 DLR 273, 1921 CanLII 634 (ONCA).↩

5. Barra at para 45.↩

6. CFPOA, s 2. Departmental corporations are excluded.↩

7. Financial Administration Act, RSC 1985, c F-11, s 81.↩

8. Foreign Corrupt Practices Act, 15 USC § 78dd-1. ↩

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