This past March, the Harper government adopted federal procurement ‘Integrity Framework’ regulations that state that companies convicted in Canada or internationally for offences such as fraud, bribery and extortion would be disqualified for a ten year period from bidding on Public Works contracts. While the list of convictions in the legislation was reportedly expanded, a Public Works spokesperson also acknowledged that the old rules called for a permanent ban.
But now the Globe and Mail reports, “The authors [of a Canadian Council of Chief Executives report] warn that the Canadian rules could open the door to lawsuits by the companies, under the North American Free Trade Agreement and eventually the Canada-European Union Comprehensive Economic and Trade Agreement. Both deals contain investor-state provisions, giving companies the right to sue governments for unfair treatment. …And a number of foreign multinationals are already exploring possible trade action, according to an industry source, who declined to be named.”
The Canadian Council of Chief Executives says, “Since debarment can be considered a restraint on trade, the Canadian measures may be challenged by foreign partners on grounds of unreasonable extension of the provisions to entities that are not under the control of the supplier. This could be construed as unnecessarily restrictive of trade and result in trade disputes.”
The news report indicates Siemens AG, BAE Systems PLC and Hewlett-Packard Inc. are among the companies facing this 10 year ban from public contracts.
– Siemens AG is a German transnational corporation with headquarters in Berlin and Munich. It is the largest engineering company in Europe. In December 2008, the company pleaded guilty in the United States to violating the Foreign Corrupt Practices Act. The U.S. Department of Justice accused the company of more than 4,000 payments to foreign officials to obtain or retain business.
– BAE Systems PLC is a British transnational defence, security and aerospace company based in London. It is the world’s second largest weapons contractor. In February 2010, the company was convicted of felony conspiracy to defraud the United States government and fined $400 million. It was also required to pay a fine in the United Kingdom on bribery charges. The investigation of the company began with charges of illegal payments in Saudi Arabia and then spread to similar allegation in the Czech Republic, Romania, South Africa and Tanzania.
– Hewlett-Packard Company is an American transnational information technology corporation based in California. In April, the company acknowledged it had violated the Foreign Corrupt Practices Act when its subsidiaries in Russia, Poland and Mexico made payments to government officials there to obtain or retain public contracts. In Russia the bribe related to a contract with the federal prosecutor’s office, in Poland the bribe related to a contract with the national police agency, and in Mexico the bribe involved the sale of software to Mexico’s petroleum company.
The Harper government says its Integrity Framework rules are compliant with Canada’s trade obligations.
Ottawa could face lawsuits for strict corruption rules: report (Globe and Mail news article)
Ottawa overkill on corporate integrity (Terence Corcoran column)
Study warns Ottawa’s new anti-corruption rules on suppliers could hurt economy (Canadian Press article)