Hewlett-Packard Co. is facing a possible 10-year ban on selling products and services to the Canada government following a guilty plea earlier this month to criminal FCPA charges by a Russian subsidiary.
“The recent criminal conviction, involving bribes paid to Russian government officials, marks the first major test of strict new Canadian integrity rules quietly introduced in March by Public Works and Government Services,” the Globe and Mail said.
Under the new procurement rules, “companies face an automatic ban on future government contracts if they or any of their affiliates are convicted of a list of various crimes, such as bribery, even if those crimes occurred outside Canada,” the report said.
The plea by ZAO Hewlett-Packard A.O. (H-P Russia) to four felonies in a federal court in San Francisco was part of a $108 million settlement reached in April by Hewlett Packard and three overseas subsidiaries with the DOJ and SEC.
U.S. District Judge D. Lowell Jensen sentenced H-P Russia to pay a fine of $58.8 million. That amount had been agreed in the April deal.
H-P Russia admitted bribing Russian government officials to win a $45 million technology contract with the Office of the Prosecutor General of the Russian Federation.
A spokesperson for Canada’s Public Works Minister said Thursday, “The department is reviewing the recent U.S. court decision regarding H-P Russia and is examining the impact of this court decision on our current and future business with H-P Canada.”
No time-table was given for the review.
“If a company the size of HP ends up being unable to do business with the federal government, then a lot of companies are going to be sitting up and taking much more notice,” said Peter Dent, a forensic accountant at Deloitte and Touche and the chairman and president of Transparency International Canada, told the Globe and Mail.
Ottawa can lift the automatic 10-year ban “if there are no other available suppliers or if there is a compelling public interest to award a contract,” the report said.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
While the measures are new and have not yet been interpreted by the Courts, Canada appears to be taking a strict approach to suppliers and their affiliates who are convicted in Canada or abroad of corruption and other crimes related to public officials. The ban applies on a going forward basis to bids submitted in response to future solicitations. Under the standard bidding documentation adopted by Public Works and Government Services Canada, bidders are required to provide a certification that the bidder (including affiliates) has not been convicted of certain listed offenses under Canadian law (including bribery of a foreign public official) or convicted of equivalent offenses abroad. To view a sample of these standard bidding instructions, see https://buyandsell.gc.ca/policy-and-guidelines/standard-acquisition-clauses-and-conditions-manual/1/2003/19 (sections 9 and 10 in particular). Note that PWGSC's standard bidding documents are administrative in nature – they are not statutory or regulatory instruments. So they can be amended easily and there is significant administrative discretion in their application.
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