Corruption

What is corruption?

The word "corruption" comes from the Latin word corruptus, which means "to break". Although corruption is a difficult concept to define, a broad definition would be the "exercise of official powers without regard for the public interest". In other words, dishonest or fraudulent conduct by those in power, often involving bribery.

In Canada, both domestic and foreign corruption are criminalized. Corrupt practices include:

  • embezzlement of funds,
  • theft of corporate or public property,
  • influence peddling,
  • bribery,
  • extortion.

Corruption is rooted in greed and dishonesty. The perfect environment for corruption is a combination of poverty or economic crisis, poor leadership, opportunity, lack of ethical standards, and the belief you can't get caught.

Examples of corruption

Bribery comes in different forms and can involve sophisticated schemes:

  • Hiring a public official's unqualified relative to get a contract;
  • Paying a public official not to do their job;
  • Giving a public official extravagant gifts (cars, homes, furniture, etc.);
  • Paying for a public official's holidays;
  • Making a large charitable donation (linked to a public official);
  • Paying for the education of the children of a public official;
  • Diverting contracts, real or not, to an entity owned or linked to a public official (beneficial ownership);
  • Using agents or third parties to funnel bribes to a public official.

A public official is a person who holds a legislative, administrative or judicial position in a foreign or domestic state. This includes members of a board, commission, corporation, state-owned enterprise (SOE) or any other authority established by the state. It can also include a member of an international organization (i.e., United Nations).

Why should businesses care about corruption?

Pressures for more honesty and accountability impact how companies conduct business, domestically and internationally. Businesses need to improve their policies, controls and risk management processes. They also have to put in place ethical policies and a strong anti-corruption compliance program.

What are the costs and consequences of corruption?

Anybody who pays a bribe to gain a business advantage feeds the unending, harmful cycle of corruption.

Global impact of corruption in numbers

  • Over $1 trillion is paid in bribes each year
  • $1 out of every $30 of Gross Domestic Product (GDP) in the world is paid in bribes
  • Adds 10% to the total cost of doing business globally
  • Total costs: US$2.6 trillion (which represents 5% of the GDP)
  • Adds up to 25% to the costs of procurement contracts in developing countries
  • 44% of compliance professionals suspect that they have lost contracts to unethical competitors

(Data from the World Bank and the Organization for Economic Co-operation and Development)

Social and human costs

Corruption:

  • Reduces the quality of government services and infrastructure,
  • Fuels social and economic inequities,
  • Prevents sustainable development,
  • Reduces trust in government and laws,
  • Increases the use of poor construction materials,
  • Breaks environmental laws,
  • Causes theft/depletion of national resources,
  • May jeopardize national security,
  • May support smuggling (drugs, humans, cash, diamonds, etc.),
  • May lower compliance rates in construction (compromising the quality of materials and safety),
  • Causes damage to people, communities and businesses.

What is the role of the RCMP?

The RCMP works with stakeholders to prevent, detect and investigate corrupt activities. It also helps Canadian industry, governments and organizations to mitigate their exposure to bribery and corruption. The RCMP feels that prevention, awareness and education are key in preventing corruption. That's why we also work with many partners such as academia and businesses.

Bribery and corruption investigations are complex, lengthy and borderless. When investigating a bribery or corruption complaint, the RCMP's goal is to find information that will either prove or disprove the allegations. This is done through a series of investigative actions which include interviews and gathering documentary evidence. When the evidence leads to charges, the RCMP works with the Crown to bring the charges to court.

As an example, the Karrigar case was the first Corruption of Foreign Public Officials Act conviction at trial. An important precedent was establish with this case. The conviction was held on the fact that the Crown only had to prove the agreement between senior executives on paying the bribe. The prosecutor did not have to prove that the bribe was actually paid, but rather to prove there was an agreement and steps taken to pay the bribe.

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