Canada drops from Top 10 Least Corrupt Countries in Transparency International Annual Corruption Perceptions Index
On January 23, 2020, Transparency International (TI) released its annual Corruption Perceptions Index (CPI), reporting that Canada had dropped four spots in its annual ranking of perceived public sector corruption, from 8th to 12th. Canada has fallen from its position within the top 10 for the first time since 2005, leaving it behind peers such as Germany (9), Sweden, (4), and the Netherlands (8). Canada does however remain ahead of countries including the United Kingdom and Australia (tied for 12), the United States (tied for 23), and France (tied for 23).
The annual Corruption Perceptions Index (the CPI) ranks 180 countries and territories by their perceived levels of public sector corruption, according to experts and business people. Since its inception in 1995, the CPI has become the leading global indicator of public sector corruption. The CPI is an annual snapshot of the relative degree of corruption by ranking countries and territories from all over the globe. The 2019 CPI draws on 13 surveys and expert assessments to measure public sector corruption, giving a score from zero (highly corrupt) to one hundred (very clean).
Top scoring countries on the CPI are not immune to corruption; while the CPI shows these public sectors are among the cleanest in the world, corruption still exists, particularly in cases of money laundering and other private sector corruption. The CPI highlights where stronger anti-corruption efforts are needed across the globe. It emphasises where businesses should show the greatest responsibility to promote integrity and accountability, and where governments must eliminate undue influence from private interests that can impact sustainable development.
The CPI follows a similar TI Report [PDF] in 2018 downgrading Canada from “Moderate” to “Limited” activity in terms of anti-corruption enforcement. Canada has fallen from its top 10 position in the CPI for a number of reasons. TI reported that this decline has been gradual since 2012, and has been driven by a number of factors.
Canada: SNC Lavalin and “snow washing”
First, the CPI flags that Canada has gained a reputation as an easy place to launder money (or “snow wash”). This perception is particularly acute in British Columbia, where two different government-commissioned reports (the Maloney Report [PDF] and the German Report [PDF]) detailed the extent of the problem in real estate, casinos and luxury goods. Money laundering is however not isolated to the West Coast; fighting money laundering was mentioned in the December 2019 speech from the Throne.
Second, the report references the federal government’s decision not to invite Montréal-based engineering giant SNC-Lavalin to negotiate a deferred prosecution agreement with respect to outstanding corruption charges earlier this year. In December 2019 a division of SNC-Lavalin Group Inc. pleaded guilty to fraud in relation to the company’s activities in Libya. Former SNC-Lavalin executive Sami Bebawi was sentenced to eight years in prison for his involvement in the company’s activities. Both the negotiated corporate penalty and the criminal penalty far exceeded previous sentences for similar offences. Before the case was resolved, it had a measurable political impact, resulting in the resignation of the Attorney General in connection with alleged pressure from the Prime Minister’s Office to award a remediation agreement to SNC-Lavalin.
Canada still ranks near the top of the CPI, ahead of a number of like minded countries. However, given the downward trend that the data notes, and enforcement challenges, companies should be alive to potential risks. Canadian companies must have proper policies and controls in place not only with respect to doing business overseas, but also respect to domestic dealings. Corruption issues both domestically and abroad can impact a company’s Canadian operations, and attract domestic liability. Given risks both to the corporation and to individual directors and officers, as well as increased scrutiny into Canada’s anti-corruption enforcement, effective anti-corruption compliance should be a priority.
 Deferred Prosecution Agreements are referred to as “remediation agreements” under Canadian legislation.