The SNC-Lavalin case is indeed a Rubik’s cube. There are many aspects on which people can speculate, and indeed people are speculating. But unless you can spend many hours sorting through all the detail, it is very hard to know what to believe. Let me review the personal conclusion that I reached after considerable time reading and watching five hours of public testimony on March 6.
The most important job of the government, which includes the Minister of Justice / Attorney General, is to protect the national interest, which includes protecting the rule of law. In a case like this where protecting the law could conflict with protecting the national interest, is there a way to do both? The answer is yes, with a Deferred Prosecution Agreement. A Deferred Prosecution Agreement (DPA) is defined as a voluntary alternative to adjudication, in which a prosecutor agrees to grant amnesty in exchange for the defendant agreeing to take certain remedial action. It is not a get-out-of-jail-free card. A DPA enables the defendant to penalize the specific people involved in crimes of corruption, while reducing potential damage to the company itself, and its innocent employees, big and small shareholders, suppliers, and pensioners. Legislation was passed in December to introduce the DPA into Canadian law, in order to put not just Canadian companies but Canada itself on a level playing field with the UK, France, Australia, USA and others.
SNC-Lavalin is one of only 12 companies in the world capable of taking the biggest multi-year infrastructure projects from start to finish. Under the old law, it was likely that SNC would go to trial and be barred from bidding on contracts in Canada for 10 years. Most of SNC’s work for the next 5 to 10 years, such as subway and transit extensions in Toronto, Montreal and Vancouver, and the Darlington nuclear refurbishment is already booked. But barring SNC from bidding could mean there could be no Canadian company doing major projects in Canada for 5 to 10 years after that. You never want to do a major project with only one bidder. It is clearly in the national interest to have Canadian companies and their Canadian suppliers of goods and services bidding on major projects in Canada.
We must consider that for good reason the Harper government privatized Canada’s nuclear reactor business. SNC is now the only company in the world to hold the very strict safety license to do certain work on the unique extra-safe CANDU heavy-water reactors that provide 60 per cent of Ontario’s electricity (Ontario is 40 per cent of Canada’s population) It is clearly in the national interest to protect the ability to do that work. It could take up to a decade for another company to go through the rigorous process of getting such a license.
By passing the law to introduce the DPA in Canada, the government was doing its job to protect both the national interest and the rule of law. But Canadian prosecutors have no experience with the new DPA tool and are on a steep learning curve. The prosecutor had reason to be fed up with SNC and wanted to get a conviction. The Minister of Justice / Attorney General was caught between the two sides of her job; enforcing old laws and introducing new laws.
According to testimony from experienced civil servants, it is customary for the Ministry of Justice to seek outside council to ensure the best possible introduction of a new law. That was refused. And it is incumbent on the prosecutor and the AG to consider all new evidence up until a case goes to trial. That was refused. It is incumbent on the PM and Cabinet to ensure those things are done and so far they have done their job, albeit awkwardly. We should all hope and expect that if any of the opposition parties were in government, they would have done the same thing. But it’s not finished yet.
Readers may be interested in these related commentaries –
Opposition actions on the SNC Lavalin case could come back to haunt them – Hugh Holland
In the case of SNC, the PM has chosen political meddling over rule of law – Dave Wilkin
A political Rubik’s cube if ever there was one – Hugh Holland
Hugh Holland is a retired engineering and manufacturing executive now living in Huntsville, Ontario.
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This whole thing has exposed political corruption at the highest level as well as a massive leadership fail in our current government. All that aside, Hugh seems to suggest SNC is too big to fail. In Canada, we have several other companies able to pick up any slack created in the unlikely event SNC disappears. One was mentioned above as the old Brascan which is now Brookfield Infrastructure who indeed are incorporated in Bermuda but whose head office is in Toronto. They are one of the largest owner/operators and builders of infrastructure projects in the world.
Another is Aecon. Again, a very big engineering and construction firm operating across Canada. In a recent BNN interview, the CEO was clear that they would be very interested in any talent that shakes loose from SNC…stating people is their biggest challenge…and I expect they would fill any void SNC opens up in the “Canadianizing” of major projects.
Based on past behavior, SNC in no way qualifies for a DPA. The law is very clear that economics are not to play a roll in any decision to implement that tool.
Brian, That would’ve been a more honourable approach, but the moral niceties are often of no consequence to those in power. It would require “cosying” up to another company who may be less pliable to the ideas of hush money and bribery. No, pragmatism dictates ignoring moral qualms unless the situation smells so bad that the public can no longer be duped.
If SNC is unable to bid on Canadian contracts that others are bidding on it just means that other firms will get the contracts and not SNC. The other firms will know that if they were to bribe people like Gaddafi with 40 million dollars they would also get banned. If they don’t have the manpower they can raid the personnel they need away from SNC. Resulting in the jobs just moving from one bidder to another and the bribing management being hung out to dry and the work being done. It’ll all work out.
Pragmatism trumps Morality. We get that. But, to quote from The Chariots of Fire, it leads to “a Guilty National Conscience”
Hugh, very hard to say. These days it seems politicians and trust don’t go together much..
Dave, I agree lets leave politics out of it and let the process move forward. But you did not answer the question. What would the Conservatives or the NDP have done differently?
Max, good points, but just one small clarification, the DPA law is new in 2018, brought in by the Trudeau government, not Harper. Harper’s contribution in this space was the Director of Public Prosecutions Act, which created the DPP, and a more independent body. The AG can still overrule the DPP, but in a very clear and transparent way. Here is how it must happen:
“15 (1) The Attorney General may only assume conduct of a prosecution after first consulting the Director. The Attorney General must then give to the Director a notice of intent to assume conduct of the prosecution and publish it in the Canada Gazette without delay”
The act was designed to discourage political meddling.
Here is a link to the DPP Act:
https://www.ppsc-sppc.gc.ca/eng/pub/fpsd-sfpg/fps-sfp/tpd/p1/ch01.html
Hugh, I would certainly like to see SNC not in this mess at all, but here we are. It would have been better if they had qualified for the DPA,. But the experts whose job it is in our judicial system have found they didn’t meet the conditions. We need to have trust in our legal system, if we don’t, god help us all. Perhaps new evidence comes to light that changes the picture. As it stands right now, as long as the new AG doesn’t step in and take over the case, (which would almost certainly trigger a constitutional crisis given what has been exposed so far), this will proceed to trial. We should let the justice system work, as its designed to; no political interference.
I am a layman at best on legal stuff, but here is the sentence right out of the current criminal code, in the section dealing with remediation agreements that suggests the DPP, now backed up by a federal court , made the right call in this case:
Factors not to consider
(3) Despite paragraph (2)(i), if the organization is alleged
to have committed an offence under section 3 or 4 of the
Corruption of Foreign Public Officials Act, the prosecutor
must not consider the national economic interest, the
potential effect on relations with a state other than Canada
or the identity of the organization or individual involved.
2018, c. 12, s. 404.
Here’s the link to the current criminal code, if you want to confirm it.
https://laws-lois.justice.gc.ca/PDF/C-46.pdf
This is an area in which I feel conflicted. Was the underlying charge not about bribing foreign officials. Assuming that such reprehensible corporate behaviour is endemic in certain areas of the world, regardless of the DPA are companies such as SNC not hand tied buy the Canadian law. Indeed, I thought that the 100 year BRASCAN enterprise picked up stakes from Montreal and reincorporated in Bermuda for that very reason (much to their success….Am I wrong about the underlying crime?
Jim, Please explain how does the federal government could possibly “profit from extortion” with a DPA? As for Ms. Blatchford, she is simply wrong. The DPA is now available to any company in Canada that meets the parameters, just as it is in the UK, France, Australia and the USA. Why should Canada and Canadian companies not have a level playing field with a mechanism that experience has shown actually reduces corruption over time ?
Dave, the parameters on who is eligible for a DPA are clearly spelled out in the following brief by Osler- Harcourt. There is nothing in the brief that would deny SNC-Lavalin from being eligible. There is no need to further change the law as you suggest.
https://www.osler.com/en/blogs/risk/september-2018/deferred-prosecution-agreements-dpas-come-into-force-in-canada
Are you saying it is not in the national interest to maintain a strong SNC with important strategic capabilities such as building and maintaining Canada’s unique and extra-safe CANDU nuclear reactors? Are you saying that the Conservatives or the NDP don’t care about ensuring Canada has ability to bid on our own major infrastructure projects for 10 years, and would not have made the DPA available in Canada, and would not have issued a DPA to SNC? I hope you are not saying that.
Your assertion about a political angle is an obvious election-time red-herring. Are you saying the Conservatives and NDP would not have supported a DPA for SNC because they are only interested in companies and voters in Alberta or BC and don’t care about companies and voters in Quebec? I hope you are not saying that. This is too important for petty politics.
Yes, the Federal Court just ruled against SNC’s request for a DPA, just as the Federal Court required more indigenous consultation on both the Northern Gateway and Trans-Mountain pipelines. But neither case is over yet. The new AG said he could still approve a DPA for SNC in the national interest. Time will tell.
All the details about the case against SNC have not been made public so it is difficult to determine if a DPA would be appropriate or not in my opinion. The fact that both the Prosecutors office and the Attorney General determined a DPA was not in the best public interests I think speaks volumes. We will not know if the DPA was appropriate and a missed opportunity until after the trial.
We have to also keep in mind that while SNC would be barred from Canadian Federal jobs but not provincial. SNC has also been reducing it’s Canadian workforce from 20,000 in 2012 to 9,000 today. All speculation of what could happen at this point is just that, speculation. I have not heard that if SNC can’t bid on federal jobs if this means other companies would not hire some of the SNC because of the increased opportunity.
Time will tell.
I think both of you are off base. First of all, the DPA was a creature that was created by the Harper Government. They tried to use it several times but were unsuccessful. The Libs polished it and stuck it in one of those OMNIBUS bills in the last budget. It was hidden in the fine print, probably on page 365 of 700 pages. So we can’t put the blame on the Libs for introducing this “monster” . As far as the author trying to legitimize the use of the DPA, I might agree with him if it was SNC’s first offence but they are habitual offenders. They were fined by the Quebec Government for illegal payments. They were also convicted by the International Court of the United Nations for similar offences. They obviously either did not learn from previous wrongdoings or they refused to. So, I think it is only right that a Canadian Court of Law should now put down the hammer and stop this illegal behaviour once and for all. Keep in mind that SNC is an International Company so they are free to move their Headquarters anytime they want. How many of the jobs are actually based in Canada ? Not 9,000 that’s for sure. They have also already been banned from bidding on Contracts through the United Nations so what advantage would it be for them to move their Headquarters from Canada ? I think this is simply a threat on their part in order to get their DPA. If they decide to move out of Canada, then good by to a corrupt enterprise. I’m sure the qualified people they leave behind will be able to find suitable employment. After all we keep being told that there is an acute shortage of professional tradespeople.
Hugh Your well thought out analysis is intriguing at first glance. . So now it is alright for the Federal Government to profit from Extortion. Whats next,prostitution? Christie Blatchford Recently pointed out online that SNC is the only corporation in Canada that has protection enshrined in law. How much did SNC Lavalin funnel into the Liberal coffers to get something this unique enshrined in law? How much has this cozy relationship cost the Canadian taxpayers? I for one feel that this is a slippery slope and the implications may far outweigh what is currently under suspicion. The right decision is not always the easiest path.
Hugh, respectively, I think you are off base when you say “the prosecutor had reason to be fed up with SNC and wanted to get a conviction. The Minister of Justice / Attorney General was caught between the two sides of her job; enforcing old laws and introducing new laws”
The DPA is the law. Its in-force today. It is new, written by the Liberal government, quietly rushed through last year, burried in a big budget bill so it could be applied to SNC. Should Canada have such a DPA law? For sure. Should it apply to SNC ? Only if they qualify, as the law is currently written. A decision that must rest the the DPP, and overruled by the AG only under rare, clear legal factors, not political ones. Otherwise, its obstruction of justice, which is illegal . The problem here, the independent judiciary system says no, SNC doesn’t qualify. This decision was upheld just yesterday, when a judge ruled against SNC,. The courts will not intervene and overrule the DPP’s decision. You can’t say the judge was not qualified or biased with this ruling…
As I said before, the right way out of this box is for the government to change the DPA law, if they set the parameters on who should qualify too tight. In the mean time, the current law must be upheld . Also, If the Liberals are concerned with SNC jobs loss, just finish the changes to the Integrity Regime, allowing them the flexibility to not apply any federal contract bans at all, or much shorter bans than 10 years. That has been the fear many point to ..which I personally think is overstated.
The current path Trudeau is on has created this scandal, damaging all involved… but meddling with the independence of the judicial system is by far the worst. Most Canadians don’t want to see that happen.