SNC job loss fear is a weak diversion from the root of the scandal; Liberal political interests in Quebec – Dave Wilkin

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Just when you think the SNC-Lavalin (SNC) scandal couldn’t get any worse, more bombshells land. Jane Philpott, the highly respected recently appointed Treasury Board President, resigned from cabinet, stating “Sadly, I have lost confidence in how the government has dealt with this matter and in how it has responded to the issues raised”. This followed news that China questions Canada’s commitment to the “rule-of-law” and “judicial independence”, comparing the handling of Huawei CFO Meng Wanzhou’s extradition and the SNC-Lavalin cases. Team Trudeau’s confused double-speak on the Wanzhou case (leading to ambassador McCallum firing) comes full-circle. Who’s next to pile on, ‘meddler-in-chief’ Vladimir Putin?

Bad enough, but the PM’s response to Canadians early on March 7 made things worse. He appeared disingenuous; a contrived self-reflecting “learning” moment over what he still sees as a “difference in perception”. No Mr. Trudeau, it’s a scandal of your making, rocking the pillar of judicial independence. You missed your best opportunity to show leadership by accepting accountability and apologizing for the entire mess. What we saw instead, textbook political-speak and old political maneuvers Canadians so abhor:

  • Shifting blame/denials PMO for communications breakdowns & trust erosion; he was “unaware”, did nothing “inappropriate”.
  • Undermining – Wilson-Raybould should have come to him earlier; his “disappointment” with her decisions.
  • Spin – reassuring Canadians the integrity of institutions and rule of law remains in-tack but failing to acknowledge that’s only because Ms. Wilson-Raybould stood her ground against sustained political pressure. Had she yielded, she would have broken the law (obstruction of justice).
  • Stonewalling, hiding behind process – 3rd party “expert” reviews, opinions, investigations.
  • Changing the channel – invoking memories of his father, pivots to government “accomplishments”, his trips,..
  • Deception – the AG must be open up until the “very last minutes of trial. Wrong, the DPP is the prosecutor, not the AG.
  • Dishonesty/deflection – “standing up for jobs” line, despite the DPA law explicitly stating economic factors must not be considered.

So, let’s dig further into his jobs defense. Of the 8,762 SNC Canadian employees , roughly 8000 are in project-based construction and engineering jobs. This work will be performed by Canadian workers, with or without SNC. Further, SNC currently has a $15B backlog of signed contracts.  Even in the very unlikely event SNC is hit with a federal contract ban, future Canadian project work will still be done by Canadian workers. This includes many large provincial government contracts that SNC would still be eligible to bid on.

So, what about SNC HQ moving out of Canada? The US and UK have been mentioned as possible options. That’s impossible before 2024 due to loan obligation commitments with Quebec’s pension giant Caisse de depot. Also, enormous political and shareholder objections, cash outlays, & staffing challenges would likely stop it. And to what ends? Only to see less political lobbying clout than they currently enjoy. Good luck lobbying any US Administration from a $4.5B US market-cap company (not even in the top 500 in the US), with no historical roots and a small US footprint. The UK, with Brexit raging, is just as unlikely.  What about a foreign takeover you say? Fully 80 per cent of SNC shares are held in Canada, mostly in big institutions.  Further, the Quebec government said it would block any takeovers, recently raising its SNC ownership stake to 20 per cent.  What engineering company would ever attempt a hostile takeover, at a big market premium, in this situation? Conclusion– these are understandable but completely hollow SNC threats aimed at the government to gain a favourable outcome, nothing more.

Finally, what does their stock price tell us? It has traded mostly sideways since an initial 25% drop on January 28, following their announcement of a $1.3B mining segment hit and profit warnings tied to oil & gas segment headwinds. This drop pre-dates the February 7 Globe & Mail bombshell report, so the market is not anticipating future major corporate damage over the scandal.  It is interesting to note however, these SNC headwinds stem from the Canadian and Saudi governments’ ongoing spat and oil and gas prices/uncertainty, notably in Canada. Now add-in an ongoing Canada-China fight potentially placing SNC’s nuclear energy contracts in China at risk. What is common across these issues and risks? They all have direct links to the PM’s damaging energy policies and geopolitical missteps.

So, the SNC job loss fear is a weak diversion from the root of this scandal – Liberal political interests in Quebec. Trudeau even carelessly let that slip in comments he made to Ms. Wilson-Raybould. This fiasco has damaged Canadians’ confidence and trust in this government over its disregard for judicial independence. March 7 will be remembered as the day Justin Trudeau had the opportunity to show real leadership and end this fiasco. Canadians will soon have the final say on how he measures up.

Readers may also 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
A Deferred Prosecution Agreement is the best way to deal with SNC Lavalin – Hugh Holland

Dave Wilkin is a Professional Engineer who lives in Huntsville.

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5 Comments

  1. Hugh Holland on

    Dave, since Conservatives have offered so little in terms of positive policy change, they are doing their best to amplify the difficulty the Liberals are having during implementation of the complex but very positive DPA legislation that will put Canada and Canadian business on a level playing field with the UK, France, the USA and Australia. The new legislation is supported by the 300 member companies of the Business Council of Canada. But Conservatives are trying their best to turn the SNC thing into some kind of a scandal where many media reports say that no real scandal exists.

    So far, the only new policy the Conservatives have tabled is to remove the tax from home heating. But they are shooting themselves and Canada in both feet, because emissions from building heat are 12% of Canada’s emissions and are higher than emissions from oil sands extraction and upgrading. The Conservative policy to remove tax from home heating will be popular but will discourage home owners from taking steps to use less energy and reduce emissions. That is exactly the wrong direction from what needs to be done to reduce the rising frequency and severity of draughts, wildfires, and extreme weather events like 15 feet of snow in Huntsville. But the SNC case makes for a convenient distraction from the Conservative’s weak program. Maybe they will come up with something good but I suspect they are waiting so long because they have nothing much to offer. Time will tell.

    • Hugh, the issue isn’t the DPA, as I have said before. It’s an appropriate tool for prosecutors. The issue is the Liberals’ political interference in the Judiciary when they didn’t get the outcome they wanted.

      Saying this is not a scandal is odd. It’s dominated major media headlines for a month straight now; left, center and right leaning alike. It’s even making foreign news… very rare for Canadian domestic issues, which many are saying. So, it’s not a scandal?

  2. Kathryn Henderson on

    Well said Dave Wilkin. I totally agree with you. And for you Hugh i can’t think of anyone that isn’t trying to conserve energy. We can’t barely afford to stay in our homes now. Maybe you have enough money to pay your bills and live comfortably but there are so many of us that are working hard and skimping by. The carbon tax was in no way going to save the world

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