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The offices of SNC Lavalin are seen in Montreal on March 26, 2012.Ryan Remiorz/The Canadian Press

Quebec prosecutors have received court approval for a deferred prosecution agreement with Canadian engineering giant SNC-Lavalin Group Inc., the first such deal since the new legal mechanism became law in 2018.

Judge Éric Downs of the Quebec Superior Court sanctioned the agreement in a verbal decision on Wednesday afternoon, thereby settling criminal charges against the company related to a bridge contract in Montreal two decades ago. The judge said he would publish a detailed written decision later.

“We’ve reached a point now where this company has an integrity program that’s exemplary,” prosecutor Francis Pilotte said. “There really was no reason not to offer them an agreement. [The law] was made for cases like this.”

SNC-Lavalin struck the remediation agreement with Quebec’s office of criminal prosecutions, known as the Directeur des poursuites criminelles et pénales (DPCP), to resolve charges laid last fall against two company entities. The pact required court approval.

Such deals, better known as deferred prosecution agreements, allow companies to acknowledge responsibility and avoid a trial in exchange for paying a fine and agreeing to outside independent oversight. Already present in several other countries, such as the United States and the U.K., the legal mechanism was introduced by the federal government in 2018 as part of an effort to widen its options in fighting corruption and other white-collar crime.

As part of a three-year agreement, SNC-Lavalin will pay a penalty of $29.6-million. It will also undergo third-party monitoring of its ethics and compliance systems by an outside law firm for three years.

“This agreement is in the public interest,” said François Fontaine, a lawyer with Norton Rose representing SNC-Lavalin. “SNC is getting a deal here because it is an important company and there is no reason to punish all of its stakeholders for the actions of a few individuals.”

Quebec prosecutors last September charged two of the company’s business entities – SNC-Lavalin Inc. and SNC-Lavalin International Inc. – and former SNC vice-presidents Normand Morin and Kamal Francis in connection with a long-standing RCMP investigation into bribes paid on a $128-million contract to refurbish Montreal’s Jacques Cartier bridge in 2002.

Michel Fournier, the former head of the Federal Bridge Corp., pleaded guilty in 2017 to fraud-related charges for accepting more than $2.3-million in kickbacks from SNC in the Jacques Cartier bridge case and laundering the funds. He was sentenced to 51/2 years, and has since received full parole. The police probe then focused on who arranged the bribes.

The SNC units and the two former executives were charged with forgery, conspiracy to commit forgery, fraud, conspiracy to commit fraud, fraud against the government and conspiracy to commit fraud against the government, the RCMP say. The two men are both over 70.

Mr. Morin’s lawyer said in court on Tuesday that his client contests the bulk of the statement of facts SNC-Lavalin and prosecutors agreed to, and said they should not be made public. He urged the judge to be “the guardian of fairness of this process.” Arguments on this will be heard on Thursday.

Lawyers and other legal experts in Canada are watching SNC’s case closely to see how prosecutors apply the law and how the court manages the proceedings, including how it will balance the rights of the two men still to face trial. Other companies are expected to seek similar deals.

What the Quebec Superior Court decides in this case will affect future agreements submitted for approval, said Jennifer Quaid, an associate professor of law at the University of Ottawa. “The debate in court today highlights the tension between transparency and public accountability on the one hand and the inevitable compromises prosecutors have to make to reach settlements with business organizations,” she said.

Quebec prosecutors have said SNC co-operated with authorities during police searches and voluntarily provided relevant information afterward, which contributed to the decision to extend an offer to negotiate a deal. The two former managers cannot benefit from a deferred prosecution agreement because such arrangements do not apply to individuals.

SNC was denied a deferred prosecution agreement two years ago in a separate case in which it was charged with violating Canada’s Corruption of Foreign Public Officials Act and fraud related to its business dealings in Libya when Moammar Gadhafi was in power. Kathleen Roussel, director of federal prosecutions, told The Globe and Mail in 2020 that a deferred prosecution agreement in that case was inappropriate because of the “severity and breadth” of the offence.

SNC undertook an intense lobbying campaign with the federal government to get a deferred prosecution agreement in the Libya case. Allegations that Prime Minister Justin Trudeau and other members of his government improperly pressed then-justice minister and attorney-general Jody Wilson-Raybould to order a settlement engulfed the government in crisis for weeks.

SNC struck a deal with prosecutors in December, 2019, in which the company’s construction division pleaded guilty to a single charge of fraud and the potentially more damaging corruption charge was dropped. The company agreed to pay a $280-million fine and received a three-year probation order, which includes oversight by an independent monitor. The Quebec judge who approved the agreement called it “reasonable” and said that, without such plea deals, Canada’s justice system “would collapse under its own weight.”

The Jacques Cartier bridge investigation, dubbed Project Agrafe (staple), has long been a legal risk for SNC. The company has acknowledged the probe in corporate filings, adding that other investigations into its past business dealings may be continuing, including in Algeria.

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