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The chief executive of Montreal-based SNC-Lavalin said the settlement is 'a game changer.'

Paul Chiasson/The Canadian Press

You know those soccer tournaments for kids, when everyone gets a trophy, just for showing up?

That’s SNC-Lavalin Group’s milestone settlement with federal prosecutors over charges that the engineering company bribed Libyan government officials. Everyone involved spent Wednesday claiming a win.

Montreal-based SNC-Lavalin’s new chief executive, Ian Edwards, called the settlement “a game changer.” Liberal Prime Minister Justin Trudeau, who burned significant credibility trying to wrangle a deal for a home-town company, said: “We got an outcome that seems positive for everyone involved." Former Justice Minister Jody Wilson-Raybould, who set the Prime Minister’s reputation on fire and was bounced from the Liberal Party for her troubles, did a victory lap on Twitter, saying: “The justice system did its work. It is time to move forward and for the company to look to its future.”

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If there was a deal to be done that made everyone happy, why was it so difficult to get here?

In the four years since the RCMP and federal prosecutors launched their case against SNC-Lavalin, this scandal created political and financial carnage. It seemed impossible to find common ground. There was a very real possibility that SNC-Lavalin would emerge from the process much diminished, or quit Canada. Yet on Wednesday, the Court of Quebec approved a settlement that gave all parties some of what they wanted.

Federal prosecutors got a guilty plea, on a single charge of fraud, out of an entity called SNC-Lavalin Construction, a company subsidiary that is being relegated to the corporate dust bin: It hasn’t bid for a contract since 2015.

SNC-Lavalin Construction agreed to a $280-million fine, paid over five years. That’s well shy of the penalty that foreign companies have faced in similar circumstances. Documents filed in court on Wednesday show that SNC-Lavalin faced sanctions ranging from $462-million to $705-million if Canadian prosecutors took the same punishing approach that British and U.S. authorities have applied in the past.

All charges against SNC-Lavalin, including bribery allegations that involve a $25-million yacht and Toronto condo being handed to a dictator’s son, were withdrawn. That decision by federal prosecutors is the most important element of this settlement.

For the parent company, a conviction or guilty plea on corruption charges was expected to translate into a crippling 10-year ban on federal government contracts, and would haunt attempts to win other business. Instead, SNC-Lavalin expects to keep bidding for business from domestic and foreign customers, including an infrastructure-hungry client in Ottawa.

“This is as close as possible to a “best-case scenario” for the company, all things considered,” said analyst Mark Neville at Scotia Capital Inc. In a report published Wednesday, Mr. Neville said the fine “while significant, is not too onerous” and that the key to the settlement is that SNC-Lavalin "will be able to continue to bid on government contracts in Canada, and projects abroad.”

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The breakthrough that led to this deal – the concept of a guilty plea from a subsidiary of SNC-Lavalin that keeps the parent company in business and based in Quebec – came this fall from federal prosecutors, who wanted to avoid a lengthy trial with an uncertain outcome, according to sources familiar with the case. These sources were granted confidentiality by The Globe and Mail because they are not authorized to speak for the company or the government.

Federal prosecutors, who report to the same Director of Public Prosecutions who turned down a deferred prosecution agreement with SNC-Lavalin last year, made it clear in court filings on Wednesday that they were concerned with the impact the corruption scandal was having on the company.

In explaining the logic behind the agreement, the lawyers said: “Any fine and the operational consequences of a conviction will have a serious economic impact on the company that will in turn impact all shareholders, including Canadian pension plans.” The settlement went on to say that the economic impact of a guilty plea is greater than the amount of a fine, as it would mean “restrictions on the company’s ability to bid on both public and private projects.”

The SNC-Lavalin settlement announced on Wednesday gives federal prosecutors a win, in the form of a guilty plea and $280-million penalty. It allows a Canadian company with more than 50,000 employees around the world to get back to business. It was a long, nasty tournament. But everyone got a trophy.

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