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Business Commentary There’s nothing sinister in wanting to spare SNC-Lavalin

There is a recurring theme in discussions surrounding allegations that members of Prime Minister Justin Trudeau’s staff sought to help SNC-Lavalin avoid a trial on corruption charges.

This narrative suggests that the motives for allegedly putting pressure on former Justice minister Jody Wilson-Raybould to defer prosecution of SNC-Lavalin on bribery charges were strictly political in nature and aimed at favouring a prominent Quebec-based company that is seen as a beacon of the province’s business establishment.

This narrative, which has lit up social media in recent days and sparked allegations of political favouritism in an election year, is incorrect – or at best, highly incomplete.

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To be clear, any direct interference by the Prime Minister’s Office in a decision by the Justice minister or the Director of the Public Prosecution Service of Canada (PPSC) to lay charges against SNC-Lavalin would contravene the independence of our justice system.

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As The Globe and Mail reported last week, officials in the PMO allegedly pressed Ms. Wilson-Raybould to intervene to spare SNC-Lavalin from having to go to trial on fraud charges brought by PPSC director Kathleen Roussel involving the company’s Libyan operations. Instead, the PMO pushed for what is known as a “remediation agreement,” under which SNC-Lavalin would make amends for the alleged bribery of Libyan officials between 2001 and 2011 by paying a fine and proving it has implemented extensive compliance measures to avoid illegal activity by employees.

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What risks getting lost in the mess the Trudeau government may have created for itself is the need to distinguish between the crass politics and the sound policy principles that led the Trudeau government to include measures in its 2018 budget bill that allow Canadian companies to seek remediation agreements in the first place.

It is highly unfortunate that the first case to gain public attention since the federal Justice Department’s new remediation-agreement regime was put in place last September involves SNC-Lavalin, the country’s leading homegrown engineering company. The company has long been a symbol of Quebec Inc. and owes its very existence to the provincial government’s intervention in 1991 to prevent Lavalin from going under by engineering its merger with SNC Group.

Quebec’s protectiveness of SNC-Lavalin has made the company an object of suspicion in the rest of Canada – suspicion that Premier François Legault’s recent suggestion that his government would intervene to prevent a takeover of the company only served to heighten – that it is politically untouchable for any federal government.

It would be wrong, however, to let the politics swirling around the SNC-Lavalin saga obscure the validity of the company’s case for a remediation agreement. Indeed, it is somewhat baffling that the director of public prosecutions chose to reject the company’s application for such a deal and opted to subject SNC-Lavalin to a potentially endless criminal proceeding that could sound its death knell.

No one is suggesting SNC-Lavalin should be let off the hook for the alleged illegal action of its former employees. The Libyan scandal, in which it is accused of bribing officials of former dictator Moammar Gadhafi government to win public contracts, is one of several corruption scandals to rock the company in recent years. Its former chief executive officer, Pierre Duhaime, recently admitted to “willful blindness” in the case of two SNC-Lavalin executives who paid $22.5-million in bribes to help the company win a $1.3-billion contract to build the McGill University Health Centre. Before that, the company was caught up in scheme to funnel almost $100,000 in illegal contributions to the Liberal Party of Canada between 2004 and 2011.

By all accounts, however, SNC-Lavalin has cleaned house. It has taken extensive actions – overhauling its management, board and compliance procedures – to qualify under Ottawa’s remediation-agreement regime. That it is based in Quebec is beside the point.

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Seeking to convict a company for crimes allegedly committed by one or a handful of employees has its downsides. In the case of SNC-Lavalin, this includes jeopardizing the very survival of an otherwise outstanding company, with 52,000 global and 9,400 Canadian employees, by depriving it of the ability to bid on federal contracts for a decade. Even if the company was acquitted – a strong possibility given the burden of proof – a lengthy trial would subject it to years of uncertainty, with considerable fallout.

Before the introduction of Ottawa’s remediation-agreement regime, Canadian companies were at a disadvantage to American and British competitors that benefited from the existence of what are known as deferred-prosecution agreements (DPA) in their home countries. Australia and other developed countries have also moved recently to allow DPAs, putting the onus on Canada to follow suit.

There is a strong evidence that DPAs encourage companies to disclose illegal activity by employees and, hence, serve the public interest. As then head of the Business Council of Canada John Manley argued in 2015, as the former Conservative government began mulling the adoption a DPA regime in Canada: “The case for alternative enforcement mechanisms has nothing to do with corporate offenders being ‘too big to fail’ or ‘too big to jail.’ Rather, they can be a much-needed addition to Canada’s anti-corruption arsenal – a means of combatting corporate crime and punishing the guilty without hurting others who have done nothing wrong.”

It’s too bad the mess in Ottawa now risks souring public opinion on a worthy policy. It could cost the country a global engineering champion.

Prime minister Justin Trudeau says he was surprised and disappointed by Jody Wilson-Raybould’s resignation Tuesday. The Canadian Press
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