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Business Commentary Canada risks losing face globally if it cuts SNC-Lavalin a deal

When HSBC, one of the world's largest banks, secured a deferred prosecution agreement with the U.S. Department of Justice in 2012 to settle criminal charges relating to an international money laundering scheme, it sparked a public outcry. The London-based bank, which was accused of washing billions of dollars for Mexican and Colombian drug cartels and violating U.S. sanctions laws, agreed to pay a $1.9-billion (U.S.) settlement to avoid a trial.

Although U.S. officials insisted HSBC was being held accountable, there was widespread outrage that it was able to cut a deal. It was the bank's third censure since 2003 for weak anti-money-laundering controls. “Clearly, the government has bought into the notion that too big to fail is too big to jail,” the New York Times said in an editorial.

These days, a furor over the conduct of another corporate recidivist is playing out in Canada, but almost all the fireworks have focused on the domestic political fallout, rather than the impact on Canada's reputation abroad.

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Prime Minister Justin Trudeau’s government is battling allegations of political interference in a criminal case involving Montreal-based engineering firm SNC-Lavalin. The company is facing fraud and corruption charges over its business dealings in Libya. (None of the allegations have been proven in court). A settlement agreement was ruled out by a prosecutor last fall, but several high-ranking officials, including some in the Prime Minister’s Office, are accused of putting pressure on former attorney-general Jody Wilson-Raybould to overturn that decision.

Trudeau insists that he and his officials are working to save thousands of Canadian jobs. But that is only one of many factors to consider. The political circus playing out in Ottawa has also cemented Canada's international reputation for being lax on bribery and corruption, and that will have consequences for a slew of Canadian companies seeking growth in foreign markets.

A settlement agreement in this case would send the wrong message to the rest of the world. SNC-Lavalin is no stranger to corruption scandals. In 2013, the World Bank banned SNC-Lavalin and its affiliates from participating in its projects for 10 years, citing its investigation of “bribery schemes” connected with a World Bank-financed bridge project in Bangladesh and “misconduct” relating to a rural electricity project in Cambodia.

Here at home, the company was ensnared in the McGill University Health Centre scandal after employees allegedly made secret payments to secure a $1.3-billion construction contract in 2010. In February of this year, former SNC-Lavalin CEO Pierre Duhaime pleaded guilty to breach of trust in one of the biggest corruption cases in Canadian history.

These scandals have damaged Canada's already declining reputation on the global stage. Last September, a report by Transparency International on enforcement of the OECD's anti-bribery convention said that Canada's rating dropped to “limited enforcement” from “moderate.”

The report was scathing. It pointed a finger at Canada's weak enforcement record, noting the country launched just four foreign bribery cases between 2014 and 2017, and concluded only one by upholding an earlier conviction.

The OECD has already raised concerns about political interference in the SNC-Lavalin case. In early 2020, the OECD is scheduled to review Canada’s anti-corruption efforts.

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Canadian voters may also be more sophisticated than the government assumes. According to a Nanos poll taken after Wilson-Raybould testified before the House of Commons justice committee in February, more than half of Canadians want SNC-Lavalin to face a criminal trial.

Voters are fed up with politicians who genuflect to corporate interests. Instead, Trudeau should be protecting the public interest. He can start by ensuring that officials have the resources they need to investigate white-collar crimes, and improving co-ordination between police and prosecutors.

Otherwise, remediation agreements and fines become just another cost of doing business. As Wilson-Raybould rightly declared, “We either have a system that is based on the rule of law...or we do not.”

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