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The SNC-Lavalin scandal still fresh in our minds, it’s a good moment to re-examine the federal policy that caused the whole misbegotten mess.

That would be the Government of Canada’s Integrity Regime, an ill-conceived policy under which companies convicted of any of a variety of corruption-related offences are automatically debarred from bidding on federal government contracts for 10 years.

It was the likelihood that Montreal-based SNC-Lavalin would be hit with such a ban, and be forced to lay off thousands of blameless Canadians, that lay behind the political machinations of the past few years.

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In 2015, federal prosecutors charged SNC-Lavalin with bribery and fraud related to inducements its employees paid to Libyan officials between 2001 and 2011.

Worried a conviction would result in automatic debarment, SNC-Lavalin lobbied and convinced the Trudeau government to pass a law creating deferred prosecution agreements – court-monitored deals that allow companies to avoid criminal conviction by admitting guilt, paying a fine and agreeing to remedial actions.

That backfired when the federal prosecutor’s office subsequently refused to let SNC-Lavalin seek a DPA in 2018, and the rest is history.

Prime Minister Justin Trudeau lost two cabinet ministers, his closest adviser and his majority in the October election after he was found to have unduly pressed his former attorney-general to overrule the federal prosecutor.

This week, SNC-Lavalin reached a settlement with federal prosecutors that saw a division of the company plead guilty to one charge of fraud more than $5,000 and agree to pay a $280-million fine.

Thanks to the plea deal’s unusual structure, the company is not at risk of being banned from bidding on federal government contracts. After the agreement was made public on Wednesday, SNC-Lavalin shares rose 20 per cent.

The government would have had no need to even think about going to bat for SNC-Lavalin in an inappropriate way had the company not faced the threat of being cut off from the federal purse for 10 years – a plight the company strategically claimed would force it to lay off 9,000 Canadians.

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Looked at another way, instead of leading a damaging assault on the rule of law, the Trudeau government should have instead reformed the Integrity Regime along the sensible lines a number of groups have been calling for, by ending the automatic debarment policy.

There are two main problems with the Integrity Regime. Firstly, it’s not a law or regulation, but merely a policy managed by Public Works and Procurement Canada. As such, it doesn’t cover the entire federal government, and it isn’t subject to the rule of law.

Secondly, it is arbitrary. No matter the offence, or how high up it goes inside a company, or whether it is a first or tenth conviction, the punishment is a 10-year debarment. Companies that demonstrate a willingness to clean up their act may be able to reduce the ban by five years. But that’s the only appeal available, and it’s not a transparent process.

Both the Canadian Bar Association and the anti-corruption organization Transparency International Canada have called on Ottawa to bring the Integrity Regime into line with due process and the general principles of sentencing.

There is good reason for doing so. As it stands now, the policy is not an effective tool for encouraging companies to self-report instances of bribery or corruption carried out by rogue employees. If the risk of coming forward includes the automatic possibility of being banned from bidding on federal contracts for a decade, companies will avoid doing so.

In fact, it will likely also discourage companies from seeking a DPA, since that comes with the risk of being refused and having to face charges. The policy is a deterrent to better enforcement of anti-corruption measures.

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Debarment can be a punitive tool for prosecutors and the courts. But it has to be used as part of a package designed to encourage good behaviour that also includes denunciation, reparations and rehabilitation.

Hanging the broadsword of automatic debarment over the heads of companies makes those other things moot, and is also a violation of due process. The Trudeau government could have saved itself a lot of trouble by fixing an obvious problem, instead of creating a whole new one.

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