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Michael Wernick, Clerk of the Privy Council, and deputy minister of justice Nathalie Drouin prepare to testify before the Houseof Commons justice committee on Wednesday.Blair Gable/The Globe and Mail

SNC-Lavalin Group Inc. chair Kevin Lynch voiced his frustration to Canada’s top bureaucrat last October about the government’s refusal to negotiate a deferred prosecution agreement, the Commons justice committee heard on Wednesday.

Michael Wernick, the Clerk of the Privy Council, revealed the Oct. 15 call with Mr. Lynch a week after Jody Wilson-Raybould testified that she faced “consistent and sustained” political pressure from Prime Minister Justin Trudeau and top officials when she was attorney-general, including “veiled threats,” to shelve the criminal prosecution of Montreal construction and engineering giant SNC-Lavalin.

Earlier in Wednesday’s hearing, former senior Trudeau aide Gerald Butts denied Ms. Wilson-Raybould was subjected to inappropriate pressure to abandon criminal proceedings against the Montreal company.

The testimony came nearly one month after The Globe and Mail reported on Feb. 7 that officials in the Prime Minister’s Office put pressure on Ms. Wilson-Raybould to reach a negotiated settlement with SNC-Lavalin.

Mr. Butts has since resigned as Mr. Trudeau’s principal secretary, and Ms. Wilson-Raybould and former Treasury Board minister Jane Philpott have quit cabinet. Ms. Philpott, who had no role in the SNC-Lavalin file, stepped down from cabinet this week, citing “serious concerns” about the political pressure exerted on Ms. Wilson-Raybould.

Mr. Wernick said Mr. Lynch, who was clerk of the privy council from 2006 to 2009, wanted to know if more could be done to help the company.

“Mr. Lynch, as the chair of the [SNC-Lavalin] board, expressed his frustration that he did not understand why a [deferred prosecution agreement] was not being considered," Mr. Wernick told MPs. “He knew that the board, in its trustee relationships for the shareholders and the company, was going to have to take some tough decisions in October and November. My recollection of the conversation is that he asked, ‘Isn’t there anything that can be done?' ”

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SNC-Lavalin chairman Kevin Lynch, a former clerk of the privy council under the Harper government, is said to have been frustrated that more couldn’t be done to negotiate a settlement, according to Michael Wernick.Graham Hughes/The Canadian Press

The clerk said he told Mr. Lynch during the call – which lasted less than 10 minutes – that he should take his concerns to Ms. Wilson-Raybould, and the director of public prosecutions, who decided in early September not to negotiate a settlement with SNC-Lavalin. "I told him in the firmest, curtest possible terms, ‘No, he would have to go through the attorney-general and the director of public prosecutions through his counsel.’ ”

Mr. Lynch could not be immediately reached for comment on Wednesday. An SNC-Lavalin spokeswoman said Mr. Lynch had requested a call with the clerk to “inform him” about an Oct. 10 news release the company issued and “to reiterate the sentiment expressed in the company’s statement.” That release informed investors the director of the Public Prosecution Services of Canada had advised SNC it would not be invited to negotiate a deferred prosecution agreement (DPA), and said it remained open and committed to striking such a deal.

If convicted on the corruption and fraud charges it faces, SNC-Lavalin could be banned from bidding on federal contracts for 10 years – a major economic blow.

In a negotiated settlement, a company admits wrongdoing and pays a fine, but avoids a trial. SNC-Lavalin faces one charge of corruption under the Corruption of Foreign Public Officials Act and one count of fraud under the Criminal Code. It is alleged SNC paid millions of dollars in bribes to public officials in Libya between 2001 and 2011 to secure government contracts.

Read former Trudeau aide Gerald Butts’s full opening statement from his testimony on the SNC-Lavalin affair

Yakabuski: Gerald Butts’s master class in taking down an adversary

Mr. Wernick defended this conversation with Mr. Lynch, saying SNC-Lavalin is “not a pariah, it was not improper to have communications with the company.” He said he had planned to mention this call during his previous appearance at the justice committee, but was cut off before he could finish recounting a chronology of events.

Ms. Wilson-Raybould has testified that senior government officials between September and December last year kept returning to the question of the company’s pending criminal prosecution even after she told them her mind was made up and that she supported the director’s decision. The B.C. MP told the committee last week that she informed Mr. Trudeau on Sept. 17 “that I had done my due diligence and had made up my mind on SNC and that I was not going to interfere with the decision of the director."

Mr. Wernick told MPs on Wednesday it was his view that the decision on whether to prosecute SNC-Lavalin could be revisited as new information came to light, including details that could affect the company’s future.

"In her mind, she had made a final decision. In law, the decision was never final, because she could always take into consideration public-interest considerations,” he said.

Mr. Wernick said relevant information continued to surface, including the potential problems facing SNC-Lavalin and the state of its activities in Canada. This included drops in the company’s stock price and what the government was hearing from Quebec Premier François Legault on the matter.

“I firmly believe there were new facts that emerged between September and December,” he said.

“The new facts that emerged, which I believe were public-interest considerations, were the tanking of the share price of the company, making it vulnerable to takeovers, and the communications from the new Premier of Quebec and government of Quebec, which changed the risk calculus around a conviction or not conviction of the company,” he said.

He added that he was afraid of the impact on the company if it was barred from government contracts at home or abroad.

“The options open to the company were a matter of public record,” Mr. Wernick said under questioning from Conservative MP Pierre Poilievre. “It is possible for a company to retain a shell headquarters in a city and move the guts of its operations somewhere else.”

Wednesday was Mr. Wernick’s second time at the committee to discuss the SNC-Lavalin affair. His remarks included commentary on matters outside of the scope of the hearings, including concerns about foreign-based cyberbullying of Canadian politicians, and how he believed people have used social media in attempts to intimidate him, a witness at the committee, since his first appearance last month. Mr. Wernick vigorously rejected allegations that his earlier testimony was pro-Liberal, saying his position as clerk is at the intersection of the bureaucratic and political worlds, but that he never crossed the line into partisanship.

The committee heard on Wednesday that, in late October, the Privy Council Office (PCO), the bureaucratic agency that serves the PMO, called on the Department of Justice to conduct an analysis of the potential impacts on SNC-Lavalin if the prosecution were to result in a criminal conviction. Deputy minister of justice Nathalie Drouin told MPs her officials conducted the analysis, but it was never shared inside the government, and not given to the PCO, at the request of Ms. Wilson-Raybould’s office.

Ms. Drouin said she learned from Ms. Wilson-Raybould’s office that the minister was not keen on pursuing an agreement with SNC-Lavalin on Sept. 11, a week after Justice became aware that the director of public prosecutions, Kathleen Roussel, had decided to continue prosecuting SNC. Ms. Wilson-Raybould confirmed her decision on Sept. 19 in person.

“I clearly recall the former AG said to me this would be the last time we discussed the SNC-Lavalin matter,” Ms. Drouin said.

Mr. Wernick rejected Ms. Wilson-Raybould’s assessment that she was the subject of “veiled threats” during a conversation in December in which the clerk suggested she was on a collision course with Mr. Trudeau over SNC-Lavalin. Ms. Wilson-Raybould had noted this conversation came just weeks before she was demoted to Veterans Affairs, but Mr. Wernick said his comments were only meant to ensure the government could continue to operate in a functional manner.

“I was worried as a secretary to cabinet that frustration was building, that colleagues and the Prime Minister had not been provided an explanation for why the DPA route or option was not being chosen or exercised and why seeking outside counsel to do due diligence on the first use of a DPA was not being chosen. There was building frustration at the time,” Mr. Wernick said.

Mr. Butts told the committee the government had raised the possibility of getting a legal opinion from a legal expert such as the former chief justice of the Supreme Court of Canada, Beverley McLachlin, to analyze the government’s options in dealing with SNC-Lavalin.

Gerald Butts, former top aide to Prime Minister Justin Trudeau, delivered a prepared statement to a committee about the SNC-Lavalin affair Wednesday.

The clerk recommended that the Justice Committee study whether the post of attorney-general should be separated from the minister of justice – as commentators have suggested. “The committee may also want to further explore the potential separation of the attorney-general function with a view to informing Canadians and permitting each party to take a clear position during the imminent election campaign. This is a change that could have consequences, intended and unintended, for decades to come and should not be rushed.”

He also recommended the justice committee develop an all-party report proposing improvements to the law around deferred prosecution agreements. “Your recommendations could be adopted by the House in a single sitting day and become law before the end of this Parliament.”

In his testimony, Mr. Butts disputed Ms. Wilson-Raybould’s account that she was subjected to inappropriate pressure to abandon the prosecution of SNC-Lavalin and suggested her concern about political interference arose only after she was demoted in a January cabinet shuffle.

Mr. Butts, who is one of Mr. Trudeau’s closest friends, told the House of Commons justice committee on Wednesday that Ms. Wilson-Raybould believed she was being removed as justice minister and attorney-general because of her refusal to negotiate an out-of-court settlement with SNC-Lavalin – an accusation he denied.

"I firmly believe that nothing inappropriate occurred here – and that nothing inappropriate was alleged to have occurred until after the cabinet shuffle,” Mr. Butts told MPs.

Mr. Butts took responsibility for some of what has transpired, saying he believes part of what has happened is an erosion of relations between Ms. Wilson-Raybould and Prime Minister Justin Trudeau.

“A breakdown in the relationship between the former attorney-general and the Prime Minister occurred. That breakdown coloured the unrelated events of the fall of 2018 in a negative light for many of the people involved. As the main point of contact in the PMO for the former minister of justice, I take responsibility for it,” he said.

The former aide reiterated much of what Mr. Trudeau and other Liberals have said in their defence, including that Ms. Wilson-Raybould would still be justice minister and attorney-general if a cabinet shuffle sparked by the resignation of Scott Brison as Treasury Board president had not triggered a shuffle. Critics have questioned why Ms. Wilson-Raybould of all the 30-plus members of the Trudeau cabinet needed to be moved.

Mr. Butts said the Prime Minister wanted Ms. Philpott to step into Treasury Board because she had been vice-chair of the board, but that left Indigenous Services vacant.

He said the Liberals offered that ministry to Ms. Wilson-Raybould, which she refused.

“She said she could not do it for the reason that she had spent her life opposed to the Indian Act, and couldn’t be in charge of programs administered under its authority,” Mr. Butts recounted.

Mr. Butts said his advice to the Prime Minister was Ms. Wilson-Raybould still had to be moved because he did not think a minister could veto a shuffle. She ended up with Veteran’s Affairs.

The former aide acknowledged he should have realized Ms. Wilson-Raybould would not want to administer the Indian Act.

“I want to say here, Mr. Chair, that I should have known that and had we had more time to think of the cabinet shuffle, I probably would have realized it,” he told the committee.

Mr. Butts said the Prime Minister’s Office and those working for the PMO were only trying to make sure all legal options were explored to save thousands of SNC-Lavalin jobs.

“When you boil this all down, the only thing we ever asked the attorney-general to do was to get a second opinion. And we also made it clear that she was free to accept that opinion, or not,” Mr. Butts said.

The former aide repeated a line Liberal MPs and Mr. Trudeau employed in recent weeks, saying if Ms. Wilson-Raybould was so concerned about pressure, she should have warned the Prime Minister.

“The attorney-general could have written or spoken to the Prime Minister at any time during this process to say attempts to contact her office on the matter were improper, and they should cease immediately.”

The Liberals used their majority on the Commons justice committee on Wednesday to vote down a motion to recall Ms. Wilson-Raybould to respond to Mr. Butts’ testimony. The Liberals defeated a motion to bring her back even though they voted to recall Mr. Wernick and Ms. Drouin.

Ms. Wilson-Raybould released a statement on Wednesday saying she is willing to offer further testimony.

“I would of course make myself available to the committee if requested to give additional testimony, to answer any further questions and to provide further clarity that may be required. I will note, as I indicated at the time, my statement to the committee was not a complete account but only a detailed summary.”

She noted that the order-in-council the cabinet issued to remove some constraints on her – including cabinet confidentiality and solicitor-client privilege – so she could testify to the justice committee covered only things that occurred when she was attorney-general.

With reports from Bill Curry and Michelle Zilio

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