SNC-Lavalin Group Inc. not only vowed to defend itself against the fraud and corruption charges levelled against the company on Thursday, it took a swipe at Canadian prosecutors for refusing to enter into a controversial type of settlement deal common in the United States.
The Montreal-based engineering giant issued a defiant press release on Thursday that said companies facing corruption allegations in the U.S. and Britain "benefit from a different approach that has been effectively used in the public interest to resolve similar matters while balancing accountability and securing the employment, economic and other benefits of businesses."
A key stumbling block in the company's talks with prosecutors on a settlement may have been what legal experts say is Canada's refusal to use "deferred prosecution agreements" and "non-prosecution agreements," which have long been standard practice in Washington's much more aggressive pursuit of companies who pay bribes. Britain has also recently adopted a similar policy.
These deals, often announced with the fanfare of a full-blown conviction, allow prosecutors to extract multimillion-dollar fines from companies facing bribery allegations. But they spare the firms a further reputation-damaging trial or an actual guilty plea that could see them fall afoul of policies that ban convicted firms from bidding on government contracts. Essentially, prosecutors agree not to pursue charges against the company, provided the firm has co-operated and brought in new measures to stop any future corruption.
For example, while French giant Alstom SA pleaded guilty late last year and agreed to pay $772-million (U.S.) after an American bribery probe, two of its U.S.-based subsidiaries, Alstom Power Inc. and Alstom Grid Inc., were able to make deferred prosecution agreements with the U.S. Department of Justice.
The rationale for such deals is exactly the one SNC-Lavalin raises in its statement: Punishing a company with a crippling ban on getting government work means hurting innocent employees and shareholders who had nothing to do with alleged bribes.
Some say Canada needs to consider offering this kind of deal, particularly because unlike in other countries, companies convicted of crimes anywhere in the world face a strict 10-year ban on winning Canadian government contracts – a policy business groups have been vigorously arguing should be softened.
Even one of the world's top authorities on anti-corruption, Swiss law professor Mark Pieth, says Canada should develop procedures similar to those used in the U.S. to allow more flexibility in resolving corruption cases.
"They better develop that system because otherwise you are really pushing yourself into an awkward situation," he said in an interview. "You can't punish because you are afraid of hurting [companies]. I am a bit astonished because you are very close to the U.S. and then of course the Brits have moved quite a bit in the direction of settlements."
But the U.S. practice has also been widely criticized. Law professor Mike Koehler of Southern Illinois University in Carbondale, Ill., runs a blog on anti-corruption issues and questions the practice of extracting huge fines without ever having to prove a case in court.
He said SNC-Lavalin's statement about U.S. and British practices was surprising: "It's basically like a child being punished and the child saying 'Well, gee, Johnny's parents do things a little bit differently, why can't I benefit from that?'"
But he praised Canadian prosecutors for bringing a case they may have to prove in court: "Kudos to Canada for continuing to do things the old-fashioned way, and that is charge, or do not charge. … To anyone who values the rule of law, that's important when the government has to prove something. That really doesn't happen here in the United States any more."