A Comparison of Scandals: SNC-Lavalin Versus the Extradition of the Huawei CFO
The collapse of the Liberal GovernmentMonths away from an election, with the resignations of Jody Wilson-Raybould (Veterans Affairs Minister), Gerry Butts (Prime Minister's Chief of Staff), and now Jane Philpott (President of Treasury Board), the Liberal Government is collapsing under the weight of the SNC-Lavalin scandal. Is the Government being brought down by the "right" scandal?
Remediation legislation tailor-made for SNC-LavalinIn September, 2018, the Liberal Government passed the "Remediations Agreement" legislation, tailor-made to allow SNC-Lavalin to escape prosecution for bribing public officials in Libya. Although the legislation was an amendment to the Criminal Code, it was passed as a part of a Budget Implementation Act (Bill C-17). No doubt to the surprise and consternation of the Liberal Government, the Public Prosecutors Office decided to proceed with the criminal prosecution of SNC-Lavalin rather than negotiate a "remediation agreement" as permitted by the newly-passed legislation.
The origin of the scandalIn most chronologies the scandal began when Jody Wilson-Raybould had a meeting September 17, 2018, with the Prime Minister and the Clerk of the Privy Council, Michael Wernick, and they raised the economic and political implications of the Public Prosecutor's decision to proceed with criminal charges against SNC Lavalin. However, as law professors Jennifer Quaid and Emilie Taman point out an op-ed in the Financial Post, "Ottawa officials keep pushing myths about 'remediation agreements' amid the SNC-Lavalin scandal," the mess began with the original bill which was rushed through as a budget bill without sufficient consultation, reflection or scrutiny.
"National economic interest" cannot be consideredQuad and Taman confirm that "In the specific context of prosecutions under the Corruption of Foreign Public Officials Act (under which SNC is charged), the national economic interest is explicitly excluded as a relevant factor." In addition, they explain that "The prohibition against taking it [national economic interest] into account is taken from the OECD Convention on Corruption and is designed to prevent countries from favouring local businesses in the enforcement of corruption offences. We would be at odds with our major trading partners if we did not abide by this rule." (The Organisation for Economic Co-operation and Development is made up of 36 member countries including Canada, the USA, the UK, etc.)
Paying bribes on foreign and on Canadian government contractsI remain convinced that the Canadian extradition of the Huawei CFO is a more significant scandal. However, Radio Canada's Enquete episode on SNC-Lavalin has caused me to waiver in my conviction that SNC-Lavalin's crimes are water under the bridge. (There is an intended pun here.) As the episode outlines, SNC-Lavalin established a pattern of paying brides in Libya and Tunisia, then continued the practice in Canada paying bribes, most notably to Dr. Arthur Porter, Director General and CEO of the McGill University Health Center, and Michel Fournier, the Director of the Federal Bridge Corporations responsible for construction on the Jacques Cartiers and Champlain bridges in Montreal.
SNC-Lavalin crimes and punishmentsFourrnier, who had extensive and close ties to the Liberal Party and was appointed to the Federal Bridge Corporation by the Liberal Government, was convicted of accepting 2.3 million dollars in bribes from SNC-Lavalin and sentenced to five and half years in prison--the longest prison sentence yet imposed. However, Fournier is now out of prison having served less than a year of his sentence. Arthur Porter and Yanai Elbaz were charged with receiving 22 million in bribes from SNC-Lavalin. Elbaz pleaded guilty and was sentenced to 39 months; Porter died in Panama before he could be brought to trial. The former CEO of SNC-Lavalin, Pierre Duhaime, pleaded guilty to "helping a public servant commit breach of trust" and was sentenced to 20 months of house arrest. Riadh Ben Aissa, an SNC-Lavalin Executive responsible for construction, pleaded guilty to forgery and money laundering in Switzerland and has been sentenced to 51 months.
There has never been an SNC-Lavalin trialThe culprits have been caught and convicted; why pursue further investigations and another trial? As the investigative journalists of Enquete point out, a number of people have been convicted of receiving bribes from SNC-Lavalin, but no-one from Lavalin has ever been convicted (or charged) with paying a bribe. Where did the money come from? And where has it gone? There has never been an SNC-Lavalin trial. All the felons have negotiated their convictions and sentences, which implies that all the the details, strategies and mechanisms of their crimes remain undisclosed.
Remediation requires that the company comes cleanIn this context we can better understand the Public Prosecutor's determination to go to trial. As Quaid and Taman point out, the protection of employees and stockholders "is not sufficient to justify a RA. There is a good reason for this: In order for RAs to work, they have to focus on promoting compliance, which presupposes that the company is willing and able to admit it acted badly and to change its ways."
How can the prosecutors confirm compliance if they remain in the dark about how the company's illegal activities have operated in the past? As the investigators of Enquete underlined, remediation agreements can easily become "corruption tax" [my translation]: companies pay bribes or commit fraud and when they get caught, under remediation, they pay a fine, which they can easily afford, and this process becomes business as usual.
Is the scandal political, ethical or criminal?How big a scandal is the Liberal Government's attempt to pressure the Ministry of Justice into arranging a remediation agreement for SNC-Lavalin? The political fallout is now obvious. We can easily imagine the scandal costing the Liberals the upcoming election. The Liberals would be more than happy to contain the scandal as an "ethical violation" and accept a slap on the wrist from the Ethics Commissioner. Were the Liberal Government's actions criminal?
The Relationship between the Attorney General and the Director of Public Prosecutions is governed by precise and measured legislation. The purpose of the Public Prosecutor's Office is to ensure the "independence of the prosecution decision-making function from inappropriate political control, direction and influence." On the other hand, the act also gives the Attorney General the power to "issue directives in respect of specific prosecutions" and even "to intervene in proceedings or to assume conduct of prosecutions." Jody Wilson-Raybould had the power to intervene in the SNC-Lavalin case. Her intervention, in itself, would have been "extraordinary" (a first, in fact, as pointed out in the Justice Committee hearings) but it would not have been criminal. However, had she intervened, the reasons being suggested for her intervention would have made her actions illegal and criminal.
If she had intervened for economic reasons she would have been acting in contradiction to the law governing Remediation Agreements which clearly states that "national economic interests" cannot be considered. If she intervened for political reasons, to save votes in Quebec, she would have been contravening the act which established the Public Prosecutors Office. In other words, if she had succumbed to the pressure, she and the Liberal Government would have been guilty of criminal acts--contraventions of both the Remediations Agreements act and Public Prosecutions act. The Liberal Government should be grateful for her stalwart defense of the law and preventing them from committing criminal acts.
How Gerry Butts avoided answering Justice Committee questionsListening to Gerry Butts before the Justice Committee, I was struck by how he invoked "not wanting to caste aspersions," "not going to answer hypotheticals," and "not being a lawyer" with such frequency that his two and a half hours of testimony resulted in very little substance. His rebuttal of Wilson-Raybould's detailed testimony was largely about character; in the vein of "I'm a good person, so I wouldn't say or do that;" "they are good people, so trust me, they wouldn't say that"--which he used to dodge every single question about whether a Wilson-Raybould claim was true or false.
"National economic interests": finally the question gets asked!As I predicted in my previous post, his reiterated and often emotional justification for the government actions (meaning the pressure they put on Wilson-Raybould, but didn't really put on her) was 9,000 jobs--exactly the argument which the Public Prosecutor was not allowed to consider according to the Remediations Agreement law. Surprisingly no-one on the Justice Committee raised the problem of this contradiction, even though Conservative MP Michel Rempel raised exactly this point in the House of Commons. Does this absence of Conservative comment in the Justice Committee mean that a Conservative Government might be planning to offer SNC-Lavalin a Remediation Agreement if elected in six months?
Only Erin Weir, the Saskatchewan MP from the Co-operative Commonwealth Federation (CCF), asked a question which came close to exposing the contradiction between Butt's liberal mantra of 9000 jobs and the letter of the Remediations Agreement law. Unfortunately, Weir misidentified the law as a DPA (deferred prosecution agreement) and was himself misidentified by CBC as an NDP MP. Gerald Butts was able to sidestep the question.
It took another two and a half hours in the afternoon of the committee hearings before Charlie Angus of the NDP and Elizabeth May, Leader of the Green Party, raised the question, one after the other, of the provision within the Remediation Agreement legislation that "national economic interests" were not to be considered. (I am delighted to report that within two hours of the hearings the National Post picked up on exactly the argument I would make.) In response, Michael Wernick showed that he was very familiar with the expression "national economic interest," mumbling that "if you consult a lawyer they might have a different interpretation" then offered that the "public interest" of 9000 jobs was somehow different from "national economic interest." The second time the question was asked, Wernick brusquely replied that this paragraph was "cut-and-paste from OECD regulations," conceding how haphazardly the Canadian legislation was put together, that he himself wasn't certain how the law should be interpreted even though he was adamant the "9000 Canadian jobs argument" was acceptable, and since we just copied it into our Criminal Code, it really doesn't count, right?