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Duff Conacher on Corruption in Canada

When running for Prime Minister in 2015, the Liberal Party’s Justin Trudeau promised honest government. And he won.

Duff Conacher
Democracy Watch
Ottawa, Ontario
Canada

Now Trudeau is embroiled in a corruption scandal that reeks of  dishonesty.

At the center of the controversy – SNC-Lavalin – a giant Canadian construction firm. The company was charged in 2015 with bribery in Libya. It wanted to avoid a full blown criminal prosecution, so it joined with business lobbies and got passed a deferred prosecution law. It then sought to pressure the government to deliver a deferred prosecution in the case against it.

One problem – the Attorney General, Jody Wilson-Raybould, said no. No deferred prosecution agreement. And she eventually resigned from the cabinet.

Elections are in October. And a corporate crime scandal is threatening to bring down the Liberal government.

Duff Conacher is co-founder of Democracy Watch, Canada’s leading democratic reform and corporate responsibility organization.

Last month, Democracy Watch wrote to the federal Conflict of Interest and Ethics Commissioner Mario Dion calling on him to delegate an inquiry into whether Prime Minister Trudeau or anyone in the PMO violated the federal government ethics law by trying to pressure Attorney General Jody Wilson-Raybould to intervene and stop the prosecution of SNC-Lavalin by the Public Prosecution Service of Canada (PPSC).

“Ethics Commissioner Dion should delegate the investigation and ruling on the situation to a provincial ethics commissioner who has no ties to any federal party, given that he was chosen by the Trudeau Cabinet after a secretive, Cabinet controlled process that failed to consult with opposition parties as required by the Parliament of Canada Act,” Conacher wrote. “Dion also has a record eight unethical and questionable actions when he was federal Integrity Commissioner.”

What is the deadline for the Ethics Commissioner’s report?

“There will be a lot of pressure on the Commissioner to rule before the election,” Conacher told Corporate Crime Reporter in an interview last week. “This guy has a clear appearance of bias. That’s the kind of person who participates in a cover-up. And we can’t afford a cover-up in this situation. Voters have a right to know before they vote in October”.

What do we know about the new Attorney General David Lametti?

“He comes out of Montreal. He stood up in the House of Commons right when the first charges were made and said – nothing was done that was wrong. He didn’t know what the communications were with the former Attorney General. The fact that he would stand up in the House and essentially repeat the Prime Minister’s line shows that he has been installed there very clearly to do the job of excusing all of this and likely letting SNC-Lavalin off the hook with stepping in and stopping the prosecution in the way the former Attorney General wouldn’t.”

One possibility is that the new Attorney General would intervene to block the prosecution of SNC-Lavalin. But that seems a remote possibility given the upcoming election. What’s a more likely possibility?

“A more likely possibility is that the government does what it probably should have done. And that is reduce the penalty for being convicted in Canada. The current penalty is an automatic ten year ban to be able to bid on federal government contracts.”

“Federal government contracts are a significant part of SNC-Lavalin’s contracts. I wouldn’t be surprised if after this next election, they reduce the penalty, make it a sliding scale with discretion allowed based on whether the company has cleaned itself up internally. And SNC-Lavalin will end up facing a one year penalty. And during that one year, the federal government won’t offer any contracts that SNC-Lavalin would bid on. And the result would effectively be a zero penalty.”

It’s unclear whether even a ten-year ban on Canadian contracts would be a death penalty to SNC-Lavalin.

“They are facing a ten year ban on World Bank contracts due to bribery in Bangladesh. But if the federal Liberals when they were elected in 2015 had changed the penalty, SNC-Lavalin would have been fine. And the political costs would have been far less. There would have been some media stories, but it wouldn’t have involved obstructing justice. Why they didn’t do it I don’t know. Probably because they thought the Attorney General would roll over because most Attorneys General in the past would. They owe their jobs to the Prime Minister. The Prime Minister could kick them out of cabinet or shift them to another cabinet position if they didn’t do as they were told. Most of them roll over because they like being in cabinet and they want to protect their government and do what the Prime Minister says. They ran into an Attorney General who wouldn’t do that. I guess it probably surprised them.”

“But it’s pretty hard to stop the prosecution now. The political costs would be enormous.”

The best outcome from your point of view is criminal prosecution with reduced penalties?

“From my point of view no. But from the Liberals point of view.”

Would a ten year ban threaten the corporation with collateral consequences – thousands of jobs, loss to innocent shareholders?

“All of this starts with a realistic attitude to what is going on in lots of countries. You don’t get the rights to do business in a whole bunch of countries unless you bribe. If every country in the world with its multinational corporations goes after them for bribery, that works to stop it. But if you have one big country, which I believe we do with China, not stopping its companies from bribing, other companies from other countries are in a bad position. And correct me if I’m wrong, but I believe that the U.S. has prosecuted mostly foreign multinationals. And Canadian police so far, although we are way beyond other countries in these prosecutions, have gone after Canadian based multinationals.”

What’s the answer?

“If a company fully cooperates, gets rid of the executives, changes the board, agrees to independent oversight, usually the shareholders take a hit anyway. Then you can have a sliding scale of one to ten years of no contracts. But the company has to essentially agree to be almost nationalized in terms of the force of the regulations and inspections and audits that are fully independent, regular and random and will continue forever. Otherwise it is letting them off the hook. The executives have to be prosecuted. The company has to cooperate. That’s how you have to do it.”

“And if you put those companies under that kind of scrutiny, they will not do business in those foreign countries. They will not win any business or contracts from some governments. I don’t know how you clean up the international problem. You have to do what you can. It’s a bad reality internationally. We are not stopping this. We are just shifting the bribery to the companies that come from countries like China.”

In her testimony, Jody Wilson-Raybould was asked her view on deferred prosecution agreements generally. And she said she couldn’t comment because there was a case in the courts.

“What is before the courts is whether the discretion exercised by the Public Prosecution Service was properly exercised in this case. The rule up here is that prosecutors can decide things the way they want. They choose how to apply the prosecution policy. It’s their exercise of discretion and therefore the courts cannot intervene unless it’s a malicious prosecution. And SNC-Lavalin has a high hurdle to prove it’s a malicious prosecution given that they were bribing government officials in Libya and that is what they are being prosecuted for.”

“Jody Wilson-Raybould testified that her default stance was – independent prosecutions are important. We have the director of Public Prosecutions Service, and my default stance is – I will never intervene because that would be political, especially in a situation where I’m being pressured. And we know that SNC-Lavalin was lobbying really hard.”

“If they hadn’t pressured her, she may have intervened and stopped it. She may have felt that she wasn’t giving into inappropriate pressure. They really blew it in every way. And all they had to do was change the penalty back in 2016 when the charges were first coming out against SNC-Lavalin.”

But they wanted the American system which is  – no guilty plea. Corporations don’t want the stigma. They will pay the fine. But they don’t want the stigma.

“That’s true. Plus a guilty plea would renew the ten year World Bank ban.”

[For the complete Interview with Duff Conacher, see 33 Corporate Crime Reporter 10(11), Monday March 11, 2019, print edition only.]

 

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