Sunday, March 10, 2019

Thinking About SNC-Lavalin

The whole SNC-Lavalin business is a mess.  It contains a nasty combination of commercial, criminal, and political matters that need to be teased apart to make any sense of it.

Before I go into this in any depth, I want to be absolutely clear here:  I do not believe that the Liberal government has handled this situation well at all, nor am I here to defend the actions of any singular party.  This post is mostly an attempt to tease apart the various threads of the matter so that I can make sense of it all.

SNC-Lavalin Libya History

The current scandal is largely related to bribery activities that SNC-Lavalin is accused of carrying out in Libya in the early 2000s, although it is far from the first time that SNC-Lavalin has been accused of criminal wrongdoing.  Further, SNC-Lavalin's participation in large government contracts has often taken on a rotten air. So, in many respects, SNC-Lavalin is seen by the public in the same light we might view any other serial offender - not exactly the most sympathetic of figures on the public stage.

We would be remiss if we didn't review a few facts about the size and scope of SNC-Lavalin's operations.  This is a multinational corporation with operations around the world employing a claimed 52,000 employees.  It does business in places that many of us would be at a loss to even begin navigating the environment.  Not all countries use the same rules of commerce that govern how Canada, the US, UK, Australia and Europe do.  Often times, practices that are in fact criminal offences here are "normal business" elsewhere.

I remember when a former employer I worked with was first branching out into international work, and had the rather rude surprise of having to "navigate" the very real differences in how other cultures and nations conduct business.  There were definitely times that the company made decisions which were to North American eyes suspect.  To some extent, it bears considering this point when thinking about SNC-Lavalin's conduct.  I may not like the conduct of the company in Libya, but there are likely cultural and political factors in play that SNC-Lavalin would have to consider if it were to conduct business in that country.

The idea of bribing public officials is intrinsically distasteful to most anglophone Canadians because we are brought up in a culture which perceives bribery as corrupt.  That doesn't mean however, that "our shit doesn't stink".  In Alberta, we have politicians like Jason Kenney meeting with car dealers and seemingly receiving large donations to an affiliated PAC in exchange for promises - hardly a shining example of honest dealing on either party's part.  

The legal mess around the Libya affair appears to have first blown up around 2011/2012, and has been fermenting ever since with criminal charges laid against the company in 2015.  Here we are four years later in 2019 and the legal case continues, having yet to make its way before the courts in any significant sense.  Given the consequences of being found criminally liable to the company, it comes as little surprise that the organization has pulled out "all the stops" to fight the criminal proceedings.  As others have pointed out, criminal convictions against corporations end up creating punishments for people who are miles away from being directly involved in the crimes the company is accused of.

Should SNC-Lavalin face criminal proceedings?  That's a different question when we are talking about a corporation than if we are talking about individual citizens.  I'll come back to this question in my closing notes.

The Political Debacle

If there is one thing the Trudeau government has failed at, it really has been situation management.  From the outset, every misstep made within this government has been bungled from a damage control perspective.  The government has, eventually, ended up doing the right thing in most cases but not before being dragged through the mud several times.  Depending on where you sit regarding Justin Trudeau, this is seen as either incompetence on his part by those who dislike Trudeau personally, or as a failure of his advisors by those are more sympathetic to Justin Trudeau.  

It seems that the whole affair started to escalate in the fall of 2018 after Bill C-74 finally received royal assent.  Why the government chose to put the DPA legislation into the Budget Implementation bill remains a puzzle to me.  It is a significant set of amendments to Canada's Criminal Code, as well as legislation related to corporate corruption, and does not seem essential to the budget bill itself.  It remains my opinion that this bill should have been introduced as a separate piece of legislation.  However, at that point in time, it appears that while the Attorney-General's offices (and within that, the Director of Public Prosecutions) were moving forward with decision making on the SNC-Lavalin case, SNC-Lavalin was ramping up its lobbying efforts to pursue a DPA (or "Remediation Agreement" (RA) as the legislation calls it).  

As a timeline published on iPolitics shows, the AG's office came under an intense amount of pressure from the PMO during October and November of 2018.  

There are two aspects of the political debacle that need to be considered.  Was the pressure being applied from the PMO offside being the first aspect.  The second aspect being some inconsistencies in the narratives and behaviours of the players.  

PMO Pressure

The pressures involved from the PMO seems to largely boil down to asking the Attorney General to add some fiscal and ultimately electoral considerations to the deliberations over how to proceed with the SNC-Lavalin file.  In itself, given that the government's responsibility is to ensure that it governs in the public interest, bringing the potential impacts of a criminal conviction on people who work for SNC-Lavalin (directly or otherwise) is not unreasonable.  One might consider the steady stream of people contacting the Attorney General through one avenue or another to be unreasonable.  That said, even in her own testimony on the matter, Judy Wilson-Raybould stated that it did not enter into the realm of criminal interference.  Further, her own actions on the matter suggest that the pressure, while high, did not cross the lines of traditional boundaries like the Shawcross Doctrine.  

The optics of the PMO's pressure are terrible.  Regardless of the intent of the PMO in this matter, they screwed up monumentally.  Not in the intent of their actions, but rather in the way they went about executing them.  (as is so often the case in politics, even good intentions can rapidly turn into disasters when optics are not properly considered).  

I don't think it's any great leap to assume that the introduction of RAs in the 2018 budget legislation was intended to create a "get out of jail soon card" for a government concerned about a 2019 election cycle where seats in Quebec are clearly "up for grabs".  SNC-Lavalin is an important feature in Quebec, and I don't doubt for a moment that there are more than a few votes associated with it.  

Contrasting Stories

We have two major versions of events on the table.  The first being Ms. Wilson-Raybould's perspective as laid out in her testimony to the parliamentary justice committee.  The second comes to us in the form of Mr. Butts' subsequent testimony to the same committee.  

Between the two versions of the story, what I see is an ambiguity in the signalling between the two offices.  On one hand, the PMO appears to understand the subject to still be an open discussion, and on the other hand, we have an Attorney General who seems to have both "made a decision" and "still be doing due diligence", the latter implying that the decision was not yet firm.  

There is no doubt that as a political operative, Mr. Butts has a considerably different perspective on these matters than Ms. Wilson-Raybould would in her role as Attorney General.  Mr. Butts' job is unequivocally political in nature and as such it makes sense that his calculations on the matter include partisan interests.  However, Ms. Wilson-Raybould is in an equally tenuous place because she wears two hats (3 if you include her role as MP), and only the AG role is specifically non-partisan (in theory).  So, I think we can reasonably include some political consideration on Ms. Wilson-Raybould's part as well, although her own testimony on the matter is somewhat vague (disturbingly so for me).  

Mr. Butts' testimony lends some credence to the suspicion that from SNC-Lavalin's perspective, the option to pursue an RA agreement remains open up to, and including the day that a trial begins.  This is understandable given the legal complexity of the case, and the fact that even plea bargain arrangements are often reached right up to the early stages of trial in other matters.  No doubt, the legal complexity of this case is such that the trial itself, when it does happen, will be enormously complex in the terms of its testimony and other factors.  

Things That Don't Add Up

Ever since this situation erupted, I have felt that we are not getting the full picture.  There are aspects of all of it that simply do not make a great deal of sense.  I am going to enumerate them here.

PMO

1.  The denial on Mr. Butts' part (and the rest of the PMO) that no pressure was being exerted on the Attorney General.  This just doesn't make sense to me, outside of the concept of pressure in politics taking on a very different meaning than most people would use.  

2.  Why lie about it at all?  If the RA structure was created in part to deal with the consequences of a potentially damaging trial involving SNC-Lavalin, it's not really difficult to say that the complexity and cost of a trial exceed the benefits of trying the company as a whole, so why not get the company to be an active participant in the prosecution of the people who enacted the scheme?  

3.  Is Justin Trudeau's seat specifically threatened by what might befall SNC-Lavalin should it go to court?  

Jody Wilson-Raybould

There are more serious questions for Ms. Wilson-Raybould.  

1.  Why on earth would you tell your deputy minister to sit on a report that the Privy Council Office (PCO) had requested?  


In other matters, such things might be normal practice, but given the high priority of this file in the AG's office and its visibility to other parts of the government, the decision not to forward the report is very questionable judgment and leaves an outside observer with the impression that another game was afoot by October.  

2.  If the decision on SNC-Lavalin was in fact solidified in September, then it becomes very important to ask why the AG, in her official capacity, did not provide the PMO with a clear statement on her decision?  It appears that she did not do so, and as a result, the PMO pressure continued to get her to consider more aspects of the situation.  

Analysis

Starting off with SNC-Lavalin's role in all of this, I am less inclined to find fault with their behaviour.  From the company's perspective, a trial and conviction is an "all-or-nothing" proposition.  If they don't win in court, they lose a big chunk of their business; if they do win, then an awful lot of lawsuits currently whirling around the dismissal of various members of the organization will become a whole lot more dangerous for the company.  An RA would mitigate both risks considerably, and would provide a measure of commercial surety (which is all that a business is really interested in in the first place).  

The partisan political equations are much more complicated.  With the NDP currently tanking in Quebec under Singh's leadership, and support for Trudeau waning in both Ontario and BC, the Liberals clearly see making gains in Quebec as a significant portion of their electoral strategy.  So, anything that would shore up support in that province will be seen as a positive in an election year. Conversely, the Conservatives - and the NDP - both see gains to be had.  The CPC in Ontario, hoping to build on Ford's election victory by going after Trudeau and making him out to be inconsistent and dishonest (which, frankly he has been).  The NDP, fresh from Singh's victory in Burnaby South may be hoping to make similar gains in the Lower Mainland which may stem some of the expected losses in Quebec.  

The PMO's game is obvious at this point - to ensure the Liberal Party's victory in this fall's election.  Clumsy as they have been, their actions are largely consistent with minimizing the damage that the scandal will do.  

Of more immediate interest are the game plans of Ms. Wilson-Raybould (and now Ms. Philpott).  I don't see either of them staying in the LPC caucus long term.  Particularly troubling is Wilson-Raybould, who is rumoured to be a figure of some division in caucus.  Trudeau can't leave her unaddressed for very long.  She will inevitably become a figure of division and polarization in the party and caucus.  Her game plan has not yet been revealed.  If she has designs on the LPC leadership, her approach to date is more reminiscent of the Chretien-Martin feuds of the 90s, which tore the party to pieces.  I'm not sure that's it.  

However, among the pieces floating out there for speculation are why she seems to have left so much of her mandate letter unaddressed since 2015, like undoing the mandatory minimum sentences that Harper created during his tenure.  Does that imply that she tacitly agrees with Harper's approach to justice?  I have suspicions that we will see Ms. Wilson-Raybould make a floor crossing either just before the next election, or just after voting day, depending on whether she thinks she can hold her seat.





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