SNC-Lavalin – Law and Ethics

There are many evaluations and many points of view on the SNC-Lavalin Affair in Canada. This is mine. But I cannot help noting that neither mine, nor that of anyone else focused on the issue, matters a great deal to the ordinary Canadian, whomever that person is. However, it is certainly a focus of concern and analysis for the chattering classes. As observed below, currently the issue also matters to enough people, possibly to swing the next election. Therefore, it is important to understand and evaluate what has taken place.

I will deal with the affair in a series of blogs to offer a reasonably thorough analysis so that these writings can also be used as a reference. As currently planned, the blogs will cover:

  1. SNC-Lavalin, law and Ethics – an Introduction (this blog)
  2. Jody Wilson Raybould (JWR)
  3. The Government’s Defence
  4. Issues:

a) The Possible Deferred Prosecution Agreement (DPA)

b) Intervention, Pressure or Inappropriateness

c) Motivations

d) Resignations

    5. Media Coverage

    6. Political Implications

David Coletto and Bruce Anderson of ABACUS Data polled Canadians regularly over the course of the controversy as it initially unfolded, first prior to The Globe and Mail story on 5 February 2019, then just prior to Jody Wilson-Raybauld’s resignation from cabinet on 26 February 2019, and then followed by rolling 3-day surveys from 28 February to 4 March 2019. What were the results? Were Canadians following the issue and did they believe the Prime Minister should resign?

Roughly, Liberal support dropped over the period by 3%, virtually all of that drop in the first phase of the “scandal.” PC strength grew by the same amount so that the party ended up with the largest lead of 6% that it has had over the current Liberal government. The Green Party increased in strength, largely at the expense of the NDP, but again only in the first phase of the scandal. It is not at all clear what this shift had to do with the affair.

The shift towards the Conservatives has largely taken place in Ontario and the three provinces from Manitoba to Alberta. The bigger news, perhaps, is that support for Justin Trudeau dropped far more than support for the Liberals, approvals declining 11% from December to the end of the first week in March; disapprovals rose 8%.  The meagre good news for the Liberals – over the period, Andrew Scheer has consistently polled below that of Justin Trudeau, except that Justin lost sufficient support to leave him only marginally ahead of Andrew Scheer.

One might conclude that the SNC-Lavalin Affair did have an impact on voters, but a deeper probe suggests that this was more because Trudeau’s reputation was further tarnished, not, in my estimation, from the substantial issues at stake, but because Justin’s political image was damaged by the discussion, either because of the way the Liberals handled the issue or because of the substance or both. I suggest that the problem lay in the way the “scandal” was handled. 40% of Canadians, tuned into the issue to some degree. That in itself is revealing.  

Bruce Anderson concluded that, “a substantial enough number of people have been following the SNC-Lavalin question, and the narrative they have been exposed to, has shaken up the political landscape, and created opportunities for the Conservatives and greater risks for the Liberal Party,” but no conclusions can be drawn about the impact on the October election, eons away by any political measure. However, the increased risk to the Liberals is evident in David Coletto’s observation that, “More people now have a negative view of the Prime Minister than a positive one – the first time since last March that our surveys have found this.”

I do not believe my analysis will have any significant impact on such polls. I believe the results are products largely of impressions rather than analysis, though I have generally found the coverage in The Globe and Mail, the newspaper that originally broke the story, to be generally very good, I believe a more comprehensive analysis is required. I will draw my own conclusions and share them with you.

In today’s blog, I focus on SNC-Lavalin itself. What is the extent of SNC-Lavalin’s use of bribery in obtaining business in Libya and what is its significance? Has there been a record of domestic corruption? Have SNC- Lavalin personnel, such as former CEO Pierre Duhaime, benefited from such corruption?

The last is easiest to answer. On 1 February 2019, Duhaime “pleaded guilty to a charge of helping a public servant commit breach of trust for his role in a bribery scandal linked to the construction of a $1.3 billion Montreal hospital.” SNC-Lavalin had been accused of defrauding the McGill University Hospital Centre (MUHC) of $22.5 million in a bid-rigging scam ensuring SNC would win the contract. The bribery scandal received a great deal of notoriety over the role of Arthur Porter, the former head of MUHC, who allegedly benefitted personally from the fraud, but he was never brought to trial and in 2015 died of lung cancer in Panama to which he had fled when the scandal broke.

In 2010, a Quebec consortium won the $1.3 billion contract both to design and build the McGill University Health Centre’s Glen Site, and, as well, maintain it until 2044. SNC-Lavalin was part of that consortium. When Duhaime was arrested in what was called “the biggest fraud and corruption investigation in Canadian history,” he was charged with ordering the secret payments to a shell company to win the contract. However, in the plea bargain, fourteen charges were dropped and Duhaime pleaded guilty to one, his failure to investigate when an employee informed him of the allegation. Further, prosecutors assented to including in the Agreed Statement of Facts that Duhaime did not know about or authorize the bribes.

A month before Duhaine’s resignation as CEO seven years ago in 2012, top executives, Vice-President Riadh Ben Aïssa and financial controller Stéphane Roy, resigned. On 10 July 2018, Aïssa pleaded guilty to the charge of using forged documents and was given one day prison time in addition to the time already served in prison and the three years that he was required to wear a tracking device after he was arrested in Switzerland and extradited to Canada. The prosecution agreed that Aïssa never personally benefitted from the scam even though he lived the high life as a top executive of SNC-Lavalin. Fifteen other charges had been dropped. At the same time as Aïssa was convicted, in a separate trial, Roy was acquitted of the two charges against him, fraud and using forged documents.

The underlying issue in the criminal investigation is not just SNC-Lavalin’s charges for fraud and corruption in connection with the alleged nearly $48 million in payments made to Libyan government officials between 2001 and 2011, less than $5 million a year, but the effect of the culture of corruption that infected the company in its overseas dealings on the domestic situation in Canada over the same period. Aïssa was closely tied in with Saadi Gaddafi, the third son of the former dictator, Muammar Gaddafi. Saadi was responsible for dealing with patronage. In return for awarding the contract to SNC-Lavalin, Aïssa arranged that 21.5 million euros and US$21.9 million be deposited into Swiss bank accounts controlled by Saadi Gadaffi.

I became familiar with SNC-Lavalin’s connection to Libya a few years ago in the course of other research I was conducting. I first became acquainted with Mexican intelligence discovery of efforts to smuggle Saadi to Mexico in the course of which I came across a number of electronic documents about the location of the over US$100 billion stolen by the Gadaffis from the Libyan people. Now that Muammar had been trapped and killed by Libyans and Saadi in March 2014 was extradited to Libya from Niger to stand trial for murder, but was acquitted, the question was where the loot had gone and who controlled it. I traced the funds to South Africa. Though it was not yet clear to me who now controlled the money and where it was, two Israeli billionaires and the Mossad seemed to be involved.

The evidence for that involvement was included in a blog a few years ago. Two of the planned series went out and when I was writing the third one early in the morning in Mexico, my screen went all fuzzy. I could not reboot my laptop. I did not know what I had done and took the computer in for repairs and, at worst, to recover the documents and data I had collected. There was evidently no possibility of either. The computer had been totally destroyed electronically. Neither the software nor the contents were recoverable. The computer expert said that he had never seen anything like the damage done. Lacking the documentation, I discontinued my writing on the missing Libyan money.  

Many however have been critical of the results of how the perpetrators of theses criminal activities get off virtually scot free and want the SNC-Lavalin charges re Libya to go to trial, not only to see the effects of corporate bribery in maintaining and enabling bloody dictators in states such as Libya, especially at a time when dictatorships are on the march around the world, but to throw light on the company’s culture of corruption.  

On the other hand, Conrad Black argues that, “Companies have to disgorge funds sometimes but they don’t commit crimes; people do, and everybody, especially in such a woolly state of affairs as this, deserves a presumption of absence of guilt. And if executives are fairly judged to have committed crimes, they face the sentences but the company continues in the hands of people with better judgment and ethics.

“SNC-Lavalin has had its ups and downs, but it is a legitimate Canadian international business success story and should not be summarily castigated as financially and ethically bankrupt (my italics) on allegations as flimsy and unsourced as these. Nor, as a country, should we be in the business of trying to drive a large and successful company into the hands of the receiver. The receivers are a bigger gang of crooks than any corrupt executives in this country going back to the CPR scandal of 1873.”

Companies do not commit crimes!!! The law says they can and do. Corporations, though not natural persons, are legal persons and can be held liable for offences committed by its personnel. Canada now has laws on the books that make is a statutory offence when a company bribes officials overseas so that there is a liability attached to the corporation, either as the principal or joint principal with a natural human agent.

The issue is not whether SNC is a legitimate corporation. It is. Nor can one determine whether the evidence behind the allegations is flimsy or not until the issue comes to trial or the investigators agree on a plea bargain. Black, however, is correct; corporate corruption and the corruption of individual agents in such corporations are difficult to prove in a court of law. Hence, the use of plea bargains.  However, the Canadian Corruption of Foreign Public Officials Act clearly and unequivocally makes it illegal for a Canadian company or its officers to use financial favours to obtain contracts.

A more general response encouraging indulgence is that this is the way the world works. If Canadian companies want to get contracts in the Third World, they have to pay bribes. This is all business as usual. It is the way the world works.

However, as indicated above, if Canada, if Canadians, if Canadian companies beget and are complicit in such crimes overseas, the cost is born by ordinary people. Further, the culture of criminality spreads to Canada. The result is a loss of faith in our financial and political institutions that end up eroding democracy and creating space for dictators to arise promising to clean up the swamp but, in reality, doing so usually be creating their own larger swamp.

That is why this issue is central to the heart of democracy. Did our highest elected officials conspire to get a Canadian company off the hook when it was accused of paying such bribes? The issue is a legal one. The issue is an ethical one. The issue is a political one beyond the cossetting and enabling role in abetting overseas dictators to rob their own people, but the rot spreads domestically to Canada. Perhaps, even more ominously, the rot strengthens authoritarianism everywhere.

Thus, the issue of whether the government suborned its own laws to get SNC-Lavalin off the hook through the use of a deferred prosecution agreement (DPA) is critical to the health of Canadian democracy. Did Justin Trudeau instruct or pressure Canada’s Attorney General to provide SNC-Lavalin with an escape hatch for criminal responsibility?

2 comments on “SNC-Lavalin – Law and Ethics

  1. Cornelia Baines says:

    Cornelia J. Baines MD, MSc, FACE Professor Emerita, Dalla Lana Faculty of Public Health, 155 College St, Suite 576, University of Toronto, Toronto, Ontario, M5R 1G6. Phone: 416-978-1458 Fax: 416-978-2087

    ________________________________________

  2. Cornelia Baines says:

    This is weird – normally I get double blogs – one just normal email formatting and the other comes later all nicely formatted. Today I did not get the plain one – just the fancy one. Let us do no more and see what happens tomorrow…I certainly do not have to receive doubles but it meant Andrew sent me the one that arrived in the morning and the second one arrive in my inbox at 4.37.

    Cornelia J. Baines MD, MSc, FACE Professor Emerita, Dalla Lana Faculty of Public Health, 155 College St, Suite 576, University of Toronto, Toronto, Ontario, M5R 1G6. Phone: 416-978-1458 Fax: 416-978-2087

    ________________________________________

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