The Director of Public Prosecutions (DPP) has the responsibility for determining whether a corporation (a partnership or an unincorporated entity) should be offered a Deferred Prosecution Agreement (DPA). The DPP has the benefit of the full police investigation, other court records, documents and witness interviews, including material that may never be publicly disclosed, that enable her to draw her conclusion. The public has no such access so I will not even try to second guess whether the DPP’s decision not to offer a DPA to SNC-Lavalin was a reasonable one.
A DPA cannot be offered to an individual, only to an artificial person for which any sanction would be financial. Like any plea bargain, the possibility and terms of a DPA negotiated between the accused and the prosecutor are subject to court approval. The DPA must “be in the interests of justice.” Its terms must be fair, reasonable and proportionate. Reasons must be given for declining a DPA. If a court does not approve a DPA, the possibility of prosecution is not jeopardized because the DPA terms are not yet public.
The SNC-Lavalin affair never came nearly that far since the DPP refused to negotiate a DPA and Attorney General (AG) Jody Wilson-Raybound (JWR) refused to intervene in the decision. JWR reviewed the DPP’s decision and concluded that she would be wrong to intervene. That is virtually all we know about why the AG declined to overturn the decision of Kathleen Roussel, Canada’s DPP, to proceed to trial.
The only substantive complaint that’s been made over this whole supposed “scandal” seems to be that the AG was not sufficiently persuaded by concerns about job losses to overturn the professional opinion of Canada’s most senior prosecutor. Further, it is helpful to keep in mind the OECD anti-bribery framework to which Canada has long been a signatory. Our legislation, including DPAs, is modeled on that framework. We also have a record of the criminal activities for which SNC-Lavalin has been convicted.
We do know the following. SNC-Lavalin has been guilty of the following overseas infractions and has:
- been banned from bidding on Asian Development Bank projects because SNC fabricated qualifications and documents (2004);
- agreed to a settlement with the African Development Bank over corruption allegations because of bribes in Mozambique (2008) and Uganda (2010);
- determined by the World Bank as having credibly participated in high-level corruption in Bangladesh in 2009-2010;
- entered into a voluntary debarment from World Bank-financed projects.
Within Canada, SNC-Lavalin has been found to have
- bribed Canadian officials to the extent of $22.5 million in relation to the McGill hospital contract I wrote about in my initial blog in this series (2009);
- agreed to voluntarily compensate seven Quebec municipalities for obtaining contracts through questionable means (1996-2011).
There is a widespread belief that general guidelines for issuing a DPA include the principle that it should be the exception and not the norm and that a DPA should only be entered into when the offences are not very serious. Neither consideration is correct. DPAs are negotiated worldwide for extremely serious crimes. They need not apply only in exceptional cases, but may, in the interests of justice, especially when there are effects on the innocent, be entered into. On appearance, SNC-Lavalin’s behaviour would seem to fall into this category since the point of a DPA is, according to OECD guidelines, to minimize consequences to innocent third parties, including employees. Therefore, the PMO and the Minister of Finance had every right and even duty to raise the possibility.
Canada can look to the UK for precedents where the issuance of three DPAs have been concluded. I have chosen the Rolls-Royce (R-R) case rather than SFO v Standard Bank plc and SFO v XYZ Ltd because R-R and SNC-Lavalin are most similar. In Britain, the Serious Fraud Office (SFO – presumably there is fraud that is not serious), following a four-year investigation, entered into a DPA with R-R approved by the President of the Queen’s Bench on 17 January 2017 following criminal conduct by R-R over three decades in seven different jurisdictions (Nigeria, Indonesia, Russia, Thailand, India, China and Malaysia). R-R agreed to reimburse SFO for its costs, thirteen million pounds, and to repay “disgorged” profits of £258,170,000 and a financial penalty of £239,082,645. R-R was also required to pay interest on those sums. (For full details of the agreement, go to https://www.sfo.gov.uk/cases/rolls-royce-plc/.
SNC-Lavalin’s crimes in Libya did not seem nearly as serious as those of R-R, certainly in monetary terms. They took place over a shorter time span, in one specific location, and did not seem to entail such enormous repayments or penalties. The R-R case seemed to offer a precedent for a DPA for SNC-Lavalin. However, as already stated, we do not have access to the evidence collected.
In Sir Brian Leveson’s ruling, he noted that R-R “is properly considered to be a company of central importance to the United Kingdom, with a reputation in the field of engineering second to none…[R-R] is a global company providing highly-efficient integrated power and propulsion solutions. [Its] power systems are predominantly used in aerospace, marine, energy and off-highway applications [locomotives…R-R is] one of the world’s leading producers of aero engines for large civil aircraft and corporate jets…, the second largest provider of defence aero engines in the world…well established in the marine sector where [the company] designs vessels [including nuclear submarines and luxury yachts] and integrated power systems.”
Worldwide, R-R employs 50,000 compared to SNC-Lavalin’s 9,000. If the UK system could balance the positive role of the company against its criminal deficiencies and take into account effects on employment, why could the Canadian legal system not do the same? One easily understands why the PM, the PMO, the Finance Ministry of the people working there all wanted the AG to consider the wider picture. On the other hand, it is also totally understandable why JWR wanted to protect the independence of the DPP, not intervene unless there was overwhelming evidence to do so, and why she would regard the repeated “pressures” as “inappropriate,” though not illegal.
Sir Brian Leveson ruled that the role of R-R in the world had to be considered when examining its criminal behaviour. There was one major difference, however, R-R voluntarily owned up to its sins, though the investigation initially was not taken as a result of self-reporting; Swiss authorities first uncovered the crimes. To the best of my knowledge, SNC-Lavalin also did not self-report. Cooperation in the criminal prosecution seemed to provide some mitigation for R-R’s serious breaches of criminal law in the arena of corruption and bribery since the conduct of the investigation was enormously assisted by R-R. Further, Leveson, while considering the impact of prosecution on employees and other innocent parties and the impact on whether R-R could continue to function in its areas of specialization, but none of these factors, and certainly the impact on national economic interests, were determinate in approving the DPA for R-R. Serving justice in a fair and reasonable way were.
What about the issue of R-R’s or SNC-Lavalin’s responsibility for causing “serious bodily harm or death”? In such cases, DPAs are not considered to be applicable. In the SNC-Lavalin case, no professional killers were evidently involved, though, indirectly, many deaths might be attributed to the record of corrupt activities. Further, SNC-Lavalin fired its key leadership and undertook to thoroughly clean house and establish a culture of honesty. Did it do the latter? I have no way of knowing to judge the appropriateness of a DPA. We do know that Riadh Ben Aïssa has been cooperating with the prosecutor.
All this must be kept in mind as we review the events that took place after 20 September 2018. As you will see, contrary to what has often been claimed on media, there is no evidence whatsoever that the government tried to obtain lenient treatment for SNC-Lavalin or even influence the terms of a DPA, but only to influence whether and how a DPA could be offered. The issue was whether the government applied pressure in such a way as to compromise the independence of the AG.
On 18 October 2018, a new effort was launched into influencing the AG to change her mind and consider offering a DPA. The method of getting around the determination of the DPP was that the AG seek an independent advisory from an eminent jurist given the lack of precedent for a DPA. Mathieu Bouchard called JWR’s Chief of Staff and requested consideration of the option of seeking an external legal opinion on the DPP’s decision not to extend an invitation to negotiate a DPA.
On 20 October 2018, SNC filed a federal court application seeking to quash the DPP’s refusal to enter into a mediation agreement and a judge was now asked to examine the DPP’s discretion. On 26 October, JWR’s chief of staff communicated to Mathieu Bouchard that the possibility of the AG intervening was moot since the matter was now before the court.
Gerry Butts in his testimony confirmed that Mathieu Bouchard and Elder Marques had a discussion on 22 November with the former AG about a memo prepared by lawyers in the Department of Justice discussing the option of seeking counsel from an eminent jurist. JWR was irritated about even holding a meeting and insisted that the DPP Act. Section 15, Section 10 ensured prosecutorial independence as a constitutional principle. JWR insisted that Bouchard and Marques were interfering. She had made a decision not to intervene.
JWR concluded that representatives from the Ministry of Finance and the PMO were kicking the tires; she had said no and her mind had been made up; they needed to stop; this was enough. As JWR argued, “We either have a system that is based on the rule of law, the independence of prosecutorial functions and respect for those charged to use their discretion and powers in a particular way, or we do not…The consistent and enduring efforts, even in the face of judicial proceedings on the same matter and in the face of a clear decision of the director of public prosecutions and the attorney general to continue and even intensify such efforts, raises serious red flags.”
At the end of a two-hour meeting over lunch between JWR and Gerry Butts at the Château Laurier Hotel on 5 December requested by JWR, she asked for Butts’ opinion on the SNC-Lavalin file. He insisted he had no expertise on the issue but understood that the prospect of appointing a retired Supreme Court Justice to advise on the situation was being discussed between the PMO and her office. Though what Elder and Mathieu had proposed was unprecedented, so were DPA remediation agreements. The referral for advice would help clarify the AG’s powers in this and any subsequent case. Nevertheless, it was her call. Gerry insisted that he had not applied any pressure while JWR recalled that he had.
What then followed was the ignition key which eventually blew the whole dissension over how to handle the DPA into the open with the minor cabinet reshuffle, a matter that I will visit in my next blog.
With the help of Alex Zisman