The SNC-Lavalin Affair – Jody Wilson-Raybould (JWR) Part I

There have been two critical developments since my last blog. Michael Wernick announced his retirement as clerk of the Privy Council because he had lost the trust of the opposition as a direct consequence of the SNC-Lavalin affair. Second, Justin Trudeau appointed former deputy prime minister, Anne McLellan, as a special adviser to consider the recommendation of both Jody Wilson-Raybould (JWR) and the former Justice Minister, Irwin Cotler, that the roles of Minister of Justice (MJ) and of Attorney General (AG) be split. McLellan was also charged with reviewing the operating policies and practices in inter-ministerial communications and between public servants and political staff. The affair keeps rolling along; a review of the legal and political history is critical.

SNC-Lavalin is a worldwide behemoth engineering and construction company.  Currently, about one-sixth of its over $9 billion income stems from Canadian government contracts and another one-sixth from provincial and other domestic contracts. As indicated in the previous blog, from 2000-2012, SNC-Lavalin had developed a reputation for engaging in seedy practices in obtaining such contracts. One question was whether it had reformed sufficiently so that the company could obtain a deferred prosecution agreement (DPA) for its alleged bribes in Libya under the Gaddafi regime. Under current rules, if SNC-Lavalin is convicted, that would mean a 10-year ban on SNC receiving federal contracts.

After engaging in discussions with various parties, a provision for deferred prosecution agreements was included in the March 2018 omnibus budget bill after lobbying from SNC-Lavalin following charges against SNC-Lavalin in February 2015. After the election of the Liberals, numerous meetings took place over two years between SNC-Lavalin and personnel from the office of the Minister of Finance, Morneau, including Francois-Philippe Champagne, Morneau’s parliamentary secretary and senior policy adviser, Robert Asselin.

The DPA was not just a product of the self-interest of big business. In 2011, the Organization for Economic Cooperation and Development (OECD) country report on enforcement of its anti-bribery convention critically singled out Canada for its failure to act against bribery. Only one successful prosecution had been managed since the law was passed in 1999. In 2018, Canada was branded with “limited enforcement” with respect to the convention, largely because Canada took too long to bring cases to court, in turn, largely a result of an inadequate number of judges being appointed. It had been determined that a reasonable wait time would be 30 months. The withdrawal of almost all charges against the former CEO and Vice-President of SNC-Lavalin has been attributed to these delays.

The SNC-Lavalin affair arose after JWR resigned as MJ and AG, but it began when she occupied that office. The MJ focuses on policy in relationship to the justice system in general. As AG, wearing her other hat, JWR is the top prosecuting authority in the country. Normally, that authority is exercised by the director of public prosecutions (DPP) with respect to any litigation on behalf of the Crown. During the period of the alleged scandal, Kathleen Roussel (KR) was appointed as DPP on 21 June 2017 and continues to hold the position.

In addition to prosecutorial functions, the AG serves as the chief legal adviser to the government of Canada (GofC) as distinct from her role as MJ responsible for policy with respect to justice issues. Under the Director of Public Prosecutions Act (DPPA), the AG retains prosecutorial authority and discretion, to be exercised individually and independently. The AG has the authority to issue directives to the DPP on specific prosecutions, or even to take over a prosecution.

Though these are not cabinet decisions, cabinet colleagues, including the Prime Minister, may draw to the AG’s attention any important policy considerations relevant to how a prosecution will proceed. Those policy considerations specifically exclude partisan political ones, such as the effect of a prosecution on the Quebec provincial election. After the Action démocratique du Québec’s election victory in October. JWR alleged that in a meeting with Jessica Prince and Mathieu Bouchard from the PMO, Mathieu, Trudeau’s senior policy adviser, raised the question of the federal election and the impact of SNC-Lavalin moving its headquarters abroad. Finally, there is an inherited important political aspect to the MJ/AG position. The MJ and AG positions are considered high ranking cabinet appointments and have often been stepping stones for the holder of those positions to becoming Prime Minster.

The Public Prosecutions Act now includes a provision for Deferred Prosecution Agreement (DPA) or remediation agreements, an inclusion supported by Transparency International Canada because it was believed that the possibility of a DPA would encourage companies to voluntarily report and remedy wrong doing. At the same time, a DPA does not exempt a company from paying financial penalties or individuals from being held accountable for criminal actions. Since the possibility of a DPA has been included in the Act, it has not yet been used. Nor have detailed guidelines been established for its use, particularly around the issue of its employment when serving a public interest.

The central issue of the whole affair was whether cabinet colleagues and/or the Prime Minister’s Office (PMO) intervened in a specific decision and/or exercised untoward pressure on the AG or otherwise engaged in inappropriate behaviour with respect to a prosecution. The path to the conflict over the DPP Kathleen Roussel sent JWR a memorandum pursuant to Section 13 of the Director of Public Prosecutions Act (DPPA) entitled, “Whether to issue an invitation to negotiate a remediation agreement to SNC-Lavalin.” It remains a political issue even though a Federal Court on 8 March 2019 struck down SNC’s appeal for a judicial review.

On 4 September 2018, the DPP offered two advisories:

1. an invitation to negotiate a DPA with SNC-Lavalin not be made;

2. the decision to reject the prospect of a DPA by the Public Prosecution Service of Canada (PPSC) would not be announced at this time.

According to testimony before a House of Commons Justice Committee, on 6 September 2018, Ben Chin, Chief of Staff for Bill Morneau, Minister of Finance, implied that SNC be granted a DPA lest the SNC-Lavalin become a political issue in Quebec, since SNC had indicated that it might be “forced” to move its head office to London, UK. Morneau defended his staff in bringing to the attention of the AG the prospective job losses in Quebec, but skirted any discussion of the appropriateness of raising the issue of the October Quebec election.  

JWR was to undertake further internal work and due diligence before an announcement would be made. On 7 September, JWR’s Chief of Staff spoke to Ben Chin, Morneau’s Deputy Minister, to inform them that deputy attorney general, Nathalie Drouin, was trying to work out something at the same time as they were writing up an opinion on what the proper relationship should be of the AG to the PPSC. Reflections on both these matters were written up and a list of options provided to the PMO as well as an opinion on the AG’s role.

JWR requested an urgent meeting with Justin Trudeau as soon as the latter returned from abroad, but it was about another matter. Finally, on 11 September, the AG’s office informed SNC that it would not receive a DPA. SNC legal counsel, Frank Iacobucci, pursued the matter believing that the decision was not final and was still negotiable, perhaps a reasonable conclusion since SNC had not been informed in writing. Iacobucci detailed the terms SNC would agree to in a DPA.

On 16 September, JWR’s chief of staff informed Elder Marques of the PMO of further discussions with representatives of SNC. She communicated what had been decided; the Director does not want to negotiate a DPA. However, the deputy minister was prepared to get outside legal advice on the issue. That was the wedge that they had hoped for and they rejoiced. Was JWR open to that suggestion?

The matter was not just left at that. Once again, the impact on the Quebec election was raised and the hope was that a more reasonable solution might be found before the SNC board met on 20 September. JWR’s back was up by this point and she informed the PMO’s office concerning prosecutorial independence and a concern re interference in the independence of the prosecutorial functions. JWR also did, as Morneau contended, contact Morneau about the issue, almost two weeks after Chin communicated the Ministry of Finance’s concerns. However, what Morneau did not say was that the contact had been made to remonstrate Morneau for raising the issue of jobs with JWR and that such expressions of concern, according to JWR, were inappropriate.

The question anyone reading this timeline has to ask, was why did the PMO and the Ministry of Finance not drop the matter then and there? Representatives from both the finance minister’s office and the PMO insisted that they did not want to cross any lines and that the decision was JWR’s alone to make. A request was made that JWR directly contact Trudeau on the matter. JWR concluded that it would be both inappropriate for her to intervene in a DPP decision and that no DPA should be pursued.

On 17 September, JWR met with both the PM and Michael Wernick, clerk of the Privy Council, primarily over another matter, but the issue was raised by the PM concerning Morneau’s contention that she take into account the impact of her decision. JWR reiterated her position. The PM asked for help in finding a solution. JWR insisted that she could not and did not want to go beyond what she believed was her proper authority to enter into negotiations. The DPP had decided and she had exercised sufficient due diligence to back that decision.

Justin Trudeau raised three issues: a) potential loss of jobs; b) the election in Quebec and c) the fact that he was an MP from Quebec. JWR asked: “Are you politically interfering with my role, my decision as the attorney general? I would strongly advise against it.” JT insisted he was not interfering at all but simply was asking her to find a solution. Michael Wernick agreed that all of the above had been discussed and reaffirmed that the issue of job losses and the effects on the Quebec election had been raised, but insisted that it was his proper role to remind federal officials of potential impacts of federal decisions on provinces. In any case, JWR agreed she would discuss the issue with her staff, would organize a meeting with Michael, herself and her DM, but reiterated that she had made up her mind.

Gerry Butts, who had not attended the above meeting but had been briefed on it, in his testimony before the Justice Committee, raised the question: If the Attorney-General had made a decision, and communicated it to the Prime Minister and Clerk, why would there be a next step at all? Why would the AG take and solicit meetings on a closed matter? I myself think the answer is obvious, the PM had requested that she do so.

Gerry’s second query was, “Why would the Attorney-General not communicate her final decision in writing to the Prime Minister?” since putting her position in writing was her preferred mode of communicating. I believe the answer to that is also obvious. The topic could be embarrassing to the government and, especially, the PMO. Better then to communicate her rejection of those repeated requests orally. Appointment of a Supreme Court justice, the TMX pipeline process, and the work of the Cabinet Committee on Reconciliation were not politically sensitive issues where fundamental principles seemed to be at stake.

On 19 September, Michael Wernick and JWR met. Wernick stressed that the issue was only about job losses and not politics. The determining date was the next day when the SNC-Lavalin board would be meeting. However, JWR reiterated her position that her deputy not meet with the DPP and that the DPP’s decision had to be respected. Could JWR not communicate to the DPP the public interest argument? JWR insisted that would be inappropriate.

Elder Marques and Mathieu Bouchard from the PMO also barged in and asked JWR’s chief of staff for an update. The latter relayed a summary of the meeting with Michael Wernick. Could not there be “an informal” outreach to the DPP? JWR’s chief of staff said that would be political interference. Morneau also raised the issue with JWR in the House, reiterating the concern with loss of jobs, and received the same reply.  

It is important to recognize how the timelines and substantial points from both sides were overwhelmingly in agreement. The interpretations and significance were not. Why didn’t Justin Trudeau call the dogs off?

To be continued.

With the help of Alex Zisman

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