The case for protecting SNC-Lavalin

Jaime Watt Navigator Ltd.
Executive Chairman
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This week has shown the Canadian public is resolved in its belief that politicians and public servants must, at first instance, be up to no good.

Take the so-called scandal around the SNC-Lavalin matter, and the emerging consensus that the government has misbehaved from the get-go.

I don’t believe this to be true. I think that an important and strong public policy case can be made for the use of remediation agreements — better known as a deferred prosecution agreements or DPAs.

The DPA is a legislative tool, long available in the United States and Britain, to be used when an organization is charged with an economic crime and where the consequences of proceeding with the prosecution could cause major job loss, harm pensioners, or even trigger an economic downturn on a national or international scale.

The DPA is entered into as an alternative to prosecution and typically forces the company to pay hefty fines and comply with strict conditions over an extended period of time.

In the United States, DPAs became a favoured tool following the investigation and subsequent collapse of auditing giant Arthur Andersen. The prevailing narrative is that the company’s criminal indictment served as a “corporate death sentence” that caused the loss of 75,000 jobs and had a ripple effect throughout the U.S. economy.

The DPA is no peace bond for a run-of-the-mill petty thief. The decision is an extraordinary one, requiring the delicate balancing of the legal, social, and economic impacts of forcing a trial and, potentially, a conviction against a company that provides jobs, benefits and pensions to thousands.

In the case of SNC-Lavalin, Canada faces the very real threat that one of its top companies and employers will move, sell, or disappear if they are subject to a conviction. At the very least, they would be forced to shed a significant number of jobs as a result of their long-term disqualification from public sector infrastructure projects.

And yet, in the deepest depths of the 2018 budget bill, the government opted to hand these fateful decisions to some poor federal prosecutor. And that was the mistake.

The question must be asked: Is this a decision that a prosecutor — and a prosecutor alone — should make? Is it sensible to expect a group of government lawyers, acting alone, to credibly assess the collateral impacts of pushing ahead with a prosecution?

Looking back, and yes, political hindsight is most certainly 20/20, the devilish details of last year’s budget bill have made all the difference. By placing these super-charged decisions on the shoulders of the ill-equipped federal prosecution service, it was a near-certainty that this day would come.

The government, of course, did itself no favours when it introduced this policy on page 555 of an impossible-to-digest budget omnibus bill, but sketchy parliamentary tricks should have no place in evaluating the effectiveness of the legislative tool itself.

In the U.S., it is apparent that executive decision-makers typically play a more direct and upfront role in the negotiation of such agreements. That was the case in 2012, when then-U.S. Attorney General Eric Holder agreed to have his Justice Department enter a DPA with U.K.-based HSBC to resolve fraud charges.

The settlement avoided a prosecution, which experts advised Holder would have had a profoundly negative impact on the national, and potentially the global, economy. As part of the process, Holder received input and advice from the likes of the U.S. Treasury Department.

Our “made-in-Canada” approach does not allow for executive-level participation in this way. That, too, is a mistake, and where we have missed the mark. Arguably, it is the reason we are currently embroiled in a full-blown national political storm.

This is not to suggest that these decisions should be political ones, alone, driven by partisan considerations, alone. But surely we can all agree that the decision to place thousands of Canadian jobs in jeopardy requires a nuanced view of enterprise-wide jeopardy and should not be bound by a slavish adherence to the principle of prosecutorial independence.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist. He is a freelance contributor for the Star. Follow him on Twitter: @jaimewatt

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