SNC-Lavalin and the Corruption of Public Discourse

Jody Wilson-Raybould sitting at a set of tables in a circle

Nobody loves a good government scandal more than journalists and opposition party members, except perhaps policy pundits, pollsters, and Internet trolls. And that, in a nutshell, is why the political firestorm that threatens to push Canadian engineering and construction giant SNC-Lavalin into foreign arms never really had a chance of being accurately or objectively presented to the public.

“Justin Trudeau simply cannot continue to govern this country now that Canadians know what he has done,” Conservative Party leader Andrew Scheer proclaimed when calling on our Liberal prime minister to resign in early March.

What exactly has Trudeau done? According to members of the federal opposition, government staffers clearly tried to curry political favour in Quebec by pressuring Jody Wilson-Raybould, our former justice minister and attorney general, to help Montreal-based SNC-Lavalin avoid criminal charges related to business dealings in Libya years ago by allowing the company to negotiate a sweetheart settlement. And a criminal investigation is warranted because this unethical desire to help corrupt executives get “off the hook” led to an attempt to obstruct justice.

In the words of Conservative MP Candice Bergen, the “old boys at SNC-Lavalin were caught bribing and spending money on prostitutes and then the Prime Minister and his good old boys said to them, ‘Don’t worry, we’ll take care of it.’ However, a woman, the former attorney-general, then said no to the good old boys and she was promptly fired and silenced.”

On the international stage, our government’s apparent support for an out-of-court settlement in this matter reportedly has the Organisation for Economic Co-operation and Development (OECD) seriously questioning Canada’s commitment to fighting corruption.

According to a commentary by Probe International’s Patricia Adams, the settlement in question would be “designed to cover up details of wrongdoing and replace jail time for corrupt government and corporate officials with fines.”

Thanks to this narrative, it was only a matter of time before the SNC-Lavalin affair was compared to Watergate, a.k.a. the mother of all U.S. government scandals, which involved a clearly criminal attempt by Republican Party operatives to help re-elect President Richard Nixon by bugging Democratic Party headquarters.

And as a result, Canada’s self-proclaimed feminist leader reportedly now has a lower approval rating than U.S. President Donald Trump, a self-proclaimed fan of sexual assault (when privately talking to male crews from Access Hollywood at least).

The problem, of course, is that none of the above is accurate—except perhaps Trudeau’s drop in the polls.

This article isn’t meant to defend the government’s questionable and ham-fisted attempt to influence decision making on the SNC-Lavalin file. It has three worthy objectives.

The first is simply to separate fact from misinformation in order to enable more constructive debate about the scandal and what is at stake. The second goal is to articulate the case for embracing negotiated settlements as a legitimate corruption-fighting tool based upon my experience as a financial-sector whistleblower during the dotcom era (which led to a long career as an investigative journalist covering white-collar crime). Finally, this article strives to identify some key takeaways for managers and directors who are expected to drive growth and profit without breaking the law.

Restoring Context

Public discourse surrounding the SNC-Lavalin affair has been tainted by biased commentary, weak reporting, and political grandstanding ever since The Globe and Mail broke this story in early February. Even the headline on the scoop of the decade was misleading when it definitively declared: “PMO pressed Wilson-Raybould to abandon prosecution of SNC-Lavalin.”

There is no question that staffers in the Prime Minister’s Office (PMO) appear to have failed to respect the former attorney general’s judgment on the SNC-Lavalin file, but what the government actually pressed her to do (and whether or not it was unethical) remains open to debate.

Indeed, while Wilson-Raybould might have felt pressure to help the company avoid a trial, according to her own testimony, she was just asked (albeit repeatedly) to decide if it should become the first application of a never-before-used legal tool after seeking external legal advice on what would be in the public interest, not to mention lawful and appropriate.

The former attorney general argues that this request was highly inappropriate because the people making it kept pointing out the potential negative impact that a criminal conviction of SNC-Lavalin could have on Canadian employment, which would impact Liberal re-election chances. But more than a few people honestly believe the request wasn’t totally self-serving or unreasonable.

Either way, there is nothing really at all scandalous about the so-called deferred prosecution agreement, or DPA, that SNC-Lavalin would like to negotiate—which would not keep anyone out of jail or let any individuals accused of corruption off the hook.

If truth be told, the SNC-Lavalin affair has nothing at all to do with whether corrupt corporate executives face justice. Nobody at the company is trying to avoid prison because the employees alleged to have been corrupt are all long gone. And a DPA in this case would have zero impact on the separate criminal cases brought against these ethically questionable individuals.

Not even Canadian pollsters seem to understand that a settlement for the company would not impact the potential for fair punishment of any individuals charged with fraud or corruption in this case.

When Angus Reid reported that 63 per cent of Canadians think SNC-Lavalin needs to be criminally prosecuted in court, it noted that a trial “would result in more severe punishment for those who broke the law.” And that’s not true, or at least highly misleading, according to Gerry Ferguson, a University of Victoria professor and author of Global Corruption: Law, Theory and Practice.

As Ferguson explained to Ivey Business Journal, corporations and individuals can be prosecuted and convicted separately, but DPAs are only available to corporations. And if SNC-Lavalin was handed one, it would not help the actual individuals accused of corruption in this case.

What a DPA would do is allow SNC-Lavalin’s new board of directors and new management team to make amends for the misdeeds of former executives without further victimizing innocent employees and other stakeholders, including suppliers and pensioners.

“The SNC-Lavalin affair is no Watergate. In fact, anyone insisting that a criminal investigation into the matter is warranted is equally guilty of not respecting the judgment of Wilson-Raybould.”

What does the OECD think? The international organization, which is always concerned with alleged political attempts to interfere with justice, has been monitoring the use of out-of-court settlements because they “present legal, institutional and procedural challenges and some experts question their ability to fairly and effectively deliver justice.” But it freely admits (at least to anyone who asks) that deals like the one SNC wants are generally considered “a pragmatic and efficient way to resolve cases that would otherwise require tremendous time and resources to investigate and prosecute before reaching a court.” That’s why almost 80 per cent of corporate corruption cases concluded under the OECD’s Anti-Bribery Convention worldwide have been settled out of court.

The SNC-Lavalin affair has cost Trudeau two cabinet ministers and two advisors. When the story broke in early February, Wilson-Raybould had just moved to Veterans Affairs as part of a cabinet shuffle triggered by Liberal MP Scott Brison’s decision to step down as Treasury Board president. At the time, she felt the move was designed to make way for a more PMO-friendly attorney general, but she was happy enough with the government to accept her new position.

Wilson-Raybould resigned from cabinet after news of her conflict with Trudeau became public and he pointed to her continued presence on his team as an indication that all was well in Liberal land. The next casualty was Gerry Butts. Despite insisting the former attorney general had brewed a teapot tempest, he resigned as Trudeau’s principal secretary after being accused of inappropriately trying to influence decision-making on the file. Former government minister Jane Philpott then protested the PMO’s treatment of Wilson-Raybould by following her out the cabinet door (both politicians were ejected from the Liberal caucus in early April in a move widely supported by their former party colleagues). Long-time public servant Michael Wernick also stepped down as Clerk of the Privy Council after his attempts to make peace between Wilson-Raybould and Trudeau led critics to question his objectivity.

Despite the body count, however, the SNC-Lavalin affair is no Watergate. In fact, anyone insisting that a criminal investigation into the matter is warranted is equally guilty of not respecting the judgment of Wilson-Raybould, who has repeatedly stated that nothing illegal transpired.

Television critic John Doyle recently noted how it is truly remarkable what can be extrapolated from HBO’s Game of Thrones. “It is about climate change. It is about gender and sexual violence. It is about subverting male power. It is about the breakdown of traditional order and the rise of faux powers. It is about globalization. It is about everything you want it to be, largely because it is derived from countless existing narratives; some real, some fictional and some mythological.”

Something similar could be said about the Liberal Party’s throne game, which has many people seeing what they want to see. But as former Ottawa Citizen columnist Janice Kennedy noted, “The real truth here is that there is no single truth and no sainted truth-teller. With a narrative involving shades, nuances, interpretations and bigger-picture considerations, the assumption that Wilson-Raybould and Philpott are the only ones with a lock on truth and principle is irrational. There is little to edify on either side, but the kneejerk and wholesale dismissal of testimony by anyone else involved in this sorry drama is the real ethical breach.”

As things stand, it is impossible to identify any clear heroes or villains in this story. But if you keep an open mind while examining all the evidence presented, you can find reasons to suspect that this scandal is nothing more than the unnecessary result of a questionable government decision to ask Wilson-Raybould to rethink her questionable decision not to review a questionable decision by federal prosecutors to take SNC-Lavalin to court. And that string of questionable decisions created an ugly tug of war between two proud and stubborn individuals with my-way-or-the-highway tendencies.

Whatever the case, a real opportunity to improve how Canada fights corporate corruption appears to have been lost in the middle.

The Start of an Affair

As part of a fraud and corruption investigation that began in 2011, the RCMP filed criminal charges against SNC-Lavalin in 2015, alleging it paid about $50 million in bribes to influence government decisions in Libya between 2001 and 2011. The company and two subsidiaries were also charged with defrauding Libyan organizations of about $130 million.

A criminal conviction on these charges could cost SNC-Lavalin the ability to compete for federal government business for a decade, which would threaten its global competitiveness along with its local operations, not to mention the company’s case for remaining Canadian. That’s why SNC-Lavalin’s new leadership started lobbying Ottawa to allow Canadian corporations, when appropriate, to make amends for corporate wrongdoing out of court. Aggressive or not, there was nothing secret about this campaign.

The adoption of a DPA regime was first considered by the former Conservative government in 2015. After its own public consultations on the use of out-of-court settlements, the Trudeau administration introduced DPAs to Canada last year as a legitimate corruption-fighting tool to be used at the discretion of public prosecutors. This was all done with Wilson-Raybould’s support.

As a result, not long ago, SNC-Lavalin was widely expected to become the first Canadian company to negotiate a DPA under the new legal regime. And nobody was screaming foul.

In October 2018, however, director of public prosecutions Kathleen Roussel decided to make the company face a criminal trial. This decision clearly did not please Trudeau administration officials who expected the matter to be settled without putting the jobs of innocent Canadian voters at risk.

The government responded by asking Wilson-Raybould to seek external council and review whether a criminal trial was in the public interest. The former attorney general could have done this, but she declined, making it clear that she had already decided not to interfere with the independence of Roussel’s office and that she considered any attempt to have her rethink that decision to be inappropriate.

As I noted in my Financial Post Magazine column last year, the charges faced by SNC-Lavalin pale in comparison to many other cases of corporate corruption. But the Libyan deals at the centre of this scandal are not the only examples of dodgy business conduct in SNC-Lavalin’s past, which include issuing bribes to win a $1.3-billion contract to build the McGill University Health Centre in Montreal, not to mention illegal contributions to the Liberal Party. So, it isn’t easy to believe that the company has reformed from top to bottom.

Nevertheless, as Globe and Mail columnist Konrad Yakabuski points out, the company has taken extensive actions to clean house, including overhauling its management, board, and compliance procedures, which is why it is “somewhat baffling that the director of public prosecutions chose to reject the company’s application for such a deal and opted to subject SNC-Lavalin to a potentially endless criminal proceeding that could sound its death knell.”

Whatever the case, some government critics insist PMO staffers were way off base by noting that a potential criminal conviction for SNC-Lavalin puts the future of 9,000 Canadian voters at risk while pressing Wilson-Raybould to get involved. But helping citizens avoid unemployment can be done in the public interest, so the government motive in this case might only look scandalous when comments never meant for public consumption are taken out of context.

Other critics, of course, argue that government concern over any threat to jobs posed by a criminal conviction of SNC-Lavalin isn’t real, just a smokescreen to help make the case for granting a DPA. This ignores the fact that the potential negative impact on employment has been repeatedly reported as a major issue by the national media for many years.

Ironically, the media has also heavily covered Canada’s steady loss of corporate head offices as a major public interest crisis.

As Eric Reguly, another Globe and Mail business columnist, put it when arguing Canadians should be seriously concerned about the costs of losing a reformed SNC-Lavalin, “Aside from the loss of stock market listings, the elimination of large head offices rots the country’s social fabric. Head offices provide high-paying, high-skilled jobs and create an ecosystem of spinoff jobs, from accountants and chefs to limo drivers and lawyers. Head offices bolster the financial services industry, which underwrites the bond and equity offerings and sponsors the arts and charities. When corporate headquarters disappear, so does talent.”

Meanwhile, armchair lawyers screaming “gotcha” point out that the Criminal Code states that “national economic interest” is not something that can be used to justify a DPA.  But this is also open to debate, since these words were imported from Article 5 of the OECD Anti-Bribery Convention, where they were intended to prevent exporters from avoiding prosecution by arguing that exports were in the national economic interest. And as noted in a commentary by Donald Johnston, who was secretary general of the OECD when the convention was signed in 1997, “as far as the meaning of the original wording used in the convention (that would later be imported to Canada’s Criminal Code section covering DPAs) goes, there was no ‘national economic interest’ exclusion contemplated that would have automatically disqualified SNC-Lavalin from a deal.”

“There is no question that the attorney-general must exercise her role objectively and independently. However, in a free and democratic society, the prosecutorial function does not operate in a vacuum, in isolation and immune from debate, discussion and, indeed, persuasion.”

That said, the accepted relationship between an attorney general and other cabinet members was described by Sir Hartley Shawcross in 1951, when the former attorney general of England stated:

I think the true doctrine is that it is the duty of an Attorney- General, in deciding whether or not to authorize the prosecution, to acquaint himself with all the relevant facts, including, for instance, the effect which the prosecution, successful or unsuccessful as the case may be, would have upon public morale and order, and with any other considerations affecting public policy.

In order so to inform himself, he may, although I do not think he is obliged to, consult with any of his colleagues in the Government; and indeed, as Lord Simon once said, he would in some cases be a fool if he did not. On the other hand, the assistance of his colleagues is confined to informing him of particular considerations, which might affect his own decision, and does not consist, and must not consist in telling him what that decision ought to be. The responsibility for the eventual decision rests with the Attorney-General, and he is not to be put, and is not put, under pressure by his colleagues in the matter.

As far as observers like the National Post’s Andrew Coyne are concerned, there is “no room for argument on the right of the attorney general to make decisions on criminal prosecutions, free of pressure from other government officials: it is settled constitutional law, absolute and inviolable.”

But others are less rigid on this point. As a commentary by lawyer Brian Greenspan notes, “There is no question that the attorney-general must exercise her role objectively and independently. However, in a free and democratic society, the prosecutorial function does not operate in a vacuum, in isolation and immune from debate, discussion and, indeed, persuasion. Isolation breeds tyranny. Access to justice requires those who administer justice to be accessible, to be open to advocacy on behalf of clients and causes.”

Presumably, the case for advocacy in this case would improve if there was real reason to suspect that the law-and-order crowd was playing politics when deciding not to offer SNC-Lavalin a DPA. After all, according to Alan Freeman, an Honorary Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs, government aides should go nowhere near decisions about whether a criminal case gets sent to trial “unless” a prosecutor “is acting irresponsibly.”

And therein lies the rub because there is some reason to suspect SNC-Lavalin is being denied a DPA for unjust reasons. Keep in mind that Wilson-Raybould testified that she was asked to seek outside council on the matter by officials who “understood that the individual crown prosecutor wants to negotiate an agreement but that the director does not.”

How the Trudeau administration came to this understanding might be a whole other scandal. Nevertheless, there is reason to believe that the actual prosecutor in charge of this case might have been overruled after concluding an out-of-court settlement for SNC-Lavalin was warranted.

This does not mean Roussel is playing games with justice. But the competence of her office has been called into question after doing a poor job convicting the former SNC-Lavalin employees allegedly responsible for this whole affair. And as CBC’s Dave Seglins bluntly put it, the umbrella case against the company might be seen as a last chance to look good by prosecutors who “desperately need a win.”

The mere perception that Roussel’s decision to prosecute this case was based on optics supports the government’s decision to ask Wilson-Raybould to consider using her legitimate authority to review the matter with the help of external advice. According to Butts, all the government wanted was for her to consider a second opinion from an eminent Canadian jurist or panel of jurists. And whether that’s true or not, Reybould would have been free to reject or accept whatever advice came her way.

The former attorney general could very well have good reasons for not doing this. But with all due respect, Wilson-Raybould’s secretly taped conversation with Wernick (which more than a few people do not see as threatening) suggests her decision not to get involved had a lot to do with appearances. “It is not that [DPAs] are not lawful,” she says while explaining one of her major concerns is with the perception of political interference that giving an out-of-court settlement to SNC-Lavalin would create because, “whether true or not,” everybody thinks DPAs were only introduced to Canada to prevent the company from facing a trial.

And as Financial Post columnist Terence Corcoran observes, “If that is one of Wilson-Raybould’s motivations, then she has thereby introduced a new concept that could be called ‘political non-interference.’ An attorney general who did not intervene for fear of being perceived as intervening would essentially be not intervening for political reasons.”

A Whistleblower’s Perspective on Fighting Corruption

Wilson-Raybould declined to answer when Maclean’s magazine asked if she thought public opinion on the SNC-Lavalin affair would shift if Canadians knew why the company was denied an out-of-court settlement. The important question, she insisted, is about whether we have confidence in providing discretion to prosecutors, not “whether SNC-Lavalin deserves a deferred prosecution agreement.”

I beg to differ. This affair is about justice and whether DPAs provide a better way to serve it while fighting corruption.

Virtually every major multinational on the planet has a code of conduct that forbids bribes. And yet, as I noted in my Financial Post Magazine column last year, an estimated US$1.5 trillion in bribes are still handed out annually because ethical codes rarely stop unethical actors.

This unacceptable activity not only distorts global markets and hinders the efficient deployment of capital—it also exports corruption while undermining the social contract and negatively impacting political stability and economic development in other nations.

When fighting corruption, however, it is important to remember that organizations like SNC-Lavalin are victims, too. I know this from experience. Years ago, I landed my dream job as head of investor relations for a U.K.-based international venture capital firm that was preparing to go public during the technology bubble. Like every other executive at the firm, my stock options were supposed to make me rich beyond my wildest dreams. Unfortunately, it quickly became clear, at least to me, that our investor story was more smoke and mirrors than growth potential.

Being responsible for investor communications, misleading the market did not sit well with me, so I raised the issue with our board of directors. In return, I was rewarded with a pink slip after the firm’s British directors blindly concluded that the kid from Canada lacked the school tie and gravitas required to lead an IPO in London’s Square Mile. I got the last laugh because the firm eventually imploded under the weight of its unethical baggage and I launched an investigative journalism career writing about my stint working for a market manipulator who made Gordon Gekko look like a Cub Scout. But getting the last laugh was not at all amusing because the vast majority of employees at this corrupt company were ethical individuals and everybody lost their job.

What’s my point? Simple. Corporations do not decide to be corrupt. People do. And that’s why the fight against corporate corruption should focus on really punishing the unethical people responsible, not the organizations they abuse. Whenever appropriate, it simply makes sense to give employers a chance to make reforms and restitutions without having their viability threatened by a criminal conviction.

Negotiated settlements should not be handed out like candy. But embracing them as a legitimate tool can actually facilitate the internal reporting of illegal activity when it is uncovered by ethical employees.

As former Canadian Finance Minister John Manley argued in 2015: “The case for alternative enforcement mechanisms has nothing to do with corporate offenders being ‘too big to fail’ or ‘too big to jail.’ Rather, they can be a much-needed addition to Canada’s anti-corruption arsenal – a means of combatting corporate crime and punishing the guilty without hurting others who have done nothing wrong.”

Governance and Management Lessons

How far a company goes to land contracts obviously depends on numerous factors. But while leadership ethics and corporate culture obviously play major roles, the pressure to deliver results can also move middle management to break rules. And yet, many corporate boards still heavily rely on senior management to report cultural issues—which is ridiculous—and not just because unethical executives rarely rat themselves out.

Indeed, with investor activism exasperating the short-term performance pressure felt by public corporations, it is time for more boards to proactively investigate the health of the corporate cultures they govern and doing that effectively requires direct contact with lower-level employees, especially ones in specialist functions such as internal audit, compliance, and risk management.

For managers, the obvious management lesson from the SNC-Lavalin affair is respect the law. The less obvious lesson is the need to make sure that your people really, really know that you really, really want them to respect the law.

As financial analyst Paul Lechem pointed out after SNC-Lavalin was placed under new management years ago, the company was previously run “with little coordination between divisions, and little centralized management, systems and control,” which led “not only to operating inefficiencies, but also to the corruption and project control issues that the company now faces.” This destructive management system wasn’t a fluke. It was put in place by former company CEO Jacques Lamarre, who retired in 2009 after delivering shareholders a 1,486 per cent return during his 13 years at the helm.

Lamarre insists he always expected employees to obey the law. But despite knowing the ethical challenges that come with doing business in corrupt environments, he never asked about how deals got done. As an outdated company history noted, he put his trust in his people and focused on fighting fires. This helped Lamarre turn a Canadian company into what was once considered a global success story. But it is a risky way to run any venture.

Simply put, trust is a good thing. But blind trust isn’t, especially when 50 per cent of total compensation for some senior players is linked to performance, which was the case at SNC-Lavalin under Lamarre.

Executives always need to remember that a workplace culture that supports ethical behaviour needs to be constantly reinforced. And to do that, management needs to know how deals are getting done, particularly when competing in some of the places where SNC-Lavalin does business.

As a mining executive told Ivey Business Journal when SNC-Lavalin was charged with corruption, “there are certain unavoidable facts of life when doing business in other countries and breaking rules, or bending them, is one of them since the only realistic alternative is often not getting any business done.”

Big cash payments, he added, probably happen less than cynics think. But things like tipping a local cop to avoid a hassle or handing something shiny to a port official so your load of produce doesn’t rot in a ship’s hold happen relatively frequently. So, employees need to know where they are expected to draw the line. And the answer must come loud and clear from the corner office.

My insight into SNC-Lavalin’s previous management style stems from a profile I wrote of Lamarre after he was named “CEO of the Year” by Canadian Business magazine in 2003. During the interview for that story, I learned how he developed a fondness for long leashes as a kid. So long as Lamarre performed well in school, his father never asked what he was up to at night. “I was a good student, so I was completely free,” he told me. “By the time I was 16, I was living on my own in Quebec City with nobody expecting any reports except for good grades.”

During the same interview, I also learned how far Lamarre was once willing to go to secure overseas business. In the early ’80s, when corporate bribes were still tax deductible in many developed nations, Lamarre was determined to win Algerian contracts for Lavalin, which merged with a rival to form SNC-Lavalin in 1991. The client contact in the African nation was a military commandant with a fondness for fierce beasts, and late one night, he and Lamarre had a playful argument over what animal is the world’s strongest.

Using his persuasive personality, the Canadian engineer convinced the Algerian commandant that polar bears are the only true kings of the animal kingdom. And when his impressed client responded by stating, “I would like to have one,” Lamarre impulsively agreed to get him one.

Regretting this promise the next day, Lamarre tried putting the guy off by describing the need for a sophisticated polar bear habitat. But the Algerian really wanted a polar bear, so Lavalin went shopping. “They come in pairs. So, I got two bears,” Lamarre told me. “After that, I don’t know what happened, but one bear slipped, broke its hip, and had to be killed.”

Lamarre was on the record when he started telling me this story, which almost gave a company public relations executive a heart attack despite the fact that it occurred long before corporate gift-giving was widely restricted. He was also laughing himself silly, which gave me the impression he liked to tell this tale and did so a lot.

I also left that meeting with the impression that Lamarre had no idea how telling a story from the good old days might influence the culture at SNC-Lavalin. And that surprised me because when I asked him what he did with his freedom from parental supervision as a kid, the answer was “everything.”

When I first reported the polar bear story in the Financial Post, Ivey Business School Professor Gerard Seijts, executive director of the Ian O. Ihnatowycz Institute for Leadership, noted that it is critical for CEOs to understand that they set the tone in their organizations whether they mean to do so or not. “What they say, do, tolerate or sanction affects how others around them feel and behave.” And as a CEO with international experience noted: “You can’t laugh about agreeing to buy a contact polar bears years ago without someone in your organization seeing it as a nod and a wink to push the envelope.”

When he retired, Lamarre handed control of SNC-Lavalin to Pierre Duhaime, who was praised as someone expected to guide the company “to new zeniths.” Instead, he recently pled guilty to a charge of helping a public servant commit breach of trust related to his role in the McGill hospital scandal.

The moral of this story—long leashes can choke companies, too.

3 responses on “SNC-Lavalin and the Corruption of Public Discourse

  1. Hon. Barry Leon

    The banner headline for your article “Why the fight against corporate corruption would be better served by focusing on punishing unethical individuals, not victimized organizations” caught my eye.

    I have been thinking that very thing since the SNC-Lavalin deferred prosecution agreement issue surfaced in the media, along with the assertions that prosecuting the company could harm Canada’s economy.

    That is the only point in the article on which I wish to comment.

    Perhaps the time has come for Canada – and other jurisdictions – to re-consider corporate criminal liability and to consider alternatives to it.

    Perhaps one valuable societal outcome of all that has gone on will be such re-thinking.

    Let’s assume acceptance in our society of strong commitments to stemming corruption and other illegal activity in which corporate employees at various levels can cause corporations to engage, whether by sins of omission or sins of commission.

    But let’s also recognize the reality – which has increased in an era of instantaneous and intense media and social media coverage – that the commencement and pursuit of criminal proceedings against a corporation, irrespective of the outcome, can cause it serious harm in many ways, and indeed be fatal to it.

    Witness, as one well-known example, the rapid demise of the major accounting firm Arthur Andersen and the consequences of that demise for its employees, its clients and the economy. To what end?

    What is the public good in destroying, harming or impeding a corporation that employs people, provides useful goods or services, and contributes to the economies of the jurisdictions in which it operates?

    One might ask, what purpose is served by the pursuit of criminal proceedings against a corporation at any time, unless the individual and the corporation are effectively one and the same?

    Corporations as a whole don’t do bad things – people do bad things.

    Of course, there is a range of situations, at one end being the corporation that has dealt with the issues by reforming its leadership, its systems, its business practices, its culture, etc. At the other end may be the corporation ‘recently caught with its hand in the till’ and needing all that reforming.

    Recognizing the range of reasons that societies have criminal liability, what is achieve for society by imposing criminal liability on corporations?

    A wide-ranging thoughtful reconsideration of the entire question would be a worthwhile exercise.

    It could lead to more effective and efficient ways of dealing with these kinds of situations.

    Not just ‘deferred prosecution agreements’ and the nature of penalties imposed on a corporation but whether criminal proceedings are an effective and efficient mechanism, or as effective and efficient as other mechanisms that we could have available.

    For example, regularly we wrest control of an insolvent corporation from its management and turn the control over to court-appointed officials to restructure and to deal with the corporation’s assets for the benefit of stakeholders.

    Why not consider the use of civil proceedings brought by the state that could lead to a court-supervised ‘restructuring’ the corporation that is doing, or has done, bad things (unless the corporation has restructured itself already, or is heading irrevocably down that road)?

    The objective would be to reform its leadership, its systems, its business practices, its culture, etc. enabling the reformed corporation to carry on its business and operations for the benefit of the jurisdiction, and all stakeholders, direct and indirect.

    Or why not have available on the menu of remedies other options such as court-appointed ‘monitors’, as we have seen used effectively in the U.S. to watch over the reformation of public authorities such as police departments, public housing authorities, education systems and so forth to deal with whatever the bad conduct has been – whether discriminatory practices or poor management and operations.

    Let’s use the momentum that the SNC-Lavalin situation has created in Canada and beyond to have a thoughtful reconsideration of corporate criminal liability, and to consider the creation of options and alternatives.

  2. Thomas Watson

    Thanks for reading, Barry. I have long thought that there should be a court monitored restructuring process for companies that have been unethically mismanaged into being “morally bankrupt.”

  3. John Dixon

    For this longtime business reader of well written press this is the kind of excellent journalism it seems no journalist any longer has the time to write and no reader the time to consider.

    Its gist for me is l’affaire Lavalin needlessly became one because public servants and politicians responsible for the introduction and first test of sensible new DPA law eschewed calm deliberation for political calculation.

    Before our upcoming federal election results in unstable government, please Tom, would you boil your 5000 carefully chosen words down to a bite or two for us mass of voters?

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