SNC-Lavalin Lobbying Scandal Has Put Justin Trudeau In a Corner

With the resignation of his right-hand man, Gerald Butts, the prime minister is now facing the biggest test of his career.

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Feb 19 2019, 3:51pm

The Canadian Press 

Despite its immense geography, Canada is actually a very small country. So small, in fact, that it could produce this video from 1983, where Chief Bill Wilson tells Pierre Elliott Trudeau that his daughter's dream is one day becoming prime minister.

Thirty-six years ago, the room erupted in laughter at the thought of an Indigenous woman calling the shots around the Cabinet table. It is harder to imagine that the heirs of Pierre Trudeau are laughing off Jody Wilson-Raybould these days. The MP formerly known as Canada’s highest-achieving First Nations Attorney General-cum-Veteran’s Affairs minister may no longer have her seat around the table, but she’s got Justin Trudeau in the palm of her hand.

You could be forgiven for thinking up to now that this was a scandal strictly for hyper-connected politics nerds. You’re not wrong, but yesterday’s surprise “nothing to see here” resignation of Liberal mastermind Gerald Butts has taken us from a back-page simmer straight into a front-page boil.

The high court drama around l’affaire Lavalin—corruption allegations, Cabinet resignations, a PMO meltdown and resignation of its most powerful advisor, a high-profile public spat between Trudeau and Wilson-Raybould as metaphor for “reconciliation,” a reminder that Quebec and English Canada are two fractious solitudes straddled by backroom balancing acts—is almost enough to make the corporate law at its heart sexy. Almost.

At issue in all of this is the fate of SNC-Lavalin, crown jewel of corporate Quebec and global engineering firm extraordinaire. Not only does the company support thousands of good construction jobs both at home and abroad, but its many infrastructure contracts with all levels of Canadian governments mean SNC is literally woven into our national fabric.

In other words, it’s too big—and too Quebec—to fail.

This is where the trouble begins, because this extremely important Canadian company has also been up to its entrails in shit. Former CEO Pierre Duhaime pleaded guilty earlier this month for his role in a bribery scandal surrounding a Montreal hospital, and SNC-Lavalin and its subsidiaries have been charged by the RCMP for allegedly paying out nearly $48 million in bribes to Libyan officials between 2001 and 2011 at the same time as they were defrauding the country some $129 million.

Meanwhile, back at the ranch, the company was also illegally funnelling upwards of $100,000 to the federal Liberal party between 2004 and 2011. (About $8,000 went to the Conservatives.)

Now, you’d think the standard procedure for white-collar crime in Canada would be to prosecute it. But this costs money, time, and having two sets of hyper-powered legal teams hurl court resources at each other like a very fancy food fight. A positive outcome is not guaranteed for either side. Worse, should it turn out that SNC-Lavalin is in some way responsible for bribing and defrauding Muammar Gaddafi’s Libyan government, then the company could be barred from bidding on any federal infrastructure contracts for a decade. Quel dommage!

None of this is ideal: not for the company’s directors, nor its many employees across Canada, nor for a federal Liberal party who counts SNC-Lavalin as a close corporate ally and valuable institutional bulwark in Quebec. Much better for everyone involved if this unfortunate situation could be smoothed down outside of a courtroom.

Fortunately, this is Canada, where peace, order, and good government are allowed—even encouraged!—to take precedent over principle. Better to have everyone parley around a backroom table to come up with a win-win for everybody, right? This country was built on negotiation and treaty. Things are much easier this way, especially when everyone just wants what’s best for the country—which is what is best for industry, what is best for stakeholders in Quebec, and what is best for Canada’s natural governing party. And everyone involved agreed after several dozen meetings between government officials and Lavalin lobbyists—that the best way forward here was to surreptitiously alter the Criminal Code by introducing ‘Deferred Prosecution Agreements’ to the 2018 Budget.

DPAs have been criticized as a means to let corporate criminals “off the hook,” which isn’t entirely true. They allow companies facing charges to avoid a trial (and potential ban on federal contracts), but the company still undergoes a full deposition, hefty fines, and aggressive oversight to ensure that some semblance of justice is meted out. It’s the Bay Street version of a plea deal. They’re lighter, and quieter, and don’t actively disrupt those honest blue-collar workers with the misfortune of having greedy idiots for bosses. You can see why this would appeal to both SNC-Lavalin and the Liberals. Not only does the government get its pound of flesh, but everything also stays hunky-dory in Quebec, which has been the lodestar of the Liberal party since Trudeau Sr. sent soldiers into Montreal.

So far, so good. The new DPA legislation was buried deep inside last year’s omnibus budget bill. (Despite 2015 campaign promises to forsake the practice of burying controversial legislation deep into broader unrelated bills so that they are more difficult to identify and oppose, it seems the Liberals have realized that this old Harperite trick is too good to give up.) There is no need to rock the boat. Special dispensations for corporate malfeasance would be a tough sell to many voters in this country, and what the plebs don’t know can’t hurt them.

The plan was foolproof, except for one catch: while DPAs were now officially on the books in Canada, SNC-Lavalin wasn’t guaranteed to get one. It seems they had been lobbying everyone in Ottawa except the people who could actually cut them a deal; David Cochrane writing for CBC reveals that “in its 80 recorded meetings to lobby on justice issues, SNC-Lavalin never once spoke to Wilson-Raybould or anyone from the Department of Justice.” One wonders whether this was an oversight or intentional.

While all this was going on, Trudeau now-famously met with Wilson-Raybould in September 2018 to inform her that any decision on the matter was hers and hers alone. Meanwhile, SNC-Lavalin lobbyists continued meeting officials from Finance and the PMO.

The final decision to proceed with prosecution against SNC-Lavalin came down in early October. They met again with a PMO advisor, and shortly thereafter decided to challenge that decision. This is when the bombshell Globe and Mail report alleges Wilson-Raybould was “pressured” by PMO officials to intervene in the SNC-Lavalin case. (Trudeau denies this occurred and Wilson-Raybould has declined comment, citing “solicitor-client privilege.”)

Whether or not this “pressuring” occurred, Wilson-Raybould was clearly less enthusiastic about using her office to defuse the charges against SNC-Lavalin than its lobbyists or fellow-travellers in government. Her stubborn spine was troubling the way Canada is supposed to work. Cabinet is supposed to be a sounding board for the prime minister’s marching orders, not some hippie-dippy committee of equals responsible for their respective branches of state. This would not do. A message must be sent. Chain of command and decorum of office and the National Interest that is SNC-Lavalin must be acknowledged. Put @Puglaas out to pasture and bring in someone who knows the score.

(OK, I’m being uncharitable. We don’t actually know that this was the reason she was pushed from Justice to Veteran’s Affairs in January’s cabinet shuffle. Maybe it was because she refused to bow to pressure over SNC-Lavalin. Maybe it was all those speeches coyly lamenting the distance between Liberal reconciliation rhetoric and the actual track record. Maybe it’s because she wasn’t fluently bilingual and this suddenly became significant to her job performance a month ago after three years in the portfolio. Or maybe it genuinely was because Scott Brison quit and Veterans is just where Wilson-Raybould happened to land in the “musical chairs” method of shuffling Cabinet. We may never know!)

Anyways, as it turns out, it wasn’t so much that Wilson-Raybould didn’t know the score as much as she may have been playing a move or two ahead. That’s what has transformed this from an otherwise dry procedural drama into a full-blown Canadian Scandal™.

When the prime minister attempted to cavalierly brush away suggestions of impropriety last week by noting that Wilson-Raybould’s continued presence in his Cabinet “speaks for itself,” she immediately resigned in one of the better political flexes of recent memory. A visibly irritated Trudeau then appeared at a Winnipeg transit announcement huffing about “Jody’s” personal betrayal. It’s uncomfortable, but then I’d be flustered too if one of my star ministers quit amidst a corruption scandal by lawyering up with a former Supreme Court judge.

It was slow to start rolling, but the situation is spiralling into a worst-case scenario for the prime minister. In the middle of a (mostly) holiday Monday, Trudeau’s right-hand man and literal best friend Gerald Butts abruptly resigned to focus on defending his personal reputation. This is a hair or two below “scorched earth” as far as damage control goes.

None of this is as surprising as it is inconvenient. This whole affair is classic Confederation. Questionable tycoons bending the ears and brains of policymakers because a circle needs to be squared in Quebec. Big John A. Macdonald/Brian Mulroney energy. Canada doesn’t get any more “back” than this. It never went out of style. It’s the only goddamned show in town.

What comes next in all this is anybody’s guess. Butts’ resignation suggests some tangly accusations about PMO officials might be forthcoming, and God knows who or what else is going to come out of the woodwork before all this is over. The eve of a ruthlessly bitter election year is an especially bad time for a governing party to come apart at the seams over corruption allegations. Trudeau’s personal popularity has been on a steady decline since 2016, and nothing about the SNC-Lavalin situation—or his reaction so far—suggests it will help. That Trudeau is now pitted against a well-respected Indigenous woman rather than some racist heckler dredged from the YouTube comment section also means he’ll have to draft up a completely new playbook.

The game has certainly changed. No one in Ottawa is laughing much about Bill Wilson’s daughter anymore.

All Jody Wilson-Raybould has to do is hold her poker face. She knows the trick is to play her opponents, not her hand. So far they’ve excelled at playing themselves in the anxious space of her silence.

You have to wonder what they’ll do if she lays down an ace.

Follow Drew Brown on Twitter.