Motion sickness & SNC Lavalin

Ottawa has been captured by the revelations of the SNC Lavalin scandal.  Severely normal Albertans can expect the Ottawa spinning tilt-a whirl to be operating at high speed for the next week or so.  The four main facts at the bottom of this post should help reduces the dizziness you might soon feel.

First the Back Story

From humble beginnings in 1911 SNC Lavalin (SNC) had grown to become an international company based in Montreal.  It is worth about $8.2 billion, with annual revenues of $10 billion.  It designs and builds big international construction projects – bridges, big buildings and other major infrastructure. Its last major project in Alberta was the AltaLink electricity line.   Given the nature of their work, many of the projects are sponsored by governments in Canada and around the world.  

Sadly, the company has a very bad track record of bribery and other illegal activities related to securing contracts.  

  • The World Bank suspended them from bidding on projects for 10 years because of bribery in Bangladesh and Cambodia
  •  The RCMP has charged them with bribery related to projects in Libya. The allegation is they offered $47 million to Moammar Gadhafi and tried to help his son get out of Libya to Mexico. The allegation is that between 2005 to 2011, the company defrauded the Libyan government to the tune of approximately $130 million.

Closer to home:

  • A $1.3 billion construction project of the McGill University Health Center was obtained as result of about $20 million in kickbacks to public servants
  • SNC won a $127 million contract in the early 2000’s to refurbish Montreal’s Jacques-Cartier bridge.  Two years ago, a public official pleaded guilty to accepting $2.3 million in bribes from SNC.  And RCMP are now continuing to investigate SNC’s role in all that.
  • SNC also made illegal campaign contributions to the federal Liberals ($107,000) and Conservatives ($10,000) over a period of 2004 to 2011.

All this came to a head in 2014, and a new board of directors and a CEO were brought in to clean up the mess and install a law-abiding culture.  Heads rolled and new ethics principles were approved. But the main issues left unsolved are the Libyan fiasco and the Montreal bridge that are still before the courts.

So, SNC began an active lobbying effort to obtain a plea agreement that would allow them to continue to get government contracts.  They argued that the culprits had long since left the company, and the inability to bid on contracts would result in job losses. Perhaps the company would even move its headquarters from Canada.

Their full court press included 60 meetings in the past year with federal Ministers, MPs, Senators and officials of which 19 were with the Prime Minister’s staff.  While not all of the interactions likely revolved around the court case, severely normal Albertans can expect the issue of getting government contracts was always top on mind. 

The federal government accommodated SNC with a provision slipped into the last budget that permitted plea agreements for companies. And then they put ‘pressure’ on Attorney General Wilson Reybould urging her to tell her prosecutor to use the plea agreement process rather than the criminal courts. But she wouldn’t play ball; got demoted and after a while, probably leaked enough of the story to get the press involved.

This created a firestorm in Ottawa; Wilson Reybould was demoted, then there were resignations, then committee testimony, whisper campaigns, and then more calls for resignations. 

But if you de-clutter all the spin, dust and smoke, the fundamentals remain:

  1. Despite the SNC legal team slow-walking this through the courts (hoping that for lesser penalties after 7 or 8 years), the Libyan bribery case is still a big deal. Remember – defrauding a poor country of $130 million and suborning its leader and his family should result in some punishment. 
  2. In Canada, corporations are treated like individuals under the law so the idea of a plea agreement to treat SNC differently is smelly.
  3. The SNC argument about jobs being at risk, is a bit of a stretch.  Although SNC might not get contracts, other companies would, thus creating jobs here in Canada.
  4. The Attorney General’s job is be make decisions based on law not political favoritism.

Severely Normal Albertans can expect the spin machine will be working at top speed in the coming weeks to obscure the four fundamentals of the situation.