Scandal With a Capital S(NC)

Taking a cue from our neighbours, Canada's smack-dab in the middle of its most serious political scandal in years — and we're explaining every detail.
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Scandal With a Capital S(NC)

Taking a cue from our neighbours, Canada's smack-dab in the middle of its most serious political scandal in years — and we're explaining every detail.
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Twitter

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THE BACKGROUND

Unless you’ve somehow managed to avoid all media (and social media, for that matter), you know that there’s a scandal rocking our nation’s capital right now.

Our Liberal leaders have been accused of putting inappropriate pressure on our former justice minister, Jody Wilson-Raybould, pushing her to intervene in a criminal case in favour of the accused.

There’s a lot to unpack with this one, so grab your coffee (we’ll wait), and get comfortable.

Today, we’re talking about the SNC-Lavalin scandal.

LET’S GO BACK TO THE BEGINNING

Way back in 2015, the RCMP criminally charged SNC-Lavalin (an engineering and construction firm based in Montreal) with fraud and corruption related to its business operations in Libya.

Now your first question might be: What was a Canadian company doing in Libya?

We’re glad you asked.

SNC-Lavalin, while based in Montreal, is actually an international company that employs more than 50,000 people around the world. (More than 8,000 of those are in Canada.)

It has offices everywhere from Algeria to Angola to Malaysia to Morocco, and deals with government contracts, mining, transportation and infrastructure.

Now back to the charges.

In 2011, Swiss authorities first got tipped off about SNC’s questionable business practices when they began investigating transactions involving Slim Cheboub, the son-in-law of former Tunisian dictator Zine El Abidine Ben Ali, who had been ousted that same year. Switzerland then tapped the RCMP to assist, and the two countries opened a joint investigation.

Clearly, they didn’t like what they found.

Now your second question might be: why is Switzerland even involved? And it’s a good one. According to reports, some of the “questionable business dealings” included using Swiss bank accounts — surprise, surprise — to funnel money.

At the same time Canada and Switzerland were conducting their investigation, SNC opened its own investigation where it found millions of “improperly booked payments” that the company believed to be bribes.

This all led back to a super senior SNC executive (a.k.a. 56-year-old Riadh Ben Aïssa, who was then head of global construction at SNC), who authorities believed was bribing Libyan officials in order to land more business in North Africa.

While these dealings happened overseas, we have a law in Canada that prohibits Canadian companies from conducting any shady business in other countries (which includes shelling out bribes) so the charges followed Ben Aïssa home.

THE GAFFE WITH GADDAFI

The big break in the case came when Ben Aïssa bribed Libyan leader Muammar Gaddafi’s “playboy son” Saadi Gaddafi in order to secure “lucrative construction projects in Libya for SNC.” He ended up pocketing “tens of millions of dollars,” which led to his arrest.

Obviously, SNC-Lavalin claimed it was completely unaware of Ben Aïssa’s tactics, and he was fired. He spent two years in a Swiss prison before heading to trial.

He entered a plea deal of guilty, and returned $47 million(!) worth of “improperly obtained assets” — $16 million of which would be returned to SNC.

One of the key components here is that SNC was recognized as an “injured party” by the court, meaning the court didn’t find them to be part of or privy to the crime. There was no proof that the company knew (or didn’t know, for that matter) what was going on in Libya. The only insurance it had against executives using funds as bribes was an “integrity check,” which most would also call complete and utter bullsh*t. 

THE CHARGES

Oh boy, you might want to get a pen for this one.

When it comes to the SNC-Lavalin case, it seems like everyone’s taking everyone to court.

First the obvious: there were criminal charges against Ben Aïssa, who’s believed to have been the mastermind behind the bribes in Libya. He served a three-year prison sentence in Switzerland, and was then extradited to Canada. He then faced fraud charges at home related to the McGill University Health Centre project, which was awarded to SNC. Ben Aïssa pleaded guilty to those charges and is now serving a 51-month prison sentence.

SNC-Lavalin is also taking Ben Aïssa to court, suing him and another contractor for $1.8 million.

The company is also suing its former CEO Pierre Duhaime over the McGill University Health Centre, after he admitted in criminal court that he helped the hospital’s former senior manager, Yanai Elbaz, commit a breach of trust tied to $22.5 million in bribes.

Then there are the corporate criminal charges against SNC. (See above.) The charges have been filed against SNC and its subsidiaries (SNC-Lavalin Construction Inc. and SNC-Lavalin International Inc.) and allege the companies defrauded numerous public agencies in Libya of almost $130 million.

Oh, and SNC shareholders are suing the company for $75 million.

SNC, of course, denied all wrongdoing in all cases, blaming Ben Aïssa for what happened in Libya: “These charges relate to alleged reprehensible deeds by former employees who left the company long ago.”

The company also claims it had no idea what Duhaime was up to when it came to the McGill University Health Centre: “Had SNC-Lavalin known of such criminal wrongdoing, it would have terminated the defendant Duhaime for cause.” The company is now trying to recoup the $1.17 million it paid in legal fees for Duhaime and a $1-million retirement package.

OK, BUT HOW DID THE PRIME MINISTER GET INVOLVED?

So now that you know exactly how SNC-Lavalin got into so much trouble with the authorities, let’s dive into when (and why… and if…) the prime minister got involved.

SNC-Lavalin found itself in a boatload of trouble with the RCMP. It’s facing criminal charges that could completely obliterate its business. If SNC is found guilty of fraud and corruption in criminal court, it would be barred from bidding on any federal projects for 10 years and any current federal projects would be in jeopardy.

That’s a lot of money to lose — and a good number of Canadian jobs could be affected by such a loss.

So, SNC tried its best to lobby the federal government to go easy, taking its plea all the way up to the Prime Minister’s Office.

The company asked that the government impose the remediation agreement regime or a deferred prosecution agreement (which it should be noted was a brand new 2018 addition to the Criminal Code 🤔). That would’ve meant the company could skip criminal court, and instead pay a hefty fine for its wrongdoing.

In that case, its federal projects could stay intact, it could continue bidding on new federal projects, and no employees in Montreal would lose their jobs.

But there was just one problem…

The federal director of public prosecutions, Kathleen Roussel, refused to negotiate a remediation agreement.

So, according to reports, the Prime Minister’s Office stepped in. And when it didn’t get the results it was looking for, the prime minister shuffled some things — and some people — around.

THE PLAYERS

There are now several versions of events, but this is what we know for sure: Senior members of the Prime Minister’s Office (including the prime minister) had several conversations with our then justice minister and attorney general, Jody Wilson-Raybould, about the SNC-Lavalin case.

• Jody Wilson-Raybould

For a long time, Wilson-Raybould was prevented from speaking about what happened due to attorney-client privilege. Eventually, the prime minister waived that privilege, allowing Wilson-Raybould to testify in front of the House of Commons justice committee — and what she had to say didn’t bode well for the PMO.

According to the MP, she was subject to inappropriate pressure to intervene in the SNC-Lavalin case from at least 11 members of the Prime Minister’s Office.

She called it “a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the attorney general of Canada.” She noted at least 10 phone calls, and multiple meetings, emails, and text messages, all of which were backed up with “verbatim texts and contemporaneous notes.”

Coincidentally (or not so coincidentally), shortly after these conversations took place, Wilson-Raybould was removed from her position as attorney general, and reassigned to the ministry of Veterans Affairs.

She then resigned from Trudeau’s cabinet altogether on Feb. 12, 2019.

• Gerald Butts

Amidst all the reporting and speculation, Trudeau’s principal secretary, Gerald Butts also resigned last month, saying it was in the “best interests of the office and its important work.” Butts also took the opportunity to unequivocally deny that the Prime Minister’s Office did anything wrong, saying the accusations were “simply not true.”

After Wilson-Raybould’s testimony, Butts wrote a letter to the justice committee asking to have his time to speak. He rebutted (ba-dum-bum) her version of events, saying he was “confident” that “nothing happened” beyond normal government business, and that he had no idea how any of the conversations he had with Wilson-Raybould (or those he was present for) could constitute inappropriate pressure.

Butts also noted that the January shuffle had nothing to do with the case, but it was a result of Scott Brison, the former president of the Treasury Board and MP for Kings-Hants, deciding to leave politics.

• Michael Wernick

Privy Council Clerk Michael Wernick was also called to testify in front of the justice committee — twice. He mostly followed Butts’ version of events, arguing that the PMO didn’t “pressure” Jody Wilson-Raybould to intervene, but simply alerted her to new information related to the case.

Wernick pointed out that there were “new facts that emerged between September and December” of last year, including SNC-Lavalin’s “tanking shares” and “communications with the new premier” of Quebec that “changed the risk calculus around prosecution of the company.”

He said the “economic impacts of jobs … is a relevant public interest consideration.”

However, the justice committee continually asked if there was any proof that those 8,500 Canadian jobs were in danger, and neither Butts nor Wernick could provide any evidence that that was the case.

• Jane Philpott

Then, last week, Jane Philpott abruptly resigned as Treasury Board president. She said she’d lost confidence in the prime minister over the SNC-Lavalin scandal. The departure added more fuel to the fire.

• Prime Minister Justin Trudeau

According to Wilson-Raybould, not only was Trudeau directly involved, he likely knew about the other conversations between his office and the former attorney general. According to her testimony, Trudeau cited the possible job losses and the upcoming election in Quebec. When Wilson-Raybould asked him point-blank if he was interfering with her role, he took a step back, said no and that they simply “needed to find a solution.”

He held a press conference on Thursday, where he took responsibility for what he described as an “erosion of trust” between his office and Wilson-Raybould, but denied that there was ever any inappropriate pressure. He also made it clear that he was not apologizing for his — or his staff’s — behaviour.

WHY DOES IT MATTER?

Well for one, it’s become abundantly clear that SNC-Lavalin has a history of breaking the law. While losing 8,500 jobs (if it were to wipe out its entire Montreal workforce) would be devastating, do we turn a blind-eye to the rule of law just to keep jobs intact?

Secondly, should the government be allowed to intervene in judicial proceedings? The court and the government are separate for a reason, allowing politicians and the people to be held to the same standards.

If Prime Minister Justin Trudeau (and his office) had successfully intervened in the SNC-Lavalin case and gotten the company the deferred prosecution agreement it wanted, how would that have affected the next election? Would SNC-Lavalin be indebted to the Liberals? Would it have encouraged its employees to donate to the Liberals? Would those employees feel like they needed to lobby for the government that likely saved their livelihood?

WHAT HAPPENS NEXT?

Well, we’re not really sure.

The NDP is calling for a public inquiry. Conservatives want Trudeau criminally investigated and have demanded he resign from his post as prime minister.

While a criminal investigation is unlikely, the federal ethics commissioner is looking into whether or not the Prime Minister’s Office pressured former justice minister Jody Wilson-Raybould to cut a deal with SNC-Lavalin.

And the scandal’s bound to affect the 2019 general election: one in four Canadianssaid this whole debacle will influence their vote.

As for SNC-Lavalin, despite its enormous criminal sh*tstorm, it appears to be business as usual. The company was just awarded a $660-million light-rail transit contract to design, build and maintain an additional 16 kilometres of track along Ottawa’s Trillium Line.

And that’s everything — literally, everything — you need to know about the SNC-Lavalin scandal.


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