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SNC scandal casting chill over DPA regime before it can show its worth, advocates fear

SNC scandal casting chill over DPA regime before it can show its worth, advocates fear
Business
The political backlash from the SNC-Lavalin scandal could put a chill on the use of deferred prosecution agreements, something that advocates fear could sideline the settlement mechanism before its potential merits can be demonstrated.

“I think that is a real risk,” said Jon Levin, a veteran corporate lawyer at Fasken Martineau DuMoulin LLP in Toronto, who believes the agreements can play a constructive role in the justice system.

Chief among Levin’s concerns is the impact on a key plank of the deferred prosecution regime that is meant to encourage companies to be forthright about corporate wrongdoing in exchange for fines and corrective action instead of criminal prosecution.

“If Canadian authorities are out of step with their counterparts in other countries (including the United States and United Kingdom) that have embraced remediation … there may be little incentive for Canadian companies to voluntarily report and remedy wrongdoing,” he added.

While they have been criticized for allowing companies to avoid punishment, deferred prosecution agreements (DPA), also known as remediation agreements, won support in some surprising places before becoming part of the Criminal Code in Canada last year.

The anti-corruption organization Transparency International Canada, the domestic chapter of the anti-corruption organization that advises governments and businesses around the world, penned a report that cautiously supported their implementation, provided companies faced financial penalties and individual wrongdoers were held accountable.

Prime Minister Justin Trudeau delivers remarks on the SNC-Lavalin scandal on March 7. Canadian Press/Justin Tang

The SNC-Lavalin affair, which has proven to be a test case of sorts for DPAs in Canada, has so far triggered the resignation of two cabinet ministers and Prime Minister Justin Trudeau’s principal secretary, and led to days of testimony before the House of Commons justice committee in Ottawa.

The process and its aftermath have revealed a need for more information and clarity about the deferred prosecution regime, said James Cohen, executive director of Transparency International Canada.

There is definitely room for more robust explanation on how the remediation agreement system works

James Cohen, executive director of Transparency International Canada

“There is definitely room for more robust explanation on how the remediation agreement system works,” he said. “There are different interpretations of how the law can be used even within the government, particularly around the issue of what is public interest.”

Montreal-based SNC-Lavalin is accused of bribing officials to secure work in Libya and could face a decade-long ban on bidding for government contracts in Canada if convicted.

It learned last fall that it would not be invited by the director of public prosecutions to negotiate a DPA. A Federal Court judge s truck down SNC’s appeal for judicial review of that decision on March 8.

Former Canadian Justice Minister Jody Wilson-Raybould testifies about the SNC-Lavalin affair before a justice committee hearing on Parliament Hill in Ottawa on Feb. 27. Lars Hagberg/AFP/Getty Images

In February, former justice minister and attorney general Jody Wilson-Raybould testified before the Commons justice committee that she faced sustained and inappropriate pressure from senior government officials to step in to resolve the SNC Lavalin charges after she had decided not to intervene in the decision of the Public Prosecution Service of Canada.

Trudeau’s former principal secretary and close friend Gerald Butts later testified that there were discussions with Wilson-Raybould about the SNC file, but that they weren’t outside the realm of normal government operations.

The justice committee also heard suggestions that the roles of justice minister and attorney general — the latter of which has the power to intervene in Public Prosecution decisions — should potentially be separated to draw a clearer line between the political role and the judicial one.

The controversy comes at a time when Canada’s place in the international fight against corruption is slipping. Transparency International’s most recent report on the subject, in 2018, revealed that Canada has fallen further behind other countries that are part of the Organization for Economic Cooperation and Development’s (OECD) anti-bribery convention, slipping one notch to “limited enforcement,” the second-lowest category.

In 2011, the country’s record on enforcement of foreign bribery offences was singled out in a critical report from the OECD, which noted that there had been just one successful prosecution completed under a law passed in 1999.

On Monday, the OECD announced that it was in the SNC-Lavalin affair, but that it was encouraged by Ottawa’s response to those concerns so far.

Jim Ridler, an adjunct professor at the Smith School of business at Queen’s University and former ethics advisor at Imperial Oil Ltd., said Canada has come a long way in tackling corruption since a beefed-up law was passed in 2012, with strong new penalties such as a decade-long ban on bidding for government contracts that stand in sharp contrast to a “history of limited concern by the federal government.”

However, he said Canada has a “terrible record” of taking too much time to bring cases to court.

“Part of the problem is slowness in appointing judges, but there is a lot more to it,” said Ridler, who was a longtime director of the Canadian Centre for Ethics and Corporate Policy.

Last month, charges were stayed against a former vice-president of SNC-Lavalin, who was among a handful of individuals charged in connection with the alleged bribery, after a judge ruled he had waited too long to have his case heard. A Supreme Court of Canada decision in 2016 capped the length of a reasonable wait for trial at 30 months.
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