Canada has come full circle, with prosecution of corporate crimes again determined by politics. Read the latest from Probe International’s Patricia Adams on SNC-Lavalin in today’s National Post opinion.
What’s old is new again. Before corruption of foreign officials became illegal in Canada in the late 1990s, Liberal governments blessed bribes that facilitated exports. After the Harper Conservatives came to power in 2006, the tide turned against corruption, with companies such as SNC-Lavalin being prosecuted, much to the chagrin of Liberals. Now the Liberals are back in power, and thanks to their recent introduction of Deferred Prosecution Agreements (DPAs), corruption has made a comeback.
In the 1970s, when Jean Chrétien was the Liberal trade minister, he urged Canadians not to put their “head in the sand” and pass up overseas sales by being fussed over bribes. The late Bernard Lamarre, former head of Lavalin Inc. (now SNC-Lavalin), boasted to Maclean’s in 1991 that whenever he did business in the Third World, he never handed out bribes without first demanding a receipt. “I make sure we get a signed invoice,” he explained. “And payment is always in the form of a cheque, not cash, so we can claim it on our income tax!”
Canada passed the Corruption of Foreign Public Officials Act in 1998 because it was forced to — thanks to an OECD convention that had deemed bribery illegal, and Canada had no choice but to comply … on paper. Federal governments spent the next decade largely ignoring its legislation.
A 2009 Transparency International study castigated Canada as one of the countries in the developed world that was most tolerant of corruption, finding we undertook “little or no enforcement” of our anti-bribery legislation and placing our record on par with the likes of Greece, Slovenia, South Africa and Turkey. A 2011 review by the OECD’s Working Group on Bribery likewise lambasted our government’s enforcement of its anti-corruption law, saying that “given the size of Canada’s economy and its high-risk industries, the Working Group recommends Canada review its law implementing the Convention and its approach to enforcement to determine why it has only had one conviction to date.” That one conviction, the 2005 Hydro Kleen case, in which an Alberta-based company pleaded guilty to bribing a U.S. immigration official, itself demonstrated Canada’s lax attitude. It led to a slap on the wrist: a fine of a mere $25,000, less than the amount of the bribe.
Canada’s ill-odour for condoning corruption began to dissipate in 2008 when, under the minority Conservative government, the RCMP created its International Anti-Corruption Unit, leading to charges against SNC-Lavalin executives as well as the firm itself and two of its subsidiaries. Following the Conservatives achieving a majority in 2011, the federal government ramped up anti-corruption efforts through its Integrity Framework, which automatically barred any company convicted of a criminal offence from doing business with the federal government for 10 years. For SNC-Lavalin, which depended heavily on government contracts — especially since its corruption also led to its debarment from World Bank contracts — the Integrity Framework represented an existential threat.
Enter the concept of DPAs, a kind of plea bargain in which a company and its executives promise to clean up their act, the company agrees to pay a fine, and all are spared a criminal record. Not surprisingly, DPAs were particularly championed by the Canadian Council of Chief Executives (since renamed the Business Council of Canada), whose CEO-members would be its chief beneficiaries. Without a credible fear of a criminal conviction that led to their incarceration, CEOs could treat bribes on a businesslike basis, weighing the benefit from winning a contract through a bribe against the likelihood of a fine that exceeded the bribe’s benefit. In effect, DPAs decriminalize bribery and other corrupt practices while also promoting them, by making bribes merely a cost of doing business.
A Deferred Prosecution Agreement (is) legislation that deems ‘the public interest’ a prime criterion for whether a prosecution should proceed — (allowing the) prosecution of corporate crimes to be determined largely through lobbying and political considerations.
The Canadian Council of Chief Executives claimed that DPAs would discourage, rather than encourage, corporate crime. “Deferred prosecution agreements and similar alternative-enforcement mechanisms act as powerful incentives for firms to disclose ethics breaches and co-operate with authorities — co-operation that leads to higher levels of enforcement,” argued the council’s then-president and CEO, former Liberal deputy prime minister John Manley, in May 2015. Ultimately, this argument did not wash with the Harper government, which eschewed DPAs in favour of traditional prosecutions of corporate crime.
Not so the Trudeau government, which replaced the Conservatives in November 2015 and almost immediately — on Dec. 10 that same year — signed an administrative agreement allowing SNC-Lavalin to continue to win contracts despite the charges pending against it. In 2018, the Trudeau government announced plans to amend the Integrity Regime (formerly known as the Integrity Framework) by giving the federal government “greater flexibility in debarment decisions,” thus politicizing it and effectively gutting the process.
Combined with the Liberals’ passing of legislation in 2018 allowing DPAs, also known as remediation agreements — legislation that deems “the public interest” a prime criterion for whether a prosecution should proceed — Canada has now come full circle, with prosecution of corporate crimes to be determined largely through lobbying and political considerations, rather than strictly through the rule of law. The bribery of foreign officials is back as a routine of business.
• Patricia Adams is an economist and executive director of Toronto-based Probe International.