Was SNC-Lavalin denied a deal all because of three simple but misunderstood words?

Was SNC-Lavalin denied a deal all because of three simple but misunderstood words?


Former attorney general Jody Wilson-Raybould may never get to testify again before the House of Commons Justice Committee. But if somehow she ever does end up providing more testimony about the SNC-Lavalin affair, the first thing she should do is explain why federal prosecutors decided that a deferred prosecution agreement (DPA) was not appropriate for the company, and why she chose not to overrule them.

She may have very good reasons. Certainly some have argued that she had no choice. The prime minister has insisted he was trying to protect SNC-Lavalin jobs when his staff repeatedly implored Wilson-Raybould to intervene in the decision of the Public Prosecution Service of Canada to decline a DPA. It has been widely noted that in the relevant section of the Criminal Code, “national economic interest” is specifically not to be taken into account in the decision to offer a DPA in lieu of a criminal prosecution. Some commentators have thus presumed that the standoff between the attorney general and the PMO was over that disagreement: the relevance of SNC-Lavalin’s “national economic interest.” In fact, the origin of that phrase as it now appears in the legislation had nothing to with protecting jobs.

A basic rule of interpretation is that every word a legislator uses is to be given a meaning. The phrase “national economic interest” was imported from Article 5 of the OECD Anti-Bribery Convention of 1997. That article says: “Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”

I was Secretary General of the OECD at the time, and I actively participated in the signing of the convention in December 1997. I can tell you that in this meaning, the phrase was intended to prevent exporters in OECD countries from avoiding prosecution under the convention by arguing that exports were in the national economic interest — and that bribery was therefore required to protect their export markets. That is what the word “national” was put in there to mean. I do not recall jobs ever being discussed as relating to the national economic interest as defined in the convention, nor were DPAs ever considered in the convention.

In other words, at least as far as the meaning of the original wording used in the convention (that would later be imported to Canada’s Criminal Code section covering DPAs) goes, there was no “national economic interest” exclusion contemplated that would have automatically disqualified SNC-Lavalin from a deal.

Consider the context. The world then was witnessing a dramatic increase in international free trade, greatly enhanced by the recent creation of the World Trade Organization in 1995. Within that context, OECD members saw international bribery of public officials as a major impediment to advancing global trade and investment.

Corporations from OECD countries routinely bribed foreign public officials, usually those in developing countries who handled, or could influence, the award of procurement contracts. So, within the OECD membership, bribery that would be completely illegal if done at home was at least tacitly condoned for businesses selling in international markets. In some countries, companies were permitted to treat such bribery payments as deductions for income tax purposes.

This meant that international contracts for products, such as military equipment or civilian jetliners, were handed out not on the basis of quality or price but on the size of the bribes being paid. The convention was intended to put competing OECD exporters on a level playing field that would not have the trade distortions created by bribery.

In a 2017 consultation paper discussing the prospect of DPAs in Canada (the legislation was passed in 2018), the federal government said such agreements would protect the “blameless,” such as innocent company employees, while enhancing the prospects for prosecuting those who committed the criminal acts inside and outside the company. Obviously, the idea of preventing certain job losses was actually considered at the time to be a benefit of DPAs.

Prosecutors in Canada have already brought charges against individual SNC-Lavalin employees accused of crimes, and the company has reportedly cleaned up its act. Still, prosecutorial independence gives the option to the prosecutors to either offer a DPA or to follow the criminal prosecution route, with the attorney general having the power to agree with the prosecutor or overrule her. A criminal conviction would seem to serve no useful purpose at this point. But it could have a serious impact on the “blameless “described in the government’s consultation paper, because it would prevent the company from bidding on government contracts for as long as 10 years and there could be job losses.

DPAs are available for prosecutors to use, and they are frequently used in the United States. It is, of course, entirely possible that the Public Prosecution Service of Canada had good reasons to not offer one to SNC-Lavalin. It is entirely possible those reasons have nothing to do with the interpretation of the words “national economic interest” as something to do with protecting jobs. But the reasons that prosecutors declined to offer a deal to SNC-Lavalin — and the reason the former attorney general chose not to overrule that decision — have not been revealed. Let’s hope, after so much uproar and scandal, that it was not simply because of a mistaken interpretation of the words “national economic interest.”

Donald Johnston is past Secretary General of the OECD and is a former federal Liberal cabinet minister.

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