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What about the workers? (SNC etc.) – Patrick Dillon

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May 3, 2019

What about the workers? (SNC etc.) – Patrick Dillon

By

What About the Workers?

Reflections on the SNC Lavalin Affair from a Jobs Perspective

 

By Patrick Dillon, Business Manager – Provincial Building & Construction Trades Council of Ontario

In most media reports, the recent controversy surrounding the federal government’s handling of the SNC Lavalin affair has shed light on legal issues regarding prosecutorial independence and alleged political interference from the Prime Minister’s Office (PMO), prompting commentators to debate whether the PMO overreached its powers in communications with former Minister of Justice and Attorney General Jody Wilson-Raybould, who refused to pursue a remediation agreement with the company in dealing with corruption charges. The unfolding story, which continues to reveal new information on an almost daily basis, has Canadians reflecting on the nature of corporate and political power in Ottawa, and how the ‘public interest’ has been framed and affected by these events.

However, few observers have approached the subject from the explicit vantage point of workers’ interests (i.e. the interests of SNC Lavalin’s 9,000 Canadian employees). I do not speak for those employees, but as Business Manager of a provincial Building Trades Council that does represent private sector employees (some of whom do work indirectly for SNC Lavalin), I sympathize and understand the sense of anxiety, concern, and frustration that those SNC employees must feel when potential disruptions to their livelihoods emerge, as has been the case since the story was revealed. The spectre of a criminal conviction for SNC Lavalin invokes reputational damage for the company, but more importantly, would translate to substantial economic harm to employees who could face termination.

Any time there is talk of mergers, acquisitions, relocations or shut-downs of major private sector companies, as we have seen in the case of SNC Lavalin, workers are understandably distraught by such prospects, fearing ways in which any one of those scenarios could negatively impact their economic trajectory. The nature of corporate power in Canada and beyond is such that major decisions like plant relocations or shut-downs, are never made with the consent of the people most greatly and most directly affected by those decisions: workers.

The sudden announcement in December 2018 by General Motors (GM) management to shut down the company’s manufacturing facilities in Oshawa, Ontario, having operated in that community for 100 years, is a case in point. All of a sudden, the 3,000 well-paying jobs that sustain that community are likely to disappear, dealing a major blow to the Oshawa workers who are an integral part of GM’s global success and record-breaking profits. The General Motors example is a vivid illustration of how a global, private-sector company can suddenly inflict great economic hardship to its employees and to communities, as a result of the immediate, unilateral decision-making power it possesses while excluding workers from having any say. The SNC Lavalin situation is similar in the sense that the company’s management seriously contemplated relocating its Montreal headquarters (home to 700 workers) or even worse, feared a potentially hostile takeover by a foreign entity, if it failed to secure a Deferred Prosecution Agreement (DPA) with the federal government to resolve its legal disputes.

SNC Lavalin Group Inc. is a Canadian-based, global engineering and infrastructure firm headquartered in Montreal, Quebec with an operational presence in 160 countries employing 50,000 people around the world. It employs 9,000 workers in Canada with $37 billion worth of projects being built around the country.

In 2015, the RCMP charged SNC Lavalin with fraud and corruption for allegedly paying $48 million dollars in bribes to Libyan officials between 2001 and 2011, to help secure infrastructure contracts in Libya. Jody Wilson-Raybould who served as Minister of Justice and Attorney General from 2015 until January 14, 2019, was responsible for overseeing the work of the Public Prosecution Service of Canada, which included the SNC Lavalin file.

In October 2018, Director of Public Prosecutions Kathleen Roussel refused to negotiate a DPA with SNC Lavalin, based on her evaluation of the case. A DPA is a mechanism which enables companies charged with criminal wrongdoing to avoid prosecution by accepting responsibility for their misconduct, by paying a financial penalty, and by implementing verifiable internal reforms that demonstrate improved behaviour. In Court documents filed April 4, 2019, the company cites “the complete turnover of SNC Lavalin’s senior management and Board of Directors, since the events in question,” as one of the reasons it should be granted a DPA.1 Internal restructuring within SNC Lavalin started in 2012, in a bid to clean up the company’s business practices and address corporate misconduct. Despite those efforts, the prosecution service rejected offering SNC Lavalin a DPA. Section 715.32 (1)(c) of the Criminal Code requires that the prosecutor consider the ‘public interest’ when making a determination on whether to prosecute. Where is the evidence that she did so, and what aspect of the public interest is of greater importance than the 9,000 direct jobs at stake and countless other workers in the related supply chain?

Partly as a result of SNC Lavalin’s lobbying efforts, the federal government amended the Criminal Code of Canada to insert DPA language as a legal option for the government to utilize, which came into force and effect on September 21, 2018. DPAs have existed in other developed countries such as the US, the UK, and France for many years, allowing corporations facing criminal charges to negotiate settlements by securing remedial action with a view to minimizing harm to business operations, jobs, and the public interest. The premise behind DPAs is to ensure that companies enact legal remediation and compliance in their business operations so as to minimize reputational harm and potential harm to job security for employees.

Despite the prosecutor’s decision, SNC Lavalin continued its efforts to pursue a DPA. In the federal Court case, the company made it clear that it had either met, or was prepared to meet, to the satisfaction of the prosecutor, all of the statutory preconditions to being granted the right to negotiate a DPA, namely:

  • implementing, monitoring, and continuously evaluating an ethics and compliance program;
  • providing anti-corruption training for all employees;
  • seeing through the complete turnover of senior management and the Board of Directors
  • dismissing and severing all senior officers and employees associated with the illegal conduct;
  • providing reparations to any and all victims of the illegal activities;
  • clearly and publicly denouncing the wrongdoing of the predecessors
  • paying monetary penalties consistent with those likely to be imposed in a prosecutorial conviction

 

Items (i), (ii), (iii), (iv), and (v) had already been taken some time ago. Items (vi) and (vii) could only be undertaken following negotiations, which were denied. If the above-listed actions and commitments are not sufficient grounds to qualify for, at the very least, a negotiation of a remediation agreement, then the Criminal Code amendment is fatally flawed, provides no protection for the public at-large, and entirely ignores the vital interests of Canadian workers.

In the Canadian context, there is no Court oversight available under the new DPA provision in the Criminal Code when the Prosecutor declines a request for negotiation, even when all of the preconditions for negotiations under section 715 of the Code have been met. The government should study this statutory gap further, with a view to addressing its flaws so that public and worker interests are also taken into account through greater oversight, beyond the narrow scope of a single prosecutor. Prosecutorial independence would (and should) be preserved, but a judicial review would bring an element of sober second thought when making decisions of vast economic implications, as in the case of SNC Lavalin.

Given its internal reforms, SNC Lavalin preferred to negotiate a DPA with the federal government instead of fighting the charges in Court, which, according to the company, would have led to “extremely negative consequences.”2 On March 25, the company reiterated that a remediation agreement “was the best way to protect and grow the 9,000 direct Canadian SNC Lavalin jobs.”3 The alternative would be much gloomier for SNC’s workforce. In fact, a conviction on the fraud and corruption charges may prompt a ban from bidding on federal government contracts for upwards of 10 years. Such a ban emanates from a policy, not a statutory provision, issued by the Public Services and Procurement Development Department, which provides a five year floor on the reduction of a 10 year ban following a conviction. Nevertheless, even a five year ban is too severe as it would have a devastating impact on employees at the company whose jobs would be at risk since the federal government is a major procurer of work that SNC Lavalin bids on. With this in mind, the five year floor should also be re-examined by the government.

In her interactions with members of the Prime Minister’s Office (PMO), then-Minister Wilson-Raybould claims that she was subjected to undue pressure to pursue a DPA with SNC Lavalin. Prime Minister Justin Trudeau said that when Wilson-Raybould asked him in September 2018 whether he would direct her one way or another, he told her he would not, and that any decision on the matter would be hers alone.4 He further maintains that nothing improper occurred and that if staff from the PMO acted inappropriately towards Wilson-Raybould, she should have reported it to him at the time, which she did not.

Had SNC Lavalin decided to relocate, restructure or be taken over, one may reasonably conclude that the company’s employees would not have had any say in such a decision, and would have been the first casualties in the proverbial ‘firing line’ in any of those scenarios. Indeed, the company itself has stated that “it is unfair that the actions of one or more rogue employees should tarnish a company’s reputation, as well as jeopardize its future success and its employees’ livelihoods,”5 in a brief to federal officials in October 2017.

This begs the question: who then, can protect public (and by extension, worker) interests when major companies threaten capital flight? Governments can, and sometimes they do but this requires bold leadership. While workers’ voices are typically excluded from corporate Boardroom decision-making, corporations do listen to governments given the latter’s wide-ranging regulatory powers and broad discretion in pursuing prosecutions. At the same time, workers’ voices are not excluded when judging the actions of governments, and more importantly, when electing governments. Therefore, governments have an obligation to workers, not only to enforce the law, but to do everything in their power to preserve (and grow) private sector jobs when those jobs are threatened by relocation, closure, or corporate malfeasance. Not doing so risks losing legitimacy with working class voters whose collective power at the ballot box is a rare but mighty instrument that can keep government leaders motivated to protect jobs (including their own).

In this case, efforts by the Prime Minister’s Office staff to minimize the prospect of SNC Lavalin’s restructuring (or even its shutdown in Canada) must be seen in the context of protecting public and worker interests. At stake are 9,000 jobs, in addition to the countless supply-chain, spinoff jobs that are part of SNC Lavalin’s substantial economic footprint around the country. On March 29, an SNC Lavalin document surfaced showing that “the company had a ‘Plan B’ under which it would move its corporate offices in Canada to the United States, cutting the workforce before ultimately closing Canadian operations.”6 There is no doubt that with the possibility of a criminal indictment followed by a Court battle, options contemplated by the company would be catastrophic for its Canadian employees. More generally, the story is important for Canada’s total workforce of 20 million people who are closely watching and weighing the government’s response ahead of the 2019 general election.

The Prime Minister and the government of Canada have not only the right, but I would argue, the duty to ensure that every possible option is exhausted before resorting to a course of government action (in this case, criminal prosecution) that would jeopardize jobs. The concept of prosecutorial independence does not exist in isolation from public and worker interests, which through her actions, Wilson-Raybould appeared to negligently ignore. Her role as Attorney General, requiring independence from the executive branch was performed in tandem with her role as Minister of Justice, which is itself an executive role as a Cabinet member, requiring Cabinet solidarity while serving at the pleasure of the Prime Minister. The fact that she did not approach the Prime Minister, nor resign when she claimed that the PMO was exerting undue influence on her speaks volumes as to her true motives in asserting the narrative that the PMO committed political interference with a legal proceeding. Her public objections to the PMO’s conduct on the SNC Lavalin file only came out after she was shuffled away from her role as Minister of Justice and Attorney General and into the role of Veterans’ Affairs Minister, widely seen as a demotion. Given the timing of her actions, one may reasonably conclude that Wilson-Raybould’s motivations are self-serving in addition to being oblivious to the threats faced by SNC Lavalin employees, whose job prospects remain uncertain to this day, with the continued failure to secure a DPA.

Testimony from the Prime Minister’s former Principal Secretary Gerald Butts shows that Wilson-Raybould never complained about improper pressure to halt the criminal prosecution of SNC Lavalin until Trudeau decided to move her out of her coveted cabinet role as Justice Minister and Attorney General of Canada.”7 In the months leading up to Wilson-Raybould’s departure as Canada’s Attorney General, why, despite her concerns, did she and her staff continue to accept calls, e-mails, and meetings to talk about her ‘final’ decision regarding SNC Lavalin? On February 11, 2019 Prime Minister Trudeau explained that “her continued presence in his Cabinet speaks for itself.”8

When Wilson-Raybould’s role in Cabinet grew untenable as a result of her retroactive condemnation of how she thought the SNC Lavalin file was handled by the Prime Minister’s Office, it was abundantly clear that trust between her and the Prime Minister and Caucus colleagues had fully eroded. She was therefore expelled from the Caucus, sitting as an Independent Member of Parliament, joined by her colleague, Jane Philpott who had earlier resigned from Cabinet as a show of support for Wilson-Raybould.

The full story has yet to play out, but it is thus far clear that in the midst of corporate wrongdoing (as with SNC’s allegations from years ago) which threatened the viability of the company, and political posturing in Ottawa (as with Wilson-Raybould’s reprehensible actions to portray efforts to save jobs as political interference), the interests of the company’s workers, whose future is uncertain through no fault of their own, are often neglected. The failure to negotiate a DPA is a shameful and indefensible result, one which Wilson-Raybould made no attempt to justify and instead simply complained that she was being unjustly dealt with. Ignoring the plight of workers is bad politics and bad policy; sooner or later, choosing to neglect worker interests leads to political peril.

Fundamentally, strong political leadership is needed to proactively fight for good jobs, and to explore every possible avenue permitted by law and by powers held by the federal government, to secure and grow steady, career-building, meaningful employment for Canadians. The 20 million workers in this country who expect political leaders to fight for them, are watching closely and will act to assert their interests at election time.

 

 

Endnotes

  1. Seglins, Dave, Rachel Houlihan, and Jonathan Montpetit. “What the SNC board may have known about the firm’s dealings in Libya – like the office safe with $10M cash.” CBC News. April 15, 2019.
  2. Fife, Robert, Steven Chase and Sean Fine. “PMO pressed Wilson-Raybould to abandon prosecution of SNC-Lavalin; Trudeau denies his office ‘directed’ her.” The Globe & Mail. February 7, 2019.
  3. The Canadian Press. “Timeline: The SNC-Lavalin controversy and Jody Wilson-Raybould.” March 25, 2019. https://www.bnnbloomberg.ca/timeline-the-snc-lavalin-controversy-and-jody-wilson-raybould-1.1221040
  4. Global News. “A chronology of events in the SNC-Lavalin controversy.” February 27, 2019. https://globalnews.ca/news/5005123/timeline-snc-lavalin-controversy/
  5. Fife, Robert, Steven Chase and Sean Fine. “PMO pressed Wilson-Raybould to abandon prosecution of SNC-Lavalin; Trudeau denies his office ‘directed’ her.” The Globe & Mail. February 7, 2019.
  6. Pickard, Bob. “In order to regain public trust, SNC-Lavalin will have to show evidence of its new character.” The Globe & Mail. April 15, 2019.
  7. The Canadian Press. “Timeline: The SNC-Lavalin controversy and Jody Wilson-Raybould.” March 25, 2019. https://www.bnnbloomberg.ca/timeline-the-snc-lavalin-controversy-and-jody-wilson-raybould-1.1221040
  8. Ibid.