SNC-Lavalin could avoid ban from federal contracts due to delay in policy update

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SNC-Lavalin ordered to stand trial on fraud, bribery
WATCH: A Quebec judge has ruled there is enough evidence to send SNC-Lavalin to court on fraud and corruption charges. – May 29, 2019

The federal government has blown its own timeline to unveil an update to Canada’s corporate-misconduct provisions, including changes that could help SNC-Lavalin avoid being barred from lucrative federal contracts.

An internal federal document obtained by The Canadian Press shows the Liberal government was planning to announce a long-studied revision to its so-called “integrity regime” in early February.

“The integrity regime’s updated ineligibility and suspension policy will be published in early February 2019, and will come into effect at the end of February 2019,” said information contained in a Feb. 4 email to an associate deputy minister. The email was released under access-to-information law.

WATCH: SNC-Lavalin headed to trial, Quebec judge rules

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SNC-Lavalin headed to trial, Quebec judge rules

Three months later, the government has yet to publish the integrity-regime update, nor has it responded to requests to explain the reason for the delay.

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The integrity regime has been under scrutiny ever since SNC-Lavalin, the huge Montreal-based engineering and construction firm facing Canadian criminal charges over dealings in Libya, found itself at the centre of a political controversy in Ottawa.

On Feb. 7, three days after the email, the Globe and Mail newspaper reported that Prime Minister Justin Trudeau’s aides pressed former attorney general Jody Wilson-Raybould to intervene in the SNC-Lavalin case and help it avoid prosecution through a plea-bargain-type deal. Trudeau has denied his officials acted inappropriately.

WATCH: ‘SNC Lavalin is a good dry run for the Mark Norman trial’: Andrew Scheer FULL Press Gallery Dinner speech

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‘SNC Lavalin is a good dry run for the Mark Norman trial’: Andrew Scheer FULL Press Gallery Dinner speech

This week, a Quebec judge ruled that there’s enough evidence against SNC-Lavalin to send the case to trial.

A conviction could result in a severe punishment for the company: a disqualification from federal business for 10 years. Since much of SNC-Lavalin’s work is in civil construction projects, that could be deeply damaging to its Canadian business.

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However, SNC-Lavalin could still see a shorter suspension from federal contracts – or perhaps none at all – if the proposed update to the integrity regime comes into force.

SNC-Lavalin urged the Liberal government in 2017 to weaken federal penalties for corporate misconduct to the point a guilty company could completely avoid a ban on receiving public contracts.

A draft of the Liberal government’s new scheme released last fall shows the revised provisions will carry no minimum ineligibility period. Public Services Minister Carla Qualtrough, who is in charge of federal procurement, has said such a change would address concerns raised by companies about the “lack of flexibility” in the 10-year suspension terms.

Any adjustments to the regime that help SNC-Lavalin dodge a ban could be politically sensitive for the Liberals.

On Feb. 28, under questioning by a House of Commons committee, Qualtrough said the updated integrity regime would be finalized by late March or early April.

Asked about the timing of the update’s eventual release this past week, Qualtrough’s department still has not provided a date. It also has yet to give an explanation for the delays.

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The integrity regime was designed to ensure the government only does business with ethical companies in Canada and abroad.

Federal officials held a public consultation on the integrity regime in 2017. A summary of the process, which included input from SNC-Lavalin, said most participants felt a disqualification period of a decade, or even five years, was too long.

Last fall, the proposal went through another round of public consultations with the aim of making additional tweaks before coming into force.

Another tool designed to deal with corporate wrongdoing has been under a microscope since the political affair involving SNC-Lavalin first made headlines.

The company has made unsuccessful attempts to preserve its ability to bid on federal contracts under that separate, plea bargain-type approach that would head off a criminal case.

WATCH: Liberals say SNC-Lavalin donations were returned

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Liberals say SNC-Lavalin donations were returned

But the federal director of public prosecutions ruled late in 2018 that its case was ill-suited for such a deal, which is known as a remediation agreement or a deferred-prosecution agreement.

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It’s the legal avenue at the heart of the political controversy that surrounded the Liberals earlier this year.

The federal attorney general has the power to overrule the director’s rejection of a deferred-prosecution agreement and take on the case him- or herself. Wilson-Raybould declined to do so.

David Lametti, who replaced Wilson-Raybould as justice minister and attorney general, acknowledged Wednesday in response to reporters’ questions that a deferred-prosecution agreement with SNC-Lavalin remains a possibility. He declined to comment further, saying the case was before the courts.

Trudeau has argued a criminal trial could lead to the company’s moving to the United States and the loss of thousands of jobs, a sentiment supported by an internal SNC-Lavalin document obtained by The Canadian Press.

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