SNC – Lavalin Charges Underline the Need to Re-think the Integrity Framework
The two criminal charges laid February 19 against SNC-Lavalin Group Inc., one if its divisions and a subsidiary relate to the companies’ alleged nefarious involvement in pre-revolution construction projects in Libya. Charge one alleges that over a ten year period beginning in 2001, the defendants paid bribes in excess of CAN$47 million to Libyan public officials contrary to s.3(1)(b) of the Corruption of Foreign Public Officials Act (CFPOA). Charge two alleges that over the same period the defendants defrauded Libya of approximately CDN $129 million contrary to s.380(1)(a) of the Criminal Code.
The charges could not have been a surprise to any interested observer or the defendants. Before his extradition to Canada in 2014, former company executive Riadh Ben Aissa admitted to a Swiss court that he bribed Saadi Gadhafi, son of Libya’s late dictator, Moammar Gadhafi, permitting SNC to benefit from Libyan construction contracts.
But nor can it be surprising that the corporate defendants have stated that they will vigorously defend themselves and plead not guilty in the interest of their current employees, families, partners, clients, investors and other stakeholders. The defendants claim that there is a lot more at stake in the prosecution than their guilt or innocence, namely their survival. If convicted, the Integrity Framework, implemented by the federal government in 2014, will effectively bar all three defendants from securing government construction projects for a period of ten years. They say, not unconvincingly, this will put their continued viability at risk.
Intended to work independently of the courts, the Integrity Framework is a policy instrument that goes above and beyond how many of our trading partners treat companies convicted of corruption and many other crimes of dishonesty. There is no discretion afforded Public Works Canada – responsible for the administration of the Framework – allowing it to permit convicted companies access to bidding on government contracts on the basis that they have worked successfully in turning a corporate culture permissive of corruption into one of zero tolerance armed with gold standard anti-corruption policies and procedures. Respectfully, by permitting the application of an arbitrary form of administrative punishment without regard to the circumstances of the convicted company, this goes far beyond what should be the point of the enforcement of the foreign anti-corruption laws, namely deterrence and denunciation, .
Absent some flexibility in the Integrity Framework, we also leave ourselves open to the argument that the unsavoury corporate leadership – not the corporation – should be prosecuted. This is exactly the strategy SNC-Lavalin pursued in the period leading up to the charges and one that continues in its public statement about the charges. Focusing only on the leadership, if pursued as an enforcement strategy by the Crown, would be contrary to the public interest and the values behind CFPOA. There are no maximum fines in Canada for indictable offences like that under the CFPOA, meaning it is open to the courts to fine convicted corporations at a level that ensures they, and their shareholders, will not benefit from corruption. In this case, if convictions were registered, one would expect the levied fines to register in the multi-tens of millions of dollars. This is an important consideration given that in Canada there is no procedure permitting the Crown to “settle” criminal allegations through civil penalties as in the United States.
Last, the Integrity Framework as it now stands acts a dis-incentive at a number of levels. Most obviously, charged companies will see little, if, no benefit, in trying to resolve corruption charges by pleading guilty early and saving everyone the costs associated of what almost certainly will be long and costly trials. It also provides no incentive for companies to self-report on corruption offences or, post offence, take the necessary steps to minimize the risk of further contraventions by investing in anti-corruption policies and procedures.
Both charges remain before the courts as unproved allegations.