SNC-Lavalin and Remediation Agreements: Part II – The First Remediation Agreement is Granted
Written by Darcy L. MacPherson
In an earlier blog on this site,[1] I discussed the then-newly minted (as of 2018) remediation agreement regime which was added by an amendment to the Criminal Code.[2] Now, the remediation agreement regime has finally been used. Three matters are particularly relevant about this judgment. The first is that, even after the SNC-Lavalin scandal (discussed in more detail below), it was nonetheless SNC-Lavalin Inc. (and a related entity, SNC-Lavalin International Inc.) which received the first remediation agreement approved by a court.[3] Second, even though the judgment may leave much to be desired, certain lessons can still be drawn from it. Third, there remain many questions to be answered about remediation agreements going forward. I have asked several questions that would seem to arise from this judgment, as well as offer some preliminary thoughts on some of them. The hope is that these thoughts will stimulate debate, rather than attempting to be the last word on these issues.
The earlier blog
The earlier blog post focused on the rule of law in the context of the governmental scandal around the decision of the Honourable Jody Wilson-Raybould (the then-Attorney General of Canada) to either (i) refuse to overrule the decision of her staff’s decision to not pursue a remediation agreement with SNC-Lavalin;[4] or (ii) not provide her consent to the commencement of negotiations which might have led to a remediation agreement.[5] Either way, the effect of the decision was that the remediation agreement regime was unavailable to SNC-Lavalin and its related entities when dealing with charges under the Criminal Code[6] and the Corruption of Foreign Public Officials Act.[7]
The decision of the then-Attorney General was not problematic for the rule of law, but the SNC-Lavalin file had evoked commentary from the Prime Minister, the Right Honourable Justin Trudeau,[8] who had indicated that he was concerned about protecting jobs in Quebec where SNC-Lavalin is based.[9] While the Prime Minister denied it,[10] the Parliamentary Ethics Commissioner found that undue pressure had been exerted by the Prime Minister’s Office.[11] SNC-Lavalin lobbied hard to be able to access this regime, including the use of advertisements in a major Canadian newspaper, pleading their case.[12] The corporation even went so far as to bring a case in the Federal Court of Canada, alleging that the decision not to enter into negotiations with the corporation was subject to review on grounds based in administrative law.[13] This application for judicial review was ultimately rejected on the basis that the decision at issue was within the ambit of prosecutorial discretion (with which the Federal Court would not interfere). But the alleged interference of the Prime Minister in the discretion of the Attorney General and his subsequent decision to shuffle the Attorney General out of that portfolio, and, not long after, out of the party caucus altogether,[14] raised serious questions with respect to the rule of law, governmental ethics, and others too.
The new case
In the subsequent case from 2022, in which a remediation agreement was granted, different offences were charged,[15] arising (according to one part of the judgment) over an almost-seven-year span,[16] though later in the same judgment, Justice Downs refers to the events as having occurred over three years.[17] The offences were concerned with the means used to obtain a contract to repair a bridge in Montreal (overseen and managed by a federal Crown corporation in based Quebec).[18] In this later case, the provincial Attorney General of Quebec signed off on the commencement of negotiations with a company related to the company that had been refused a remediation agreement for other wrongdoing involving interactions with government officials in Libya. The federal Attorney General said “no” to a remediation agreement for an entity in this corporate group for serious criminality; a provincial Attorney General agreed to a remediation agreement for a different entity in the same group for different (and arguably less serious) criminality. Pursuant to the remediation agreement regime, the next step was to seek court approval.
Justice Downs begins his judgment by explaining that technical requirements of (i) the provision of an invitation to commence negotiation by the prosecutor[19]; (ii) the consent of the Director of Public Prosecutions pursuant to paragraph 715.32(1)(d) of the Criminal Code[20];[21](iii) the public filing of the invitation;[22] (iv) the acceptance (of each of the organizations involved) of the invitation to negotiate;[23] (v) an undertaking (by each of the organizations involved) to “provide all information required by the prosecutor of which it is aware or which can be obtained by reasonable efforts”[24], which is required as part of the remediation agreement regime.[25]
Beginning in October 2021,[26] the parties negotiated the terms of the remediation agreement over the next three months, and then consented to a two-month extension to complete the negotiations.[27] The prosecutor then applied to the Superior Court of Quebec for approval of the agreement, and provided significant documentation to the Court for this purpose.[28] It appears that the parties also agreed that settlement privilege would apply to protect any information provided as part of these discussions that were not specifically required to be divulged as part of the legislative regime.[29] Over several paragraphs in its judgment, the Court detailed the bifurcation of its process with respect to this remediation agreement.[30] The later part of its process would be open to the public. The early part of the process would be under sealing orders and publication bans until the public portion began This bifurcation is designed to protect “ongoing prosecutions”.[31] Interestingly, the Court refers to the British deferred prosecution agreement regime as authority for this bifurcated process,[32] even though it would appear that there are some textual differences between the two regimes, and the Canadian version does not appear to make explicit reference to a part public/part private process, although there may be enough oblique reference in section 715.42 of the Criminal Code (and the sections to which it refers) to allow the Court to enter into a bifurcated, part public/part private process.[33] In my view, however, the very fact that the Court felt it necessary to refer to the British deferred prosecution agreement regime would seem to indicate that it did not believe that the Canadian wording might have been strong enough to allow the Court to do what it sought to do here with its bifurcated, part public/part private process.
In my view, the Canadian Parliament, if it approves of the process undertaken by the judge on these facts, should actually amend the wording of the Canadian remediation agreement regime to make explicit provision for this type of process. Even more interesting, in my view, was the fact that the Court used the British wording to justify its process decision, and then specifically said that it was not following the British pattern at other times, without explaining why the different treatment was justified.[34]
After giving a brief history of diversionary regimes similar to remediation agreements in several jurisdictions,[35] the Court turned its attention to the remediation agreement regime adopted in Canada itself, pointing to the purposes of the regime as set out in section 715.31 of the Criminal Code. This section reads as follows:[36]
The purpose of this Part is to provide for the establishment of a remediation agreement regime applicable to any organization alleged to have infringed and having the following objectives:
(a) denounce any wrongdoing of the organization and the harm caused by it to the victims or to the community;
(b) hold the organization accountable for its wrongdoing through the imposition of effective, proportionate and dissuasive penalties;
(c) promote compliance with the law by requiring the organization to put in place corrective measures and a culture of compliance;
(d) encourage voluntary disclosure of wrongdoing;
(e) provide for the reparation of harm done to victims or to the community;
(f) reduce the negative consequences of the wrongdoing on those — employees, customers, retirees or others — who did not engage in it, while holding those who engaged in it accountable.
After suggesting that what he was doing was not “rubber stamping”[37] the agreement, the judge then engages in what he refers to as a “a formal first step”[38] ensuring that the technical elements required by the remediation agreement regime have been complied with. It appears that the judge simply lists each requirement, and then points to the part of the agreement where the parties believe that they have dealt with this issue.[39]
The Court recognizes that its obligations under the remediation agreement regime require a balancing act.[40] Then, the Court proceeds to accept the joint submission by the parties that remediation agreement should be treated the same as guilty pleas,[41] and “is mindful that the Prosecutor took into consideration the public interest when inviting the Organizations to negotiate.” I read this sentence as indicative of an attitude that the Court should generally accept the agreement entered into with the prosecution by the organization, as long as technical compliance can be demonstrated. If there were any doubt about this, in my view, the next paragraph proceeds to erase that doubt. The paragraph reads as follows: “The Tribunal will therefore exercise restraint in its analysis, while ensuring that the conditions set out in the Criminal Code are met.” In my view, this one sentence indicates quite persuasively, that at least for this particular judge, the goal is to ensure that legal requirements are met, not to apply judicial judgment to the issue at hand. After all, if one intends to apply judgment to the issue, why would one point out that one of the parties promoting the acceptance of the agreement has already applied the judgment necessary to find that each of these provisions has been satisfied?
Undoubtedly, it is possible that a person who looks at the situation presented in the case could find that the negative impacts of labeling SNC-Lavalin and its related entities as “criminals” may do more harm than good. But, for someone like me, who spends a significant amount of their professional time and effort talking about organizational criminal liability, it is very distressing to think that judges will, despite overt statements to the contrary, will simply “rubber stamp” (which is how I read the words “judicial restraint” in this factual matrix) the decisions of a prosecutor, pointing out that the prosecutor has already come to the conclusion that the agreement is appropriate in the circumstances.
The judge then proceeds to point out that there are both provincial and federal laws and regulations that would apply to SNC-Lavalin if they were convicted of these offences. This is the first thing to which the judge points when considering the public interest.[42] In my view, part of the problem with this analysis of the public interest is to suggest that it is in the public interest that the courts ignore part of the statute book in appropriate cases, because innocent third parties may be damaged by the application of the law as it stands. In my view, the public interest never demands ignorance of the law, especially by the courts themselves. Certainly, in my view, it does not demand that judges answer the following questions: “Which part of the statute book is more important today? Is it the integrity regimes put in place for government contractors at both the federal[43] and provincial[44] levels of government referred to by the Court?[45] Or is it the criminal law itself?” It seems to me that just because the federal government chose to adopt the remediation agreement regime, it does not necessarily follow that the “public interest” under the remediation agreement regime should allow prosecutors and judges simply say it is in the best interests of the public that we pretend that the integrity regimes created by government for contractors who wish to do business with the government no longer apply. To me, one part of the statute book (the remediation agreement regime) should not be used to invalidate another portion of the same statute book (the integrity regime). I recognize that what I am writing here maybe somewhat controversial. I do not pretend that resolving this issue (with respect to how to harmonize the statute book with itself) is easy. Rather, I know that it is difficult, but we need to have this conversation. I can only hope that this blog may be part of starting that conversation, because I believe the conversation is important. Whether I am proven right or wrong in the end is, to me at least, immaterial.
Takeaways
Several points can be taken from this case. First, the Quebec Superior Court has now become the first to use the remediation agreement regime. Second, Justice Downs does refer to the appropriate sections of the Criminal Code[46]in making his determinations with respect to the Court’s approval of the remediation agreement entered into between the prosecutor and SNC-Lavalin and related entities. Third, although it is certainly possible to take issue with level of analysis in which the judge engages on several points, this is still the first judicial analysis available with respect to these relatively new sections of the Criminal Code. As a result, any practitioner interested in the criminal law should review this case in significant detail. Fourth, given that this is the first case decided under the remediation agreement regime, and specific references made to its British counterpart, practitioners would likely be well advised to at least consider the potential application of British precedents in cases involving remediation agreements.
Fifth, because the remediation agreement regime can only be utilized when both the prosecution and the putative offender have agreed to the terms under which the putative offender avoids being labeled a criminal, and a court must approve the agreement as well, there is little reason to think that there will be significant appellate jurisprudence with respect to the utilization of this regime. After all, other than the victim or victims of the offences that are the subject-matter of the remediation agreement, it is hard to think of who might have standing to challenge the ruling of any court approving the remediation agreement. In my view, the analysis of Justice Downs in the case does just enough to satisfy the basic requirements to apply the remediation agreement regime. In my view, it does little to provide guidance for other courts.
Nonetheless, this is likely only the beginning of the conversation with respect to several areas of the remediation agreement regime. In addition to the question that I laid out earlier about the integrity of the statute book, there are legitimate constitutional questions to be asked. For example, on what basis does a provincial Attorney General decide that it is in the public interest not to apply a federal statute, particularly where the victim is a federal Crown corporation? The court also mentions that a corporation related to SNC-Lavalin (SNC-Lavalin Construction Inc.) has already been convicted criminally for certain activities in Libya.[47] It also points out that the financial penalty paid by the entities that would be subject to this remediation agreement is generally equivalent to what they would have paid under the sentencing provisions of the Criminal Code,[48] had the entities been sentenced under those provisions.[49] Since the Court acknowledges that a related company has already been convicted of even more serious criminality than that alleged here,[50] and the federal government had already denied the related corporation an opportunity to utilize the remediation agreement regime as a means of avoiding the requirements of the integrity regime, there is a legitimate question as to why labeling a related corporation as a potential “criminal” (admittedly, there has neither a guilty plea in court nor a conviction after a trial) is somehow so untoward that we need to remedy it through the application of the mediation agreement regime? Though technically different parties, even less serious criminality by a related company in the same group legitimately be thought of as an aggravating factor, making the provision of a remediation agreement less in the public interest, not more so.
I do not intend to use this post as a means of resolving this issue, or any of the other questions that I have posed here. Rather, my point here is to show that it is less than clear to me whether in fact this decision serves the public interest, or simply puts economic needs of employers above the public interest as they attempt to hide behind the job losses that might result if they are unable to carry on business. For me, a corporate group that has already been fined over $280 million for misbehavior has little credibility when speaking of acting in the public interest by avoiding criminal sanction. I hope that this post will stimulate genuinely respectful debate about where the proper line is between economic development, on the one hand and true genuine criminality by corporations and other organizations, on the other. In my view, the SNC group of companies lies has had serious problems in obeying the criminal law, even though a judge in Quebec just found a way for that group to avoid the label of “criminal”. Since the appellate courts are unlikely to get much of a chance to weigh in, in my view, it is important that the academic literature provide all sides of this important debate.
[1] Darcy L. MacPherson, “Politics, Discretion and the Rule of Law as Applied to the Criminal Law: A Case Study of SNC-Lavalin” (12 March 2019), online (blog): Robson Crim Legal Blog <POLITICS, DISCRETION AND THE RULE OF LAW AS APPLIED TO THE CRIMINAL LAW: A CASE STUDY OF SNC-LAVALI (robsoncrim.com)> [https://perma.cc/AF4A-PJFQ] [MacPherson].
[2] RSC 1985, c C-46 [the “Criminal Code”, or simply, the “Code”]
[3] On this point, see R v SNC-Lavalin Inc., 2022 QCCS 1967 [R v SNC-Lavalin Inc. (2022)], per Justice Downs
[4] MacPherson, supra note 1.
[5] See the Criminal Code, supra note 2, para. 715.32(1)(d)
[6] Ibid.
[7] SC 1998, c 34
[8] Prime Minister Trudeau’s electoral district is in Quebec riding of Papineau. See Elections Canada, “44th General Election 2021: Official Voting Results” (Last modified 13 July 2022) online: Elections Canada <THEMA CANADA PARLIAMENT 44 EN 2022_03_01_RGD_300dpi_FINAL (elections.ca)> [https://perma.cc/44RJ-QKH3].
[9] Mark Gollum “What you need to know about the SNC-Lavalin affair”, CBC News (13 February 2019) online: <What you need to know about the SNC-Lavalin affair | CBC News> [https://perma.cc/25TJ-JKBD].
[10] See The Canadian Press “SNC-Lavalin CEO urged Ottawa to change anti-corruption rules”, CBC News (5 March 2019) online: <SNC-Lavalin CEO urged Ottawa to change anti-corruption rules | CBC News> [https://perma.cc/X4YH-WF9Z].
[11] Canada, Office of the Conflict of Interest and Ethics Commissioner, Trudeau II Report by Mario Dion, (Report) (Ottawa: Office of the Conflict of Interest and Ethics Commissioner, August 2019) online: <Trudeau II Report.pdf (parl.gc.ca)> [Trudeau II Report]; It is worth noting the conceptual distinction between the Prime Minister, on the one hand, and the PMO, on the other. The Prime Minister is the de facto day-to-day head of the executive branch of government. The Office of the Prime Minister is in place with civil servants to help the Prime Minister to execute this role. The PMO, on the other hand, is in place to assist with political considerations, essentially helping the Prime Minister in his or her role not as Prime Minister per se, but rather as the leader of the political party then in power. This office is generally members of the governing party who are not lifelong civil servants. Johnson, David, Thinking Government: Public Sector Management in Canada (2nd Edition), Peterborough, ON: Broadview Press, 2006, pp. 209-211; 218-231.
[12] SNC Lavalin, News Release, “An open letter to Canadians” (19 October 2018) Globe and Mail; SNC Lavalin, News Release, “Thank you for considering our position” (26 October 2018) Globe and Mail.
[13] SNC-Lavalin Group Inc. v. Canada (Public Prosecution Service), 2019 FC 282, [2019] 3 FCR 327, per Justice Kane [SNC-Lavalin Group Inc. v. Canada (2019)].
[14] Ryan Patrick Jones, “Jody Wilson-Raybould won’t run in next election, denounces ‘toxic’ environment in Parliament – Wilson-Raybould kicked out of the Liberal caucus in 2018 during the SNC-Lavalin scandal” CBC News (08 July 2021), available online: https://www.cbc.ca/news/politics/jwr-won-t-run-next-election-1.6094409.
[15] The offences included contraventions of s. 121 (fraud on the government), s. 336 (forgery) and s. 380 (general fraud) of the Criminal Code, supra note 2, as well as conspiracy to commit these offences.
[16] R v SNC-Lavalin Inc. (2022), supra note 3, at para. 22.
[17] Ibid, at para. 185. Although this is a significant inconsistency within the judgment, in my view, for the purposes of this post, little turns on which time frame is the correct one. Rather than spend a significant amount of time trying to resolve which time is correct, I will simply identify the inconsistency, and leave it for others to figure out.
[18] Ibid, at para. 22. See also https://jacquescartierchamplain.ca/?lang=en.
[19] Ibid, at para. 29.
[20] Supra note 2.
[21] Interestingly, the definition of “Attorney General”, whose consent is required under paragraph 715.32(1)(d) makes no reference to the Director of Public Prosecutions. Instead, the definition reads in the relevant part as follows: “(a) with respect to proceedings to which this Act applies, means the Attorney General or Solicitor General of the province in which those proceedings are taken and includes his or her lawful deputy or, if those proceedings are referred to in subsection 2.3(1), the Attorney General of Canada or the Attorney General or Solicitor General of the province in which those proceedings are taken and includes the lawful deputy of any of them,” For the purposes of this contribution, I will assume for the sake of argument that the Director of Public Prosecutions is a “lawful deputy” of the Attorney General of Quebec.
[22] R v SNC-Lavalin Inc. (2022), supra note 3, at para. 30.
[23] Ibid, at para. 35.
[24] Ibid.
[25] Criminal Code, supra note 2, para. 715.33(1)(e).
[26] R v SNC-Lavalin Inc. (2022), supra note 3, at para 37.
[27] Ibid, atparas. 39-40.
[28] Ibid, at paras. 41-42.
[29] Ibid, at para 43.
[30] Ibid, at paras 44-55
[31] Ibid, at para. 57.
[32] Ibid, at para. 61.
[33] The court, quite correctly in my view, identifies section 715.42 of the Criminal Code, supra note 2, as providing it an opportunity to keep the remediation agreement out of public view. The section reads as follows: “715.42(1) Subject to subsection (2), the following must be published by the court as soon as practicable: (a) the remediation agreement approved by the court; (b) an order made under any of sections 715.37 to 715.41 and the reasons for that order or the reasons for the decision not to make that order; and (c) a decision made under subsection (2) or (5) and the reasons for that decision; (2) The court may decide not to publish the agreement or any order or reasons referred to in paragraph (1)(b), in whole or in part, if it is satisfied that the non-publication is necessary for the proper administration of justice; (3) To decide whether the proper administration of justice requires making the decision referred to in subsection (2), the court must consider (a) society’s interest in encouraging the reporting of offences and the participation of victims in the criminal justice process; (b) whether it is necessary to protect the identity of any victims, any person not engaged in the wrongdoing and any person who brought the wrongdoing to the attention of investigative authorities; (c) the prevention of any adverse effect to any ongoing investigation or prosecution; (d) whether effective alternatives to the decision referred to in subsection (2) are available in the circumstances; (e) the salutary and deleterious effects of making the decision referred to in subsection (2); and; (f) any other factor that the court considers relevant; (4) The court may make its decision subject to any conditions that it considers appropriate, including a condition related to the duration of non-publication; (5) On application by any person, the court must review the decision made under subsection (2) to determine whether the non-publication continues to be necessary for the proper administration of justice. If the court is satisfied that the non-publication is no longer necessary, it must publish the agreement, order or reasons, as the case may be, in whole or in part, as soon as practicable.”
[34] R v SNC-Lavalin Inc. (2022), supra note 3, at para. 71.
[35] Ibid, at paras 96-102.
[36] Ibid, at para 105; Criminal Code, supra note 2, s. 715.31.
[37] Ibid, at para 113.
[38] Ibid, at para 119.
[39] Ibid, at paras 121-154.
[40] Ibid, at para 156.
[41] Ibid, at para 157.
[42] Ibid, at paras 165-170.
[43] Government of Canada, Integrity Regime, Ineligibility and Suspension Policy, enacted under the Financial Administration Act, RSC 1985, c. F-11.
[44] Act respecting contracting by public bodies, CQLR c C-65.1, section 21.1.
[45] R v SNC-Lavalin Inc. (2022), supra note 3, at para. 167.
[46] Supra note 2.
[47] R v SNC-Lavalin Inc. (2022), supra note 3, at para 182.
[48] Supra note 2.
[49] R v SNC-Lavalin Inc. (2022), supra note 3, at paras 9, and 197-199.
[50] Ibid, at para 202.
The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.