SNC-Lavalin: A Case in Corporate Influence Over Legislation

In 2015, the RCMP charged Canadian multinational engineering firm SNC-Lavalin with corruption and fraud. SNC allegedly bribed Libyan officials to obtain contracts, and the company’s lobbyists met with federal government officials on multiple occasions to advocate for the inclusion of Deferred-Prosecution Agreements (DPAs) in the Canadian Criminal Code (Globe, 2019). This type of provision would require the firm to pay a fine, while unrelated facets of its business would continue to operate normally. On June 21st 2018, Bill C-74–which includes DPAs–became law. In October 2018, the director of the Public Prosecution Service informed SNC that it would be unable to negotiate a DPA, and the firm subsequently filed an application for judicial review of the decision (Globe, 2019). Jody Wilson-Raybould, the then Attorney General, confirmed the Public Prosecution Service’s decision, despite receiving pressure from the Prime Minister’s Office and senior bureaucrats to overturn the original verdict (Strashin, 2019). Wilson-Raybould was subsequently re-assigned to a less powerful cabinet post during a parliamentary shuffle (Globe, 2019). 

The SNC-Lavalin Affair drew significant attention to the Canadian government's relationship with certain prominent and influential corporations. Applying theories of  corporate-governmental relations to the SNC-Lavalin Affair reveals that companies strive for less regulation through lobbying efforts. This process ultimately undermines the independence of the justice system. By minimizing the financial and personal consequences of illegal activities, corporations are able to operate outside the margins of the legal system with diminished ethical accountability. The implication is that large politically connected firms become more powerful than other types of organizations and individuals. 

Any government, particularly one with a majority of seats, has the ability to pass legislation that establishes the severity of constraints with which firms must comply. Therefore, corporate power is a function of government regulation. More regulation implies less power; less regulation implies more power. Logically, corporations opt for more legal freedom, and SNC’s attempt to receive a DPA suggests a legal system that is lenient in its sentencing is preferable for corporations. Companies advocate for punishments which least adversely impacts their business.  

SNC’s lobbying efforts demonstrate that corporate politicking raises ethical concerns because outcomes benefits the firm, not society. The Canadian Government has been attempting to improve corporate regulation by prosecuting SNC-Lavalin for illegal activities. And on May 29, a Quebec Judge ruled that the firm will stand trial for corruption charges (CBC, 2019). While a DPA would benefit SNC in a variety of ways (e.g. financially), it would be at the expense of the integrity of the justice system. This outcome would suggest the Canadian government does not place significant importance on the rule of law, particularly in its application to corporations. If companies perceive that they will not be held accountable by their home government, their motivation to conduct business in an ethical manner will be significantly undermined.  

SNC’s ability to influence the criminal code to diminish the severity of charges applied to corporations suggests that firms are more legally powerful than other types of organizations or individuals. The deferred prosecution agreements offered by the Canadian Government are available only to corporations, and not to individuals or unions (CBC Radio, 2019). Specifically, a DPA involves: fines, remediation measures, enhanced reporting or allowing a third-party oversight of compliance techniques (Ritchie and Aboud, 2018). Viable companies can comfortably (assuming the fine is not exorbitant) engage in the required remediation activities, while other types of organizations (e.g. unions) or individuals are not provided with the same option. The argument could be made that such groups may not have the necessary resources to satisfy these arrangements. Perhaps, but by providing non companies with a choice, all styles of organizations and individuals would be treated equally under the law. Moreover, it is less consequential for companies to pay a fine than for individuals or other types of organizations to face criminal charges in court. Thus, there is a clear legal power imbalance. “If the former regime at [SNC-Lavalin] pays … millions of dollars to Muammar Gaddafi's thugs and henchmen, then they have an option for avoiding a trial. This does seem like a double standard”. (CBC Radio, 2019).  

The SNC-Lavalin Affair illustrates the power asymmetry that corporations possess relative to other actors in society under the law. Greater corporate power enables unethical behaviour, an undesirable outcome of laws instituted by a democracy.