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SNC-Lavalin warned of U.S. move, slashing workforce if no plea deal, documents show


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March 29, 2019 by Jordan Press and Christopher Reynolds, The Canadian Press

OTTAWA—SNC-Lavalin warned federal prosecutors last fall about a possible plan to split the company in two, move its offices to the United States and eliminate its Canadian workforce if it didn’t get a deal to avoid criminal prosecution, newly obtained documents show.

The documents, part of a PowerPoint presentation obtained by The Canadian Press, describe something called “Plan B.”

The scenario details what Montreal-based SNC might have to do if it can’t convince the government to grant a so-called remediation agreement to avoid criminal proceedings in a fraud and corruption case related to projects in Libya.

Under that plan, SNC would move its Montreal headquarters and corporate offices in Ontario and Quebec to the U.S. within a year, cutting its workforce to just 3,500 from 8,717, before eventually winding up its Canadian operations.

“The government of Canada needs to weigh the public interest impact of the prosecution of SNC-Lavalin,” the presentation reads.

“We must humbly ask whether the public interest is served to prosecute SNC-Lavalin, and to try to achieve a guilty verdict. Such a decision would effectively lead to the end of SNC-Lavalin as we know it today and has been for more than 100 years.”

Of all the options for the future of the company, the plan in the presentation was the “most obvious” to follow and “well advanced” in terms of planning, say the documents, which the Privy Council Office confirmed receiving in late September, at the same time as prosecutors.

The company’s board and senior management were prepared to quickly bundle parts of the business that had no role in the Libya case into a new entity, putting the “trio of possibly convicted entities” into another organization that would operate “on a reduced business level in Canada or heading into eventual wind-up,” they read.

The details appear to contradict public statements by chief executive officer Neil Bruce, who has denied both that the company threatened to move its headquarters, and that the company cited its some 9,000 Canadian jobs as a reason the construction giant should be granted a remediation agreement.

The company walked back the comments days later in a statement, saying a remediation deal was the best path to protect its Canadian workforce.

SNC-Lavalin spokesman Nicolas Ryan confirmed the authenticity March 28 of what he called a “confidential document” that was submitted to the Public Prosecution Service of Canada to allow the director of public prosecutions to consider the company’s request for an agreement.

“We have always been transparent with our various stakeholders about the importance of the public interest argument/case for Canada in having a globally competitive SNC-Lavalin as part of Canada, headquartered in Montreal,” Ryan said in a statement.

A remediation agreement remains “the best way to protect and grow the almost 9,000 direct Canadian SNC-Lavalin jobs, as well as thousands of indirect jobs,” the statement continues.

“We have also said that we have a fiduciary duty to our shareholders and employees, and as such is our responsibility to look at all our options available…. this does not mean that we have chosen one option or that a decision has been taken on which option we will pursue, simply that there are various possibilities we must consider.”

The presentation, which was delivered by mail to The Canadian Press anonymously and without a return address, also suggests the end of seven-figure donations and sponsorships for various community causes, hundreds of millions more in lost tax revenues, and the loss of spending on research positions at universities.

Prime Minister Justin Trudeau has held up the threat of job losses as the main reason he and others pressed former attorney general Jody Wilson-Raybould to look into the prosecutor’s decision.

Wilson-Raybould told the Commons justice committee last month she came under “consistent and sustained” pressure — including veiled threats — from Trudeau, his office, the Privy Council Office and Finance Minister Bill Morneau’s office to halt the criminal prosecution of SNC-Lavalin.

The ensuing political fallout has cost Trudeau two cabinet ministers — Wilson-Raybould and former Treasury Board president Jane Philpott, who said she had lost confidence in the government’s handling of the affair — as well as one of his top aides, Gerald Butts, and Michael Wernick, clerk of the Privy Council, who will leave his post as the top federal civil servant before the fall election.

Bruce and Wernick met on Sept. 18 about the company’s legal troubles.

Notes taken at the meeting, tabled as evidence with the House of Commons justice committee, show that Wernick told Bruce to take the public interest argument to the director of public prosecutions, adding the company “will want to get it right.”

Wernick testified earlier this month that he spoke with Wilson-Raybould the next day where the former attorney general appeared “very firm in her mind” that the prosecutor’s decision to not negotiate a deal with SNC-Lavalin was final. Wernick said Wilson-Raybould told him the only option for the company was to make public interest arguments through its lawyers.

A spokeswoman for the prosecution service said any discussions or documents in the case are confidential.


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2 Comments » for SNC-Lavalin warned of U.S. move, slashing workforce if no plea deal, documents show
  1. Ray Gagnon says:

    As president of a relatively small company of industrial equipment supplier, we deal with the SNC Lavalin(s) of the world. I am not a legal professional so my views may not reflect what our legal system allows. There is no question the management team that allowed the wrong doings that went public, had to be punished to the greater extent of the law. From what I read, we have the legal alternatives to do this right. Our democratic government has the power to make and change laws for the greater good of our nation. When it comes to potential 9,000 jobs being eliminated and thousands of shareholders of a public company taking the hit for bad political motives and decisions ; as well as a huge negative economic and business environment projected aura residual that will affect where businesses choose to locate and operate for many decades.
    I am not a partisan person but I do know right from wrong as I make many of those decisions on a weekly basis.
    Our elected body should be the supreme rule when it comes to cases such as this. We cannot become a country ruled by Supreme Court judgements. That is why politicians that pay the price for their decisions should guide this country. That is why we elect them. Guiding the country in the (for greater good of the whole) is what we expect of them.
    Mr Trudeau, come clean but stand your ground. This is a defining moment and be the leader we expected regardless of politics surrounding the issue. There is always fallout on tough political issues. Make the hard calls we elected you to make and live with the fallout is the tru nature of a great leader. All parties should support what is for the greater good of our nation.
    Sincerely

  2. Dik Coates says:

    With one exception, I disagree with your thesis in its entirety.

    The number of jobs at stake is not 9000; this is a fictitious number and was concocted by the Liberal party; it was not advanced by SNC. What is at stake here is not the number of people employed, but, the integrity of our judicial system.

    The jobs are simply a political ‘red herring’. If Canada allows politics to meddle with our judicial system, we become another banana republic.

    Politicians meddle in the worst way and their current machinations become a ‘stepping stone’ for future endeavours. Governments have shown this, time and time again. To maintain the integrity of our judicial system, this has to stop. I’m not surprised that the Liberal ‘corral’ and most of the Canadian public is unaware of this fundamental issue. Our education system has failed.

    I understand when a firm is charged under the Corruption of Foreign Public Officials Act that: “The prosecutor,” states the legislation, “must not consider the national economic interest, the potential effect on relations with a state other than Canada, or the identity of the organization or individual involved.” [from Tyee]

    From the Government of Canada website: The chief argument that has been made against DPAs is that they may not deter misconduct. Some argue that DPAs have become “a cost of doing business,” allowing corporations to buy their way out of trouble by paying a financial penalty and passing the costs on to the consumer. [from Government of Canada]

    Clearly SNC should not be permitted a DPA.

    SNC, moreover, does not seemed to have learned their lesson. They were charged with bribing foreign officials, among other offences. To me, and others may have a different view, there is little difference between offering a contribution to a foreign official (aka ‘bribe’) and offering a contribution to a political party (aka ‘donation’). They are opposite faces of the same ‘double edged sword’.

    That SNC would ‘offer up a threat’ to the Canadian government, in some circles, would be considered reprehensible and beyond the pale. I wish that other political parties were aware of this. It was only the ‘On Site’ article that brought this to my attention.

    The problem is that the government is in control of both the Justice department and the Ethics group. Both these entities have shown that they are incapable of doing their intended job. This has to change so that they are bi-partisan and are independent of political interference. The Liberal government has shown that this does not work. This, IMHO, is a fatal flaw for these departments. In addition, the part of government for application of the ‘Laws of the Land’ has to be independent and free of political interference. Legislation has to be tabled to create this since the Government of Canada does not appear to be able to. They are not working in the best interests of the people. There is a fundamental dishonesty at play.

    ‘We cannot be ruled by Supreme Court judgements’ is correct, and the only part of your thesis I agree with. The SCoC is another ‘check and balance’ to make sure that Canadian laws follow some fundamental principles. I’m a strong advocate of FIJA (Fully Informed Jury Association) and believe that, properly applied, provides yet another check and balance on government.

    Your statement, “Our elected body should be the supreme rule when it comes to cases such as this” is OK as long as the government body is not corrupted. This appears to be the case with SNC and the Liberal party, bought and paid for by donations.

    Canada’s recent free trade deal with the EU allows European companies to bid on Canadian government contracts, potentially opening a door to SNC-Lavalin through subsidiaries, such as the London-based WS Atkins, that are not listed in the criminal case, analyst Derek Spronck of RBC Dominion Securities said in a research note. This ‘loophole’ should be closed.

    The SNC meddling has a serious impact on the current Meng Wanzhou from Huawei extradition. Huawei should take this to the World court, of which Canada is a signatory, if they can. It is clearly a ‘special application’ of the Rule of Law.

    My $.02.

    Dik

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