A Scandal Made In Canada

Canadian Prime Minister Justin Trudeau ensnareda major scandal.

Canada, not known for political scandals, is in the midst of a full-blown one leading to the prime minister’s office. In a nutshell, the former attorney general has accused Prime Minister Justin Trudeau and members of his inner circle of trying to influence a decision on the fate of a large infrastructure-contracting company based in Quebec.

Jody Wilson-Raybould testified in February to the House of Commons justice committee that the prime minister, his staff and other officials wanted her to arrange a remediation agreement that would save SNC-Lavalin from going to trial on corruption charges. The trial could result in the company being banned from obtaining federal contracts for years. Four government officials resigned as a result of the scandal, at least one in protest.

Trudeau says he had not asked the minister to do anything untoward and was looking to save 9,000 jobs from being lost. But are SNC-Lavalin jobs that important economically?

“SNC-Lavalin is a very successful firm with approximately C$10 billion [US$7.5 billion] in annual revenue, which is an infinitesimal amount of Canada’s C$2 trillion GDP,” says Ian Lee, associate professor at Sprott School of Business, Carleton University in Ottawa. “The premier of Quebec stated publicly that [the province] stands ready to invest additional capital in SNC-Lavalin beyond the 20% ownership it holds through Caisse de Depot et Placement. SNC-Lavalin is not on the edge of collapse, as suggested or inferred by the prime minister of Canada and the minister of finance.”

SNC-Lavalin says it has “fully reformed” its business ethics and anyone associated with bribery or fraud has been terminated. In an interview with The Globe and Mail, President and CEO Neil Bruce said Canadian authorities have not brought the guilty to justice, leaving the company to shoulder most of the blame. With a national election coming up in a few months, the opposition parties have taken up this scandal in attempt to chip away at the Liberal government’s support.

As for SNC-Lavalin itself, there may be two equally problematic outcomes, says Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University. The prime minister throws the book at the company and risks Canadians thinking he goes too far, or he lets SNC off lightly and suffers losses in the 2019 election. Either way, a government once seen as squeaky-clean has been tarnished.