“Canadian environment writer Andrew Nikiforuk has aptly termed Canada a ‘corrupt petro-state’. The country possesses the third-largest fossil fuel reserves in the world. Its financial and industrial elites are hell-bent on extracting and selling every last drop if given the chance, global warming be damned.”
By Roger Annis,
Published on his blog, A Socialist In Canada, Feb 24, 2019
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Canadian environment writer Andrew Nikiforuk has aptly termed Canada a ‘corrupt petro-state’. The country possesses the third-largest fossil fuel reserves in the world. Its financial and industrial elites are hell-bent on extracting and selling every last drop if given the chance, global warming be damned.
The term ‘corrupt state’ would also do. A front page story in the Globe and Mail on February 15, 2019 reveals the huge sums the Canadian government’s export-promoting agency has doled out to Canada’s corrupt engineering giant SNC-Lavalin. Since 2002, an estimated $2 billion to $4.3 billion has been provided in 19 loans by Export Development Canada. The exact amounts are unknown because EDC withholds them in the name of ‘commercial confidentiality’. Additionally, hundreds of millions of dollars have been provided to the company in a loan guarantee and in political risk insurance policies for its operations in Venezuela and Angola.
The company is at the center of a political storm following news revelations beginning on February 7 of this year that the office of Prime Minister Justin Trudeau had joined Lavalin in lobbying Canada’s judicial system to exempt the company from criminal accusations of corruption related to its operations in Libya. Charges were laid by the RCMP on February 19, 2015, when the Conservative Party was still in power in Ottawa. These are the charges still hanging over the company.
SNC-Lavalin has also faced criminal accusations of bribery in Canada related to various projects, notably the construction of the new ‘super hospital’ of the McGill University Health Centre in downtown Montreal. In most cases, company individuals took the rap in the form of resignations. A few faced criminal charges.[1]
On February 4, former Justice Minister Jody Wilson-Raybould resigned her cabinet post as minister of veterans’ affairs. She lasted only a few weeks in that post. On January 14, she was demoted from justice minister. The demotion and now resignation remain surrounded in mystery because the former minister is refusing to talk.
It is known that during Wilson-Raybould’s tenure as justice minister, prosecution officials in her ministry came under heavy lobbying pressures from SNC-Lavalin and the Prime Minister’ Office (PMO) to accept the company’s request for what is termed ‘deferred prosecution agreements‘ (DPA) brought into law in the spring of 2018 by the Liberals to assist companies caught out in bribery or other illegal actions to gain contracts or influence. The change to the Criminal Code was bundled into the ‘omnibus’ federal budget bill (a practice used by the preceeding Harper regime and vigorously denounced by the Liberals at the time) and adopted by a majority in Parliament.[2]
According to reports, justice ministry officials resisted the pressures. Wilson-Raybould herself is said to have resisted, though she is not speaking and no evidence to that effect has been forthcoming. Trudeau met with Wilson-Raybould to ‘discuss’ the file two weeks after federal prosecutors formally informed the company (on September 4, 2018) that they would not entertain the route of a deferred prosecution agreement over the bribery and fraud charges the company was facing. After that decision, the only salvation open to the company to avoid a damaging, potentially catastrophic, trial was for Wilson-Raybould to override her officials’ decision. It’s not known whether that was attempted or not.
Criminal convictions of company officials are a potentially serious matter for the firm because Canadian law prohibits such companies from applying for government-funded works for at least ten years. Convictions could even bar SNC-Lavalin from current projects that are worth billions to it.[3] (The company’s share price was $60 in June 2018; as of February 21, 2019, it was just below $36, a ten-year low. On February 22, the company reported fourth quarter 2017 results; it lost $1.6 billion on revenues of $2.6 billion.)
Trudeau has acknowledged that in his September 17 discussion with Wilson-Raybould, he raised concerns about the economic impacts that a criminal conviction would have on the firm. But the new DPA legislation specifically prohibits consideration of economic impacts from prosecutoria decisions.
The second large victim of the scandal to fall is Gerald Butts, the principle secretary in the PMO. He resigned on February 18. He and Trudeau have been lifetime confidantes. Longtime Liberal Scott Reid, a former aide in the office of former Prime Minister Paul Martin, wrote on Twitter that it is “impossible to overstate his commitment to Trudeau and his importance to this government and today’s Liberal Party.”
He added, “The inescapable conclusion is that Gerry believes there is incoming fire and a) he wants to take that hit as personally as possible and b) he is freeing himself to wage the pushback as fiercely as possible.”
Circling the wagons around SNC-Lavalin
SNC-Lavalin is up to its ears in corruption allegations and convictions related to contracts it received in Canada and Libya. But it is deemed by the federal government and corporate Canada to be ‘too big to fail’. The company has 50,000 employees worldwide with operations in over 160 countries. Close to 9,000 are employed in Canada. The government of Quebec is also heavily invested in protecting and financially aiding the company at all cost.
Following Wilson-Raybould’s February 4 resignation from cabinet, Prime Minister Trudeau and some cabinet members and PMO officials issued various rumours and explanations for her dramatic removal as justice minister. It is said she was not a ‘team player’, she was not fluent in French (the second official language of Canada), her removal was part of routine cabinet shuffling, she had failed to bring to Trudeau’s attention any concerns about lobbying pressure being applied against her, etc. Trudeau is revealing alleged conversations he had with her, including asserting that she has told him all along that no undue pressure in favour of Lavalin was being applied to her or her ministry by the prime minister or his office.
For her part, Wilson-Raybould remains silent on the whole case in the name of ‘solicitor-client’ confidentiality, the ‘client’ being the government which she served as justice minister. All this while her (former) ‘client’, including Trudeau himself, cannot stop talking about the case, in an effort to dissuade public attention and concern. (To follow the full story of the scandal surrounding SNC-Lavalin, see the ‘Canada newsroll’ page on A Socialist In Canada website containing an extensive listing of news and analysis headlines-with-weblinks.)
Jody Wilson-Raybould acquiring underserved hero status
Some First Nations leaders and some journalists in alternative media are treating Jody Wilson-Raybould as something of a hero. They say she was a victim of the Trudeau government’s subservience to corporate interests in the SNC-Lavalin story as well as the government’s failure to live up to its promises to improve the status of Canada’s Indigenous peoples. She is of Indigenous descent and her appointment as justice minister was one of the key public relations measures by the new Trudeau government to tell Canadians that a ‘new era’ in First Nations relations had dawned in the country following the Liberals’ October 2015 election win.
The Liberal Party’s election campaign had promised a ‘new era’ in relations between governments and natural resource pillaging companies, on the one hand, and Canada’s 600-plus First Nations communities on the other. This followed the ten, intolerant years of Conservative Party rule under Prime Minister Stephen Harper. But any improvements have largely been the stuff of political speeches. Most Indigenous peoples still live in conditions of dire poverty and grave violations of political and civil rights. They live on the front lines of the global warming emergency—in the melting Arctic of Canada’s north or in mountain, forest or oceanside regions being plundered by natural resource or hydro-electricity producing companies. Approximately half of First Nations people reside in urban settings where chronic unemployment, poor housing and poor social services prevail.
After years of obstruction and delay, Canada finally signed onto the UN Declaration of the Rights of Indigenous Peoples (UNDRIP) in 2016. But has failed to live up to its signature, including UNDRIP’s requirement of “free, prior and informed consent” with respect to political, economic and cultural rights of Indigenous peoples.
According to the 2016 census, Indigenous peoples in Canada number some 1.7 million(nearly five per cent), out of a total Canadian population of 36.7 million. They number approximately 977,00 First Nations people; 586,000 Métis (mixed ancestry); and 65,000 Inuit (northern and Arctic).
The Trudeau-led government has ‘doubled down’ on a soulless, death-cult, capitalist economic imperative which defines ‘progress’ as endless growth that pollutes life-sustaining land, water and air. Humans have a moral duty of care and compassion for the species with which humans share the planet, but capitalist expansionism destroys that, too.
Jody Wilson-Raybould was a loyal flag bearer of this government while serving as justice minister, including of Canada’s harsh and punitive justice system. Among the most egregious of her legacies as justice minister is her failure to end or even curb Canada’s murderous ‘war on drugs’. That war runs parallel to the better-known U.S. version. It criminalizes the possession and use of hard drugs and results in thousands of deaths and injuries each year. A disproportionate number of victims of that drug war are First Nations people.
Far from ending the ‘war on drugs’, the ‘legalization’ of marijuana in Canada which Wilson-Raybould steered though Parliament, becoming law in October 2018, has led to increased police powers. Bill C-46 was approved by a majority in the Canadian Parliament in June 2018 and came into effect six months later. It gives more powers to police agencies to randomly detain citizens for breathalyzer tests and saliva (DNA) samples, in the name of combatting driving while impaired by alcohol or marijuana. Bill C-46 will increase the use by police of race-based random checks, which are already widespread.
Wilson-Raybould has also set other bad precedents. Last May, she refused to appear before the Senate committee that was charged with studying the then-proposed deferred prosectuion agreements for corporate criminals. (As in Britain, Canada’s senate is an appointed body.) Today, she is refusing to speak to media or to appear before a Parliamentary committee being created by the Liberals to examine their conduct in the SNC-Lavalin case.
The minister has been a loyal advocate of the pro-fossil fuel, pro-tar sands pipeline policies of the Liberal party and government she serves. This places her at odds with the overwhelming sentiment of Canada’s First Nations people as well as the views of the majority of the constituents of her electoral district in downtown Vancouver. She has opted instead to represent the fossil fuel magnates and the thin crust of First Nations leaders who are buying into the pro-fossil fuel death cult of Canada’s economic elite.
Opposition parties say its mere shennanigans
The newest revelations by the Globe and Mail of the federal government financial largesse towards SNC-Lavalin are deepening existing public anger over the growing gap between the rich and poor in an increasingly out-of-control capitalist world. But the opposition parties in Ottawa are staging spectacles to limit disillusion in the capitalist economic system as a whole. They are painting the matter as a mere case of political skullduggery by the Liberals, thus diverting attention from the deeper issues of endemic, corporate corruption and crime under capitalism.
“The prime minister seems to be continuously helping out his friends rather than everyday Canadians,” NDP leader Jagmeet Singh told reporters on February 18. He says that the resignation of Gerald Butts is “a shocking admission of potential wrongdoing on the part of the [Liberal] party with respect to the SNC-Lavalin scandal…”
The Conservative Party governed Canada most recently from 2006 to 2015. Its record in bestowing government funds and praise on corporate criminals is the very blueprint picked up and improved upon by the Liberals.
The Conservatives and the New Democratic Party fear the political radicalization that will result as more and more Canadians catch wind of the fact that the SNC-Lavalin story is much more than another story of corporate corruption. In fact, corporate corruption is integral to the capitalist system. This system is daily committing crimes against people and the planet in the form of rising imperialist militarism and war, a growth-at-all-costs imperative that is fueling a global warming emergency, and rising social and national inequalities. This is the most important lesson to draw from the unfolding spectacle in Ottawa.
‘Corrupt corporate Canada:
SNC-Lavalin is but one of many stories of corruption at the highest levels of Canadian industry. Few, if any, comprehensive overviews of that corruption have been written. Below is a list of some of the largest and most notorious of recent cases.
* Tax avoidance by the wealthy. A June 2018 news report estimates $47 billion dollars in federal taxes sits unpaid by wealthy Canadians. Some of the unpaid sums dates back several decades, and the overall amount is growing, not diminishing. The 2016 ‘Panama Papers’ revelations (Wikipedia) gave impetus to more public (though not government) scrutiny over how wealthy Canadians avoid paying taxes.
* Money-laundering through casinos and the real estate industry In British Columbia, the NDP provincial government is refusing to convene a public inquiry into the controversy surrounding recent revelations of billions of dollars being launderedannually through casinos and the real estate industry during the past 15 or more years. A trial of one of the largest of those cases collapsed late last year after federal prosecutors withdrew charges, citing procedural errors by investigating police (reports here and here). A news report on February 18 suggests that as much as $7 billion annually is being laundered in the province. (See note#4 below.)
* Fossil fuels subsidies Canada’s Environment Minister Catherine McKenna is skating around commitments made in 2016 to end billions of dollars of subsidies to the fossil fuel industry.
* The construction industry Corruption became so endemic and outlandish in the construction industry in Quebec that the Quebec government was obliged to convene a commission of inquiry, the Charbonneau Commission. The commission reported in 2015, following four years (!) of deliberations.
* Electricity production A study released by the British Columbia government in February 2019 shows that electricity ratepayers will pay an estimated $20 billion in excess electricity fees during the next 20 years due to past NDP and Liberal party provincial governments obliging the state-run BC Hydro to purchase electricity at inflated prices from private producers. The current NDP government criticizes that past policy, but it has opted to continue construction of the $10 billion-plus ‘Site C’ dam on the Peace River. The electricity generated by that project is wanted for hoped-for expansions in natural gas fracking and liquefaction and mineral mining, with excess production hopefully to be sold to Alberta’s slowly tar sands extraction industry. Hydro-electric projects in Canada routinely come in at more than twice their estimated, original costs (Muskrat Falls project in Labrador; Keeyask dam on the Nelson River in Manitoba).
* Aerospace industry. One of the more comical corruption cases involves Bombardier Aerospace and the Export Development Canada. The federal agency subsidized the sale of a Bombardier jet to a corrupt businessman in South Africa. He promptly disappeared along with the jet. Bombardier is deemed by critical observers to be one of Canada’s largest ‘corporate welfare bums’ over the decades. The company was cobbled together and gifted to a Quebec corporate family when the Canadian government privatized its ‘Canadair’ enterprise in 1986.
* Shipbuilding contracts for the Canadian navy An admiral in the Canadian navy is on trial (and here) for illegally providing privileged information to a Canadian shipbuilding firm to aid the firm in acquiring a lucrative contract to build the next-generation warship for the Canadian navy. Canada is notoriously behind in planned modernizations of its air, naval and land armed forces due to competing pressures among arms manufacturers and between the regions of Canada where the stuff gets designed and built.
Between consent and force stands corruption, which is characteristic of situations when it is hard to exercise the hegemonic function and the use of force is too risky.’—Italian philosopher Antonio Gramsci
Notes:
[1] Here is the outcome of current criminal proceedings against three officials of SNC-Lavalin:
* Stéphane Roy, a former vice-president, was charged with fraud (bribery) in 2014 related to contracts in Libya. Those charges are similar to those faced directly by SNC-Lavalin. Proceedings against Roy were stayed on Feb 19, 2019; the judge cited unreasonable delays in prosecuting the case.
* One week earlier, charges of attempting to bribe a witness to the company’s work in Libya were stayed against Sami Bebawi, a former company vice-president, and his lawyer for the same reasons of unreasonable delays by prosecutors. Bebawi is still facing eight charges of fraud, money laundering and possessionof property obtained by crime. His is the last outstanding criminal case against an SNC-Lavalin official.
* Earlier in February 2019, former chief executive Pierre Duhaime escaped jail time when he pleaded guilty on lesser charges than the original charges of fraud and forgery of documents related to construction of the MUHC super hospital. Those charges dated back to 2012. Duhaime was sentenced to 20 months of house arrest.
The most spectacular of the domestic corruption cases involving SNC-Lavalin was that of Arthur Porter. He became director general and CEO of the McGill University Health Centre in 2004 and served there until 2011. He faced criminal fraud charges related to construction of the MUHC’s new super hospital in downtown Monteal. Porter received payments and awarded the engineering contract to Lavalin. The project was completed in 2015 at more than double its original cost estimate and schedule. In 2011, he and his wife fled to Panama to escape the criminal charges. He fought extradition and died of cancer in Panama in 2015.
In 2008, Porter was appointed by then-Prime Minister Stephen Harper to head the uber-sensitive Security Intelligence Review Committee, charged with overseeing Canada’s overseas spying agency. The appointed ended ignonimously with his fugitive flight to Panama in 2011.
[2] Here is a legal analysis and argument in favour of deferred prosecution agreements: ‘Canada announces impending DPA legislation and further integrity regime amendment’, February 27, 2018.[3] Among the Canadian projects being sought by SNC-Lavalin is construction of a multi-billion dollar extension of the ‘Millenium Line’ rapid transit system connecting Vancouver city center to the University of British Columbia. The project is conceived to spur more condominium sprawl along Broadway Avenue and university lands. SNC-Lavalin was the lead engineering firm on the ‘Canada Line’ rapid transit project, a public-private partnership connecting downtown Vancouver to its airport which opened in time for the 2010 Winter Olympics. Municipal politicians in the Vancouver region are beginning to voice concern about SNC-Lavalin’s potential involvement in the rapid transit/sprawl proposal for UBC and the proposed sprawl proposal to extend the Skytrain Expo Line from the suburb of Surrey to the subrub of Langley.
[4] ‘Estimates of criminal money laundering in British Columbia are in the billions, according to the Paris-based Financial Action Task Force’, by Gordon Hoekstra, Vancouver Sun (Postmedia), Feb 18, 2019 Excerpt:
In July 2018, an international agency that sets anti-money laundering standards quietly released an explanatory report on professional money laundering. In the 53-page report, the Paris-based Financial Action Task Force made a stunning claim: A “massive” underground bank in B.C. had laundered more than $1 billion a year. The underground bank offered its services, says the report, to organized crime groups around the world, including Mexican cartels, Asian gangs and Middle Eastern crime groups…
According to a 2011 study by the United Nations Office on Drugs and Crime, the estimate for money laundered internationally is just under three per cent of gross domestic product (GDP), a measure of the size of the economy. That money-laundering figure is within estimates from the International Monetary Fund of between two and five per cent of GDP.
At three per cent of GDP, money laundering in Canada would be worth about $50 billion — and in British Columbia about $7 billion. Officially, Canada has estimated the money-laundering problem in Canada at between $5 billion and $15 billion. But a retired senior RCMP officer, who spoke to Postmedia on condition of anonymity, said the number could be as high as $50 billion…
Three postcripts:
* Top civil servant in Canada, appointed by Trudeau, confirms in appearance before Parliamentary investigation that much pressure was applied to Justice Minister Jody Wilson-Raybould to aid SNC-Lavalin accused of corruption, report by CBC News, Feb 21, 2019 (includes video of Michael Wernick’s presentation on February 21, 2019 to the Parliamentary committee in Ottawa investigating the collusion between the office of Prime Minister Justin Trudeau and SNC-Lavalin engineering firm facing bribery and corruption charges)
* It’s taboo to talk about Canada’s real corporate scandal: Military procurements, by Matthew Behrens, columnist, Rabble.ca, Feb 22, 2019
* SNC-Lavalin’s criminal record, by Andrew Nikiforuk, published in The Tyee(British Columbia), Feb 22, 2019 [Andrew Nikiforuk is an award-winning journalist who has been writing about the energy industry for two decades and is a contributing editor to The Tyee. He has authored numerous books on Canada’s fossil fuel industry and the global warming emergency.]
Here is the introductory paragraph to Wikipedia’s entry on ‘Corruption in Canada‘:
Transparency International’s 2016 Corruption Perception Index ranks Canada as the 9th least corrupt nation out of 176 countries, and the least corrupt nation in the Americas. However, in recent years, corruption has been an increasingly large problem in government, industry and non-governmental organizations. For instance, in 2013, the World Bank blacklisted SNC-Lavalin and its subsidiaries from “bidding on its global projects under its fraud and corruption policy” due to the Padma Bridge scandal. Canada also ranks at the bottom of the bribery-fighting rankings, “with little or no enforcement of anti-bribery measures”. The 2014 Ernst & Young global fraud survey found that “twenty per cent of Canadian executives believe bribery and corruption are widespread in this country”. According to a study by the Graduate School of Public Policy at the University of Saskatchewan, “a large proportion of Canadians see their politicians and their institutions as fundamentally corrupt”…
