Resignation of Butts and a lament for ethical government

di Joe Volpe del February 20, 2019

TORONTO - The departure of Gerald Butts from the position of Principal Secretary to Prime Minister Trudeau is a minor distraction in the larger scheme of the unfolding SNC Lavalin (SNCL) affair.

He may want to defend his reputation which, until he raised the matter, was of peripheral consequence – if at all – to the general public. His departure will strip any “cover”, however light, on the most urgent issues that have surfaced from his ham-handed dexterity on the file.

For starters, SNCL, from the investigations conducted by the World Bank and forensic investigative agencies like the RCMP, emerges as a stain on the international reputation of Canada as an ethical place to do business; where the rule of law and transparency are always the default positions of governments and corporate citizens.

SNCL’s corporate culture appears to tolerate, if not nurture, tactics that cannot be tolerated in a democratic, rules- based society: bribery, graft, corruption and dealing with officials who practice extortion. The RCMP is investigating; the World Bank has already condemned its practices and applied punitive measures.

In Canada, legislation was surreptitiously introduced in the Budget omnibus bill of 2018 to allow SNCL (its executives and members of the Board), among others, to escape consequences of criminal prosecution and subsequent jail time upon conviction. SNCL lobbied heavily for the Bill and afterwards for “deferred prosecution”.

Essentially, they said “why don’t you just levy a fine, and we’ll pay”. Secondly, the Attorney General (then Minister Jody Wilson- Raybould), who alone has the jurisdictional authority to decide how to proceed, apparently “resisted pressure” – however nuanced – by Mr. Trudeau and/or Mr. Butts to proceed in a manner favourable to SNCL. What’s wrong with that? Briefly, she is like a judge in Court.

Any intervention by a political entity, or others, is akin to obstruction of justice.

It happens in what we call “third world countries”. Here, it is followed by resignations, dismissals or prosecutions. Ms Wilson-Raybould balked at the apparent pressure and has now retained a former Supreme Court Justice to defend her rights as she prepares to speak to the issue. Mr. Butts is a first casualty.

Canada’s governmental reputation may indeed be another. Thirdly, the pressure on the Trudeau government to act in favour of a deferred prosecution is coming not from dynamics of an impending election (eight months from now) but from the government of Quebec.

Premier Legault demands a quick and early decision, before the atmosphere is poisoned further. His government is a 20% owner of SNCL. It is buying up shares now that their value has dropped from the $ 50+ to the $ 30+ range. It is aiming for 35% ownership to curtail a “foreign-buyout”.

The potential value of its investments could take another “hit” if SNCL were to be debarred for ten years from bidding on federal infrastructure projects. The Liberal government has announced an $18 Billion Infrastructure programme over the next ten years.

Legault’s Quebec government relies on its financing arm, the Caisse de Depot et Placement for “economic development”. Infrastructure is a big part of its portfolio. The Caisse is not a small operation.

Its assets last year topped the $308 Billion mark, a 50% increase from five years ago. It claims that $192 Billion are invested in Canada.

Fourthly, the Canadian Conservative Party, now seemingly poised to make some electoral gains at Mr. Trudeau’s expense, has yet to carve out an ethical position or strategic messaging that will differentiate it from its rivals.

The closest they have come so far is a statement made in an interview by its deputy Leader that, were her Party in government, it would make a decision and let the public know.

Tactics rather than vision. Back to square one. Poor Canada.

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