The SNC-Lavalin Affair: Lessons For Bill C-69

Ottawa watchers remain mesmerized by the debacle surrounding a deferred prosecution agreement for SNC-Lavalin. The ejection of Jody Wilson-Raybould and Jane Philpott from the Liberal caucus is one of the latest developments.

Unfortunately, the political intrigue of the affair is sucking up most of the oxygen in the room. The case raises fundamental questions about legislation, policy and regulation, but these issues are getting lost in the shuffle.

Are there lessons here for legislators, policymakers and regulators in the energy sector? Definitely. Most especially when it comes to Bill C-69.

First, take the idea that the details of decision-making arrangements can be worked out in implementation. Those who critique Bill C-69 for lacking clarity when it comes to who does what, when and how, are met by government reassurances that the specifics will be ironed out once the legislation is in force. But as we’re seeing with DPAs (deferred prosecution agreements) and the SNC debacle, for good or ill, governments lay in the legislative beds they make for themselves — and the DPA provisions in the 2018 omnibus budget bill are making for a very uncomfortable bed.

The DPA legislation explicitly prohibits consideration of the national economic interest in bribery cases (one of the charges SNC-Lavalin faces) and only the attorney general has the authority to overrule a decision by the Director of Public Prosecutions about whether or not to pursue a DPA. That the government didn’t foresee this would tie its hands in untenable ways is difficult to comprehend. Was no one thinking about how all of this would actually work in the real worlds of politics, economics and society?

The lesson for C-69 is clear: whether and how decision-making arrangements will work in practice needs to be carefully thought through at the legislative drafting stage. This means considering things from the perspective of all parties — the government, regulators, communities, investors — and with the full range of project scenarios in mind, whether it be pipelines, nuclear energy or renewable power.

Second, take decision-making criteria prescribed in legislation. Many criticize Bill C-69 for not striking a workable balance between economic, social and environmental imperatives, noting that the economy and competitiveness are underweighted in the bill.

Decision-making criteria are at the heart of the SNC affair: the prime minister and key advisors say they were deeply concerned about the potential economic impacts of not offering a DPA to the company, but the legislative arrangements made it difficult for them to do much about it. The legislation’s ‘purpose’ clause states that the DPA regime is there to protect innocent parties like employees, but given the exclusion of the national economic interest from consideration in bribery cases, it’s not clear how employment weighed into the Public Prosecutor’s decision not to pursue a DPA. Certainly not enough from the government’s perspective.

The lesson for C-69? Make sure all relevant decision-making criteria — perhaps even their relative weighting — are made explicit in legislation.

Third, take the matter of who decides what, based on what information and with what level of independence. Some critics of C-69 point out that the bill vests too much decision-making power in the hands of ministers, leaving decisions about long-term capital-intensive projects vulnerable to the vagaries and short-termism of partisan politics.

In the case of DPAs, the government vested decision-making authority in the attorney general, with no requirement on her part or channel for her to receive and consider its concerns. Other countries, including the United States, have established mechanisms for the political executive to communicate its views to the attorney general. This ensures the government can make its views known and can foster a more fulsome consideration of broader matters of public policy in DPA decision-making.

The takeaway for C-69? Who does what, with what information and with what level of independence matters. If a minister upends a regulator’s recommendation to proceed with a project after the agency has undertaken a thorough assessment of the proposed development, on what basis is he or she doing so? And with what level of transparency to Canadians about the motivations driving the decision?

In the coming days, the SNC-Lavalin affair will no doubt continue to mesmerize. At the same time, the senate is studying Bill C-69. Let’s hope senators will take lessons from this saga into account as they evaluate the bill. The government — along with investors, communities and all Canadians — will lay in this bed for years to come.