The Deep State: The Trudeau government, lobbyists and the legalization of corruption in Canada

"There's no whore like an old whore" – Brian Mulroney on the Liberal Government in 1984

What many people outside of Ottawa don't understand is that there is a parallel system of government in Ottawa. This Deep State has more power than the elected MPs and ministers who are supposed to run the country. These people are the lobbyists who ply their trade with the efficiency of a surgeon’s scalpel. They ensure that banks, telecoms, airlines, special interest groups and large corporations like SNC Lavalin (SNC) can skirt the rules. They might even make special ones providing protections that everyday taxpayers would never receive. The big banks and credit card companies in Canada continually rake in billions of dollars in profits each quarter through services fees and other outrageous charges that can only be made in an uncompetitive, monopolistic banking structure—ever wonder how? These banks have a permanent lobby in Ottawa known as the Canadian Banking Association. They monitor legislation and issues, meet with key ministers, and spin jargon to claim they are actually competitive businesses in order to justify their constant consumer fee increases and monopolistic banking practices.

For decades, they have shut down competition in Canadian banking. With government approval, they have colluded with insurance companies to increase fees and suppress competition in that industry as well. They have successfully shut down all attempts to rein in the double-digit credit card interest rates and the annual service fees and charges that are, essentially, legalized theft. Banks, airlines, marketing boards, telecoms and large corporations all support the Deep State, hiring former political aides or ministers to work for them as “lobbyists.” They thrive in Ottawa and other provincial capitals.

In Ontario, during the Wynne regime, if you wanted to meet with a minister you would often be redirected through a lobbyist or have to be affiliated with one to get access. Telecom lobbyists are especially active in Canada's Deep State; their sole purpose is to ensure that the Canadian Radio-television and Telecommunications Commission (CRTC), the federal body in charge of regulating the industry and rates for Canadians, remains a toothless eunuch. The telecom monopoly in Canada are vampires who have sucked the life and credibility out of this “regulatory body.” Canada has continually had the highest telephone, cable and cell phone rates in the western world for the past four decades—all thanks to lobbyists. Just look at your monthly cell phone bill.

You can “visit” the Deep State online by going to the website of the Commissioner of Lobbying of Canada—if you can call them that. “Commissioner” is the wrong title for this job: a better title would be “Maitre’D” of lobbying. The current holder of the post, Nancy Bélanger, was appointed by Justin Trudeau on December 30, 2017, for a seven-year term. The government seemingly installed someone with no prior substantive corporate experience despite the fact that the majority of lobbying involves the business sector. Bélanger has never worked in the private sector and has spent her entire career in government, much of it working as a senior legal advisor with the Immigration and Refugee Board. To say she is a toothless tiger would be an understatement. Her silence about SNC lobbyist scandal rocking Canada's government and justice system speaks volumes about the impotency of her office.

The Trudeau Liberal government allowed the Deep State to achieve an unprecedented level of influence. They passed Deferred Prosecution Agreements (DPAs) legislation allowing for sentencing agreements between the government and a criminal corporation, where the criminal agrees to plead guilty and pay a large fine in exchange for a “get out of jail free” pass and the ability to continue to bid on more government contracts. As a result, corporations in Canada can now be involved in criminal acts and get off if they can pay; in essence, corruption and criminality are legal. This new law was cut in the back rooms of Ottawa at the behest of SNC-Lavalin and a cabal of other lobbyists who convinced an incognizant Prime Minister, a conceited Clerk of the Privy Council, a dimwitted Minister of Finance, several obstinate cabinet ministers and a caucus of sheep to pass this DPA legislation into law. They supported it despite the fact that it would allow for transformative changes in terms of how corporate criminal fraud cases would be prosecuted under the criminal code. When the matter was raised for debate by committee members at the Justice Committee, the Liberal majority on the committee shut down reviewing the DPA legislation. A Conservative senator also flagged it but was voted down by the Trudeau appointed “independent” senators. The government buried the bill in the bowels of a larger omnibus bill that that included the 2018 Federal Budget Implementation Act. The DPA section is in Division 20 in Part 6 of the 385-page document (making Deferred Prosecution Agreements a legal part of the Criminal Code, Part XXII.1, “Remediation Agreements).

Conservative finance critic and Ottawa-Carleton MP Pierre Poilievre stumbled on the provision during Committee hearings to review the budget bill. He questioned why such a law was being put forward which allowed criminals to avoid prosecution. Surprisingly, the chair of the finance committee, Liberal MP Wayne Easter, admitted he did even not know a criminal code change (DPAs) was in the budget bill. He told the committee, “there is a huge question whether this (DPA’s) should be in a budget bill.” Hull-Aylmer Liberal MP Greg Fergus told the committee that he too was surprised to see the DPA law in the budget bill and acknowledged that he learned of it when Poilievere mentioned it. “It left an uncomfortable taste in my mouth,” Fergus added. “It seems we are letting white-collar criminals off the hook with a slap on the wrist.”

Poilievre raised the matter again in the House of Commons in May 2018, asking Finance Minister Bill Morneau why the budget bill included “a provision that would allow accused white-collar criminals charged with bribery, fraud, insider trading and other offences to have all charges dropped.” Morneau responded, “We believe that our approach to deferred prosecution agreements will enable us to pursue an approach that is functioning and doing well in other economies—one that will result in more effective continuation of business success by companies once they have paid their dues to society.” In plain terms, Morneau was saying – do the crime, pay a big fine, and business as usual.

Despite their concerns about criminality, both Wayne Easter and Greg Fergus voted in favour of the DPA legislation without changes along with every other government MP. The law to resolve corporate offences in Canada under the Criminal Code and the Corruption of Foreign Public Officials Act (DPA) took effect on September 19, 2018.

In February 2019, Clerk of the Privy Council Michael Wernick testified before the Justice Committee that DPA legislation had been a transparent process. He claimed all the rules were followed, asserting that the information on DPA’s were published in a February 2018 report highlighting public support for a DPA process in Canada. His presentation describing the transparency of it all was deserving of a bureaucrats gold star. In reality, DPA legislation was cleverly crafted and passed in a way where its proponents could claim “transparency” in the process, when the exact opposite was true. The public had never been asked about them, Finance Committee MPs including the committee chair were not aware they had been slipped into the budget bill, the Liberal-dominated Justice Committee refused to allow discussion on them and they were never debated in an open and transparent manner in Parliament. Only lobbyists and select law firms were aware of this drastic change to the criminal code—of course, that is to be expected since these were the interested parties who drafted the content that became the basis of the new law. The Deep State hustlers for a DPA were SNC-Lavalin Chairman Kevin Lynch, SNC CEO Neil Bruce and a handful of seasoned lobbyists.

SNC-Lavalin and Past Criminal Activity

SNC-Lavalin is a Montreal-based corporation which provides engineering, procurement and construction (EPC) services in various industries including mining and metallurgy, oil and gas, environment and water, infrastructure and clean power. They have tens of thousands of employees worldwide, with offices and operations in over 160 countries.

In 2013, the World Bank banned SNC and its subsidiaries from any involvement in projects it finances for a decade – the longest debarment period it has ever imposed. These unprecedented sanctions followed an investigation into the alleged bribery of officials by SNC-Lavalin for projects in Bangladesh and Cambodia. The World Bank statement said, “SNC-Lavalin’s misconduct involved a conspiracy to pay bribes and misrepresentations when bidding for Bank-financed contracts.”

“This case is testimony to collective action against global corruption,” said Leonard McCarthy, World Bank Integrity Vice President. “Once we had evidence of the company’s misconduct, we referred the matter to the Royal Canadian Mounted Police.” The World Bank’s action came at the same time that SNC-Lavalin was under investigation by Canadian and Swiss authorities over bribery payments in Libya and was facing a series of class-action lawsuits on other matters involving Canadian projects. In the months prior to the World Bank banning the company in 2013, its former CEO Pierre Duhaime was arrested in Montreal on charges of bribery related to the construction of a $1.3-billion hospital project in Montreal. He was found guilty on February 1, 2019 and sentenced to 20 months of house arrest after pleading guilty to a single charge in connection with the hospital fraud.

After the World Bank’s banning decision in 2013, newly placed SNC President and CEO Robert Card said, “The company’s decision to settle signals our determination as we go forward to set standards for ethics in business conduct and for good governance that are beyond reproach. The company has already taken, and will continue to take, measures to ensure rigorous compliance and control procedures are in place.” This was poppycock. SNC was still facing charges in Canada under the Corruption of Foreign Public Officials Act (CFPOA) for bribes totaling over $48 million to Libyan government officials, including former dictator Moammar Gadhafi’s son, Saadi, to secure government contracts. It was discovered that part of the money SNC executives paid in bribes to Gadhafi was used to finance a booze-filled cross-country tour for him to visit prostitutes in cities across Canada. By October 2018, the case was in preliminary hearings in the courts in Canada.

Desperate to avoid being held accountable for their alleged criminal activity, SNC hired Kevin Lynch, the former Clerk of the Privy Council (2006-2009), Secretary to the Cabinet, and Head of the Public Service of Canada as a director, and appointed him Vice-Chairman of SNC in May 2017. He is also the Vice-Chair of BMO Financial Group, a job he has held since leaving government in 2010. Seven months later, in December 2017, Lynch was named Chairman of SNC. He still serves on the BMO Board. Mr. Lynch is neither a contractor, engineer, nor construction worker, but he is familiar with how government works and how laws are made. Canada's former highest “public servant”—generously paid and pensioned off by taxpayers after a 33-year career—was now one of the key executives running SNC-Lavalin.

Lynch had decades of expertise and a large network of contacts, and as the new Chair of SNC-Lavalin, he saw it fit to use his experience to lobby senior government Ministers and officials to pass DPA legislation. Lynch was not breaking any laws in doing the bidding for SNC. However, the ethics of Canada former "top civil servant " becoming the main maestro and strategist for a criminally convicted firm that was now lobbying government of Canada officials is another matter entirely. Working with SNC’s executive team and other lobbyists, a two-step process was devised to ensure SNC could avoid a criminal conviction in Canada. First, they would lobby the government to pass a DPA law. Then, SNC would utilize the DPA legislation to avoid criminal prosecution and potential jail time by paying a fine. Lynch and other Ottawa lobbyists (two of whom were key advisors to previous Prime Ministers) persuaded influential Trudeau Ministers to support DPAs under the ruse that by doing so they were protecting the jobs of innocent employees of SNC who might be affected by the fraud of company executives. Doing this, they said, was quite normal. Similar types of remediation agreement legislation had been passed in the United States, France, Brazil and Great Britain after the 2008 financial crisis. Interestingly, the only key Minister they did not lobby was Jody Wilson-Raybould, the Attorney General and Justice Minister of Canada.

The new law stated that DPAs were to be negotiated by the prosecution and the accused, and are subject to judicial approval. They could be accompanied by the payment of penalties, restitution, implementation of compliance measures, and other terms and conditions as negotiated by the parties including the potential appointment of corporate monitorships. Some offences are subject to resolution through a Remediation Agreement: bribery of public officials, both domestic and foreign, fraud, municipal corruption, insider trading, private bribery (secret commissions), money-laundering and other offences. Competition offences such as price-fixing, bid-rigging and misleading advertising were not part of the new law. The new law required judicial approval of remediation agreements and the potential involvement of victim representatives. Negotiations for a Remediation Agreement were to be formally initiated by the prosecution, but the expectation of the law was that accused corporations would be the ones to request the initiation of a negotiation as part of a company’s cooperation with an investigation.

Most importantly, prior to commencing a negotiation the prosecution must determine that there is a reasonable prospect of conviction, recognize that the negotiation is in the public interest, and obtain the consent of the Attorney General to the negotiation. If the Attorney General refuses, based on the advice of the prosecutors, the case proceeds to court. In the SNC case, prosecutors had determined that the company did not meet the DPA standard—period. By December 2018, that had been made very clear to the company. In an attempt to get the Justice department to change its mind, SNC issued a statement in December 2018, saying its Quebec operations were under threat as a result of "ongoing legal challenges."

Records show that SNC-Lavalin representatives met at the Prime Minister's Office 18 times between February 2016 and December 2018—an abnormal amount of access for anyone, let alone a company undergoing criminal prosecution. SNC and its lobbyists had 80 additional meetings with top officials at Global Affairs Canada, Innovation, Science and Economic Development, (including Innovation Minister Navdeep Bains himself), the Privy Council Office, Export Development Canada, Public Services and Procurement Canada and Public Safety, Treasury Board, and Natural Resources and Environment. They also met with many Senators including Peter Harder, the government's representative in the Senate. Curiously enough, they met with David MacNaughton, Canada’s Ambassador to the United States who had served as Ontario co-chair for the federal Liberal campaign in 2015. Before taking on the role of Ambassador, MacNaughton ran Strategy Corp, one of the most influential lobbying firms in the country.

The lobbyist registry stated the reason for all these meetings was “justice and law enforcement.” However, Lynch and the SNC lobbyists never met with Wilson-Raybould or anyone from the Department of Justice. They were using their Deep State influence to do an end run on the Attorney General of Canada. It is not known whether or not SNC Chairman and Former Clerk of the Privy Council Kevin Lynch and current Clerk of the Privy Council Office Michael Wernick had any private one-on-one conversations or phone conversations related to SNC. Most troubling of all is Wernick’s admission that he tried to convince Attorney General Wilson-Raybould to support a DPA for SNC.   Wilson-Raybould told the  Justice committee that  Michael Wernick, the clerk of the privy council,   said “there is a board meeting on [Sept. 20] with stock holders” and warned that the company “will likely be moving to London” without an intervention. Incredulously Wernick  and Finance Minister Bill Morneau could not produce one document to verify  the veracity of any of that  claim.  They apparently did not consider  that  this was a veiled threat  by SNC to get their way. The idea that SNC would move its corporate office to London England in the middle  of the Brexit crisis is beyond absurd. Trudeau himself  made the same claims without any evidence,  stressing that he represents an electoral district in Quebec where SNC employs people.However he too could cite no proof or evidence to support SNC was moving.  SNC  employs about 9,000 people in Canada and has  expressed publicly that it’s looking to relocate.Neil Bruce, chief executive of SNC, was quoted in a fourth-quarter conference call on February 22 saying the exact opposite “We've got plenty of opportunities to grow the business, outside of Canada. But also we are committed to the Canadian market and to our Canadian employees as well.” Further, SNC has a number of legal and commercial agreements that require it to stay in Montreal until at least 2023. So the whole "moving thing" was a ploy that Wernick and Trudeau fell for hook,line and sinker.  Many questioned why Wernick, Canada’s most senior  “public servant” and Finance Minister Bill Morneau were so intimately involved in shilling for a large corporation without  at least doing some basic due diligence. Wernick  told the Justice Committee that he raised concerns about SNC having an impact on the Quebec elections—which is absolutely none of his business as the “apolitical” Clerk.

On February 12, Attorney General Jody Wilson-Raybould resigned from cabinet. In testimony before the Justice Committee, she said she believed she had been removed from her role as Attorney General because she refused to be pressured into allowing SNC to obtain a DPA to avoid criminal prosecution. She asserts that direct and constant pressure to do so came from Prime Minister Trudeau, Clerk of the Privy Council Michael Wernick, Principal Secretary Gerald Butts, Chief of Staff Katie Telford, and others in the Prime Minister's Office (PMO) and Minister of Finance's office .

The SNC-Lavalin affair raises several governance  and ethical issues that strike at the heart of Canada's democracy. More importantly, the scandal raises questions about the actions and integrity of some of Canada's most senior public servants and elected officials:

1. Why was the Clerk of the Privy Council, Canada's top public servant, Michael Wernick so personally engaged in a lobbying process to get SNC a DPA?

2. Why didn’t the Commissioner of Lobbying take notice of the 80 meetings and inquire as to the efficacy of these meetings?

3. How is it possible that the two key government MPs on the Finance Committee including the Chairman, Liberal MP Wayne Easter did not know that new DPAs legislation that would dramatically change Canada’s laws with regards to corporate fraud and corruption had been included in the budget bill?.

4. Why did the Chair of the House of Commons Finance Committee Wayne Easter vote for DPA's in the budget bill after he raised concerns about the ethicality of these agreements being put in a budget bill?

5. Why did the Justice committee not review the DPA legislation in an open and transparent manner before it was passed?

6. Why and when did lobbyists meet with the then-President of the Treasury Board, Scott Brison, in this matter? Did Kevin Lynch promise Scott Brison anything for supporting DPAs? Brison resigned from cabinet in his role as Treasury Board President in February 2019 to “spend more time with his family,” yet within weeks, he announced that he had taken a new job as vice-chair of investment and corporate banking with the Bank of Montreal. Kevin Lynch is on the Board of Directors at the Bank of Montreal.

7. Has the Commissioner for Lobbying or the Ethics Commissioner at the House of Commons asked to see records of all correspondence, calls and meetings between Kevin Lynch and Scott Brison between 2016-2019? If not, why haven’t they requested this information?

8. Why did SNC press for a DPA for economic reasons when the legislation explicitly states that job dislocation is not a qualifying reason to obtain a DPA?

9. Why did SNC Lavalin representatives report meeting for lobbying communications on “justice and law enforcement,” with Canada’s ambassador to the United States David MacNaughton on Oct.17 and Nov.7, 2018? Before being named US Ambassador, Mr. MacNaughton was the Chairman of StrategyCorp, a communications, public affairs and lobbying company in Ottawa. What was discussed at the meetings with MacNaughton, and did he push for the DPA for SNC with the PM and PMO? If so, why? Was he acting in his role as Ambassador or in some other capacity? The real point is—why is Canada's Ambassador to the United States involved in helping SNC at all?

10. Why were Prime Minister Trudeau, Finance Minister Bill Morneau, Principal Secretary Gerald Butts, PMO Chief of Staff Katie Telfer, and Clerk of the Privy Council Michael Wernick — all non-lawyers pressuring the Justice Minister and Attorney General of Canada to interfere in a criminal case?

It is quite common for executives in private businesses and corporations in Canada to sign professional standards agreements once a year with language that states they will not participate or engage in offering bribes, enticements or gifts to any official to another company or government. Ironically, over several years, the government of Canada has paid billions of taxpayers’ dollars in contracts to SNC. This is a key part of why the company has been very profitable. In fact, SNC’s main business in Canada is from government contracts. It is thus reasonable to assert that any bribe SNC made to anyone else—either directly or indirectly—had its genesis from us, the Canadian taxpayers.

And while we are on the subject, corruption is considered by many as a natural byproduct of gambling. A few months ago, a scandal exploded in British Columbia with the establishment of the so-called ‘Vancouver model’ in which a myriad of small-scale casino transactions were used to launder dirty money. Another scandal involving gambling hit B.C. when a government employee allowed a businessman with proven ties to Asian organized crime to purchase stakes of a B. C. Lottery Corp. casino. Hence it comes as no surprise that the Federal Government seems to be favouring the growth of online casinos in Canada – as this article explains – through various measures such as Bill C-13, as opposed to corruption-ridden land-based casinos.

Prime Minister Trudeau asserts that Canada is a "rule of law" country when it comes to commercial business practices. However, he did not apply that standard to himself or this government. Instead, he supported and passed DPA legislation at the behest and request of the Deep State. Seen through this lens, one can easily understand why China is so upset about the arrest of Huawei Executive Meng Wanzhou. Huawei and Meng have never been charged or convicted of corruption. Meng is detained in Canada on a warrant with limited freedom. Yet SNC, a company convicted of fraud and bribery (including paying bribes for prostitution), gets special treatment from a government tripping over themselves to ensure they did everything possible so SNC could avoid prosecution. It appears the Chinese government would have been much further ahead in the Meng arrest if they hired Kevin Lynch or another Deep State operative to be their lobbyist. Maybe they should call Gerald Butts. Apparently he is looking for work.