With the SNC-Lavalin scandal, it’s easy to miss the forest for the trees. The interpersonal drama. The dates. The evolving timeline, based on who recorded what, and who forgot when.
It’s as good as political theatre gets in Canada.
Amid the din of the details, a critical fact has been buried: the SNC-Lavalin affair is business as usual in Canada. Pro-business policies have long been the norm. It just happens to be that this time, Canadians get to see behind the curtain.
The 'he said-she said' of the SNC-Lavalin affair is a distraction from the real issue, @nolore writes: corporations in Canada have far too much political power, and clearly, rare is the politician who is willing to stand up to that power.
In 1998, French philosopher Pierre Bourdieu wrote The Essence of Neoliberalism, in which he argues that in order for free market capitalism to reign, the collective structures within a national state that impede free market logic must be weakened or destroyed. Therefore, public policies that aid corporations to maximize profits are relied on more and more, and markets are, either slowly or quickly, deregulated.
His essay identifies that with globalization came incredible capital mobility. Corporations no longer needed to be loyal and tethered to a single location, and instead could move where market forces were more favourable to maximize profits. Anything that gets in the way of this: unions, taxes or government policy, becomes the enemy of the free market, and must therefore be eroded.
I returned to this essay this week to help me understand what happened to Canada’s feminist movement, and was struck by the parallels between Bourdieu’s analysis and the SNC-Lavalin scandal.
While the prime minister prefers that we understand the scandal as a 'he-said, she-said', SNC-Lavalin is relying on the same tropes that Bourdieu identified to save it from being prosecuted. The power that corporations in Canada hold is incredible, and they often advocate for policies that gut the welfare state while making it sound like they really care about protecting Canadian jobs.
Risk of job losses overstated
At issue in this scandal is the Liberal’s new policy tool called a deferred prosecution agreement. It allows SNC-Lavalin to avoid prosecution for corruption, and make amends for their alleged corruption in an alternative way.
There have been only two arguments offered by the Prime Minister’s Office for why SNC-Lavalin should be offered a deferred prosecution agreement. One is that if prosecuted, SNC-Lavalin might move its corporate headquarters to London. This would be a blow to Montreal. The second argument is related: with that move, 9,000 jobs would vanish.
The 9,000 jobs figure comes, probably, from SNC-Lavalin itself. In a news conference held on Thursday morning, Justin Trudeau said that the 9,000 jobs figure came from “various sources” including the company. Canadians should be highly skeptical of a job-loss figure that comes from SNC-Lavalin; they have no reason not to inflate the economic impact of their move. Trudeau, his former principal secretary Gerald Butts, and clerk of the Privy Council Office, Michael Wernick, all parroted this line. Jody Wilson-Raybould and her former departmental staff disagreed that these factors were enough to offer a deferred prosecution agreement.
The opposition has poked holes in this logic. Conservative MP Pierre Poilievre pointed out that SNC-Lavalin had an agreement with Quebec’s pension fund, Caisse de dépôt et placement, that would make moving their offices impossible. They also pressed witnesses who appeared before the House of Commons justice committee where the 9,000 jobs figure came from, and none of the witnesses could deliver a reasonable reply.
On Oct. 10, an SNC-Lavalin media release informed shareholders that the Public Prosecution Services of Canada would not negotiate a deferred prosecution agreement with SNC-Lavalin. On October 11, SNC-Lavalin’s stock fell from $51.85 to $44.36. Four days later, Wernick took a call from the chair of the board of SNC-Lavalin, Kevin Lynch, who asked if anything could be done about this decision, according to Wernick’s testimony.
Lynch was the clerk of the privy council from 2006 to 2009.
Facing prosecution, SNC-Lavalin could be barred from bidding on federal contracts in Canada. They are currently involved in dozens of infrastructure projects worth billions.
More corporate welfare means less for social safety net
Trudeau wants Canadians to decide which side of the story to believe. He and Butts have consistently argued that people can experience the same thing in different ways, and that’s true. But this frame is a distraction from the real issue: corporations in Canada have far too much political power, and clearly, rare is the politician who is willing to stand up to that power.
SNC-Lavalin is a leader in global corruption indices, and it’s easy to single them out. They’re the extreme version of a far more mundane problem. Tax money is bled out to corporations all the time: Bombardier received billions; General Motors received billions; Kinder Morgan received billions. Giving corporations the funds that they say they need is how Canada does business. Every billion that fills shareholders’ pockets is taken from our social safety net. One billion to a company means one billion less to fund a national childcare program, for example.
In addition to direct financial transfers, policy also helps to boost corporate rule. Governments regularly introduce corporate-friendly policies to try to encourage corporations to stay in Canada and, as they would say, “create jobs.” In 2009, Canada’s corporate tax rate was 31 per cent. Last year, it was 26.5 per cent. While the biggest cuts in the tax rate were made by the Conservatives, its low level was maintained by the Liberals. Corporate profits increase, public coffers are emptier.
It was the Liberals who brought in the deferred prosecution framework, passed as part of an omnibus budget bill implemented in June 2018, and the case of SNC-Lavalin is its first test. If some Liberals were hoping that it would be used in cases like the one involving SNC-Lavalin, clearly there was never consensus reached within the caucus.
Bourdieu warned about these free market-friendly changes more than 20 years ago. They threaten our democratic power, and they’re systemic. Trudeau likely, honestly, believes that nothing inappropriate happened in how they dealt with Wilson-Raybould. Because in Canada, bowing to corporate pressure is the norm. Standing up to corporate power is the exception.