Political Storm Engulfing Canada’s Prime Minister Justin Trudeau, Opposition Demands Resignation

OTTAWA – A political crisis engulfing Canadian Prime Minister Justin Trudeau deepened this week after former Justice Minister Jody Wilson-Raybould accused government officials of pressuring her to help SNC-Lavalin Group Inc avoid a corruption trial.

Trudeau, who disputed Wilson-Raybould’s allegations and rejected an opposition call that he resign, got the support on Thursday of a top ally inside his Cabinet, indicating there was no immediate pressure inside his Liberal Party to oust him over the scandal.

SNC-Lavalin has about 9,000 employees in Canada, including about 3,400 in the province of Quebec, where the Liberals say they need to pick up seats in a federal election this October to stand a chance of retaining a majority government.

Here are some key facts about the case and the company at the center of the controversy.

What’s SNC-Lavalin’s Involvement?

Montreal-based construction and engineering firm SNC-Lavalin was charged in 2015 by the Public Prosecution Service of Canada with bribing Libyan officials to influence the awarding of contracts between 2001 and 2011.

The company had tried unsuccessfully to avoid trial, arguing instead for a negotiated settlement since it had cleaned shop by changing executives and overhauling its ethics and compliance systems in recent years. The preliminary hearings in the case are ongoing, SNC-Lavalin spokeswoman Daniela Pizzuto said on Thursday.

Neil Bruce, who took over as SNC-Lavalin’s chief executive in 2015 and led its C$3.6 billion ($2.7 billion) acquisition of British engineering and consultancy WS Atkins two years later, said the firm had done “nothing wrong” in the political crisis. and that “we have never asked for charges to be dropped.”

What’s at Stake?

Canadian government officials said they were concerned about the potential for job losses, especially in the predominantly French-speaking province of Quebec.

“The consequences for the economy are always very important and my staff are always talking to other people in government to ensure that we consider the need to protect jobs,” Finance Minister Bill Morneau told reporters on Thursday.

Wilson-Raybould told a hearing on Wednesday that officials in the offices of Trudeau and Morneau had cited the risk of SNC-Lavalin cutting jobs or moving its headquarters out of Quebec if found guilty. The company faces being barred from bidding on Canadian contracts for 10 years.

In 2016, SNC-Lavalin admitted that some former executives had illegally arranged donations of more than C$80,000 to the Liberals from 2004 to 2011.

The company is also facing pressures on its bottom line as an August 2018 dispute between Canada and Saudi Arabia weighs on its contracts in the Middle East kingdom. SNC-Lavalin also wrote down C$1.2 billion in oil and gas assets, which resulted in a C$1.6 billion fourth-quarter loss.

Company Snapshot

The company generated total revenue of C$10 billion ($7.6 billion) in 2018. About 10 percent of total revenues came from Saudi Arabia. It employed 52,435 at the end of December, with over 15 percent working in Saudi Arabia.

As of year’s end 2018, SNC-Lavalin reported a total backlog of C$14.9 billion and had $634.1 million of cash and cash equivalents.

Pressure to Resign

Conservative Leader Andrew Scheer is calling on Prime Minister Justin Trudeau to resign in the wake of stunning testimony from his former attorney general on the SNC-Lavalin affair.

Scheer told reporters Wednesday that Trudeau has “lost the moral authority to govern” and called on the RCMP to open an investigation into the controversy.

The Conservative leader said he was “sickened and appalled” by Jody Wilson-Raybould’s testimony before the justice committee, which detailed the political interference she claimed to have experienced as the former attorney general.

By Allison Lampert and David Ljunggren
Thompson Reuters