But Mom / Dad, when Johnny gets into trouble his parents do things a little bit differently, why can’t I benefit from that?
As I told The Globe and Mail in this article, that is my reaction to SNC-Lavalin’s unusual statement upon being criminally charged by Canadian authorities for alleged improper payments to Libyan officials.
As noted in this previous post, last week the Royal Canadian Mounted Police (RCMP) announced charges against the SNC-Lavalin Group Inc., its division SNC-Lavalin Construction Inc. and its subsidiary SNC-Lavalin International Inc.
Upon being charged, SNC-Lavalin issued this release, which as relevant here, stated:
“It is important to note that companies in other jurisdictions, such as the United States and United Kingdom, benefit from a different approach that has been effectively used in the public interest to resolve similar matters while balancing accountability and securing the employment, economic and other benefits of businesses.”
SNC-Lavalin should be grateful about various aspects of Canada’s legal system (compared to the U.S.) and not pout.
For starters SNC-Lavalin can only be found guilty of the charges alleged to the extent one of its “senior officials” engaged in improper conduct. This is a much more exacting standard than the very lenient U.S. standard of respondeat superior corporate criminal liability in which a business organization can face criminal liability to the extent any employee engaged in improper conduct within the scope of employment and intended, at least in part, to benefit the organization.
Perhaps most importantly, SNC-Lavalin should be grateful, and not pout, that Canadian authorities will have to prove the facts and legal theories alleged in the enforcement action. In the U.S., FCPA enforcement agencies are rarely put in the position of having to prove anything in a corporate FCPA enforcement action. Rather, the DOJ (or SEC) occupy the position of prosecutor, judge and jury all at the same time and use resolution vehicles such as non-prosecution and deferred prosecution agreements (NPAs / DPAs) or administrative settlements – all of which are not subjected to any meaningful judicial scrutiny.
In short, SNC-Lavalin should be grateful, and not pout, that Canadian law enforcement authorities have not abandoned (as U.S. authorities have) traditional legal principles in the name of ease and efficiency. Accusing a person – whether a natural person or a legal person such as SNC-Lavalin – was never meant to be easy or efficient and it is interesting that SNC-Lavalin appears to be begging for such a system.
In other portions of its recent statement, SNC-Lavalin stated that the criminal charges “are without merit.” In other words, SNC-Lavalin seems to be saying that even though the criminal charges “are without merit,” it would have gladly forked over tens of millions – or perhaps hundreds of millions of dollars – of shareholder money to make the RCMP go away. How would that benefit SNC-Lavalin’s employees and shareholders?
It is also worth nothing that SNC-Lavalin’s statement casts several opinion statements as fact.
For instance, many would disagree that companies subject to the FCPA “benefit” from the common enforcement approach in which the DOJ (or SEC) are not put in a position to prove anything in relation to the facts and legal theories alleged. Many would also disagree that companies subject to the FCPA “benefit” from the excessive leverage the DOJ (or SEC) have over companies in extracting corporate settlement. Moreover, many would disagree that the U.S. approach to resolving corporate FCPA enforcement actions through NPAs and DPAs or administrative SEC actions have “been effectively used in the public interest.”
In short, SNC-Lavalin should be grateful, and not pout, that it is subject to a legal system in which law enforcement has to prove facts and legal theories to someone other than itself.
And let’s face it, the problem with SNC-Lavalin’s predicament has little to do with Canada’s legal regime for prosecuting companies, but rather Canada’s recent – and foolish – automatic debarment rules (see here and here).