• Crony capitalism may bring down Justin Trudeau
  • Crony capitalism may bring down Justin Trudeau
9 Mar
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On the same day that Michael Cohen testified before Congress, Canadians witnessed their own testimonial drama from someone you’ve almost certainly never heard of: Jody Wilson-Raybould, the former attorney general of Canada. Cohen’s testimony was significant, and it could hurt President Trump. But Wilson-Raybould may end up bringing down the current Canadian government.

The former attorney general spent more than four hours testifying before the House of Commons Justice Committee, confirming major details of a corruption scandal that has engulfed Canadian politics and implicates Prime Minister Justin Trudeau himself. At its core, Raybould’s testimony offered us deep insights into the insidious nature of crony capitalism, and the destructive impact it has on individuals, institutions, and the rule of law.

Last month a Canadian newspaper published a report alleging that Trudeau and senior officials had pressured Wilson-Raybould to intervene in a corruption and fraud case against SNC-Lavalin, a global Montréal-based engineering firm. Wilson-Raybould stood her ground and refused, and a few months later she was pushed out of her role as attorney general in a move widely seen as a demotion. At the time, before the scandal broke, Wilson-Raybould released a cryptic departure letter in which she said that “it is a pillar of our democracy that our system of justice be free from even the perception of political interference.”

Last week, Wilson-Raybould confirmed the allegations, telling the Justice Committee, “I experienced a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the Attorney General of Canada.” The scandal has already claimed the scalp of Gerry Butts, Trudeau’s close friend and principal secretary, and a senior cabinet minister has since resigned over the affair.

The company at the center of the scandal, SNC-Lavalin, has a history of shady dealings. The corruption charges include allegations the company paid $48 million in bribes to Libyan government officials between 2001 and 2011, and conviction may result in SNC-Lavalin being barred from federal government contracts for a decade, a major source of its revenue. In 2018, the Trudeau government quietly amended Canada’s Criminal Code to create “deferred prosecution agreements.” SNC-Lavalin had lobbied heavily for DPAs, as they would allow companies like SNC-Lavalin accused of offenses like corruption to avoid criminal charges. The pressure on Wilson-Raybould was specifically to get her to intervene and grant SNC one of these DPAs.

Why would a government ostensibly committed to the rule of law abandon this principle to protect a disreputable company? The answer is simple: crony capitalism.

SNC-Lavalin has been called a “crown-jewel of Québec.” It is based in Montréal, has some 3,400 employees in the province, and is often seen as a source of pride for Québec. Québec’s pension fund even owns around 20 percent of SNC’s shares. Québec is a vote-rich province crucial to the success of Trudeau and the Liberals in the upcoming federal election. Québec’s provincial government has insisted on protecting the employees of the company and the provincial pension fund, and warned of the consequences of failing to do so. In their repeated attempts to interfere, Trudeau and his officials were keen to remind Wilson-Raybould of this. In her testimony, Wilson-Raybould claimed in a conversation that Trudeau had reminded her that “I [Trudeau] am an MP in Québec – the member for Papineau.”

The line between direct subsidies and public contracts is often blurred, which creates obvious incentives for corruption. A company reliant on public contracts doesn’t just innovate by being more productive, but rather by ensuring those public dollars keep rolling in. SNC-Lavalin, which is currently banned from World Bank projects because of another corruption scandal in Bangladesh, “innovated” in the best way it could, by ensuring that it was awarded public contracts by whatever means necessary. It is inevitable that this kind of behavior will eventually seep into other aspects of government and law as well.

Rule of law is a bedrock principle in liberal democracies like Canada and the United States. It means applying the law to everyone equally, without arbitrary exceptions. Crony capitalism has a corrosive impact on these values, as the interests of a specific company eat away at the impartial application of the law. Protecting the rich and well-connected is often cloaked in the language of “protecting jobs” and the interests of individual companies get equated with the economic interests of an entire community.

Crony capitalism corrupts everything it touches, and Justin Trudeau’s government, whose re-election this year is looking increasingly unlikely, may end up being the latest thing poisoned by this insidious practice.

Benjamin Woodfinden (@BenWoodfinden) is a doctoral student in Political Science at McGill University.

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