The Trudeau Scandal Happens All the Time in America

The most acute political scandal in North America—the one with
the greatest chance of toppling a head of state anytime soon—is occurring not
in the United States, but Canada.
Prime Minister Justin Trudeau is barely hanging on to power after being accused
last month of pressuring his attorney general to abandon the criminal prosecution
of an influential company that hails from Quebec, his political
stronghold.

Political media in the U.S. can’t comprehend how this can be
so damaging. “There’s no money, no sex and nothing
illegal happened,” wrote
Rob Gillies of the Associated Press. “This is what passes for a scandal in
Canada.” 

It should also pass for a scandal in
America, but selective prosecution—which spares the powerful while punishing
those without connections—has become all too common in this country, and
notably so under President Obama. As Democratic candidates seek to save America
from President Trump’s kleptocracy, they ought to acknowledge that this era of unaccountability
long predates him, and be as indignant about it as our Canadian neighbors.

SNC-Lavalin is a Montreal-based engineering
firm that employs roughly 9,000 Canadians on numerous construction projects
inside the country. It also does substantial business abroad, where it’s been
accused for years of corruption
and fraud. This specific case alleges that the company paid 48
million Canadian dollars (around 36 million USD) to Libyan government officials
to secure construction contracts from 2001-2011, then defrauded the Libyans for
about 130 million Canadian dollars. 

The Royal Canadian Mounted Police submitted
these charges in 2015, before Trudeau entered office. A successful
criminal prosecution would bar SNC-Lavalin from bidding on any federal
government contracts for 10 years. But the Globe and Mail broke
the news in early February
that Trudeau’s office had asked Attorney General Jody Wilson-Raybould to
abandon the criminal charges. Wilson-Raybould, who also sat in Trudeau’s
cabinet as justice minister, later confirmed
a “barrage” of pressure from senior officials, including Trudeau himself, who
asked her to “help out” with the case and “find a solution.” She rebuffed their
campaign, was demoted, then resigned.

Trudeau’s team sought a deferred
prosecution agreement (DPA), which would impose a financial penalty and some
greater oversight of SNC-Lavalin, but no criminal sanctions, enabling it to
continue to bid on government contracts. Prosecutors in Canada didn’t have the
option of deferring criminal prosecution until a change
in the law last year, one that SNC-Lavalin lobbied for.

While deferred prosecution agreements are
new to Canada, they’ve been used
in corporate settlements in the U.S. for more than two decades,
particularly during and after the last financial crisis, when hundreds of
DPAs were executed. In other words, the major difference between the
scandal engulfing Canada’s government and what happens routinely here is that
nobody in our Justice Department needs to be pressured to issue a deferred
prosecution agreement.

The Justice Department’s most notorious
DPA of the past decade was in 2012 with
HSBC, the bank that facilitated money laundering for drug cartels
and terrorist groups. Drug lords even designed specially shaped boxes
filled with money that slid easily through HSBC Mexico’s teller windows. Neither
HSBC nor its executives were criminally prosecuted, and the bank was merely
fined $1.9 billion—around
five weeks’ profit.

Justice Department officials had cautioned
that criminal charges would destroy HSBC and put thousands of innocent bank
tellers out of work. Eric Holder, Obama’s attorney general at the time, expressed
concern that banks like HSBC have become so sprawling that “it does
become difficult for us to prosecute.” The phrase “Too Big to
Jail” was coined out of the HSBC mess.  But Holder had been warning of “collateral
consequences” for prosecuting corporations since a memo
he wrote while deputy attorney general in 1999.

Trudeau echoed this reasoning in remarks
last week about the SNC-Lavalin scandal. Referring to a meeting with
Wilson-Raybould, he said, “I stressed the importance
of protecting Canadian jobs and re-iterated that this issue was one of
significant national importance.” 

This justification
for neglecting serious crimes is sometimes known as the Arthur Andersen defense,
named after the accounting firm that destroyed documents as Enron’s auditor.
The 28,000-employee company went out of business amid a successful prosecution,
which the Supreme Court overturned years later on a technicality
over jury instructions.
(The firm had already split up by then.) 

Law enforcers and
business lobbyists alike have agreed that the Arthur Andersen case was a
mistake that sent thousands of low-level accountants to
the unemployment line. Few mentioned that Andersen employees simply got jobs with other accounting
firms. Similarly, if SNC-Lavalin couldn’t
bid on government contracts, somebody else would, and the same number of
Canadians would fill those jobs.

Trudeau also made clear his real
rationale for pressuring his attorney general: as a member of Parliament, he represents
Quebec, home to SNC-Lavalin. Politicians are inclined to defend the
interests of their constituents, but as prime minister, Trudeau’s actions
affect the whole country. He sought to pervert the justice system so a
favorite-son company could evade punishment and continue to profit from the Canadian
government.

From his firing of FBI Director James
Comey to reportedly trying to prevent the
AT&T–Time Warner merger because he doesn’t like CNN (a Time Warner
subsidiary), Trump has perverted the law in ways that tower over the relatively
gentle nudges of Trudeau’s government. But the pre-Trump status quo, of
perfunctory deferred prosecutions and no jail terms for financial fraudsters,
was itself a scandal. That’s why jettisoning Trump won’t, on its own, restore
the rule of law in America. The Democrats competing for president also must lay
out a plan for treating every American equally under the law, no matter how
rich or connected. Because the party’s last president failed this test.