Too Big to Fail—A Sound Idea?

So the Ethics Commissioner has slapped the Prime Minister’s wrist, stating in his report

I found that Mr. Trudeau used his position of authority over Ms. Wilson‑Raybould to seek to influence, both directly and indirectly, her decision on whether she should overrule the Director of Public Prosecutions’ decision not to invite SNC-Lavalin to enter into negotiations towards a remediation agreement. Therefore, I find that Mr. Trudeau contravened section 9 of the Act.

As the commissioner says, Trudeau overstepped his bounds in attempting to have SNC-Lavalin dealt with via a remediation agreement rather than criminal prosecution. So much for cabinet politics, (Read more…) what about that remediation agreement he mentioned, sometimes called a deferred prosecution agreement or, more cynically, a too-big-to-fail agreement. The idea is that instead of charging an errant corporation in the criminal courts, it pays a fine, cleans house appropriately and promises to behave itself in the future. The government then monitors its behaviour and may still level criminal charges if the corporation doesn’t fulfill its obligations.

The reason for this plea bargain arrangement is to avoid public harm that may result if the corporation is subject to criminal punishment. In the case of SNC-Lavalin, accused of corruption and fraud in its operations in Libya, a criminal conviction would have made it ineligible for government contracts for 10 years, work vital to its business. This could have resulted in the loss of thousands of jobs. These workers, who had nothing to do with the alleged crimes,would be inadvertently punished for the crimes of those who were guilty. This is simply unjust.

In 2018, the government introduced a budget bill that included a change to the Criminal Code allowing remediation agreements. This would solve the problem of punishing innocent parties. On the other hand, another problem now arises. Under the Corruption of Foreign Public Officials Act the company employees guilty of the corruption can be sent to prison. Under a remediation agreement their punishment is left up to the company, which may be required to fine or discipline them. Whatever the penalties administered, they will almost certainly be a great deal less onerous than going to jail. For the guilty individuals, the agreement is a get out of jail card. This, too, is unjust.

It appears one injustice is simply replaced with another. The answer is to hold the guilty parties, and only the guilty parties, responsible. Those employees who engage in corruption should be subject to the full force of the criminal law. The corporation need not be penalized at all. After all, people commit crimes, not companies.

This may also be more effective in discouraging illegal behaviour. Companies may consider fines simply the cost of doing business, but the possibility of high officials going to jail would give those officials much more incentive to behave themselves.

Indeed, treating companies as people is a questionable concept in any case. In the United States, a decision by the Supreme Court that essentially gave corporations the same free speech rights as citizens has resulted in corruption of the American political process by big money. Better to confine rights and responsibilities to citizens, leaving corporations to be treated as the things they are.