How Justin Trudeau Imperiled His Own Re-Election

(Bloomberg) -- A scandal that threatens to derail Prime Minister Justin Trudeau’s bid for re-election returned to the headlines at a particularly sensitive time. Following a months-long investigation, Canada’s ethics watchdog found that Trudeau had inappropriately interfered in a judicial matter, a conclusion that reignited criticism of his dominant Liberal Party as overly cozy with big business. The case has taken a toll on Trudeau’s brand as one of most progressive leaders in Canada’s history, just months before the Oct. 21 federal election.

1. What are the allegations?

The controversy centers around a series of conversations Trudeau and aides had late in 2018 with the country’s then-attorney general, Jody Wilson-Raybould, and her staff over whether to let SNC-Lavalin Group Inc. settle a fraud and corruption case out of court. SNC is a major engineering and construction company based in Trudeau’s hometown of Montreal. Wilson-Raybould said she faced “veiled threats” about what might happen if she refused to order public prosecutors to settle the case through a deferred prosecution agreement that would allow SNC-Lavalin to continue to receive federal government contracts. Trudeau said his interest in SNC’s fate was based on his desire to avoid job losses. Trudeau transferred Wilson-Raybould to minister of veterans affairs in January, and she resigned from the government a month later.

2. What was SNC accused of doing?

The company was charged in 2015 with attempted bribery and fraud related to its work on construction projects in Libya from 2001 to 2011, during the rule of Moammar Qaddafi. The company has “apologized for the behavior of the previous management,” and prosecution now, so many years after the fact, risks “damaging the innocent people,” the company’s former chief executive officer, Neil Bruce, said before announcing his retirement in June. SNC has sought a judicial review of the decision not to offer it a deferred prosecution. The company also says it’s preparing for trial.

3. What did Trudeau allegedly do wrong?

In a report released on Aug. 14, Ethics Commissioner Mario Dion said he identified “many ways in which Mr. Trudeau, either directly or through the actions of those under his direction, sought to influence” Wilson-Raybould about intervening in the prosecution of SNC. Dion said he found Trudeau’s actions “troubling” and a violation of Canada’s Conflict of Interest Law. Speaking to reporters after the ruling, the prime minister said he would accept responsibility “for everything that happened” but disagreed with some of the conclusions. He said he would implement new measures to reinforce the independence of the attorney general’s office.

4. What’s the next step in the case?

Andrew Scheer, the leader of the opposition Conservative Party, admonished Trudeau for being the first prime minister in history to be found guilty of breaking federal ethics laws, and he called on the Royal Canadian Mounted Police to investigate whether criminal charges are appropriate. But there’s a high bar to turn the case into a criminal one, and even Wilson-Raybould has said she doesn’t believe the interference broke any laws.

5. What does this mean for Trudeau’s re-election chances?

The case has dredged up ghosts of the Liberal party’s past, which is marked by hand-in-glove ties with corporate Canada -- particularly in Quebec. Those impressions have hurt the party in previous elections, and Trudeau had promised to do things differently. He was elected under a pledge of “real change,” freezing out much of the party’s old guard from power and bringing in a wave of new faces, many of them women. Few of Trudeau’s star recruits held a higher profile than Wilson-Raybould. She was a regional chief in the British Columbia Assembly of First Nations, who then became Canada’s first indigenous justice minister after winning election in the Pacific Coast battleground of Vancouver in 2015. Before the scandal erupted earlier this year, the Liberals were polling close to 40%, a level of support considered sufficient to form a majority government in the country’s multiparty system. In recent months that support has fallen to as low as 30%, putting the Liberals and Conservatives in roughly a dead heat.

6. What can Trudeau do?

He can hope that attention on the scandal fades and he can change the channel to issues he thinks are vote-getters, especially among progressives, such as climate change. Helping Trudeau is the fact that Liberal lawmakers, including women such as Foreign Affairs Minister Chrystia Freeland, have stayed in his corner throughout the last several months.

The Reference Shelf

• The full report from the ethics commissioner.
• One columnist’s view of how this affects Trudeau.
• Wilson-Raybould’s statement following the ethics report.
• The New York Times found Quebec still supports Trudeau, and SNC.
• Stories on SNC’s legal troubles involving bribery charges in Libya, a record ban on World Bank projects and campaign contributions.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Laurence Arnold, Chris Fournier

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