SNC Lavalin, the Canada Infrastructure Bank, and Endless Budget Deficits: PART 2
In Part 1 of this blog, I wrote about the costly and unnecessary Canada Infrastructure Bank (CIB). In Part 2, I connect the dots between the CIB, La Caisse de Depot et Placements du Quebec, SNC Lavalin, and our federal Liberal government.
Bring the CIB further into perspective – in light of the recent illumination on the influence of SNC-Lavalin with the Liberal Government (including $100,000 in illegal donations to the Liberal Party which were required to be paid back), and their efforts to avoid facing a 10 year ban on participation in public works in Canada (due to their bribery of government officials in Libya and the ensuing misdirection of millions of dollars of project funding, which helped lead to the misery of millions of people).
Little wonder that the Canadian Infrastructure Bank has been slow to roll out its cheque book. To date, the only allocation has been a $1.28 Billion investment in Montreal’s light rail transit system. To confuse and complicate matters, this project is sponsored by La Caisse de Depot et Placements du Quebec (‘La Caisse’) – a large Quebec pension fund with over $300 Billion in assets – and a key instrument in Quebec economic development – part of the institutional network referred to as ‘Quebec Inc.’ by those familiar with Government-backed intervention in local economies. The ‘moral hazard’ associated with this business model places a clear financial burden on taxpayers.
SNC Lavalin is a publicly-traded company whose life-blood is participating in engineering and construction contracts, and is a ‘go to’ bidder on much government work. Last year, they had revenue of over $9 Billion. They are the engineering firm that is designing the aforementioned Montreal light rail transit network. Their largest shareholder is La Caisse – which has billions of dollars invested into SNC Lavalin. It sounds like a virtuous circle – until Canadian taxpayers become the financial backstop.
If the rule of law is applied – as we would expect in Canada – SNC Lavalin will not be allowed to bid on Canadian government sponsored projects for 10 years. Some suggest this will mean the death of the company – although this could be an exaggeration. But it will definitely impact their revenues and hurt the company’s value. La Caisse will take a financial hit to its balance sheet – and will need to explain that to the people whose pensions it manages. The folly of the conflicted business model inherent in ‘Quebec Inc.’ will be clearly exposed.
If the Government of Canada decides to institute new rules that allow SNC Lavalin to wiggle around the rule of law, we need to ask what message we are sending to the company’s competitors – such as Quebec-based WSP Group. This is not a regional issue. This is an issue about the importance of government influence in a company’s business plan. In other countries, we would call this what it is – corruption.
Let’s be clear – portions of a $35 Billion infrastructure fund with no clear rules on financing criteria will be a boon to SNC Lavalin’s business.
Let’s watch this ‘slush fund’ get allocated – particularly as we approach a federal election – and as one of the main beneficiaries attempts – with the Prime Minister’s assistance – to come out of the penalty box.
The Canadian Infrastructure Bank was designed to be a deficit-inflating, conflicted boondoggle – with the taxpayers on the hook for politically motivated projects. Parliament needs to demand the Government FREEZE any further expenditures out of this slush fund until after this SNC Lavalin mess has been resolved.