OTTAWA—The Liberal government could invoke a “public interest” exception that would allow SNC-Lavalin to avoid a 10-year federal contract ban even if it is criminally convicted, according to a justice department memo.

Yet the justice department advice, which had been requested by the Privy Council Office (PCO) but never delivered, says the reasons to grant such an exemption are “narrow.”

The five-page memo was written by Nathalie Drouin, Jody Wilson-Raybould’s former deputy minister, and is dated Nov. 9, 2018.

It makes clear the option of a mediated settlement of the SNC-Lavalin corruption charges is one avenuue that would avoid the contracting ban because no conviction would be registered against the company. The government could also change its policy on contracting bans, or in certain “narrow” circumstances, invoke the public interest exception to continue doing business with the company.

On Wednesday, Prime Minister Justin Trudeau did not rule out a mediated agreement for the company. Asked if it was still on the table for his government, Trudeau replied, “That is entirely up to the attorney general.”

The justice department’s memo indicates there is also another option in law.

It says that depending on the offence for which the company is convicted, it could be ineligible to bid on federal contracts for a period of up to 10 years “unless the government considered it possible and appropriate to invoke a public interest exception.”

Marked “protected/solicitor client privilege,” it was quietly posted on the Commons justice committee website this week as the controversy over the Liberal government’s attempts to aid SNC-Lavalin culminated with Trudeau’s ouster of Wilson-Raybould and former cabinet Jane Philpott from the Liberal caucus.

The two women had already resigned from Trudeau’s cabinet over concerns the prime minister and his officials pressured Wilson-Raybould to negotiate a settlement in the SNC-Lavalin prosecution.

Trudeau acknowledged for the first time in the Commons that he did hear Wilson-Raybould’s first early warning to him on Sept. 17. She has testified she looked him in the eye and asked “Are you politically interfering with my role, my decision as the attorney general? I would strongly advise against it.”

Asked directly by Conservative MP Pierre Poilievre if he heard her say that, Trudeau said in question period Wednesday, “once she said that, I responded no, I am not, it is her decision to make and she then committed to revisit and look into the decision once again.”

Wilson-Raybould testified she told him that day her mind would not change. The prime minister, his former top aide Gerald Butts and former privy council clerk Michael Wernick have said they did not believe her decision was — or could be — final at that early stage, and that she ought to consider the fallout of a conviction on the company.

Drouin testified her officials drew up a memo on the topic after the Privy Council requested an opinion on what the possible consequences of a criminal conviction might be for the company.

SNC-Lavalin still faces one count of fraud under the criminal code and one count of corruption under the Corruption of Foreign Officials Act. But the memo does not outline any of the evidence or indicate that the company is alleged to have bribed the Libyan regime of Moammar Gadhafi between 2001 and 2011.

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Drouin signed the memo and wrote: “The reasons to invoke the public interest exception are narrow.”

She listed an emergency where any delay in contracting from a company “could harm public interest”; situations where “the contract is essential to maintain sufficient emergency stocks” or situations where “not entering into the contract with the company/supplier would have a significant adverse impact on the health, national security, safety, public security or economic or financial well-being of Canadians or the functioning of any portion of the federal public administration.”

“Other than this narrow public interest exception,” Drouin writes that the federal government’s corporate integrity policy “does not afford the government any discretion to continue to contract with the convicted company/supplier.”

However the memo does underline that Public Works Canada consultations were underway to change that policy to reduce the time a company would be suspended from bidding on contracts.

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Drouin said she never delivered the memo to Wernick at the instruction of Wilson-Raybould’s office. Drouin testified at the justice committee that “I knew my minister was not comfortable for us continuing those conversations. I felt I should test with her office before I shared the piece with the Privy Council Office, and I was instructed not to send it.”

Wilson-Raybould testified she didn’t recall giving a specific instruction on the memo. But in her written brief last week she questioned why Wernick asked for the advice “in the first place having known I had already considered the matter and had decided not to intervene.”

The memo essentially summarizes the general legal frameworks that cover the SNC-Lavalin case. The Star had requested the document last week, but was denied access because justice department officials said their analysis of whether it could be released was still underway.

It says the biggest difference between a conviction and an outcome under the newly enacted legal regime that allows a deferred prosecution agreement or remediation agreement in cases like SNC-Lavalin’s is the “ineligibility” period during which a convicted company would be suspended from business with the federal government.

“In other words, a conviction might lead to a period of ineligibility, but a remediation agreement would not,” she wrote.

“Any period of suspension or debarment is likely to trigger adverse effects, such as foregone business opportunities, reputational damage, and possible reporting requirements to third parties, such as banks and other financial institutions that are the source of operating capital.”

In the SNC-Lavalin case, the independent director of public prosecutions Kathleen Roussel declined as early as Sept. 4 — according to court documents — to enter negotiations with the company to mediate a settlement of the criminal trial. The company announced the prosecution decision to its shareholders and to the public on Oct. 10 and continued to aggressively lobby for a deferred prosecution agreement or DPA.

A DPA could allow it to avoid being “debarred” from bidding on federal contracts for up to a decade as a result.

Roussel gave formal notice of her decision to Wilson-Raybould on Sept. 4, when the former attorney general was out of the country at a conference, but Wilson-Raybould testified she provided a copy of that notice to the PMO in September, and in the Sept. 17 meeting with Prime Minister Justin Trudeau told him she would not overrule Roussel.

Wernick said, in the now-infamously recorded phone call on Dec. 18 between the clerk and the former minister, that he was not aware she had shared Roussel’s notice with the PMO that he worried she and Trudeau were at loggerheads. He said the prime minister “was gonna find a way to get it done one way or another.”

Trudeau told the Commons Wednesday, “I was not debriefed on that conversation between the clerk and the minister. I should have spoken directly with the minister. There was not an opportunity to do that.”

Wilson-Raybould says she was finally replaced as attorney general for refusing to bend to what she called “inappropriate political pressure” by Trudeau and his officials to mediate a settlement for SNC-Lavalin.

She later quit cabinet in February after the story went public and Trudeau denied pressuring her.

Her replacement as justice minister and attorney general, David Lametti, says the option of a deferred prosecution agreement or DPA with SNC-Lavalin remains one that is available under the law, however Lametti’s office confirmed Wednesday he has so far not issued a directive in the matter.

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