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CPSA/CAPPA section on Public Administration

K05 - Too Big to Fail or Jail? Exploring Structural Theories of Business Power After the Financial Crisis

Date: Jun 4 | Time: 01:30pm to 03:00pm | Location: SCRF 1023

Chair/Président/Présidente : Jared Wesley (University of Alberta)

Discussant/Commentateur/Commentatrice : Jean-Patrick Villeneuve (Università della Svizzera Italiana)


Session Abstract: How do corporations inform and influence government decisions? Are politically-involved corporations less accountable than the average citizens? What explains the power of business in democratic countries like Canada? In the wake of the 2008 financial crisis that resulted in the bailout of banks in the U.S. and Europe, we have seen a reemergence of theories of business power that highlight the pervasive and structural influence that corporations have on democratically-elected governments. Whether it is the write-off of billions in the debt of Chrysler by the Canadian government, or the bailout of the Bombardier C-Series by the Quebec government, many recent political events in Canada have reinforced the view that corporate businesses with enough political influence and economic power are less accountable than the average citizen. However, other events, such as the recent refusal of Canadian prosecutors to negotiate a deferred prosecution agreement with SNC-Lavalin, show that business interests may not always have the upper-hand. This, we think, points out to some shortcomings in our understanding of business power. This panel addresses these theoretical issues by exploring how corporate political activities and strategies, as well as the regulatory environment in which politically-active corporations navigate, can impact business influence on the government.


The Arthur Andersen Effect: Business Power and the Re-Making of the Rules Against Corporate Corruption: Denis Saint-Martin (Université de Montréal)
Abstract: Cet article veut expliquer l’adoption récente par de nombreux pays de nouveaux instruments de lutte à la corruption d’entreprise, tels que les « accords de poursuite suspendue » au Canada, ou les « deferred prosecution agreements » (DPA) au Royaume-Uni. Fondés sur le modèle des DPA originaire des États-Unis, ces nouveaux instruments prennent la forme d’accords passés avec les procureurs du gouvernement, par lesquels une entreprise sous enquête pour corruption, paie une amende et reconnaît les faits, et reçoit en échange l’annulation des poursuites engagées à son encontre. Pour les procureurs, ces accords sont un moyen d’éviter de coûteuses poursuites à l’issue incertaine. Pour les firmes, ils sont une assurance contre le sort réservé à Arthur Andersen, qui s’est effondré en 2002 après avoir été trouvé coupable dans l’affaire Enron. Les entreprises étrangères poursuivies pour corruption aux États-Unis ont fait pression sur leur gouvernement national afin d’obtenir le même régime de DPA, et jouer à armes égales avec les américains en matière de lutte à la corruption. La recherche a surtout mis l’accent sur cette logique concurrentielle pour expliquer la diffusion de ces instruments. Ce texte interroge plutôt les théories du « business power » pour rendre compte de ce processus. Comment des firmes poursuivies pour corruption comme Alstom, Siemens, BAE Systems et SNC Lavalin, parviennent-elles à obtenir ce qu’elles attendent des gouvernements? Le bruit qui entoure les scandales de corruption et coûte cher aux actions et à la réputation, ne devrait-il pas affaiblir leur pouvoir sur les gouvernements?


Self-Regulation and Revolving Doors in Canada’s Financial Sector: Maxime Boucher (University of Waterloo), Christopher Cooper (Université d'Ottawa), Denis Saint-Martin (Université de Montréal)
Abstract: Scholars studying the regulatory failures that led to the 2008 financial crisis have shown the detrimental consequences of close-knitted networks between industry and public regulators. Yet other actors have pointed out that efficient regulation of the financial market requires that regulatory agencies actively exchange information and expertise with private financial institutions. In Canada, major players of the banking industry communicate with regulatory agencies through the Canadian Bankers Association, who also help ensure self-regulation schemes in the financial sector. However, lobbying regulation and post-public employment rules in Canada impose a cooling-off period of five years to former public office holders who desire to become lobbyist and contact the federal government. This makes the Canadian case particularly interesting for us scholars interested in the impact of corporate political strategies on technical and complex policy-making processes. What is the effect of revolving door regulation on the proximity of public regulatory agencies and private industry actors in Canada? Are revolving doors strategies playing a significant role in the exchange process involving the government and the banking industry? In this paper, we gather empirical evidence to look at the revolving doors between the financial industry and regulatory agencies in Canada such as Finance Canada and the Superintendent of Financial Institutions. We also propose a comparative analysis to see if the financial sector has a higher rate of revolving door lobbying than other sectors.


Revolving Doors: An Illegitimate Influence of the Business Sector into the Political Sphere?: Stéphanie Yates (Université du Québec à Montréal), Étienne Cardin-Trudeau (Université du Québec à Montréal)
Abstract: Should revolving doors – those professional trajectories between private and public sectors – be considered as a problematic phenomenon for our democracies? Do they lead to illegitimate influence from economic interests into public affairs? While this assumption is at the core of the capture theory, one can think that, in certain cases, they allow policies that are more connected to the business’ realities and a better understanding of political constraints and opportunities. Based on a longitudinal study of the professional trajectory of selected Quebec public office holders (ministers, deputy ministers, chiefs of staff, heads of agencies) who were nominated between 1994 and 2012, we first propose to characterize the phenomenon and evaluate its scope. Relying on about fifty semi-directed interviews conducted with political observers and public office holders whose careers included at least one revolving door, we then present its overall perception. Under which conditions is it problematic? Are there specific contexts where it might bring a positive dynamic? Is it unavoidable? If not, what should be done to limit the situations where it raises ethical concerns? Our finding suggests that perceptions are very nuanced, and go beyond the mere condemnation of the phenomenon. These results enlighten the discussions around the regulations aiming at reducing its occurrence.

686.Yates-Cardin-Trudeau.pdf