Canadian Prime Minister Justin Trudeau has lost his top aide as the controversy over the government’s role in the SNC-Lavalin Group Inc. (SNC.TO) legal case deepens.

In a bombshell departure ahead of an election this year, Gerald Butts resigned as Trudeau’s principal secretary on Monday, a holiday in much of the country. The move follows allegations the prime minister’s office pressured former attorney general Jody Wilson-Raybould last year to end a legal case facing the Montreal-based firm. Butts denies he did so.

His decision to step away underscores the weight of the controversy facing Trudeau’s government, which cast itself as progressive and a champion of women, only to face allegations it tried to arm twist one of its most prominent female cabinet ministers to help SNC-Lavalin. Wilson-Raybould quit cabinet last week.

“Any accusation that I or the staff put pressure on the Attorney General is simply not true,” Butts, 47, wrote in his resignation, which was tweeted by Trudeau. “My reputation is my responsibility and that is for me to defend. It is in the best interests of the office and its important work for me to step away.”

Butts is a longtime staffer, college friend and one-time groomsman to Trudeau -- and preeminent among a small inner circle the Canadian leader keeps. Butts and Chief of Staff Katie Telford have been the two most powerful aides in Trudeau’s government since it took power in 2015. Butts also had an unusually public profile among the prime minister’s senior staff, which made him a lightning rod for critics of the administration. Trudeau’s Liberal Party is neck-and-neck with the opposition Conservatives heading into the October election.

Corruption Charges

The Globe and Mail newspaper reported this month the prime minister’s office pressured Wilson-Raybould into helping SNC-Lavalin. The case hinges on years-old corruption charges, which the company has been pressing to settle. The government gave itself the power to do so last year by changing the law to allow for deferred prosecution agreements, whereby the attorney general can order the country’s independent prosecution service to strike a deal to end a criminal case.

Trudeau acknowledged last week his government discussed the issue in part to avoid job losses at SNC-Lavalin, which employs about 9,000 people in Canada. He said he told Wilson-Raybould in September the final decision was hers as attorney general.

What happened between then and a January cabinet shuffle that saw Wilson-Raybould demoted to veterans affairs is unclear. Wilson-Raybould has said virtually nothing since she quit cabinet, and has hired a former supreme court judge to advise her on what she can say publicly. She’s bound by cabinet confidentiality and solicitor-client privilege.

Liberal Ghosts

It’s possibly the gravest political challenge yet for Trudeau, whose slogan of “real change” was meant to breathe new life into a Liberal Party tainted by corruption and back-room deals. But the controversy around SNC-Lavalin -- with its longstanding ties to powerful party members -- is evoking the Liberal Party of old.

“I categorically deny the accusation that I or anyone else” in Trudeau’s office pressured Wilson-Raybould, Butts said.

The country’s ethics watchdog is now investigating whether Trudeau’s office -- run jointly by Butts and Telford -- pressured Wilson-Raybould into ordering an end to SNC-Lavalin’s criminal case. Those investigations typically take months at least.

Butts, the son of a Cape Breton coal miner, was previously a senior aide in the Ontario provincial government and head of World Wildlife Fund Canada. While he helped run virtually every file in government, environmental initiatives were of particular importance. He warned of the need to fight climate change in his resignation statement. “Our kids and grandkids will judge us on one issue above all others. That issue is climate change,” he said.

Butts didn’t specify where he was going after his resignation, and it’s unclear whether he’ll contribute at all to Trudeau’s reelection campaign.

College Friend

Trudeau’s opponents were quick to pounce on the resignation. Butts’s departure is “the clearest indication yet that there is much more to the SNC-Lavalin affair than the Prime Minister has so far admitted,” Conservative Leader Andrew Scheer said in a statement. New Democratic Party Leader Jagmeet Singh called for a public inquiry.

It’s hard to overstate how close Trudeau and Butts are. In his 2014 biography, Trudeau -- the son of a former prime minister -- recounts how a childhood friend introduced him to Butts at Montreal’s McGill University. “I didn’t know how I was going to make new friends, and wasn’t sure I wanted to try,” he recalls. "We became fast friends."

It was Trudeau who picked Butts and his wife up at the Canadian border after the Sept. 11 attacks grounded flights across North America, stranding the pair in the U.S., and it was Butts who Trudeau called in 2012 when he decided to make a bid for the leadership of the party. He and Butts then approached Telford. Trudeau called them the core of his inner circle. Telford remains Trudeau’s chief of staff.

He thanked them both in a speech accepting the helm of a Liberal party that, in 2015, he’d ultimately return to government: "Thank you for what you’ve done, for what you’re doing and for what we are going to do together."


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