SNC-Lavalin approaches final bend in road to rehabilitation

SNC-Lavalin approaches final bend in road to rehabilitation

19 January 2015 | By Rod Sweet 0 Comments

In March Canada’s biggest corruption case begins, and it will drag the country’s biggest engineering and construction firm, SNC-Lavalin, into the spotlight once again for the wrong reasons.

But instead of further damaging the firm’s reputation, which has been pummelled by corruption scandals since early 2012, the case is looking more like the final bend in its road to rehabilitation.

It concerns an alleged bribery scheme connected to the CAN$1.3bn contract to build the new McGill University Health Centre (MUHC), one of Canada’s biggest hospital projects. 

Police believe that former executives of SNC-Lavalin channelled CAN$22.5m to the former director of MUHC, Arthur Porter, in return for winning the contract in 2010.

The allegations go straight to the top of the firm, but it’s the firm in a previous incarnation. Among those charged are former SNC-Lavalin chief executive Pierre Duhaime, former SNC-Lavalin vice president and financial controller, Stephane Roy, and former vice president in charge of construction, Riadh Ben Aissa.

Riadh Ben Aissa was extradited to Canada in October 2014 from Switzerland, where he spent 29 months in prison for fraud, corruption and money laundering in connection with SNC-Lavalin’s business in Libya.

Ben Aissa had protested his innocence, but in August 2014 he acknowledged in court that he had bribed Saadi Gaddafi, son of Libya’s late dictator, Moammar Gaddafi, so SNC-Lavalin could win contracts. Canadian police have alleged that Ben Aissa funnelled an estimated CAN$160m in corrupt payments from SNC to Gaddafi.

In the deal he struck with Swiss authorities Ben Aissa also admitted to pocketing commissions. He was sentenced to 29 months in prison, a term he had already served, which cleared the way for his extradition to Canada.

The Libya thread of the corruption tangle had a bizarre subplot. Police also alleged that Ben Aissa had been involved in a plot to smuggle Saadi Gaddafi out of Libya to Mexico when Libya’s civil war broke out. 

In connection with that, a Canadian woman, Cynthia Vanier, was arrested in Mexico in November 2011. She was finally released in April 2013, with Mexican police dropping charges relating to making fake passports and organised crime.

In a 16-page statement of defence filed in Quebec Superior Court in May 2013, SNC-Lavalin said Stephane Roy and Riadh Ben Aissa plotted to help Saadi Gaddafi and his family flee Libya without its knowledge. The company filed a CAN$2m claim against Ben Aissa to recover money it said went to Vanier.

While all this was going on, in April 2013, SNC-Lavalin was banned from bidding on World Bank projects for 10 years following an investigation into allegations of bribery involving a $50-million bridge-building contract in Bangladesh.

Also that April, the company took out a full-page ad in an Algerian newspaper promising full co-operation with authorities investigating a bribery scandal there.

Now, SNC-Lavalin claims to be a completely different company. In February 2013 it hired former ethics boss at Siemens, Andreas Pohlmann, to implement a complete corporate governance overhaul. A number of top executives were replaced in a board renewal campaign and a corruption whistleblowing programme encouraged staff to report wrongdoing. 

The company’s new chief executive, Robert Card, who was brought in from CH2M Hill to replace Pierre Duhaime, even admitted that crime doesn’t pay when he told editors at Canada’s Financial Post newspaper that the projects won through corruption have tended to be commercially disastrous anyway.

With Ben Aissa’s guilty plea, the MUHC case could be the last bend in the company’s road to rehabilitation. Crucially, SNC-Lavalin will be hoping it has shed enough management skin to deflect any further liabilities arising from historical corruption. “SNC-Lavalin’s goal is nothing less than to set a new standard for clean business in the engineering and construction industry,” Card said in a statement after Ben Aissa admitted his guilt in Switzerland.

In that statement the company said it had been the injured party in Ben Aissa’s rogue dealings. 

A preliminary hearing on Ben Aissa’s case will take place in March.  Meanwhile, reports that former MUHC director Arthur Porter will be extradited from Panama, where he was arrested by Interpol agents in May 2013, will be encouraging to SNC-Lavalin executives keen to make a clean break from the past.