The Canadian engineering giant SNC-Lavalin has escaped debarment by the African Development Bank (AfDB) over bribery allegations, but must pay CAD$1.5m.
The payout resolves allegations that were uncontested by the company of illicit payments from SNC-Lavalin employees to officials in order to secure contracts in Uganda and Mozambique.
SNC-Lavalin’s president and chief executive, Robert Card (pictured), who leaves his post today, said the settlement was proof that companies can change.
SNC-Lavalin’s outgoing president and chief executive, Robert Card (SNC-Lavalin)
SNC-Lavalin International Inc. (SNCLI), a subsidiary of the company, was contracted in October 2008 to supervise the construction of a 66-km road and bridge project between Marrupa and Litunde in Mozambique.
And in December 2010, the company won a contract from the Uganda National Roads Authority to supervise the upgrading of the 75-km Kazo-Kamwenge road in Uganda.
Under the terms of the agreement announced on 1 October the AfDB imposes a conditional non-debarment on SNCLI for a period of two years and ten months.
The CAD$1.5m will go to supporting programmes combating corruption in Africa.
SNC-Lavalin also committed to maintaining a group-wide ethical compliance program, subject to review by the AfDB, and to cooperating with the bank’s Integrity and Anti-Corruption Department (IACD).
In April 2013 the World Bank Group debarred SNC-Lavalin from its projects for 10 years following an investigation into allegations of bribery in relation to the Padma Multipurpose Bridge Project in Bangladesh, as well as misconduct under another Bank-financed project.
This settlement agreement demonstrates SNC-Lavalin’s commitment to the highest standards of business ethics and is proof that companies can engage in a constructive dialogue and find effective means to reward remediation while allowing companies to move forward– Robert Card, SNC-Lavalin
The firm has been embroiled in corruption scandals at home and abroad since 2012, with a number of former senior executives, including ex-CEO Pierre Duhaime, facing fraud charges.
Despite a comprehensive corporate governance overhaul undertaken by new chief executive Robert Card, in February this year Canadian police charged the company itself with one count of corruption under the country’s Corruption of Foreign Public Officials Act and one count of fraud under the Criminal Code.
SNC-Lavalin said the charges were "without merit" and that it would "vigorously defend itself".
The AfDB said SNC had cooperated, and was a changed company.
"The sanctions imposed under the settlement agreement reflect the level of cooperation provided by the company in the investigation of the matter," said Anna Bossman, Director of IACD.
"SNC-Lavalin has demonstrated that it has undergone significant changes in the past two years, continuously improving ethics and compliance in its operations under a new management.
"IACD believes in crediting such dedication to ethical business and is at all times willing to resolve amicably instances of sanctionable practices with companies that show a sincere commitment to integrity by collaborating in the resolution of allegations and enhancing their compliance regimes."
For SNC-Lavalin, president and chief executive Robert Card said the settlement was "proof" that companies can change.
SNC-Lavalin has demonstrated that it has undergone significant changes in the past two years, continuously improving ethics and compliance in its operations under a new management– Anna Bossman, Director of IACD
"This settlement agreement demonstrates SNC-Lavalin’s commitment to the highest standards of business ethics and is proof that companies can engage in a constructive dialogue and find effective means to reward remediation while allowing companies to move forward," Card stated.
"Our cooperation with the AfDB clearly shows our efforts to become a global benchmark in ethics and compliance in our industry with a system designed to promote integrity through prevention, detection and remediation."
Other details of the settlement agreement with the AfDB will remain confidential, as stipulated by the agreement, SNC-Lavalin said.
SNC-Lavalin said it had made "huge investments in time and money" on ethical compliance since 2012.
Measures include creating the position of Chief Compliance Officer; creating a dedicated Ethics and Compliance Team; reinforcing internal controls and procedures; producing a dedicated Anti-Corruption Manual; and using an independent third party to screen candidates for senior management positions.
Meanwhile, effective today, Robert Card will be replaced as president and chief executive by Neil Bruce, SNC-Lavalin’s chief operating officer.
"Neil’s appointment comes as we embark on the next stage of the company’s evolution," stated Lawrence Stevenson, chairman of SNC’s board of directors, when the announcement was made last month.