Corporations tend to be craven entities. Why? Because they are
financially rewarded for being disloyal to those who do not serve their
interests, no matter who those people might be.
There is no better example of this than the Canadian engineering
giant, SNC-Lavalin, which has repeatedly engaged in suspect activity for its
own financial gain. When it gets caught, it cuts loose people who, up until
they landed in hot water, were considered stand-up folks doing good work for
the company.
Below is a list of some of the troubles that the firm has
faced, followed by an analysis of a few of the company’s issues, and, finally, an
accounting of how good business has been in Canada recently.
1990s. SNC-Lavalin, with funding assistance from
Export Development Canada (EDC) and the Canadian International Development
Agency (CIDA), lands a big hydro deal in India. Investigators find that
SNC-Lavalin’s lack of professional oversight and financial mismanagement
results in a financial loss of about 375 core, or $75 million, to the state of
Kerala.
2011: September.
The RCMP raids SNC-Lavalin’s offices in Toronto as part of an investigation
into corruption at the Padma Bridge project in Bangladesh.
2011. November.
SNC-Lavalin contractor Cynthia Vanier is arrested in Mexico City, accused of
leading a plot to smuggle Saadi Gaddafi to Mexico. Saadi, the third son to fallen
Libyan dictator Muammar Gaddafi, was the point person for hundreds of millions of
dollars of SNC-Lavalin business in Libya.
2011. November. The
day after Ms. Vanier’s arrest, SNC-Lavalin executive Stephane Roy, a financial
controller who hired Ms. Vanier, is briefly detained by police in Mexico City.
2012: February. Stephane Roy and his boss, executive vice-president Riadh Ben Aissa, resign or are let go, depending on who is lying. In a statement, SNC-Lavalin vaguely asserts that “all employees must comply with our Code of Ethics and Business Conduct”. Stephane Roy goes dark, and Ben Aissa, in an impressive display of moral outrage, threatens legal action, (though that may now be more difficult, given that as of mid-April has been in a Swiss jail cell).
2012: April. The
World Bank, the world’s largest development organization, sets its sights on
the SNC-Lavalin subsidiary connected to the Bangladeshi job, and suspends its
right to bid on projects.
2012: April. SNC-Lavalin
CEO Pierre Duhaime resigns after an “internal investigation” determined he had
signed off on unauthorized payments. To date, those payments total $56 million,
and appear to be related to Riadh Ben Aissa’s habit of playing fast and loose
with contracts in North Africa. As a reward for steering the Titanic into the iceberg,
Mr. Duhaime is given a $4.9 million kiss-off.
2012: April. The
RCMP raids SNC-Lavalin’s
headquarters in Montreal – twice.
2012: April. The
Globe & Mail reveals close ties between the Ben Aissa family and
SNC-Lavalin’s business in Tunisia, including the use of family property and the
hiring of a Philadelphia-based firm Ramla Benaissa Architects, which is owned
by Mr. Ben Aissa’s sister. The firm was hired by SNC to plan a $275-million
prison and also to rehabilitate lakes in the city of Benghazi, in eastern
Libya.
2012: April. The
northern Chicago suburb of Peotone, Illinois, remains embroiled in controversy
regarding the awarding of a contract for the construction of a new airport to
SNC-Lavalin. Governor Quinn and Congressman Jesse Jackson support the project, but continue to be dogged by questions about how the construction would be
funded. Jackson has said that the $700 million project would be
privately-funded by SNC-Lavalin, and has claimed that funding would be backed
by the Canadian government. The government of Canada has denied this.
2012: April.
SNC-Lavalin persists in saying that Ms. Vanier was not legally contracted to the
company, because the executives who employed her were acting outside of the
company’s code of ethics. Morally suspect, and on a weak footing legally,
SNC-Lavalin continues to strum the same tune while arguing that it is changing
how it does business.
2012: April. Riadh Ben Aissa is arrested in Switzerland and held on accusations of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.
2012: April. Riadh Ben Aissa is arrested in Switzerland and held on accusations of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.
Canada is SNC-Lavalin’s
back yard
Now, given that rather frightening accounting of human and
corporate folly, you’d think that people would be a little gun-shy on the home
front. Three RCMP raids. Three
executives let go. Tens of millions of dollars in wayward cash, possibly lost
to bribes. Getting shut out by the World Bank.
This is Canada, after all, and SNC-Lavalin is a Canadian
corporation. We do things right here. Canada ranks #10 as one of the “least
corrupt” countries in the world.
But Libya, unfortunately, ranks #168 (a pre-revolutionary
number, when the murderous Gaddafi regime was doling out cash to SNC-Lavalin and
its friends). Tunisia, which was ruled by the horribly corrupt President Ben
Ali, was ranked at #73, though it is worth remembering that it was here that
street vendor Mohamed Bouazizi lit himself on fire and ignited the Arab Spring.
India, where SNC-Lavalin got nailed in the 1990s, ranks a pathetic #95. Bangladesh,
where SNC-Lavalin is now shut out from bidding due to the Padma Bridge project,
ranks even worse, at #120.
That long and rather depressing list is intended to suggest
that SNC-Lavalin may be able to peddle for cover abroad, but not on the home
front.
After all, the fact that Gwyn Morgan, Chairman of the Board
of SNC-Lavalin, is a long-time friend of Stephen Harper’s, surely has little
effect on how both SNC-Lavalin and the Harper government have hung Cynthia
Vanier out to dry.
Mr. Morgan is a Conservative party supporter and former
fundraiser for the Conservative Party of Canada. In 2006 Stephen Harper
unsuccessfully attempted to appoint Morgan as chair of a new public appointment
commission. Opposition MPs objected, and Mr. Morgan was rejected, largely due
to his close ties to the Conservative Party.
Also on SNC's list of board of directors is Honourable Hugh
D. Segal, a conservative who moonlights as a senator in Ottawa, and who is seen
by many as responsible for improving Mr. Harper’s image to make him more “electable”.
These and other board members were asleep at the wheel as
former SNC-Lavalin CEO Duhaime overrode his own CFO and authorized $56 million
of questionable payments to undisclosed agents, and as Mr. Roy, authorized by
Mr. Ben Aissa, financed Ms. Vanier’s work in Libya.
Duhaime - they loved him in the good times
That same board is still actively distancing itself from Ms.
Vanier. This is a feeble position that only confirms SNC-Lavalin’s continued reluctance
to assume any ethical responsibility for its actions.
That may not last for long.
The Ontario Securities Commission (OSC) recently published a Staff
Notice, the result of almost a year’s work that outlines its concern related
to Canadian companies active in emerging markets. That notice spoke directly to
the corporate governance practices of boards.
Specifically, it asked for more transparency for
underwriters, better controls on foreign auditors, and enhanced disclosure of
risk factors. These actions need to be understood in the context of new
corporate regulations such as the UK Bribery Act and the SEC Whistle-Blower
Rule, as well as last year’s watershed enforcement of Canada’s bribery statute.
In that case, Niko Resources pleaded guilty under the Corruption
of Foreign Public Officials Act in June, 2011, for bribing Bangladesh’s energy
minister. Niko was
fined C$9.5 million.
Specific to SNC-Lavalin, there could be more leaks to come
with regard to fraud and bribery. These actions are rarely secret; almost
always, employees other than the principal actors are aware. The problem, of
course, is that there is little incentive to speak out, particularly when a lot
of money is on the line.
The RCMP may have more work to do
In time, too, we will learn more about the company’s
relationship with Ms. Vanier, who was paid $100,000, billed another $395,500,
and had a retainer account of about $1 million with funds from SNC-Lavalin. If
Ms. Vanier had no legal relationship with SNC-Lavalin, then one expects they
would be charging her company, Vanier Consulting, with fraud. Odd, that hasn’t
happened yet.
Incredibly, SNC-Lavalin’s behaviour has had little to no
effect on its business in Canada. In fact, the company has been on a roll of
late -
Some highlights:
2012: March. SNC-Lavalin
is awarded the project management, engineering, procurement and construction
management contract for Vale’s $2-billion Clean AER project in Sudbury.
2012: March. SNC-Lavalin,
with its partner, the European-based construction group Cintra Infrastructures,
lands a $1 billion contract to build and maintain Phase I of the eastern extension of
the Highway 407 toll road from Pickering to Oshawa.
2012: March. As
part of a joint venture with Aecon Industrial, SNC-Lavalin is given a major
contract by Ontario Power Generation (OPG) to carry out the Definition Phase
for the Darlington Retube and Feeder Replacement (RFR) Project. The total value
of the Definition Phase is estimated at over $600 million.
2012: April. The
Honourable Peter MacKay, Minister of National Defence, announces a contract
award for 2.5 million to a joint venture between SNC-Lavalin and Aecon Atlantic
Group for the design of a new accommodation tower and dining and messing
facilities at Canadian Forces Base Halifax.
2012: May. SNC-Lavalin is awarded a contract by AltaLink LP for work on
portions of transmission infrastructure projects in Alberta. Industry analysts
estimate the contract to be worth about $1.6 billion
As one loyal La politica reader emailed us to say: "Is there not an honest engineering company out there our government could start sleeping with?"
Apparently not.
(TE Wilson is the author of Mezcalero, a Detective Sánchez novel.)
N.B: La politica is researching for a book on SNC-Lavalin.
To contribute as a possible source, please use the contact information provided below.
Twitter: @TimothyEWilson
If you are having difficulty submitting to the e-mail feed at the top of this page, press "enter" on your keyboard instead of the "submit" button.
(TE Wilson is the author of Mezcalero, a Detective Sánchez novel.)
N.B: La politica is researching for a book on SNC-Lavalin.
To contribute as a possible source, please use the contact information provided below.
Twitter: @TimothyEWilson
Email: lapoliticaeslapolitica [at] gmail [dot] com
If you are having difficulty submitting to the e-mail feed at the top of this page, press "enter" on your keyboard instead of the "submit" button.
Aissa arrested in Switzerland, wonder if he'll sing?
ReplyDeletehe is the song!...now maybe there is hope for Ms Vanier the truth will set her free
ReplyDeleteI doubt it somehow Bludsho.....While Gwyn Morgan is staying on look who has decided to take a power powder. According to Reuters - The Honourable Hugh D. Segal, CM, is no longer Independent Director of Snc Lavalin Group Inc., effective May 3, 2012.
ReplyDeleteThe federal government also "sold" the commercial division of AECL to SNC-Lavalin in a secret backroom deal that closed in October of 2011. Check out that dirty deal. SNC paid $15 million and the feds turned around and gave them $65 million. It stinks. Oh yeah, so now this corrupt corporation has access to nuclear technology.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteAs of December 2012, SNC-Lavalin is being investigated in connection with the one billion dollars hospital construction in Montreal.
ReplyDeleteNo one is paying any attention to the corruption going on in Canada.
ReplyDeleteJournalists reports are ignored by politicians and our national police. And until people sit up and take notice corrupt politicians will continue to steal everything that their corporate masters tell them to.
Next on their list: the Canada Wheat Board; CBC: and Canada Post.