As the Canadian and international SNC-Lavalin corruption probes continue, AltaLink’s parent company’s business takes a hit. The Shriners have decided to retain control of the bidding process and selection of sub-contractors instead of making SNC the general contractor for their new hospital in Montreal to be built next to the McGill University Health Centre (MUHC), presently under construction (Canadian Press). SNC is currently under investigation for allegedly making illegal payments to secure the contract to build the MUHC, which is facing further construction delays. Two credit-rating agencies have warned there are mounting concerns that construction of the MUHC is significantly behind schedule (Montreal Gazette).
Hydro Quebec has yanked a contract from scandal-plagued SNC-Lavalin, midway through its 5-year term, to run an energy efficiency program for the utility. Hydro Quebec will manage the program in-house (CJAD).
First Quantum Minerals Ltd. has recently suspended engineering contracts with SNC-Lavalin at Cobre Panama, as part of cost-cutting measures being implemented following the takeover of the Panama copper mining project from Inmet Mining Corp. (Globe and Mail). SNC has already de-booked its work related to the project, estimated at a value of $120 million.
Because SNC-Lavalin has been accused of bid-rigging, bribery and fraud at the Charbonneau Commission construction industry corruption investigation in Quebec, it will face close scrutiny by the Autorite des marches financiers (AMF) (Montreal Gazette). Companies bidding on the $3.7 billion contract to overhaul Montreal’s Turcot Interchange need to live up to the new integrity standards of the AMF. In light of multiple Canadian and international corruption allegations against SNC-Lavalin, eyes are also closely watching SNC’s participation in the bidding process for Waterloo’s $600 million contract to finance, build and operate its new rapid rail transit project (The Record).
The Charbonneau Commission inquiry continues to hear damning testimony about SNC-Lavalin and other construction companies in Quebec. Inside information about upcoming engineering contracts was being passed along exclusively to those construction companies that donated funds to the Montreal municipal party – Union Montreal. The Canadian Press recently reported, “Yves Cadotte, an engineering executive with SNC-Lavalin, had said during his own time on the stand that he paid a fake bill from (Andre) Morrow (spouse of former federal Liberal cabinet minister Liza Frulla) worth $75,000 as part of $200,000 destined for Union Montreal.”
Quebec Premier Pauline Marois has denied any knowledge of disguised illegal donations passed onto her Parti Quebecois by construction companies in the last 12 years (CJAD). On the other hand, SNC-Lavalin and other companies have testified at the Charbonneau Commission inquiry that they handed her party more than $700,000 from 1998 to 2010. The Quebec Liberals are also accused of receiving nearly $900,000.
CBC News has investigated political donations by SNC-Lavalin, and recently reported that 12 SNC executives and 2 family members made $15,000 in political donations to a Conservative candidate during the 2011 federal election. The Canada Elections Act has prohibited corporate donations since 2006. Yves Cadotte has explained to the Charbonneau corruption inquiry how SNC had its executives make political contributions and then compensated them through their bonuses.
A writer to the Northumberland Today editor recently wondered about SNC-Lavalin’s involvement with the $1.28 billion project to rid Port Hope of its radioactive waste. He speculated about possible collusion in this project, in light of the construction industry’s alleged collusion scheme to drive up construction costs in Quebec by as much as 30%.
About 40 temporary foreign workers from Costa Rica have finally been paid the money they were owed by SNC-Lavalin and others for the work they did building the Canada Line rapid transit link between Vancouver and Richmond, British Columbia. In 2008, a B.C. Human Rights Tribunal had ruled they were discriminated against by SNC and other companies in wages, accommodation, meals and expenses when compared to their European work colleagues (Canadian Press).
Internationally, SNC’s troubles also continue. As part of 7 Bangladeshi officials standing accused of conspiracy in the Padma Bridge Project attempted bribery case, the Deputy Director of the Bangladesh Anti-Corruption Commission recently argued that a Bangladeshi official “smuggled out important information to the Canadian firm SNC-Lavalin despite holding an important government office” (bdnews24).
It has recently been learned that SNC-Lavalin maintained ties to Watan Risk Management (an Afghan security firm) into 2011, long after the U.S. banned contracts with Watan to prevent aid money from winding up in the hands of corrupt officials and the Taliban (The Star).
As part of SNC-Lavalin’s attempts to stem the tide of negative media coverage surrounding various corruption and ethics probes during the past 2 years, it continues to make staff and other personnel changes. SNC recently hired a new chief financial officer to replace Gilles Laramee who refused to sign off on suspect payments ordered by former SNC Vice President Riadh Ben Aissa, currently detained by Swiss authorities, but which were signed off by former SNC CEO Pierre Duhaime (Globe and Mail). And at the top, SNC Chairman Gwyn Morgan and 3 other directors will depart the SNC Board and be replaced at the annual shareholders’ meeting on May 2, 2013 (Canadian Press). Ian Bourne, currently the Vice-Chairman of SNC, will become the new Chairman. SNC hired an executive search firm to recruit 3 new directors – Jacques Bougie, Lise Lachapelle, Alain Rheaume – all of whom speak French. Stephen Jarislowsky, SNC’s largest shareholder, has disagreed with the nominations, saying “I do not believe that these people understand the heart of SNC, which is project management…When I see the names and the qualifications, I do not believe that is what’s required.” He said the company chose only Quebec-based candidates and failed to diversify the board internationally (Financial Post).
While these and many other personnel changes are being made, SNC took measures last year to keep managers who were considered “high potential” or “key project” employees from bailing out in the midst of the company’s ethics scandal. As the Financial Post wrote, “SNC dished out more than $15 million to a select group of employees for doing nothing more than not quitting.” The move has been criticized as throwing performance pay out the window in favour of simply trying to provide guarantees to keep employees from leaving the scandal-plagued company.
See this link for more on the corruption scandal at SNC-Lavalin which, together with AltaLink (wholly-owned subsidiary of SNC) and EPCOR, is currently building unnecessary high voltage power lines in Alberta.