Some stock analysts are suggesting that SNC-Lavalin has rounded the corner on the multiple Canadian and international corruption investigations, allegations and charges against SNC-Lavalin and many of its former executive members during the past few years. To the contrary, the string of fraud, bribery and money-laundering allegations and charges against SNC has not gone away.
(Quebec-based SNC is currently 100% owner of AltaLink but is in the midst of trying to sell the transmission company to U.S.-based Berkshire Hathaway Energy which is owned by billionaire Warren Buffett. After the sale, SNC-Lavalin will continue to build and manage construction of AltaLink’s high voltage power lines.)
CBC News recently compiled a list of who’s who in the McGill University Health Centre (MUHC) bribery case where SNC-Lavalin executives are alleged to have committed crimes , and charged with committing crimes, in order to secure the lucrative $1.4 billion contract to build the new MUHC in Montreal. The Quebec Provincial Police (QPP) says the bribery case is “the biggest fraud and corruption investigation in Canadian history”. The super hospital contract is one of Canada’s most expensive public works projects.
Former SNC-Lavalin CEO Pierre Duhaime was forced to resign and was arrested in 2012 on charges of fraud, conspiracy and issuing false documents in relation to allegedly ordering secret payments to help SNC win the super hospital construction contract in Montreal.
Riadh Ben Aissa, former executive vice-president of construction at SNC, was forced to resign and was arrested in Switzerland in 2012, accused of bribery and corruption in securing SNC contracts in Libya under the dictatorial Moammar Gadhafi regime. A warrant for Ben Aissa’s arrest has also been issued in Canada on charges of fraud and issuing false documents, alleging he ordered $22.5 million in kickbacks to help SNC win the MUHC contract. Ben Aissa and Duhaime are among eight people charged in connection with alleged fraud and other crimes in the MUHC corruption case.
QPP investigators and the media discovered there had been regular and improper communications between MUHC employees (including former MUHC director Arthur Porter and redevelopment director Yanai Elbaz) and representatives from SNC-Lavalin (including Pierre Duhaime and Riadh Ben Aissa). An agreement was allegedly reached between SNC-Lavalin and Porter and Elbaz that ensured the contract would be awarded to a consortium headed up by SNC in exchange for a $30-million bribe. QPP speculated that in the end, perhaps due to the complexities involved in cheating the system, only $22.5 million were allegedly transferred to Porter and Elbaz. The transactions were allegedly hidden using seemingly legitimate payments made by SNC-Lavalin to a series of shell companies set up by Porter and Elbaz.
While SNC-Lavalin and a Spanish consortium OHL were in the midst of bidding on the MUHC contract in 2010, SNC VP Riadh Ben Aissa called Miguel Fraile of the Spanish consortium into SNC’s Montreal head office. According to testimony by Fraile at the Quebec Charbonneau Commission corruption inquiry, Ben Aissa threatened Fraile by asking, “Who am I? Who is OHL? We are nothing. We are nobody. Montreal is SNC’s city, the MUHC is its project”. Ben Aissa told Fraile OHL must withdraw from the bidding, which was set to close in March. SNC is a “powerful company in Canada” said Ben Aissa, and if OHL dropped out, the two firms might be able to team up in the future. Fraile testified saying, “Ben Aissa said that if we (OHL) won the contract, he would make our lives impossible.” A senior MUHC hospital official told the inquiry commission that the menacing sense of entitlement reflected in Mr. Ben Aissa’s alleged tirade was also evident among senior executives at the MUHC.
Based on testimony from MUHC executive Imma Franco at the Charbonneau inquiry, Elbaz spoke directly to her, telling her to encourage contract selection committee members to give higher marks to SNC-Lavalin than to the Spanish consortium also bidding on the hospital contract. Elbaz told Franco to remember what the boss (Arthur Porter) wanted, and to remember where her paycheque came from. Franco said she ignored Elbaz’s suggestion and encouraged her fellow selection committee members to be fair and impartial. They gave higher marks to the Spanish consortium. The Spanish consortium was suddenly disqualified, which came as a shock to the selection committee, and the MUHC top brass announced that SNC-Lavalin would build the super hospital. In an additional subsequent rigged bidding process, SNC-Lavalin was awarded the contract.
Further testimony at the Charbonneau Commission inquiry revealed SNC-Lavalin engineers cheated by changing their plans and using a rival consortium’s designs for the MUHC which were deemed technically superior. Testimony indicated that Yanai Elbaz of the MUHC had secretly provided SNC with privileged design information from the rival bidder. At least two of the SNC engineers felt uncomfortable about cheating but did what they were asked under pressure from their superiors. One of the SNC engineers went to the QPP in 2012 after learning of the alleged fraud.
As if the MUHC corruption case couldn’t get any more scandalous, SNC-Lavalin had the audacity a few months ago to submit a request to Quebec Health for an additional $191 million to complete the hospital project which was supposed to be a $1.343-billion fixed-price contract. Quebec’s Health Minister said they have no intention of paying that amount of money because the vast majority of the request is for unauthorized work.
With respect to Ben Aissa’s imprisonment in a Swiss jail over alleged bribery, money laundering and corruption in relation to his work for SNC in Libya, he and his lawyers are reported to have signed an out-of-court settlement last month with Swiss federal prosecutors for him to enter a guilty plea on all the charges, except embezzlement, in exchange for a sentence recommendation that could see him released from Swiss custody. The deal will be considered by a Swiss court possibly in October. Ben Aissa still faces extradition to Canada to face charges of arranging $22.5 million in alleged bribes paid to secure the contract to build the Montreal MUHC.
Burnaby, British Columbia Mayor Derek Corrigan continues his criticism of SNC-Lavalin’s involvement in Port Metro Vancouver’s approval of a $15-million coal transfer facility that would see a dramatic increase in the number of coal trains through New Westminster, Surrey and Delta as American coal is brought into B.C. and shipped overseas to China. Corrigan has blasted the standards of SNC-Lavalin, pointing out the engineering giant’s history of corruption in Canada and many other countries.
The RCMP and Swiss authorities continue to investigate allegations against Michel Fournier of accepting $1.5 million in bribes from SNC-Lavalin which won a $127-million contract in 2000 to resurface the roadway on the Jacques-Cartier Bridge. At the time, Fournier was the head of a federal Crown corporation that operates the Jacques-Cartier and Champlain bridges in Quebec.
Lafarge Canada has recently sued the consortium of SNC-Lavalin and Graham Companies for not receiving all payments for work Lafarge conducted on the west leg of Calgary’s LRT line. Lafarge says it has tried to collect for more than a year but has been unsuccessful, so has now filed a lawsuit.
In follow up to the past several years of corruption allegations and charges against SNC-Lavalin, the company recently reported a return to profit in the second quarter that fell sharply below analysts’ expectations. SNC says it has been challenged by old projects started by previous management that continue to hurt the bottom line, but some analysts wonder about the effect of the widespread corruption scandal on SNC’s performance.
The above reports are based in part on: CBC News 1, Montreal Gazette 1, Montreal Gazette 2, CBC News 2, CTV Montreal, Canada News, Toronto Star, CBC News 3, Burnaby Now, Reuters, CTV Calgary and QMI Agency. For additional information on the many corruption allegations and charges against SNC-Lavalin and its former executive members in Canada and around the world, see this link.