Boardroom blunders at SNC-Lavalin
By Tamsin McMahon and Chris Sorensen - Friday, December 7, 2012 - 0 Comments
How things went terribly wrong under the watch of one of the most distinguished boards in Canada
Graham Hughes/Canadian Press
Less than a week before its former CEO, Pierre Duhaime, was arrested by Quebec police investigators, SNC-Lavalin announced it had received an award for excellence in corporate governance from the Canadian Institute of Chartered Accountants—the seventh time it won the award in the past decade.
As one of the world’s largest engineering firms, with 32,000 employees and projects ranging from airports to water-treatment plants in more than 100 countries, SNC-Lavalin has cultivated a board of directors that could serve as a who’s who of Canadian business. It includes: EnCana Corp. founding CEO Gwyn Morgan, former York University president Lorna Marsden, Canadian National Railway Co. CEO Claude Mongeau, and, until recently, Conservative Senator Hugh Segal. Among them are three recipients of the Order of Canada. Many of the directors have served on SNC-Lavalin’s board for years.
Yet despite the board’s impeccable credentials, on its watch, senior executives at the firm are now alleged to have misappropriated millions to influence the awarding of big contracts both at home and abroad, and then covered their tracks by earmarking the payments for unrelated projects. The Quebec police have charged Duhaime—who resigned in March—with fraud, reportedly in connection with a contract to build and design a new $1.3-billion “super hospital” in Montreal. Authorities are also looking to charge Riadh Ben Aissa, who led SNC-Lavalin’s construction business from the company’s office in Tunisia. Ben Aissa has been indicted in Switzerland as part of an investigation into a money- laundering scheme, which reportedly involved $139 million worth of payments by SNC-Lavalin. Both he and a company vice-president and financial controller, Stéphane Roy, were fired by SNC-Lavalin earlier this year. Continue…
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In conversation: SNC-Lavalin CEO Pierre Duhaime
By Martin Patriquin - Monday, April 11, 2011 at 9:40 AM - 7 Comments
From our archives: The executive, who quit the firm this week, on capitalism, Libya and the future of nuclear power
Photograph by Roger Lemoyne
Update: Pierre Duhaime quit his job as chief executive at SNC-Lavalin on Mar. 26, becoming the third executive to leave the firm in under a month. Duhaime’s resignation followed news that he had authorized $56 million in payments previously rejected by the CFO, thus breaking the company’s ethics code. Exactly what the money paid for is unknown. Here is a Maclean’s Q+A with Duhaime from April of last year.
As one of the largest engineering firms in the world, Quebec-based SNC-Lavalin is a corporate giant in Canada and beyond. Starting as a small engineering firm in Montreal in 1911, the company now operates in 100 countries across the globe, with annual revenues of over $6 billion. Yet SNC’s centennial year has been marked by upheaval in many of the countries—Egypt, Libya and Tunisia among them—where it does business. President and CEO Pierre Duhaime recently spoke about the company’s operations in these suddenly unstable parts of the world—and about its contract to build an immense prison complex in Libya.
Q: Tell me about SNC-Lavalin’s decision to build Libya’s Guryan Judicial City prison.
A: For us, in Libya or elsewhere, this is an infrastructure project. We have been in Libya for 25 years, we have been building airports, roads and water plants. It was presented to us as way of opening up the country, of respecting civil rights. It was one of the key projects of Gadhafi’s son, Saif. We went around the world but mostly in the United States to find out what were the best jails in terms of respect. We thought, “What’s wrong with this?”
Q: How much did you consider Libya’s human rights record before taking on the project?
A: Libya was part of the human rights commissions with the United Nations. Mr. Gadhafi was very welcome by many prime ministers and presidents around the world. Saif was very vocal in terms of respecting human rights in Libya. And of course, you need to have jails, no matter what. It’s not for political prisoners, it’s for prisoners.
Q: But we have no way of knowing if it was for political prisoners or not.
A: The way it was presented to us, it was nothing to do with political prisoners.
Q: SNC-Lavalin did a fair bit of publicity around the irrigation projects and the airport work. The prison wasn’t publicized.
A: Because it’s too small. The project was $200 million. It wasn’t really big enough to attract that much attention. We talk about billion-dollar jobs. A hundred million or $200 million is not something we talk about. And it wasn’t even 100 per cent us, it was with a joint venture with another company. We see that more as a service contract, nothing else.
Q: I have trouble believing that a jail is the same thing as an airport.
A: For me, it’s the same thing. Here in Quebec we are bidding on jails, we are bidding on hospitals.
Q: But our human rights record is pretty good. In Libya, it’s not good.
A: Why are you saying that? Do you have any proof?
Q: Sure. You mentioned Saif. He referred to the people in the rebellion as “rats” and has handed out arms to pro-Gadhafi forces.
A: Yes, after the rebellion started. Look, you just have to go back to what Saif said in the last five years. He has given speeches at the London School of Economics. Go and see what he said.
Q: Do you believe him now?
A: When you are in a war you say some things that maybe you wouldn’t repeat later on, and you don’t really believe it. He’s in a war and he has to defend his family’s interests. Maybe they are reacting too heavily. And I don’t support what he is saying. I am totally against what they are saying. But they’ve said it.
Q: What has been the fallout from all of this, as far as public relations?
A: We are trying to explain to people that we are an engineering company working for a customer who was totally welcomed by the Canadian, American and British governments. Today, things have changed. There are all kinds of politics behind the scene. Who has initiated the thing? Who has armed the rebels? Why has it suddenly happened now?
Q: I think it happened because people were fed up with 40 years of dictatorship.
A: That’s a bit naive. There’s always external forces behind these things to help the rebellion. It didn’t happen just like that. I’m not saying all the people were happy, but there are a lot of people who still support Gadhafi. Right now we don’t have a true democracy. And I support what the international community is doing, because the way [the Gadhafi regime] has resisted is not the right thing. I’m not there to defend the Gadhafi system. I’m saying we have been working in Libya for the last 25 years, we respected the government conditions, we were well in line with the rest of the world. What’s wrong there?
