SNC-Lavalin says new bribery allegations across Asia, Africa are history

By The Canadian Press - Wednesday, May 15, 2013 at 12:27 PM - 0 Comments

MONTREAL – Embattled engineering company SNC-Lavalin says allegations in published reports that a subsidiary used a code to account for bribes on several projects across Africa and Asia have been resolved and are history.

The company says it is focused on moving ahead with systems that would prevent the problems from re-occurring.

The Globe and Mail and CBC reported Wednesday the company paid “consultancy costs” between 2008 and 2011 to win several development contracts.

The payments are described as PCCs — project consultancy cost or project commercial cost. But former SNC engineer Mohammad Ismail, who agreed to examine the documents obtained by CBC and the Globe, was quoted in the published reports as saying the real intention was to bribe.

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SNC-Lavalin CEO assures shareholders that problems fixed, unveils strategy

By Ross Marowits, The Canadian Press - Thursday, May 2, 2013 at 6:39 PM - 0 Comments

MONTREAL – SNC-Lavalin’s chief executive assured shareholders Thursday he’s fixing the problems that have undermined the engineering company’s reputation and hammered its stock price.

In his first address to an SNC-Lavalin annual meeting, Robert Card thanked investors for sticking with the firm, adding he believes the problems were “compartmentalized.”

“Our key stakeholders believe this is limited and fixable and we have their trust and respect and that we’re on the right track,” he said.

While acknowledging that dealing with the fallout of accusations of corruption has been a costly distraction, he said clients continue to provide support.

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SNC-Lavalin CEO to unveil strategy to shareholders to move beyond woes

By The Canadian Press - Thursday, May 2, 2013 at 7:11 AM - 0 Comments

MONTREAL – SNC-Lavalin’s new chief executive will be in the hot seat Thursday as he unveils a strategy to move the company beyond improper business activities.

Robert Card will attend his first annual shareholders meeting since taking the reins of the engineering company last October.

The American has been cleaning house since his arrival by replacing key executives and hiring a new compliance officer.

The company has also accepted a 10-year bidding ban from the World Bank for a key subsidiary and affiliates over bribery allegations in Bangladesh and Cambodia.

On Thursday, Card is expected to outline broad strokes of his strategy which analysts expect will involve selling a portion of its lucrative concession assets, or spinning them into a separate public company.

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SNC-Lavalin renewal hits boardroom with departure of chairman

By The Canadian Press - Thursday, April 4, 2013 at 1:42 PM - 0 Comments

MONTREAL – Embattled engineering giant SNC-Lavalin’s efforts to turn the page on its troubled past is moving from the executive suite to the boardroom.

After hiring a series of new executives in the past year, including a CEO and chief financial officer, the company says one-third of its directors including chairman Gwyn Morgan won’t stand for re-election at its annual meeting next month.

Including three new directors who will be elected at the meeting and three others directors who joined last year, half of the new 12-member board will have arrived since the company’s reputation has been rocked by an internal investigation that uncovered $56 million in questionable payments.

In a letter to shareholders included in a regulatory filing, Morgan called 2012 a year of significant change for the company in which the board has been focused on rebuilding its momentum and leadership team.

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Newsmakers

By Aaron Wherry - Sunday, March 3, 2013 at 7:00 AM - 0 Comments

Antonio Calanni/AP

Bagman on the stand

Nicolo Milioto, construction magnate and alleged bagman for Montreal’s infamous Rizzuto Mafia clan, took the stand at an inquiry into Quebec’s construction industry last week. Milioto, known as “Mr. Sidewalk” for his uncanny ability to nab municipal construction jobs, stated his name and occupation—and very little else. According to one newspaper’s tally, the bullet-headed Milioto said, “I don’t know” or “I don’t remember” 522 times during his testimony. He said he was insulted to be associated with the Mafia, saying he was but a friend of since-assassinated don Nick Rizzuto. It’s a surprise he remembered that much.

Basketball diplomacy

Former NBA bad boy Dennis Rodman is trying his hand at “basketball diplomacy” in North Korea. News that “the Worm,” as he was once known, had made it into the Hermit Kingdom to film a documentary arrived via Twitter: “It’s true, I’m in North Korea. Looking forward to sitting down with Kim Jong Un,” he said. The sentiment may be shared: growing up, Kim Jong Un, the country’s young dictator, was a huge fan of Rodman’s ’90s-era Chicago Bulls.

Enter Mr. Fixit

SNC-Lavalin Group hired a new chief compliance officer last week to help clean up the embattled engineering giant in the wake of a bribery scandal. (Two former SNC executives—former CEO Pierre Duhaime and Riadh Ben Aissa—face fraud charges relating to the firm’s contract to design, build and maintain the McGill University Health Centre’s new $1.3-billion hospital.) SNC’s incoming CCO, German executive Andreas Pohlmann, has acted as a go-to for scandal-plagued companies: he was brought in to fix Siemens after a $2-billion bribery scandal in 2006. Next, he headed up the compliance unit at German engineering firm Ferrostaal in 2010, after a bribery scandal there.

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Former SNC-Lavalin executive Stephane Roy sues for wrongful dismissal

By The Canadian Press - Wednesday, February 13, 2013 at 11:25 AM - 0 Comments

MONTREAL – A former SNC-Lavalin executive who worked with the jailed ex-head of the company’s construction division has launched a nearly $1-million wrongful dismissal and defamation lawsuit against the Montreal-based engineering giant.

Stephane Roy said he was made a “scapegoat” and described as a “rogue employee” when he was fired a year ago despite always acting on the company’s orders.

The former controller is seeking $930,000 in lost salary and benefits, including $100,000 in moral damages and for ruining his reputation. He also claims more than $270,000 worth of shares held in a stock option plan as of September when he tried to claim them.

Roy reported directly to Riadh Ben Aissa, who remains in custody in Switzerland on suspicion of laundering millions of dollars and bribing North African public officials. In Canada, Ben Aissa is accused, alongside former CEO Pierre Duhaime, with fraud relating to the construction of a new superhospital in Montreal.

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Former SNC head Pierre Duhaime formally charged with fraud

By The Canadian Press - Monday, February 11, 2013 at 12:07 PM - 0 Comments

MONTREAL – Pierre Duhaime, the former chief executive of Canada’s biggest engineering firm, has been granted more flexibility to travel within the country pending trial on fraud charges.

Duhaime, a prominent Quebec businessman and once the head of engineering powerhouse SNC-Lavalin (TSX:SNC), was formally charged with fraud on Monday.

He was not in the courtroom as his lawyer, Michel Massicotte, pleaded not guilty on his behalf.

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RCMP affidavit says SNC-Lavalin execs paid $160M kickbacks to Gadhafi son

By The Canadian Press - Friday, January 25, 2013 at 6:08 PM - 0 Comments

MONTREAL – A former SNC-Lavalin executive allegedly paid the son of dictator Moammar Gadhafi $160 million in kickbacks to obtain major contracts in Libya, according to an unsealed affidavit from the RCMP’s anti-corruption squad.

The RCMP affidavit used to obtain a search warrant of the engineering giant’s Montreal headquarters last year said some of the money was paid for luxury yachts.

The search warrant document, which was later resealed, said the bribes were paid to Saadi Gadhafi by former SNC vice-president Riadh Ben Aissa, who is now jailed in Switzerland. He has denied any accusations.

The document also implicated Ben Aissa and former SNC-Lavalin controller Stephane Roy in an alleged effort to smuggle Gadhafi’s son and his family to Mexico as the Libyan regime was failing in 2011.

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Quebec’s foundation of corruption

By Martin Patriquin - Wednesday, December 19, 2012 at 6:10 AM - 0 Comments

Vincenzo D'Alto

Lino Zambito is many things, not all of them good. The former contractor, would-be construction magnate and budding restaurateur is currently facing, he estimates, “about 12” fraud, collusion and breach of trust charges for, among other things, his role in an alleged bid-rigging scheme in the Montreal suburb of Boisbriand. In April, he pleaded guilty to a charge of attempting to subvert the outcome of a municipal election in that same community. Two days after Maclean’s met with him at the strip-mall pizzeria he now runs, Revenu Québec officials raided it in search of some $38,000 in unpaid taxes. And as the owner of the construction company Infrabec, he has, by his own admission, spent much of the last decade participating in a system that bilked taxpayers out of millions of dollars.

Yet it is precisely because of his misdeeds, or at least his willingness to talk about them under oath, that Zambito is something of a folk hero in Quebec these days. Subpoenaed on Sept. 5—one day after the Quebec election—by the commission investigating the province’s notorious construction industry, Zambito testified for eight days, and what came out of the tall, beefy 43-year-old’s mouth shocked a province and arguably brought a premature end to the careers of two big city mayors.

As a contractor in Montreal, Zambito says he participated in bid-rigging schemes involving the Rizzuto Mafia clan that usually culminated with mobsters stuffing wads of cash into their knee-high socks in the ill-lit backroom of a north end coffee shop. He not only kicked up a cut of his profits to those mobsters but also to various municipal and provincial political parties as well.

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SNC suspends payments to retired CEO; starts hunt for new CFO

By Ross Marowits - Thursday, December 13, 2012 at 9:18 AM - 0 Comments

MONTREAL – SNC-Lavalin is shaking up its management and board and suspending payments to a retired CEO as the engineering giant attempts to ensure that its reputation isn’t permanently damaged by corruption charges levelled at several former officials.

The Montreal-based company said that while the allegations have not been proven in court, it is suspending payments to Pierre Duhaime because the criminal charges he now faces suggest there may be additional facts of which it was not aware at the time of his departure earlier this year.

“Until the facts surrounding Mr. Duhaime’s situation are clarified or resolved, the payments under these arrangements will be held separately,” the company said in a news release Thursday. Continue…

Boardroom blunders at SNC-Lavalin

By Tamsin McMahon and Chris Sorensen - Friday, December 7, 2012 at 2:14 PM - 0 Comments

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…

SNC-Lavalin’s saga continues with arrest of former vice-president in Switzerland

By Gabriela Perdomo - Monday, April 30, 2012 at 10:35 AM - 0 Comments

Swiss officials have confirmed the arrest of Montreal-based SNC Lavalin’s former executive vice-president Riadh Ben Aissa in that country on suspicions of corruption, fraud and money laundering, the Montreal Gazette reports.

According to the Globe and Mail, “originally from Tunisia, Mr. Ben Aissa joined SNC in 1985. (…) He worked largely out of Tunisia and also oversaw the company’s extensive operations in Libya.”

As Maclean’s reported last month, SNC-Lavalin, an engineering giant headquartered in Montreal that conducts business in North Africa and other parts of the world, is being investigated for its ties to the regime of late Libyan dictator Moammar Gadhafi.

From the Gazette:

In February, SNC-Lavalin announced that Aissa and another executive, Stephane Roy, had lost their jobs. Both men had links to Saadi Gadhafi, the son of the late Col. Moammar Gadhafi. The elder Gadhafi was killed last October.

(…)

In March, the company said that $56 million had been paid to unnamed “agents” in North Africa to help secure contracts for two projects, and that CEO Pierre Duhaime had approved the payments. That included a payment of $22.5 million made through SNC-Lavalin’s office in Tunis.

SNC-Lavalin is under scrutiny for its ties to Gadhafi regime

By Chris Sorensen and Erica Alini - Tuesday, March 13, 2012 at 10:46 AM - 0 Comments

Mario Beauregard/CP

In early January, Saloua Benkhouya stood in front of a packed room at the University of Toronto’s Rotman School of Management. Armed with a Power Point presentation, the international director of strategy and infrastructure projects for SNC-Lavalin Inc. talked about the risks and mega-rewards of building highways, airports and other infrastructure in the Middle East and North Africa. Among her tips: the “critical” importance of befriending a local partner, someone who can “open doors” and make the necessary introductions. When the topic of the Arab Spring came up, she mentioned that SNC-Lavalin was forced to pull out of Libya, where it had signed deals worth nearly $1 billion with the late Moammar Gadhafi’s regime. “We’re monitoring the situation and hopefully we can go back very soon,” she said.

Lately, though, it’s the dark side of what it may take to open those doors that’s drawing all the attention to SNC-Lavalin. The Montreal-based engineering giant has suddenly found itself embroiled in a deepening scandal about the extent of its ties to the deposed Gadhafi regime—particularly third son Saadi Gadhafi, a former footballer and international playboy who appears to have been the company’s key man in Libya. In the weeks since Benkhouya took the podium in Toronto, allegations surfaced that SNC-Lavalin spent millions lavishing Gadhafi with expensive gifts, ranging from cases of champagne to hunting trips. More troubling are links that have emerged to a bizarre plot to smuggle Gadhafi out of Libya into neighbouring Niger last August, in apparent contravention of a UN ban on his travel.

So far, two SNC-Lavalin executives have been sacked in apparent connection with the affair. The company is also probing $35-million worth of unexplained construction project payments, although it hasn’t said whether they are connected to Gadhafi or Libya. Investors are nervous, sending shares down by more than 25 per cent over the past month. Some are even seeking a class action lawsuit that accuses senior management of being “engaged in unlawful activities in Libya.” SNC-Lavalin has denied any wrongdoing.

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Gadhafi ties helped Canadian firm land prison deal

By macleans.ca - Monday, January 16, 2012 at 11:16 AM - 0 Comments

A Canadian engineering firm planned to build a massive prison in Gadhafi’s Libya prior to the dictator’s demise, documents unearthed by the Globe and Mail show. Quebec’s SNC-Lavelin had a $275 million contract to construct a state-of-the-art detention centre outside Tripoli that would have held 4,000 beds in a “campus-style” complex. The prison was to have been built to international standards, according to the documents, a stark contrast to the dank and overcrowded detention centres where prisoners were often crammed under Gadhafi’s rule. The contract for the prison was linked to the dictator’s third son, Saadi Gadhafi, who the Globe earlier reported had developed tight ties with the Quebec firm. SNC-Lavelin had offered to help Gadhafi with the Libyan Corps of Engineers, a civil-military unit he was setting up.

Globe and Mail

A great buying opportunity

By Aaron Wherry - Wednesday, September 28, 2011 at 11:00 AM - 5 Comments

Data contained in a Parliamentary Budget Office report raises questions about the government’s sale of Atomic Energy of Canada Limited.

Atomic Energy of Canada Ltd. — the financially troubled Crown corporation whose commercial operations are being sold to SNC-Lavalin — received approximately $183 million in government payments in the first quarter alone, nearly double its $102 million voted budget for the entire 2011-12 fiscal year.

Approximately $114 million of that government funding was invested in the spun-off nuclear reactor division that was sold in the same quarter for only $15 million plus royalties to SNC-Lavalin, the Montreal-based engineering and construction giant.

Montreal is falling down

By Philippe Gohier - Tuesday, August 23, 2011 at 12:05 PM - 9 Comments

Photo by Roger Lemoyne

When a grapefruit-sized chunk of concrete smashed through the windshield of a 29-year-old man’s car in Montreal last Thursday, city officials quickly scrambled to the scene. Like most Montrealers, they assumed the worst—that it was yet another in a series of mishaps involving the city’s crumbling infrastructure. Their worries turned out to be misplaced. Within a few hours, police had eliminated the possibility that the object was once a part of the overpass above busy Papineau Avenue and were instead investigating whether someone had thrown it. “I want to reassure the people of Montreal: the rock that caused this incident has nothing to do with the structure,” Montreal Mayor Gérald Tremblay told reporters at the scene, deftly avoiding the very word “concrete.” “Vehicles can pass in total safety.” Still, it’s hard to blame even the most paranoid residents for assuming the contrary. It’s raining concrete in Montreal, it seems, and the situation has people on edge.

The most recent incident occurred in late July, when a 15-m long, 25-tonne chunk of concrete fell onto the busy Ville-Marie expressway in the city’s downtown core. Miraculously, no one was injured. (Transport Québec estimates 100,000 vehicles travel along the expressway daily.) Montrealers were no doubt shocked by the accident but, at this point, it may be a stretch to say they were surprised.

The accident was, after all, a grim reminder of a similar collapse in nearby Laval in 2006. Five people died and six more were seriously injured when the de la Concorde overpass came tumbling down onto cars travelling below. And the de la Concorde collapse was itself reminiscent of an incident in which eight heavy concrete beams fell from the Souvenir Boulevard overpass in Laval in 2000, killing one and injuring two others.

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In conversation: SNC-Lavalin CEO Pierre Duhaime

By Martin Patriquin - Monday, April 11, 2011 at 9:40 AM - 7 Comments

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?