Canada's Royal Canadian Mounted Police (RCMP) on Feb. 19 charged Montreal-based global engineer SNC-Lavalin Group Inc. and its construction and international units with several counts of corruption and fraud related to alleged bribes by long-departed executives of officials in Libya linked to work on infrastructure projects.
These are the first official charges against the firm, with RCMP noting that separate charges already have been brought against "three individuals" who were not named.
RCMP says the firm paid nearly $38.1 million in bribes and also defrauded various Libyan entities of about $104 million on projects that included an airport in Benghazi and the Great Man-Made River, which is deemed the world’s biggest irrigation project.
In a statement, SNC-Lavalin contests the charges and says it "will vigorously defend itself." The engineer-contractor ranks eighth on ENR's list of The Top 150 Global Design Firms, reporting $3.5 billion in global design revenue in 2013.
“The charges stem from the same alleged activities of former employees from over three years ago in Libya, which are publicly known, and that the company has cooperated on with authorities since then,” says Robert G. Card, SNC-Lavalin Group president and CEO since 2012. He is a former executive of CH2M Hill and the US Energy Dept.
“Even though SNC-Lavalin has already incurred significant financial damage and losses as a result of actions taken prior to March 2012, we have always been and remain willing to reach a reasonable and fair solution that promotes accountability, while permitting us to continue to do business and protect the livelihood of our over 40,000 employees, our clients, our investors and our other stakeholders.”
In its statement, the company contends the charges do not preclude it from working or bidding on "any public or private project" in Canada. SNC-Lavalin previously settled with the World Bank in 2013 related to separate bribery allegations in Bengladesh, and has been debarred from working for the agency for ten years, although that work accounts for only 2% of revenue, the firm had said.
SNC Lavalin also was certified last year to bid on Quebec municipal and public-private work in the wake of that province's long-running corruption scandal.
RCMP declined further comment on the charges in its statement.
Former SNC executive vice-president Riadh Ben Aissa is allegedly at the center of the corruption; he struck a plea agreement in Switzerland, was extradited to Canada last October and faces a preliminary trial next month, according to The Globe and Mail newspaper.
He also faces separate allegations in an alleged kickback scheme involving the firm's win of a $1.3-billion hospital project in Montreal. Ben Aissa could not be reached but has previously denied the allegations.
Another ex-executive, former construction vice president Sami Bebawi, was released on bail on Feb. 12 after voluntarily returning to Canada from Egypt to face bribe and extortion charges also linked to foreign work, according to Canada's CBC News.
"These charges relate to alleged reprehensible deeds by former employees who left the company long ago," says Card, who replaced Pierre Duhaime as CEO following allegations that the former executive was aware of some of the questionable activities. "If charges are appropriate, we believe that they would be correctly applied against the individuals in question and not the company."
The company also announced earlier this month a $47-million lawsuit against Ben Aissa and other former executives and outside firms related to the Montreal hospital.
Maxim Sytchev, an industry analyst for Toronto-based Dundee Capital Research, said on Feb. 19 that the alleged corruption "pertained to an isolated portion of the company’s business," but he speculated "the market will treat the information as yet another cloud over the company’s head."
He said that SNC-Lavalin's $2-billion acquisition of UK construction giant Kentz in 2014 strengthens and diversifies the Canadian parent. "RCMP will clearly need to differentiate between implicated divisions and the entire entity," said Sytchev.
SNC-Lavalin also notes its expanded and reinforced global ethics compliance program implemented in the last three years.
