Anti-Corruption Squad

Quebec’s anti-corruption squad has arrested former SNC-Lavalin CEO Pierre Duhaime, charging him and Riadh Ben Aissa, ex-head of the company’s construction arm, with fraud in connection with construction contracts for a Montreal super-hospital.

Duhaime stepped down from SNC-Lavalin in March after an investigation revealed he signed off on $56 million in “improper payments,” to undisclosed agents, breaching the company’s code of ethics.

SNC-Lavalin spokeswoman Leslie Quinton issued a statement Wednesday, saying the company “has and will continue to co-operate fully with all authorities who request our assistance” and that it has “voluntarily turned over information” to authorities.

Authorities in Canada and Switzerland have been conducting a widening probe of the company’s dealings, including in Libya, focusing on $195 million in payments by SNC-Lavalin.

On Sunday, a joint investigation by CBC/Radio-Canada and Swiss public Broadcaster revealed the Swiss probe is examining $139 million in payments to a Swiss bank account tied to mega-construction contracts in Libya. That’s in addition to $56 million in “improper payments” identified by the company last spring, when Duhaime was forced to resign.

Widening investigation

Swiss investigators are trying to determine who approved a string of multimillion-dollar payments by SNC-Lavalin International now at the centre of the case. Sources have told CBC/Radio-Canada that Swiss investigators have questioned six high-level SNC-Lavalin executives, and hope to question three more, as they hold Ben Aissa in jail.

Geneva-based lawyer Roland Kaufmann is facing similar charges of money laundering and corruption in connection with the case.

Ben Aissa oversaw global construction projects and forged close ties to the Gadhafi regime in Libya, winning the company billions in contracts to build an airport, a prison, and a major water distribution project.

SNC-Lavalin says it has handed its records documenting payments to the two companies to Swiss authorities, but that it is unaware of any “misuse of the funds.”

Ian Lee, a professor of international business at the Sprott School of Business, says large corporations face risks when they do business in corrupt countries.

“It’s a real dilemma,” he told CBC News. “If you don’t pay bribes, the chances are you won’t get the contract. And if you do, there’s a very good chance you’ll go to jail in Canada.” He said with some countries, “you have to walk away.”

Shares of SNC-Lavalin Group fell 92 cents to close at $39.99 in TSX trading Wednesday, from a 52 week high of $54 .

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 Discussion Questions:

1. In order to do business in certain countries, you need to bribe. In your opinion do you believe this to be a true statement?

2. Why are bribes in certain countries tolerated?

3. As a Forensic Accountant, what steps would you take to detect bribes in large multinational corporations?

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