July 23rd, 2019

Insights into the SNC-Lavalin saga

By Lethbridge Herald Opinon on March 13, 2019.

Company’s situation could have major political, economic consequences

Al Barnhill

Saga: “a long, involved story or series of incidents”; scandal: “actions or events perceived as morally or legally wrong.”

A saga is an objective account. A scandal is a subjective, biased judgment. What follows is guided by two key principles: be objective and not rush to judgment. “Judge not, lest ye be judged” (Matthew 7:1)

The SNC-Lavalin saga has had two stages: pre-2014 and 2014 onward. Already judgments are being made perceptually about the company, its management, political leaders and other targets. Our society hungers for scandals and the media feeds the appetites. Ultimately, Canada is governed by Parliament and guided by due processes, laws and legal decisions.

To make this complex, ongoing story understandable, it will be broken down into its two stages, because SNC-Lavalin changed significantly in 2014.

Pre-2014 – In 1911 Arthur Surveyor started a small engineering company in Montreal. Based on the principles of doing its best work, competence and client satisfaction the company grew dramatically. By 1915, it was designing and constructing a multi-million-dollar hydro-electric dam on the St. Maurice River. From that time onward, it expanded into mega projects such as roads, bridges, railroads, atomic and hydrogen power plants across Canada and globally. In 1991, SNC merged with Lavalin. For the next 20 years, despite some serious setbacks, the corporation flourished.

In 1996, “the wheels started coming off.” During 1996-2011, SNC obtained municipal contracts “through questionable means.” Between 2004 and 2011, the company was charged with making illegal federal election campaign donations. In 2009, SNC officials were charged in a $22.5-million bribery scandal involving the McGill University Hospital contract. From 2001-2011, SNC allegedly was involved in bribery and other nefarious activities related to Libyan contracts. Other alleged international illegalities included falsifying qualifications and documents for Asian Development Bank projects, bribery in Mozambique and Uganda and corruption in Bangladesh.

2014 onward – In 2014, SNC’s board of directors changed from its passive oversight role to an active, “hands on” group. Four members were replaced. It completely rehabilitated its corporate culture to become one of Canada’s most ethically stringent. Governance and Ethics is one of its four committees. A Chief Compliance Office was established and staffed for enforcement. It brought the Libyan case to the attention of the RCMP and co-operated fully with its investigation. The company has sued five former managers and four companies for $67 million for fraud and financial losses. During 2014-15, it reduced its global workforce by 4,000 employees (nine per cent) and chose its current CEO. Six of its 13 senior managers are now from the U.K. Revenues for 2018 totalled $12.08 billion. With a multiplier effect of four, the company’s macroeconomic impact is estimated at $48 billion. Currently, SNC and its affiliates employ approximately 50,000 globally, 9,000 across Canada.

This situation has major economic and political consequences. If found guilty of criminal activities, SNC could be banned from Government of Canada projects for 10 years. Billions in contracts and many jobs could be lost. With a national election scheduled for October, key politicians are amplifying the situation. Prime Minister Trudeau shuffled Attorney General Wilson-Raybould into Veterans’ Affairs. Subsequently, she resigned from Cabinet and was allowed to testify before the Commons Justice Committee. In part, her testimony claimed that she was pressured 10-12 times during four months to change her prosecutorial position against SNC-Lavalin. The PM and others attempted to persuade the Attorney General to consider other alternatives than having SNC charged criminally. One available alternative is a recently enacted Deferred Prosecution Agreement (DPA). DPAs are part of an international anti-bribery framework to which Canada is a signator.

On Friday, March 8, the Federal Court of Canada “dismissed a request by SNC-Lavalin to review a federal prosecutor’s decision… to settle criminal charges against the company out of court.”

The saga continues, hopefully without the taint of political scandal, and with the full flavour of facts, integrity, due process and the “rule of law.”

Al Barnhill has owned a management business for 42 years. He is a former professor of management at the University of Lethbridge and has three degrees in business administration, including a PhD from the University of Washington. Al has taught business administration courses for 20 years at universities in Canada and internationally, and in addition to consulting work in the private sector, has served as a senior consultant with the federal government and as a special adviser to the president of the federal Treasury Board.

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