Quebec’s Anti-Corruption Crackdown

Large corporations face major risks when bidding for construction contracts and while Quebec cracks down on questionable dealings in the industry, Pierre Duhaime of Montreal based SNC Lavalin is feeling the risk. The former SNC-Lavalin CEO was charged with fraud after allegedly approving $56M worth of untraceable payments to the company's major projects.

Rumoured to be the largest corporate scandal in Canadian history, Pierre Duhaime faces three charges of fraud, conspiracy to commit fraud and using forged documents. One of the projects related to these charges is Montreal's 1.3 billion dollar contract to design, build and maintain the McGill University Health Centre. Canadian police are focusing their investigation on $22-million in so-called "irregular" payouts authorized by SNC executives in order to win the McGill super hospital contract. The executives are also suspected of using a counterfeit document to cheat the Montreal University Health Centre during the bidding process for the contract between 2009 and 2010.

The scandal goes well beyond Canadian borders as SNC has global reach. Riadh Ben Aissa, the former SNC executive who led hundreds of construction projects worldwide is being held in a Swiss jail on similar charges. Aissa was arrested in April on charges of money laundering and corruption. Authorities in Canada and Switzerland have been conducting a widening search of the company' dealings, including dealings in Libya, focusing on $195 million in payments by SNC-Lavalin. The $139 million in payments is tied to a Swiss bank account in relation to mega-construction contracts in Libya. This is in addition to $56 million in "improper payments" on other international projects.

SNC has since tried to distance itself from the two executives, naming an outsider to replace Mr. Duhaime and distinguishing any foul play as the work of employees who are no longer with the company. So far this scandal has done little damage to the company' success at winning contracts. Its backlog continues to stand near an all-time high of nearly $10-billion. SNC Lavalin released a statement assuring its dedication to maintaining ethical standards of conducting business.

In the construction business, it is commonly known that winning contracts can be a real dilemma. Bribes are often common in less developed countries and if you don't pay them, the chances of winning the contract are slim. This is nothing new to Quebec's construction industry as the head of Quebec's anti-corruption squad called for "urgent action" to tackle collusion in the sector. The province has had an increase in allegations of bribery and corruption, bid rigging, false claims, labour and materials over-charging. Quebec's anti-corruption squad is cracking down on the construction industry including investigation of common contract and grant fraud.

For Further Information Please Visit:

http://news.nationalpost.com/2012/11/28/pierre-duhaime-ex-lavalin-ceo-charged-with-fraud/

http://www.huffingtonpost.ca/2011/09/27/quebec-building-industry-public-inquiry_n_984241.html