SNC-Lavalin facing allegations of kickbacks in Canada

(February 21, 2014) SNC-Lavalin, the Montreal-based engineering giant, is facing more allegations of corruption.

By Brady Yauch for Probe International

SNC-Lavalin, the corruption-embattled Montreal-based engineering giant, has found itself in hot water once again – this time involving accusations of kickbacks that one expert says resemble a “Hollywood movie.” An investigation by CBC uncovered a money trail suggesting that nearly $1.5 million in payments were made to the then boss of a Crown corporation after it had awarded a bridge contract to SNC-Lavalin.

In 2000, the Federal Bridge Corporation (FBC) awarded a $127 million contract to SNC-Lavalin to refurbish Montreal’s Jacques Cartier Bridge. Just twenty days after the contract was given, the head of the FBC at the time, Michel Fournier, opened a bank account in Zurich and gave it a code name “Zorro”, according to the investigative report by CBC’s Radio-Canada. Then, in January 2002, when the refurbishment work began, a commercial agent frequently used by SNC-Lavalin – Promotag SARL – started making deposits into that account.

Promotag, which had done work for SNC-Lavalin in Russia, Kazakhstan, Nigeria, Niger, Senegal, Algeria, Luxembourg, Chad, Guinea, Kenya and Mauritania, was at the time doing work for SNC-Lavalin in Algeria and Libya. According to the CBC report, the money was later moved – and additional payments made – to a second Swiss bank account opened by Fournier in 2002. The National Post reported that, by 2004, payments to Zorro and the second Swiss account operated by Mr. Fournier totalled $1.5 million.

CBC says Fournier – who was Prime Minister Jean Chretien’s chief of staff in his first year as party leader (1990-91) and was appointed to the FBC by the PM in 1998 – originally denied having a Swiss bank account. He later admitted that he had opened one for a family member in 2000 but had no knowledge of any of the activity in the account.

Seven years later, in 2009, Fournier transferred the money from the Swiss account opened in 2002 to an account he set up in the British Virgin Islands controlled by Flonast International Corp – an offshore company he created. When confronted by the Radio-Canada crew at his home in Victoria, Fournier at first denied having any knowledge of Flonast, but later admitted by phone that he had set up the company.

The allegations against Fournier are part of a larger investigation by Swiss authorities into the activities of former executives at SNC-Lavalin. The company’s former executive vice-president Riadh Ben Aïssa was arrested in 2012 on suspicion of fraud, money laundering and corruption and has spurred a much larger and wide-ranging investigation of the company’s executives.

Allegations of corruption against SNC-Lavalin led the World Bank to slap a 10-year ban on the company and more than 100 of its affiliates – an unprecedented penalty that has made Canada home to more debarred companies than any other country.

The allegations against Fournier and potential kickbacks from SNC-Lavalin were raised in the House of Commons last week. In response to questions on whether the government was going to act on the allegations, Jacques Gourde – Parliamentary Secretary to the Prime Minister, for Official Languages and for the Economic Development Agency of Canada for the Regions of Quebec – called the allegations, “serious” and “troubling” and said they would be investigated. He pointed out that Fournier was appointed by the previous Liberal government.

Brady Yauch is an economist at Probe International. 

Further Reading

Millions in ‘extras’ for federal bridge contract

Categories: Corruption

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