MONTREAL — SNC-Lavalin is turning another page on its sullied past with a deal to settle corruption allegations in two African countries in a move it hopes could provide a formula to resolve problems in Canada.
Under the deal, the company has agreed to pay $1.5 million and accept certain conditions to settle a corruption case filed by the African Development Bank Group, both the bank and SNC said Thursday.
The regional development bank said the settlement resolves allegations, which SNC didn’t contest, that former employees of SNC-Lavalin International Inc. ordered illicit payments to public officials to secure two contracts.
The development bank said one of the contracts was awarded to SNC (TSX:SNC) in October 2008 to supervise construction of a road and bridge in Mozambique. The other was awarded in 2010 to supervise a road upgrade in Uganda.
“The sanctions imposed under the settlement agreement reflect the level of co-operation provided by the company in the investigation of the matter,” said Anna Bossman, director of the development bank’s anti-corruption department.
In addition to the monetary penalty to support anti-corruption initiatives in Africa, SNC has agreed to meet certain undisclosed conditions for two years and 10 months. The settlement means the subsidiary won’t be barred from bidding on future contracts in the two countries. No other SNC subsidiaries will be sanctioned.
In 2013, the World Bank suspended SNC-Lavalin International and more than 100 affiliates from bidding on projects it finances for up to 10 years over allegations of bribery in Bangladesh and Cambodia.
Outgoing SNC-Lavalin CEO Robert Card said the African settlement demonstrates that companies “can engage in a constructive dialogue and find effective means to reward remediation while allowing companies to move forward.”
SNC-Lavalin wants Canada to adopt a similar model used in Britain and the United States that allows it to pay a fine but spares companies trials that could prevent convicted firms from bidding on government contracts.
The Montreal-based company will appear in court Oct. 16 for a criminal fraud case filed in Canada. The RCMP alleges that SNC-Lavalin paid nearly $47.7 million to public officials in Libya between 2001 and 2011 to influence government decisions.
It also charged the company, its construction division and its SNC-Lavalin International subsidiary with one charge each of fraud and one of corruption for allegedly defrauding various Libyan organizations of about $129.8 million.
SNC has said it will plead not guilty and that the charges stem from alleged activities of former employees who face criminal charges.
If convicted, SNC-Lavalin could be banned from bidding on Canadian government contracts for 10 years under Ottawa’s so-called integrity framework. However, the federal government has moved to reduce penalties if companies co-operate with authorities and take remedial action. But SNC-Lavalin says the government’s changes don’t go far enough and are out of step with Canada’s trading partners.
Analyst Maxim Sytchev of Dundee Capital Markets said the Africa settlement was a small step in a lengthy process by SNC to clean up its operations and deal with issues of the past.
“If the company is not being debarred from foreign jurisdictions I believe the probability of them being squeezed by Canada is diminishing as we speak,” Sytchev said.
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Ross Marowits, The Canadian Press
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