Front Burner - A widening scandal and SNC-Lavalin's history of alleged corruption

Episode Date: February 13, 2019

With Jody Wilson-Raybould's resignation from the Liberal cabinet, the scandal involving SNC-Lavalin and the Liberal government continues to grow. CBC investigative reporter Dave Seglins guides us through the troubled history of the engineering company that's at the heart of the political firestorm.

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Uncover, bomb on board. Investigating the biggest unsolved mass murder in Canada, CP Flight 21. Get the Uncover podcast for free on Apple Podcasts and Google Podcasts. Available now. Hello, I'm Jamie Poisson. Available now. and the Liberal government. Jody Wilson-Raybould is resigning her position in Justin Trudeau's cabinet. She's quit Justin Trudeau's front bench in the wake of the SNC-Lavalin controversy. The move follows last week's report that in her post as justice minister, she was pressured by the prime minister's office. In a letter, Jody Wilson-Raybould announced that she's leaving the Liberal cabinet

and that she's seeking advice from a former Supreme Court judge about whether she can answer a growing list of questions. Questions like, was she in fact pressured by the Prime Minister's office to settle a case involving engineering giant SNC-Lavalin? And if so, was she shuffled out of her role because she wouldn't? Today, we're going to get you caught up on this story and try to add some context around why exactly SNC-Lavalin is in court now and why they've ended up there in the past. This is FrontBurner. I'm going to be talking to CBC's Dave Seglins in a second. He's covered SNC-Lavalin for years.

But first, a couple of things I want to go over. SNC-Lavalin is a global engineering firm based in Montreal. It builds transit systems and hydroelectric projects. Right now, the company is fighting a fraud and corruption case in connection with nearly $48 million in alleged bribes made to Libyan government officials between 2001 and 2011. And a new law in the criminal code could allow SNC to strike a deal by admitting guilt and paying a fine. It's called a Deferred Prosecution Agreement, or a remediation agreement.

And it's at the center of this whole scandal involving Jody Wilson-Raybould, SNC, and the PMO. Okay, so how did this end up in court in the first place? Let's get to Dave Seglins. Hi, Dave. Hi there. Today we're talking about some reporting that you started to do in 2012. And I understand a key moment for you happened on a ski hill? Well, yeah.

So let me back up even from that. I was assigned to cover this bizarre little story. The assignment desk said, look, there's a Canadian woman who has been arrested in Mexico. And it's some bizarre allegation that she was trying to smuggle a member of the Gaddafi family out of Libya, which was falling and in the midst of civil war and UN sanction. And to smuggle him to a life in hiding along with his family with fake passports. And she'd been arrested in Mexico. So we looked into it and we put a story out there. And our email addresses were attached to that

story. Always helpful. And ding, ding, it was late one night, January 2012 on a weekend, an email appears in my inbox and it is from an anonymous email service in some broken language that I later find out has been sent through Google Translate several times into different languages. But the message is this.

I am contacting you because Cindy Vanier, the Canadian woman you wrote about, is trapped in the middle of an international conspiracy involving the Canadian engineering giant SNC-Lavalin. the Canadian engineering giant SNC-Lavalin and actions by senior executives that have been so cozy with the Libyan regime, the dictatorship that's falling, that has involved criminal activity, laundering of hundreds of millions of dollars on behalf of the Gaddafi regime. These are the allegations in this email that arrived to me on a Saturday night. And then it says, if you would like to learn more, you will be on such and such a ski hill in such and such a place in Quebec, and this individual will tell you more. I instantly call my reporting partner

and our editors and go, what do you make of this? There was so much specificity in this particular email that we were so intrigued, we thought, You gotta go. You gotta go. You gotta go.

So the next morning at 5 a.m., jump on a flight, jump in a rental car, jump into rental skis, get to the Midway station out of breath. And there is the guy in the specially colored spider ski suit. And he says, follow me. And we ski off down the hill to the side. We learn that this guy is a senior executive at SNC-Lavalin.

And what progresses through the course of that afternoon is allegations. He says there are some senior executives that have knowingly been bribing and benefiting this public company that has become so corrupt. And now that Libya is falling, this is, keep in mind, 2011, 2012, there's a war going on there. It is all coming unraveled. So we take all of this, we catch our breath, can't believe what we're hearing. And we said, look, we need proof. And what do you find out about what this company is allegedly doing in Libya? Well, this is a massive engineering firm that works all over the world, looks for contracts in developing areas,

often partners with things like the World Bank and other granting agencies. In Libya, they're very closely aligned and very close friends with members of the Gaddafi family, one of the sons in particular. Saudi Gaddafi loved the rich life, but according to the RCMP, it was paid for by a Canadian company. Winning contracts for portions of a massive underwater tunnel system, it was an irrigation project. They're involved in building airports.

They're involved in building a prison there. What we learn subsequent is that the executive vice president of construction, Riyad Benessa, was so close to the regime, he was arrested shortly after the beginning of our reporting in Switzerland. CBC News has learned that Swiss investigators are looking at a decade's worth of SNC payments tied to its work in Libya. He was held there. He pleaded guilty to bribery and fraud and money laundering to the tune of tens of millions of dollars. Riyad Ben Asa served two years in a Swiss jail for bribery and corruption in Libya. All paying off members of the Gaddafi

family to win these billion-dollar contracts for SNC-Lavalin. And it didn't stop in Libya. So I want to get to allegations that this was happening elsewhere. But first, in 2015, the RCMP laid these charges against SNC-Lavalin, and they have to do with allegations of corruption in Libya. The RCMP has charged the Canadian engineering giant SNC-Lavalin with fraud and corruption. And is this all the same thing that we're talking about? It's very similar, but it's a much larger scale. And it is no longer about Riyad Ben Asa, the singular executive. It's about the company. And the allegations are bribery to the tune of $48 million. The allegation is the

company knowingly bribed members of the Gaddafi regime to win these contracts and also fraud on the people of Libya because $130 million apparently was siphoned off through this process. And the company's being held to account for that. This is all under the Corruption of Foreign Public Officials Act. Canada has been something of a leader in signing on to international agreements that say companies can no longer do this with impunity in other developed parts of the world. Those rules started to kick in in the early 2000s. What we know from the SNC case is that the allegations that Riyad Benesa in Switzerland pleaded guilty to, some of these things were happening back in the 1990s. So if I'm to read this properly, it appears that the company had a pattern of doing business.

And when the laws changed in Canada that said, you will be held accountable for doing that if you're caught, it appears that things continued in the same manner. And now the RCMP has laid charges against the company, which is a big disaster. This is, of course, at the center of this political firestorm involving the prime minister's office and the former attorney general and justice minister, Jody Wilson-Raybould. Absolutely, because if there is a criminal conviction here in Canada against SNC-Lavalin, they will be banned from bidding on domestic contracts, which in our calculation, about four or five years ago, we looked at this.

SNC-Lavalin, we believe, had about $5 billion worth of federal contracts over the course of 10 years. With Canada. With Canada. So no wonder that the company is number one lobbying.

Is there a different way to do this? Going to the political masters. Bob Fyfe is the Globe and Mail's Ottawa Bureau Chief. They've 50 times had gone to people in the government, 14 times in the prime minister's office. They spoke to Gerald Butts, Mr. Trudeau's principal secretary, the most powerful person in the prime minister's office. And so let's get into that record, this history of alleged corruption with SNC-Lavalin. So let's start with Bangladesh.

Padma Bridge, it is a massive infrastructure project. It was valued at $3 billion. The Padma River multi-purpose bridge was to provide a desperately needed road and rail link across the six kilometer wide river that cuts Bangladesh in two. In the bidding there were a number of competing companies. The allegations are that members of the bidding team with an arm of SNC which was SNC International went there were willing to make payments and offered to make payments to members people with ties to the government with the selection process, but were caught.

Now, the World Bank pushed that investigation. The World Bank has pulled out of the project to build Bangladesh's largest bridge, citing corruption charges. The World Bank is cancelling a $1.2 billion line of credit. The RCMP would later charge a few people here in Canada, but that case all fell apart. And at the end of the day, that case was withdrawn domestically. But SNC still pays the price for the Padma project and the allegations of bribery there because they've been banned from bidding on World Bank projects for 10 years. So SNC's international operations get curtailed significantly there.

So is it fair to say that there was this widespread pattern of bribery from this company across the developing world? It's hard to paint with such a wide brush, but there are certainly more than one or two bad apples. There are lots of good employees at the SNC-Lavalin,

some of whom came to us on a ski hill, reaching out, trying to pierce through and say, look, this is not the way we want our company to be run. But there were certainly large pockets. And for years, the company was making profits off of these illegitimately won contracts. We'll be back in a second. the world already have. Audible has Canada's largest library of audio books, including exclusive content curated by and for Canadians. Experience books in a whole new way, where stories are brought to life by powerful performances

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of the Audible membership are free, including a free book. Go to www.audible.ca slash cbc to learn more. I know that there have also been allegations domestically of corruption involving SNC-Lavalin. Can we go to Montreal? Well, we can go to Montreal, but on two points. Number one, many people may have heard of the super hospital that was built. We know that immediately after the Libya thing was exposed, there were charges laid against a couple of executives, including the former CEO, who just recently pleaded guilty to one count of breach of trust. Quebec's anti-corruption squad arrested Duhaime

in 2012 on fraud charters related to the $1.3 billion contract. Today, Duhaime admitted to turning a blind eye to illegal payments made by his company in order to win the contract. 14 other charters were dismissed. Now, he made no omissions about what he did or didn't know as to where that money was going, but it was a conviction, at least in that case. For this super hospital in Montreal, what does SNC say? Well, SNC has long said that the people involved were rogue actors. It was unauthorized and they've since, you know, gotten rid of them. Now, that's one story. But there's a second story where there has been a conviction here in Canada.

It's lesser known, but the Jacques Cartier Bridge in Montreal needed revamping. There was a former liberal insider, a Chrétien-era chief of staff, a man named Michel Fournier. I never receive any money from SNC-Lavalin, ever, ever. Fournier is serving five and a half years in prison, having pleaded guilty to accepting 2.3 million dollars funneled from SNC-Lavalin through Swiss bank accounts for awarding the Jacques Cartier Bridge redevelopment to SNC-Lavalin. So this is a second massive project here in Canada where money's being paid to officials,

contracts are being granted, and people are profiting personally for this kind of bribery. I do want to get a sense of what's happened to the company in recent years, because to be fair, these allegations, they don't stem from recent years. Well, some of them within the last decade, for sure. But fair enough, there has been a lot of change at SNC-Lavalin. Instantly, they brought in outside advisors. They changed their CEO. It's been two CEOs, I believe now. And so there has been a recognition that what went on with some of these people was not right. So there's been an internal house cleaning and lots of checks and balances.

And SNC-Lavalin has been recognized for its new internal controls and accounting and anti-corruption measures. The company has self-remediated in so many different ways. We've changed the board, we've changed the management. All of the alleged bad actors of all left of business. But what is hanging over it is the legacy of the decades of profiting in various parts of the world, but specifically in this legal case against the company that is so dire for its prospects, is what happened in Libya. Here's what I want to talk to you about.

Because SNC-Lavalin had been lobbying hard for this remediation agreement, sort of a plea deal so that they could pay a fine and make some whole, you know, if these changes have been made at the company and if the original players who are alleged to have done wrongdoing are no longer there, by charging this company and pursuing a criminal case, who could it potentially hurt in the end? It could hurt all sorts of people. And SNC-Lavalin has been out in front saying so. When the public prosecution service went public last October saying, look, we are going to push ahead. There will be no deal. SNC doesn't fit the criterion for a settlement agreement. SNC said, look, we strongly disagree. And they say they remain open and committed to trying to reach a deal in the interest of its employees, its partners, its clients, its investors, pensioners and other stakeholders. All innocent parties, they say, to the events that have transpired over the last six years.

Shareholders, pensioners, supply chain, not the people who actually caused this problem in the first place. So those are people who can be hurt. And so what would be the argument on the other side for the prosecution of the company? I think there are a lot of people that have watched the SNC case. Some of the prosecutions against the individuals, number one, haven't been successful. Number two, not all of the executives who knew what was going on, in my view and my guesstimation, have been held to account. in my view and my guesstimation, have been held to account. So by targeting the company, it's certainly a broad way of sending a very strong message. What we have seen in the pattern of behavior, whether it's the Montreal Hospital, the bridge, Libya, Bangladesh, all of those other

places across Africa, is it sufficient for all the profits that were made to simply have a fine? Or should the company have to suffer a 10-year banishment from bidding on federal contracts? Now, what does that look like? I don't know. I'm not a business expert. But it would most likely mean that the company would either dissolve into parts or be bought up by some other interest. Perhaps a foreign interest. So we would lose it as a Canadian company.

Absolutely. Quite possibly. So there's arguments on both sides. I don't know what the right answer is, but I think if ever there was a case in Canadian corporate history that deserves to have a thorough examination and probably the strictest meeting out of the justice system that the courts will allow, I think this is one,

because they've been caught widely participating in this kind of behavior. Dave, thank you so much. Thank you. Late Tuesday afternoon, Prime Minister Justin Trudeau addressed the resignation of Jody Wilson-Raybould. He said he was, quote, surprised and disappointed by her decision. This resignation is not consistent with conversations I had with Jody a few weeks ago when I asked her to serve as Canada's Minister for Veterans Affairs and Associate Minister of National Defence, nor is it consistent with the conversations we've had lately. When it came to SNC-Lavalin, Trudeau said the government had done its job and met standards

expected of it. If anyone felt differently, they had an obligation to raise that with me. No one, including Jodi, did that. We're going to keep on this story, so I really hope you'll stick with us. That's it for today. I'm Jamie Poisson. Thanks for listening to FrontBurner. For more CBC Podcasts, go to cbc.ca slash podcasts.

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