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Canadian engineering giant SNC-Lavalin admits to political financing schemes

By: The Canadian Press

Posted: 03/14/2013 3:27 PM | Comments: 0 | Last Modified: 03/14/2013 6:58 PM

Pedestrians walk past the offices of SNC Lavalin, in Montreal, March 26, 2012. Canada's largest engineering company has admitted to participating in illegal political financing in Quebec. THE CANADIAN PRESS/Ryan Remiorz

MONTREAL - Canada's largest engineering company has admitted it helped raise money for Quebec political parties despite a three-decade-old law that makes corporate donations illegal in the province.

A vice-president at SNC-Lavalin (TSE:SNC) admitted to participating in such financing activities while testifying Thursday at Quebec's corruption inquiry.

Yves Cadotte said dozens of SNC executives, and sometimes even their spouses, donated just over $1 million to the Quebec Liberal party and the Parti Quebecois between 1998 and 2010. A small majority of that cash went to the Liberals, although the PQ got nearly 50 per cent of the amount.

He said executives would get company bonuses after they donated, with the amount of the bonus greater than the donation amount.

It has been illegal since the 1970s for companies to make political donations in Quebec, although the law was tightened in 2010 to crack down on companies that reimbursed people for making endorsements.

In a tense exchange, Cadotte was told by a commission lawyer he was breaking election laws and was asked whether he was aware it was illegal for companies to donate.

Cadotte replied yes.

But he said it was the political parties that came to solicit the money. He said the parties would even set fundraising targets for his company.

SNC-Lavalin received 550 contracts, worth $247.5 million, from Quebec's Transport Department between 1997-98 and 2011-12.

Cadotte said he didn't believe the donations helped get public contracts. On the other hand, he said the company was afraid of what would happen if it didn't donate.

"That's the dilemma: not contributing would be a risk that is perhaps intangible," he said. "Maybe there is no (consequence), but in our mind it's a risk we don't necessarily want to take."

SNC reacted swiftly to deny that its vice-president had admitted the company's guilt in participating in an illegal fundraising scheme.

The company said there was no actual admission of illegal activity.

It said its legal department, like those of other companies, believed that it was respecting the letter of the law as it existed before changes adopted in 2010.

"Mr. Cadotte did explain that we stopped this practice in 2010 when the law was made more explicit," company spokesman Leslie Quinton said. "We don't consider that Mr. Cadotte made an admission that what the company did was illegal."

The company has been mired in corruption scandals at home and abroad, and high-ranking former figures now face criminal charges.

But this is the most detailed account of SNC-Lavalin's political activities, to date, at the Quebec inquiry. Cadotte also described Thursday how he pumped cash into Montreal's long-ruling municipal party, which is now disintegrating.

It's unclear whether the company engaged in such practices in the rest of Canada or at the federal level.

The Charbonneau inquiry is only focusing on corruption at the provincial and municipal level in Quebec — and will not touch on politics in Ottawa or other provinces.

The company has issued a statement saying it is co-operating with the inquiry and trying to provide the information being sought.

SNC also says there's an internal investigation into the events Cadotte described, and the company will have no further public comment in the meantime.

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