Canada is sporting a black eye these days in international construction circles on account of SNC-Lavalin's reputation for bribing public officials. The deeper the police dig into the engineering and construction firm's records, the more signs they are finding of slipshod financial management.
The state of SNC's reputation was crystallized in mid-April when the World Bank, the Washington, D.C.-based agency that finances large-scale projects in developing countries, banned the firm from its projects for the next 10 years. The ban was the result of a negotiation in which SNC agreed not to contest charges it had attempted to bribe public officials in Bangladesh and Cambodia. Police are also investigating the firm's payments to public officials in Libya and Montreal.
SNC appointed a new chief executive officer, Andrew Card, and a new board chairman, Ian Bourne, to clean up the firm's act. They have created a new compliance department to stop the executives from offering bribes and robbing the company. If the firm can no longer win contracts through corruption, it may have to compete on price and skill -- and there is no telling how it will perform in that context.
The company's public discourse these days is all about how it has reformed itself and put the old scandals behind it. But the World Bank's 10-year ban expresses legitimate skepticism about how quickly this leopard can change its spots. SNC is a huge organization, reporting $8 billion of gross revenue in 2012. The corruption charges the firm is not contesting involve conduct of senior executives. It is reasonable to suppose that their conduct, continuing over many years, reflected to some extent the wishes of their masters and the culture of the organization. Mr. Card and Mr. Bourne face the daunting task of changing that organizational culture and teaching all their people a new way of making money for the shareholders.
All Canadians should wish them well. SNC has been a huge, proud Canadian presence in the hydro-electric stations, the highways, the power transmission systems, the bridges, the complex construction sites of the world. It has given this country a capacity to manage and complete ambitious undertakings, both for the benefit of the professionals who do the work and for the users. Canada will be the poorer if SNC proves unable to compete and has to curtail its activities. Canadian governments may then have to call in firms from other countries to manage their most difficult projects.
Information about the skulduggery at SNC is coming out in dribs and drabs as the Royal Canadian Mounted Police sift through the records and interview witnesses. Most recently, the RCMP won a Quebec court order freezing some Montreal houses and condominiums on the basis that they appear to be proceeds of crime. The police theory is the SNC executives who were paying the bribes overseas skimmed some of it off for themselves and invested the proceeds in real estate. The firm's financial records are so obscure it is hard to follow the trail. It is also hard to tell how much the top management knew about the bribery and diversion of funds that was apparently being carried out under their noses.
For the benefit of Canadian business, the full story of SNC and how it went off the rails needs to be told. In the tradition of Canadian criminal prosecutions, it is possible a few people will plead guilty to subordinate matters such as tax evasion so that there will never be a criminal trial or a public airing of the prosecution's case and the defence answer. That result would leave Canadians guessing who did what to whom and who paid for it and would pave the way for another great Canadian institution to blunder into a similar ethical morass. The greatest public good will be served by the greatest public disclosure of the SNC story.