Winnipeg Free Press - PRINT EDITION

SNC's new reality

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The arrest of the former head of Canada's largest engineering firm,

SNC-Lavalin, on charges of fraud, conspiracy to commit fraud and using forged documents is startling. More startling is just who and what is apt to be caught in the net of misconduct ensnaring SNC.

Former CEO Pierre Duhaime, who abruptly resigned from the engineering giant in March, faces charges related to $22.5 million in alleged improper payments to agents -- some of whom may or may not exist -- to win construction contracts related to the $2.3-billion redevelopment of Montreal's McGill University Health Centre. Ex SNC vice-president Riadh Ben Aissa, Duhaime's colleague of 20 years, faces the same trio of charges.

SNC-Lavalin is working hard to distance itself from its two former executives, emphasizing any wrongdoing is the work of employees no longer with the company.

This isn't just a public-relations rearguard action. The corporate entity that's SNC-Lavalin has good legal reason to try to divorce itself from the acts of its former executives because it, too, will likely face criminal charges arising from their activities.

Amendments to Canada's Criminal Code over the last decade have made it easier to prosecute corporate misconduct. Until recently, finding a corporation criminally responsible for the acts of its officers involved invoking the hoary common-law concept of a corporation's "directing mind." To attach criminal liability to a corporation's acts, they had to be traceable to its directing mind. But defining a corporation's directing mind was fraught with technical difficulties for prosecutors.

In 2004, however, the Criminal Code was amended to apply a wider concept of corporate criminal liability. Broadly speaking, the old directing-mind concept was junked in favour of a framework that attributes the criminal acts of any senior officer to the corporation. These less restrictive rules make charges more likely and increase the odds of the Crown winning a conviction.

SNC-Lavalin's very public disavowals of its former executives' actions disclose it knows it's up against the new reality of prosecution of corporate misdeeds.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition December 3, 2012 A10

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