Blogs & Comment

The real lesson from Gwyn Morgan’s SNC experience: Duncan Hood

A failure of responsibility.

SNC Lavalin chairman Gwyn Morgan (Photo: Frank Gunn/CP)

SNC Lavalin chairman Gwyn Morgan (Photo: Frank Gunn/CP)

To many who follow business in Canada, Gwyn Morgan is a hero. After all, he represents everything that is good about commerce in this country. The youngest of four children, he somehow clambered up the rickety ladder from a modest childhood on a small dusty farm near Carstairs, Alta., to become the founder and CEO of EnCana, which was, at the time of his tenure, one of the largest and most successful corporations this country has ever seen.

Even more impressive, throughout his journey Morgan has been a strong moral force in Canadian business. His columns and speeches preached a gospel of honesty, hard work and integrity. And it wasn’t all talk: in 1999, he resigned as chairman of the Alberta chapter of the Canadian Olympic Foundation to protest corruption within the International Olympic Committee.

How sad, then, to see his career end like this. It was bad enough he was chairman of the board at SNC-Lavalin during the firm’s recent corruption scandal. It was much worse that he penned an explanation in The Globe and Mail in which he took absolutely no responsibility for what happened.

In the piece, titled “Lessons I learned from SNC-Lavalin’s woes,” he takes a lecturing tone, distilling his own experience to offer sage advice to others. He admits there was wrongdoing at the Montreal-based company, which was caught up in a corruption scandal involving $56 million in improper payments, leading to the departure of CEO Pierre Duhaime (who was subsequently charged with fraud). But Morgan claims the board had absolutely no knowledge of the problems, and seems to minimize the extent of the rot, suggesting that “the company may have been the victim of embezzlement by two trusted, long-time executives.”

He doesn’t use these words, but the general message is: “Think you were appalled by what happened at SNC? Imagine how I felt!” Nowhere does he acknowledge that one of the board’s primary responsibilities—one of his primary responsibilities—was to detect and prevent exactly this kind of disaster.

There are many minor points one could quibble with in Morgan’s article. For instance, he asks if the board could have done more to detect the wrongdoings, but then excuses it by noting that “when a small number of people deliberately set out to falsify documents, commit bribery and cover up theft, it can be exceedingly difficult to detect.” He does not mention that, as first reported by the CBC, the company’s directors did, in fact, receive an anonymous letter more than a year earlier outlining serious allegations, including that payments were being funnelled through shell companies to the Gadhafi family in Libya.

So what’s the real lesson from Morgan’s SNC-Lavalin experience? In my mind, it is that corporate corruption and scandal will continue for exactly as long as the people at the top fail to take responsibility for it. As chairman, Morgan was one of the most influential and powerful forces at SNC. When he fails to claim responsibility for the fraud and corruption that took place on his watch, in my opinion, he is enabling it.

There are plenty of board members at other corporations who seem to take their responsibilities more seriously. If the companies they presided over collapsed into a scandal like the one at SNC, they would take at least some of the blame. Given his impeccable record and strong moral compass, I used to think Gwyn Morgan was one of those guys. I guess I was wrong.

Duncan Hood is the editor of Canadian Business.