MONTREAL – Quebec’s health minister has rejected a lawsuit filed Friday by an SNC-Lavalin consortium seeking $330 million for extra costs to build and manage a big Montreal hospital at the centre of bribery allegations involving a former CEO of the engineering and construction firm.
“We will not pay one penny above what is justified,” Gaetan Barrette said in an interview.
The minister said the government is willing to pay more for unexpected expenses that are part of any large project, but nowhere near the amount being sought by McGill Healthcare Infrastructure Group (MHIG), which includes SNC (TSX:SNC) and Innisfree Ltd.
The group is seeking compensation for additional costs beyond its $1.34-billion contract to design and build the $3.65-billion health-care centre. The so-called “superhospital” opened last year, replacing several other hospitals, which were closed.
The lawsuit also includes present and future costs related to managing and maintaining the hospital complex through September 2044.
Named in the lawsuit is the McGill University Health Centre (MUHC) which runs the hospital and the Quebec government, which contracted the project under a public-private partnership arrangement in which MHIG financed, designed, built and maintains the sprawling facility.
The consortium said an agreement with the MUHC entitles it to compensation to cover additional work requested. The consortium said the hospital made many changes to expand the project, failed to provide timely information and misused a review process.
They include adding a sterile core to the operating area and expanding the central pharmacy that results in the building being five square metres bigger than originally planned.
Late changes also forced the demolition and reconstruction of walls, changes to install mechanical-electrical systems and delays in finishing work, said the claim.
“MUHC abused its position of strength under the agreement to force (the consortium) to agree to perform all its demands for variations and enhancements without paying the compensation it was entitled to receive, ” the 30-page statement of claim states.
“MUHC behaved throughout all phases of the project as though it had every right but no obligations and MHIG had every obligation, but no rights.”
The SNC-Lavalin group said it launched the lawsuit after about two years of unsuccessful negotiations.
The MUHC declined to comment, referred questions to the government.
Barrette said the consortium has a right to seek payment, but a doubling of the value from $172 million presented a couple of years ago was an “obvious tactic” to try and get somewhere near its original claim.
“In our view, there are justified amounts which are way, way lower than what is demanded in their lawsuit and way lower than what was demanded previously at $172 million,” he said, refusing to indicate what the government considers justified.
Crown prosecutors allege former SNC-Lavalin executives paid a $22.5-million bribe to a former MUHC chief executive to obtain the contract. That case is still before the courts.