Companies & Industries

SNC-Lavalin's problems just beginning

Behind closed doors, fraud and corruption have long been tolerated in Canada, especially when it takes place overseas.

Recently I turned on the nightly news and let out a silent cheer. There was Pierre Duhaime, former CEO of global engineering firm SNC-Lavalin, caught in that most embarrassing of situations, the perp walk. Half a dozen cameras clustered on the sidewalk outside the Montreal police headquarters to capture a fallen titan gamely striding to his car, his black nylon jacket zipped all the way up to the bottom of his nose.

I wasn’t cheering because I have it in for Duhaime (who has been charged with—but not convicted of—fraud, conspiracy to commit fraud and the use of false documents in association with an SNC project to redevelop the massive McGill University Health Centre). Nor am I happy to see one of Canada’s pre-eminent corporations embroiled in scandal. What I am glad to see, however, is that Canada is finally taking a stand on fraud and corruption.

When you look at the SNC-Lavalin scandal together with the astonishing testimony of the Charbonneau inquiry—which has already resulted in the departure of the mayors of Montreal, Laval and Mascouche—it’s tempting to conclude that corruption is running rampant. But the opposite is happening. The sudden deluge of allegations is not a symptom of the disease, but a sign of the cure.

The truth is, behind closed doors, fraud and corruption have long been tolerated in Canada, especially when it takes place overseas. As a nation, we actually have a bit of a reputation for turning a blind eye. Don’t believe me? Consider that for years the Organization for Economic Co-operation and Development (OECD) has been pleading with Canada to crack down on bribery in foreign countries. For the past eight years, we have been the only G7 country on their list of off enders with “little or no enforcement” of corruption laws. Canadian companies have been operating in some of the most corrupt countries in the world for decades, but guess how many successful prosecutions there have been under foreign bribery laws in the history of our nation. Twenty, you say? Fifty? The surprising answer is…two. Countries such as the U.S., Germany, even Italy of all places, have been cracking down, according to the OECD, while we looked the other way.

That seems to be changing, and fast. The RCMP now has more than 30 ongoing investigations into violations of Canada’s Corruption of Foreign Public Officials Act. The charges against Duhaime are not related to bribery overseas (they concern a project in Montreal), but it is worth noting that SNC-Lavalin first caught the attention of the RCMP just over a year ago due to an investigation into—guess what?—foreign bribery. I understand that when Canadian companies are operating overseas, they often have to adapt to a legal and cultural framework that makes the folks back home uneasy. But the legislation we have concerning bribing foreign officials is now clear, and it’s actually much more lax than the laws under which the U.S. and much of Europe operate. If we don’t take the few regulations we have seriously, we’re basically telling businesses they can do anything they want.

Completely ignore corruption, and it starts to spread like a virulent disease. Start cracking down, however, and everyone falls in line surprisingly quickly. Stay tuned, because this isn’t over yet. With more than 30 investigations underway, I have a feeling that Canada’s two foreign bribery convictions will be joined by several others soon. It’s going to be messy, but the majority of businesses in Canada are honest. As a nation, we have nothing to lose and a lot to gain.

Duncan Hood is the Editor of Canadian Business magazine.