Beleaguered engineering giant SNC-Lavalin Group Inc. — which has been rocked by multiple corruption scandals in recent years — has appointed a new general counsel and has expanded the role to include formal oversight of ethics and compliance.
Taking on the position of executive vice-president and general counsel is Hartland Paterson, who is currently general counsel, chief compliance officer, and secretary at CAE Inc., a builder of flight simulators also based in Quebec. His term at SNC-Lavalin begins on Sept. 10.
In February, the RCMP charged SNC with fraud and corruption relating to allegations of bribery in Libya and ties to the former Gaddafi regime. The scandal prompted the departure of at least seven executives, as well as a shake-up in April in which former general counsel Réjean Goulet announced his retirement.
SNC spokesman Louis-Antoine Paquin has stated that Goulet’s retirement was unrelated to the RCMP charges, but analysts have expressed doubt over the matter. (Both Paterson and SNC-Lavalin declined comment for this story.)
David Taylor, president of IA Clarington — an investment firm that has amassed a sizeable stake in SNC — has publicly derided the company for having allowed Goulet to retain his position for so long. The appointment of someone with specialized ethics and compliance experience may signal an increased focus on the area at SNC-Lavalin.
In a press release, the company states: “Mr. Paterson will oversee both the Legal and Ethics & Compliance functions, in order to facilitate even tighter coordination and links between these complementary functions that work in tandem across all facets of the business.”
“This is a natural evolution as the company aligns with excellence and best practices in large, global and complex organizations. . . . Mr. Paterson brings both legal and ethics & compliance executive-level experience in Canada and internationally. . . .”
Enhanced compliance oversight can also be gleaned by a shift in organizational structure, with chief compliance officer David Wilkins and senior vice president of legal affairs Jean Eric Laferrière both reporting to Paterson.
Richard Stock, founder of Catalyst Consulting, which consults to law departments across the country, says the idea of formalizing the oversight of ethics and compliance under the general counsel makes a lot of sense for SNC, given the three years they’ve had.
“It may simply be that the compliance and ethics functions are already reporting to the general counsel at many companies across Canada, except that it hasn’t gotten the visibility. It’s a good idea for SNC and it makes an awful lot of sense for them.”
Stock also points out the emphasis on compliance may signal a greater investment in the area.
“It’s likely not just a shifting of the boxes on the organizational chart. In order to do this and be serious about it, they really need to invest some resources into it.”
It remains to be seen, however, whether the new general counsel at SNC will be given enough independence to execute meaningful compliance oversight. Paterson will report directly to president and CEO Robert Card, who has been given a broad mandate by the board to introduce anti-corruption best practices.
But Stock points out the chief ethics and compliance officer at any company needs a direct line to the chairman of the board; otherwise, the perception of corruption within managerial ranks may remain.
“The reporting line is critical, so there’s some independence to this,” he says. “Whether you also give this person a reporting line to the board for the compliance and ethics function is a really key question. If they report too low in the organization, they may feel hamstrung.”