SNC-Lavalin Group shouldn’t be surprised it’s being hit with corruption and fraud charges against its companies given the breadth and depth of the alleged activity, says one lawyer who has led clients through corruption charges before.
Last week, the RCMP announced it was laying charges against SNC-Lavalin Group and some of its units in relation to its operations in Libya.
A statement from the RCMP said it had charged SNC-Lavalin, SNC-Lavalin Construction Inc., and SNC-Lavalin International Inc. with offering $47.7 million in bribes to Libyan officials between 2001 and 2011.
It also charged the three companies with defrauding Libya of $129.8 million over the same time period.
SNC said the charges were without merit and that it would vigorously defend itself and plead not guilty.
“The charges stem from the same alleged activities of former employees from over three years ago in Libya, which are publicly known, and that the company has co-operated on with authorities since then,” said SNC chief executive Robert Card in a statement.
SNC’s former chief executive, Pierre Duhaime, resigned in 2012 following the discovery of $56 million in missing funds and was later arrested. He was among several executives accused of fraud and other criminal offences in a scandal that stretched from Montreal to Tripoli.
The company said if charges are appropriate, they should be applied against the individuals in question and not the company.
“I’ve been very interested to see, in the coverage to date, that there seems to be some degree of surprise that SNC corporately was charged and there have been some writings that have started to stir the debate over whether or not corporate charges are appropriate in these circumstances or not,” says Kristine Robidoux, a partner with Gowling Lafleur Henderson LLP in Calgary.
Robidoux was the lawyer who represented Griffiths Energy International in 2013 when the company was fined $10.35 million on a corruption charge for bribing the ambassador for Chad.
That company did its own investigation and came forward with a voluntary disclosure, all factors that led to an outcome of a fine that was five times the amount of the original bribe.
So what could be the potential fine be against SNC? There is no maximum described in the Criminal Code and the closest precedent is the Griffiths case.
“They had the model reaction of voluntary disclosure and ended up with a fine that was a multiple of five of the bribe. Apply that multiple to the $48 million SNC has alleged to have paid in one country and you see the potential,” says Robidoux.
The Criminal Code provides that criminal liability is attributed to the company for the actions of a senior officer if that senior officer acted at least in part to benefit the organization.
“While I have no doubt that SNC will mount a rigorous defence to this, I find the statement that the charges are wholly without merit to be a bit of a difficult one for them to make,” says Robidoux. “A senior representative of the company has already admitted to engaging in the wrongdoing at least in part to benefit the corporation.”
Last August, former SNC-Lavalin executive Riadh Ben Aissa signed a deal with prosecutors in Switzerland on charges of money laundering, fraud, and corruption.
“There may be an excellent triable issue such as Riadh Ben Aissa may not satisfy the definition of senior officer in the Criminal Code or he did not act even in part to benefit the organization,” says Robidoux.
“If either are accepted by the court, then criminal liability is not attributed to the company and they are not guilty, but the term senior officer is very broadly defined.”
The definition includes someone who has an important role in the establishment of the company’s policies or someone responsible for managing an important aspect of the organization’s activities. In past cases, individuals with titles such as vice president, country manager, sales manager, and regional sales manager have satisfied that definition.
“I think from a legal perspective there is a very tough road ahead for SNC,” says Robidoux. “From a philosophical and policy perspective is where I think the argument gets really interesting. Essentially, they are saying they have paid enough of a price.”
Robidoux says she views the ethics and compliance program put in place by SNC since the scandal first broke as being “gold standard,” but that doesn’t mean it should evade corporate charges.
“Any organization that is caught having engaged in this kind of activity we should expect they would take remediation seriously. Since they have done that, should it be a reason to back off on charging the corporation? That’s where the interesting policy discussion comes into place.”