World Bank is ‘engaged’ with SNC
MONTREAL • The managing director of the World Bank Group says SNC-Lavalin Group Inc’s efforts to overhaul ethics policies and restructure leadership have not gone unnoticed as the international financial institution tries to fill a more than $1-trillion need for infrastructure in developing countries.
“We are engaged with them and we have discussed with them, but the situation is what it is. The position is official: they’ve been debarred,” said World Bank chief financial officer and managing director, Bertrand Badré, in an interview during the International Economic Forum of the Americas in Montreal.
SNC-Lavalin and more than 100 of its affiliates continue to serve out a 10-year ban from bidding on World Bank Group projects, following investigations into allegations of bribery schemes involving officials in Bangladesh.
“They don’t ignore the situation and the new CEO and the team are very much focused on addressing the issues from the past,” Badré said.
In April 2013, the World Bank announced that 115 companies representing SNC-Lavalin and its subsidiaries would not be able to participate in the group’s projects, while the remainder of SNC’s affiliates also face being banned from World Bank projects if they do not comply with certain undisclosed conditions.
The debarment can be reduced to eight years if the companies comply with all conditions of the agreement.
“We cannot change the world with a silver bullet but we can impact behaviours, we can set standards and we can impact the way people do business,” Badré said.
“We have a very important leadership role in setting standard practices.”
SNC’s ban continues at a time when the World Bank is trying to help meet a massive global demand for infrastructure, with some Canadian help.
In late 2014, the World Bank launched the Global Infrastructure Facility, a program to give institutional investors access to the upwards of $1 trillion in projects needed in developing nations every year through 2020.
“One of the things we are facing is that there is still a limited appetite of institutional investors in advanced economies to put their money at risk in emerging and developing markets, in particular in infrastructure,” Badré said.
The global infrastructure initiative is supported by asset management and private equity firms, pension funds, banks and governments from around the world.
Badré said Canadian institutional investors are punching above their weight when it comes to bridging this gap, with the Caisse de dépôt et placement du Québec, the Canadian Pension Plan, Desjardins Group and the Ontario Teachers’ Pension Plan being among the world’s most “advanced” organizations of their kind.
He said even though these Canadian institutions are relatively few in number, they have a significant amount of experience to offer.
“They are very interesting, very sophisticated, and they think global, which is not that frequent,” said Badré.
“That’s why our relationship with Canada is relatively deep.”
Although the World Bank has a “healthy competition” with the recently founded Asian Infrastructure Investment Bank (AIIB), Badré said he believes that, even with the billions offered by the China-led project, funding won’t come close to meeting global needs.
As of April, almost all Asian countries and most major countries outside Asia had joined the AIIB, with notable exceptions being the U.S., Japan and Canada.
“Even AIIB will not bridge the $1-trillion gap. So I think if we are serious and consistent with our analysis, we have to say there is room for people and we have to work as a system of institutions doing the same job and basically sharing the same risk and the same approach,” Badré said.
“I met with (the AIIB) and my team is engaged with them. We’ve been in this business for 70 years, so we have learned,” he said. “We’ve made great things, and we’ve also had some failures. So if we can share our experiences with others, I think that does make sense.”