Former SNC-Lavalin exec pleads guilty in Switzerland
A former SNC-Lavalin Group Inc. executive at the centre of the engineering company’s corruption scandal over the past two years has pleaded guilty to charges in Switzerland.
Riadh Ben Aissa, former head of SNC’s construction unit, admitted his guilt on charges of corruption of a foreign public official, money laundering and fraud, according to local reports. He has been in jail in Switzerland for more than two years, accused of using the nation’s banking system to funnel millions worth of bribes to win contracts for SNC in North Africa while keeping a small fortune for himself.
SNC released a statement Wednesday acknowledging the Federal Crime Court of Switzerland’s acceptance of the guilty pleas and said it is being recognized as an injured party in the proceedings. The company said it will recover an unspecified amount of money — between $14 million and $16 million, according to reports — from Ben Aissa.
SNC says it still reserves the right to file other civil claims against him in the future to recover additional funds.
SNC-Lavalin shares closed the day up 60 cents, or 1.2 per cent, to $52.17 in trading on the Toronto Stock Exchange. They’ve gained 17 per cent this year.
“SNC Lavalin’s goal is nothing less than to set a new standard for clean business in the engineering and construction industry,” SNC chief executive Robert Card said in a statement. “We’ve adopted a zero-tolerance policy for ethics violations of any kind.”
SNC-Lavalin is trying to move past a two-year corruption scandal that has forced out several senior executives and spooked investors as police in Canada, Switzerland and other countries investigate the company’s business here and overseas.
Although SNC has made extraordinary efforts to improve its ethics and business practices, these will not prevent a formal reckoning under Canada’s anti-corruption law. If it is charged and found guilty, it would have to pay a penalty. Investors are said to be looking for a penalty of $300 million or less as a positive for the company.
SNC conducted an internal investigation in 2012 that uncovered $56 million worth of improperly booked payments widely believed to be bribes. Subsequently, the RCMP alleged in separate affidavits that Ben Aissa paid $160 million in bribes disguised as consulting fees to Saadi Gadhafi, the playboy son of deposed dictator Moammar Gadhafi in exchange for steering major contracts in Libya to SNC.
An investor class-action lawsuit filed in March 2012 alleges SNC and some of its senior management were engaged in “serious unlaw- ful activities in Libya.” It is unclear how Ben Aissa’s guilty pleas will affect the outcome of the ongoing legal proceedings.
Ben Aissa will stay in jail until he is extradited to face justice in Quebec, Radio Canada reported. He is said to have been co-operating with Swiss police.
Those charges stem from $22.5 million in alleged payments by SNC-Lavalin to win a contract to build the new McGill University Health Centre superhospital. Former SNC CEO Pierre Duhaime also faces fraud charges in connection to that case.
Ben Aissa’s shares, Paris apartment and bank accounts have been seized, Radio Canada reported. SNC will receive $14 million as part of the confiscation of those assets, the network said. It said the company will receive another $2 million funded by Ben Aissa’s wife’s bank account.
Ben Aissa was also allegedly involved in a secret project to smuggle Saadi Gadhafi and his family out of Libya in 2011, in violation of United Nations sanctions. SNC is suing Ben Aissa as well as an Ontario contractor in that case to try to recoup about $1.8 million, claiming it had no knowledge that corporate funds were being used for that purpose.
In part because of the ties Ben Aissa nurtured with the Gadhafi family, SNC was one of the most active corporate players in Libya. The country was big business for SNC, and it won some major contracts, including a piece of the Great Man-Made River project, a massive plan to pump water from super-deep wells in the southern desert to the coastal north.
As recently as 2010, SNC tallied $418 million in annual revenue from work in the nation. The company was forced to pull out a year later as a six-month uprising turned to civil war. It has since expressed a desire to resume bidding for work there.