RiskFinancial CrimeFormer SNC-Lavalin CEO Charged with Fraud

Former SNC-Lavalin CEO Charged with Fraud

A major corporate scandal is developing in Canada according to press reports, after Quebec anti-corruption police arrested the former chief executive officer (CEO) of engineering group SNC-Lavalin (SNC). The police have also launched efforts to extradite another former company executive who is in prison in Switzerland.

Officers from Unité permanente anticorruption (UPAC), Quebec’s anti-corruption squad, arrested Pierre Duhaime at his home on 28 November. He faces three charges, of fraud, conspiracy to commit fraud and using forged documents, related to the engineering firm’s contract to design, build and maintain the McGill University health centre’s new C$1.3bn hospital in Montreal. Former SNC executive Riadh Ben Aissa, who led the company’s construction business worldwide, faces similar charges.

The company itself has not been charged with any wrongdoing. It has attempted to ring-fence the actions of its two former executives, who have both been dismissed, calling them isolated incidents by individuals who are no longer with SNC. Duhaine stepped down in March with a C$5m severance award, to be paid over two years. Robert Card, a US engineering industry veteran, took over the position of CEO in September and the board is dealing with the fallout of police investigations while he attends to business matters

Commenting on the case Anthony Scilipoti, vice-president at Toronto’s Veritas Investment Research, said: “This is not contained. It’s not isolated,” adding that he had never seen anything of similar magnitude. Earlier this year Veritas completed an analysis of SNC’s own internal investigation into C$56m worth of improperly documented agent payments this year. Duhaime and Ben Aissa were dismissed after it was found that they were involved in the untraceable payments to commercial agents for two specific projects.

The separatist Parti Québécois (PQ) government has requested that independent auditors review the operations and books of the McGill health centre, reports Montreal’s La Presse newspaper. The auditors must judge whether the institution itself, which oversees six hospitals in Montreal, was a victim of administrative problems or deliberate fraud, according to the report. They are expected to deliver a report in the next few days.

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