It was all smiles for Rene Navarro Gonzalez and his teammates in September 2012 in Montreal as he gripped the trophy handed to him by new chief executive Robert Card in SNC-Lavalin’s hometown.
They were celebrating mission accomplished for mining client Anglo American’s $2.1-billion Barro Alto nickel plant in Brazil, where Navarro Gonzalez spent four years as project manager. SNC-Lavalin deemed it the year’s best-managed large project, boasting 13.2 million person-hours of work without a recordable health and safety incident.
The ceremony was a respite from controversy for one of Canada’s biggest multinational corporations. SNC-Lavalin, which builds, operates, and/or maintains energy, mining, water, infrastructure, and power projects, had also recently become one of its most notorious.
Cascade of negative headlines
The company counts British Columbia as an important market because of its involvement here in everything from rapid transit and highways to hydro plants to ferry terminals to drinking-water systems to garbage dumps. However, the engineering and construction giant, founded in Quebec in 1911 and today with 45,000 employees and offices in 50 countries, faces an uncertain future in the face of cascading headlines alleging international bribery and corruption.
SNC-Lavalin won the contract for Barro Alto in summer 2007 with Brazilian partner Minerconsult, which it bought outright before the end of the year. By late November, Anglo American had sent SNC-Lavalin a list of complaints about ineffectual management, defective services, and inadequate procurement; it even withheld some payments to SNC-Lavalin. Next summer, SNC-Lavalin’s Toronto-based mining and metallurgy division hired Navarro Gonzalez away from an aluminum project in Iceland.
Navarro Gonzalez—a 63-year-old from Bolivia now living in Port Moody—and his team got the project back on track. In an April 22, 2014, affidavit supporting a wrongful-dismissal lawsuit, though, he complained about a lack of support from superiors in disputing local contractor Camargo Correa’s pursuit of US$100 million in compensation for alleged Barro Alto cost overruns.
“I wonder what would have happened if I did not manage the Camargo Correa claim properly and ethically?” Navarro Gonzalez stated. “How much money would SNC-Lavalin have been liable for?”
When he was finished at Barro Alto, Navarro Gonzalez helped Anglo American study the feasibility of another Brazilian project. He then waited for another SNC-Lavalin assignment but he was laid off on October 21, 2013. He sued in January.
“I feel that it was a bad dream and that’s it; life must continue,” Navarro Gonzalez said in an interview at a Coquitlam restaurant. “Other companies are not like that.”
Widespread bribery alleged
“Other companies”, though, were not raided by RCMP detectives in April 2012 and suspected of paying $160 million worth of bribes to Saadi Gadhafi, a son of deposed Libyan dictator Moammar Gadhafi. Other companies were not banned in April 2013 from bidding on World Bank development projects for a decade for alleged bribery in Bangladesh and Cambodia.
And other companies in Canada haven’t had such an eventful autumn in 2014 as has SNC-Lavalin. In October this year, its former global construction head, Riadh Ben Aissa, reached a plea bargain with Swiss authorities, was sentenced to 29 months already served, and was extradited to Canada, where he is free on $250,000 bail. Ben Aissa, former SNC-Lavalin CEO Pierre Duhaime, and former investor-relations head Stephane Roy are facing corruption and fraud charges in Quebec, where police claim they paid $22.5 million in kickbacks to former McGill University Health Centre CEO Arthur Porter for the contract to build a $1.3-billion hospital in Montreal.
Duhaime’s successor, Card, a former CH2M Hill and U.S. Department of Energy executive, has endeavoured to clean up the company. He hired Michael Hershman, the former Watergate investigator who advised German giant Siemens during its bribery crisis. SNC-Lavalin took out full-page newspaper ads to claim it was turning over a new leaf, published an anticorruption manual, and held a whistle-blower amnesty. It also went to social media in an image-making effort.
CEO warns Canadian jobs at risk
In October, another milestone. Card publicly warned that 5,000 Canadian jobs are at risk if the company is charged with corruption—a not so subtle message to governments across Canada that rely on the $8-billion-a-year giant.
“If the company can’t do business, you really only have two choices. You are going to do some dismemberment and cease to exist entirely or you are going to be owned by somebody else,” Card told the Globe and Mail.
In early November, Card blamed a mining downturn and slowdowns in Brazil, Russia, India, and China for 4,000 layoffs (including 1,000 in Canada) to come within 18 months. Then, Public Works and Government Services Canada named Brookfield Johnson Controls Canada to succeed SNC-Lavalin with a $9.6-billion, eight-year contract to operate and maintain 3,800 federal buildings, including Library Square and Sinclair Centre in Vancouver. When one door closed, another opened. During Prime Minister Stephen Harper’s state visit to Beijing, SNC-Lavalin’s Candu Energy announced a preliminary agreement to build nuclear-power plants at $5.5 billion to $7 billion each with a Chinese partner.
SNC stands for the surnames of the company’s Quebec founder, Arthur Surveyer, and his 1937 partners, Emil Nenniger and Georges Chênevert. The firm rescued the Jean-Paul Lalonde and Romeo Valois–founded Lavalin engineering firm and merged with it in 1991. That was five years after Lavalin spent $50 million to privatize Urban Transit Development Corporation, the Ontario government company behind SkyTrain. Bombardier bought UTDC in 1992.
Scandals preceded acquisitions
Acquisitions of Kilborn Engineering in 1996 and B.C. Hydro’s interest in a Pakistan diesel power plant in 1997 heightened SNC-Lavalin’s western Canadian profile. (Kilborn had estimated that Calgary junior mining company Bre-X found 2,200 tonnes of gold in Borneo, but the results were later deemed fraudulent.) Under NDP premier Glen Clark, SNC-Lavalin scooped up B.C. Hydro’s shares in the Raiwind project for $2.4 million after a share-sale scandal cost the utility’s top two officials their jobs. Clark predecessor Mike Harcourt’s administration had offered SNC-Lavalin an option in 1995 for 25 percent of SkyTrain project management and engineering. That particular option, ultimately not exercised, involved Eric Denhoff, SNC-Lavalin’s B.C. development-board chair (who spent 1992 to 1994 as chair of B.C. Transit).
In 1997, the Clark government chose a Denhoff protége, B.C. Transit corporate secretary Lecia Stewart, to oversee a rapid-transit expansion. Cabinet opted for the costlier SkyTrain technology in 1998 over light rail for the $1.2-billion Millennium Line. Consultant Alan Greer’s 1999 Review of Rapid Transit Project Claims was critical of an SNC-Lavalin study that influenced the decision.
“Lavalin has a direct interest in the technology choice, as a strategic ally to Bombardier and the preferred engineering firm for SkyTrain systems,” Greer wrote. “The Lavalin assessment therefore, could best be viewed as a bid of a proponent, competitively crafted to minimize the apparent costs of the project.”
Transportation minister only concerned with B.C.
Stewart was dispatched with a $402,000 golden parachute after Gordon Campbell and the B.C. Liberals won the 2001 election, but she later found a vice-president job with Bombardier. SNC-Lavalin’s Industry Canada profile boasts that its Vancouver-based transportation division had a hand in every SkyTrain phase, from design, planning, and tendering to construction, operations, and maintenance. SNC-Lavalin is the key partner in InTransitBC, which built and operates the $2-billion Canada Line, which opened in 2009. It now leads the EGRT Construction consortium building the $1.43-billion Evergreen Line. Mary Polak was the transportation minister when SNC-Lavalin was chosen and downplayed the company’s problems after a March 2013 news conference. “We have had very good working relationships with SNC on other projects, haven’t had any of those problems here in British Columbia,” Polak said. “A very, very large company, very diverse. They have distinct and separate entities within the larger SNC-Lavalin, so we don’t have any concerns.”
Polak boasted that “fairness monitor” Jane Shackell observed Evergreen tendering, which also included EL Partners and Kiewit/Flatiron, and the lawyer found nothing improper. However, SNC-Lavalin’s international troubles were beyond her scope.
SNC-Lavalin involved with Compass card, fare gates
SNC-Lavalin work for TransLink in the past four years has also included Expo Line propulsion-power-system upgrades ($2.92 million), operations-and-maintenance-centre expansion ($1.85 million), and $8.5 million of contracts to support the Compass card and fare-gates installation. It’s a partner in B.C. Ferries’ Terminal Asset Management and the builder/operator of Kelowna’s William R. Bennett Bridge.
(Update [December 12]: In a November 28-posted tender document seeking a conceptual designer and cost estimator for the Broadway subway, TransLink revealed that SNC-Lavalin has already provided design and engineering services to develop the plan since 2009. From 2012 to 2014, SNC-Lavalin also worked on design refinement for the Great Northern Way Station in support of Vancouver city hall’s Great Northern Way Campus Structure Plan.)
B.C. Hydro paid SNC-Lavalin $50.8 million last year, up from $37.1 million in 2012, for engineering services, facilities management, and dozens of projects. SNC-Lavalin, the prime contractor for Columbia Power’s $900-million Waneta Expansion Project near Trail, is also in charge of the $1.1-billion John Hart Generating Station replacement project near Campbell River. B.C. Hydro boasts that Hart is its biggest project since the 1980s.
In North Vancouver, SNC-Lavalin’s Pacific Liaicon division has a $21.1-million engineering, design, and construction contract on Metro Vancouver’s Seymour-Capilano Filtration Plant project. Multinational firm Bilfinger Berger quit the tunnelling job over safety concerns in 2008 and the project ballooned by $200 million, to $823 million.
From Mount Polley Mine to Vancouver city hall
As of last summer, SNC-Lavalin held contracts worth almost $9.5 million with B.C.’s Forests, Lands and Natural Resource Operations and Transportation and Infrastructure ministries to remediate various mines and contaminated rural sites and to plan Highway 97 expansion. After August’s Mount Polley Mine tailings-pond disaster, Imperial Metals hired SNC-Lavalin’s Environment & Water division to aid in the cleanup near Likely.
Vancouver city hall paid SNC-Lavalin $2.05 million from 2010 to 2013, including $586,000 for landfill engineering services and $252,000 as property manager for city cultural space in the CBC building. SNC-Lavalin also held six engineering contracts ranging from $138,000 for the Olympic Village to $285,000 for Firehall No. 15.
SNC-Lavalin’s favourable November 2013 environmental-impact assessment of the planned Surrey Fraser Docks coal terminal was panned by Vancouver Coastal Health and Fraser Health officials as well as the Mayor of Burnaby, who, coincidentally, advocated light rail over SkyTrain when he was B.C. Transit chair from 1994 to 1997.
Burnaby mayor tore into company publicly
“SNC-Lavalin has done more to bring Canadian engineering into disrepute than any company has ever had the misfortune to do in the history of Canada,” Mayor Derek Corrigan said at a January 13, 2014, city council meeting. “This is one of the few Canadian companies who could attain the high goal of being banned for 10 years by the World Bank for corruption. This is a company that is up to its earlobes in corruption in Montreal.”
Surrey’s Brent and Rebecca Gray are among unhappy shareholders in an Ontario-filed class-action lawsuit seeking $1 billion from SNC-Lavalin. They sued in 2012 after SNC-Lavalin share prices fell when it was revealed that US$56 million in payments to commercial agents had been made under Duhaime. The lawsuit’s statement of claim alleges: “Although SNC purports not to know the purpose of such payments, their purpose was, in fact, to bribe foreign government officials and/or persons in Canada for the procurement of business by SNC,” thus violating company policy and exposing it to prosecution. No allegations have been proven in court.
SNC-Lavalin has denied liability and is contesting the claim; examination for discovery is expected in 2015. Its 2013 annual report warned investors: “Due to the inherent uncertainties of litigation, it is not possible to predict the final outcome of these lawsuits or determine the amount of any potential losses, if any, and SNC-Lavalin may, in the future, be subject to further class action lawsuits or other litigation.”
CBC alleged agent made payments to Swiss account
In February 2014, Radio-Canada’s Enquête show found Michel Fournier, the retired former head of the Federal Bridge Corporation, living in Victoria. Enquête revealed how Fournier opened a Swiss bank account, nicknamed Zorro, in 2000, three weeks after FBC awarded SNC-Lavalin a $127-million contract to refurbish Montreal’s Jacques Cartier Bridge. Bank records showed 11 payments worth $1.45 million to the account from Promotag SARL, a Paris-based SNC-Lavalin–associated “commercial agent”, between 2002 and 2004. Fournier denied receiving payments from SNC-Lavalin or being involved in a kickback scheme and told Radio-Canada that he opened the account as a favour to a sister-in-law in Europe.
North Saanich resident Gwyn Morgan is the founding CEO of Encana Corporation who retired from SNC-Lavalin’s chairmanship in May 2013. His “Lessons I learned from SNC-Lavalin’s woes” commentary in July 2013 for the Globe and Mail denied fault for the company’s troubles.
“Non-executive directors are not involved in day-to-day operations of the company. They must rely on information received from people within the company,” Morgan wrote. “When a small number of people deliberately set out to falsify documents, commit bribery and cover up theft, it can be exceedingly difficult to detect, even with good controls in place. This has proven to be true at corporations around the world.”
Ex-Rogers chair admonished former SNC-Lavalin chair in Globe
Nonsense, argued Garfield Emerson, a director of CAE and Canadian Tire who chaired Rogers Communications for 13 years and publishes GovernanceCanada.com. “Mr. Morgan is directly on point when he cites the most important ‘lesson’ he learned: corporate culture has to be built upon a bedrock of strong ethical values that penetrate every level of the company,” Emerson wrote in a letter to the editor. “What Mr. Morgan did not learn was that the chairman of the board and the board, as the leadership of the company, are responsible for assuring that the company they direct and supervise has established the right corporate culture and management they appoint practices strong ethical values.”
Elections B.C. shows only $27,647 in SNC-Lavalin donations to the B.C. Liberals since 2007 and it is not listed in B.C.’s lobbyist registry. Morgan was a prominent member of Premier Christy Clark’s transition team after she won the B.C. Liberal leadership in 2011. Last spring, she made Morgan the chair of the Industry Training Authority, the Crown corporation implementing her jobs-for-liquefied-natural-gas plan. A government news release trumpeted his Encana credentials but it omitted his six years atop SNC-Lavalin during a crucial period.
Clark promised a transit-funding referendum in her 2013 campaign platform, originally to coincide with 2014’s civic elections. Metro Vancouver mayors lobbied for postponement to 2015. Before the delay, TransLink hired a name from the past on a no-bid “government relations, planning and stakeholder engagement” contract. The Stewart Group, under former Millennium Line executive Lecia Stewart, received $79,042.47 to help formulate the regional transportation strategy and long-term funding plan. Stewart’s website lists associates that include ex-VANOC vice-president Taleeb Noormohamed and Compass project consultant Ian Wardley.
Stewart is also the spokesperson for Rideau Transit Group, an SNC-Lavalin–involved consortium building Ottawa’s $2.1-billion Confederation Line rapid-transit system, and had a $351,000 contract with the City of Edmonton to gain public support for an LRT expansion in the Alberta capital. SNC-Lavalin (with junior partners Kiewit and Alstom) was among three groups shortlisted last summer for the $1.8-billion Valley Line project.
Under Christy Clark, SNC-Lavalin has benefited from the Evergreen Line and John Hart Generating Station contracts at a troubling time in its history. If the B.C. Liberals green-light the $8-billion Site C Dam and voters agree to build the $3-billion Broadway subway, SNC-Lavalin would be a logical bidder on both projects.
Unless, of course, Robert Card’s warning of the firm’s dismemberment, disappearance, or sale comes true.
SNC-Lavalin public relations manager Lilly Nguyen said the company does not disclose the number of layoffs in each province and did not have readily available figures for the number of people the company employs in B.C. Ex-BC Transit chair and ex-SNC-Lavalin B.C. board chair Eric Denhoff said via email: “I just don’t really spend much time thinking about 20 years ago!” Lecia Stewart did not respond to queries.
OTTAWA — When Stephen Harper arrives in Panama on Friday it will bring him within a short drive of a man he’d probably rather forget: alleged fraudster Arthur Porter.
For his part, Porter, who’s been jailed in Panama City for nearly two years, still thinks about the man who made him a member of Canada’s spy watchdog a few years ago.
He also has a message for Harper.
Porter told The Canadian Press in a recent phone interview from La Joya prison that he wouldn’t mind a visit from Harper while the prime minister is in the region this weekend for the Summit of the Americas.
“If he wishes, he is most welcome to come and see the conditions that I live in now,” Porter said of Harper during the conversation, which was drowned out at times by the shouts of other inmates in the background.
“The (prison) air is the same, the infections are the same, the difficulties in finding water and food are the same. You know, some days are better than others.”
Porter has been detained since May 2013 in the Central American country as he fights extradition to Canada. He faces fraud charges in Canada related to a $1.3-billion hospital project in Montreal.
It has been a long fall from grace for a man who won the trust of many high-level Canadian officials and politicians, including Harper.
Harper has faced criticism for choosing Porter as well other past appointments, including now-suspended senators Mike Duffy, Patrick Brazeau and Pamela Wallin, who are all in trouble over expense claims.
The prime minister named Porter in 2008 to the Security Intelligence Review Committee, which monitors the Canadian Security Intelligence Service.
In joining SIRC, Porter was also sworn to the Privy Council and he remains a member.
Porter was elevated to SIRC’s chair two years later but resigned in December 2011 following published reports of his business links to an international arms dealer.
After moving to the Bahamas, he was arrested along with his wife, Pamela, during a flight layover in Panama.
Since his arrest, he claims he’s had no contact “whatsoever” with Canadian authorities and has yet to have a court hearing in Panama.
Still, the Sierra Leone-born doctor says he would rather stay in the prison and fight extradition than return to Canada, a country where he now mistrusts authorities.
“I don’t think I have a level playing field in Canada and I certainly am not interested in getting penalized for something that I am not guilty for,” said Porter, who is a cancer specialist.
I don’t think I have a level playing field in Canada and I certainly am not interested in getting penalized for something that I am not guilty for
Before his arrest two years ago, Porter revealed he was suffering from stage four lung cancer and likely had three months to live.
He credits his survival to treatments he says knocked the cancer into remission. But he fears the disease is re-emerging and was recently told by friend Dr. Karol Sikora that he may only have six weeks to six months left.
“I am still a tremendous optimist,” Porter said through a muffled, raspy voice.
“Of course, being an oncologist, I also know the score.”
Sikora, who ran a cancer clinic with Porter in the Bahamas, based his estimate on email conversations with his friend and has not examined him in person.
The U.K. physician also wrote an email last week to Harper, urging him to raise Porter’s situation with Panamanian officials while he’s in the country.
“It is just amazing that this sort of human rights abuse of all prisoners not just Arthur can occur today in a civilized country,” Sikora wrote in the email to Harper, which he forwarded to The Canadian Press.
Sikora, who also sent Harper some of Porter’s medical records, said the jailed physician was in urgent need of scans, tests and a new course of treatment.
Aside from the invitation to visit him in jail, Porter said he doesn’t have any specific message for Harper, who will meet with hemispheric leaders at the summit on Friday and Saturday.
He hopes someone will ensure he gets access to adequate medical care and speed up his legal process.
Porter feels his case got a boost following a recent report by the United Nations special rapporteur on torture. The brief UN report said that Porter is being held in degrading and inhuman conditions and has been denied medical treatment.
“I am here not at the request of Panama, but at the request of Canada,” Porter said.
“They need to know the conditions that led to the UN finding that was against the convention against torture.”
His frustration, he added, is not directed at Harper himself.
“I’m not unhappy about the man, but I am certainly unhappy about the government,” he said.
A spokesman for the Foreign Affairs Department said in an email that Porter has received consular services and that the government will provide more help if necessary.
Ottawa – February 19, 2015 – Today, the RCMP National Division has laid charges against the SNC-Lavalin Group Inc., its division SNC-Lavalin Construction Inc. and its subsidiary SNC-Lavalin International Inc. The three entities have been charged with one count of corruption under paragraph 3(1)(b) of the Corruption of Foreign Public Officials Act and one count of fraud under paragraph 380(1)(a) of the Criminal Code.The alleged criminal acts surfaced as part of the ongoing criminal investigation into the company’s business dealings in Lybia.
The charges laid are the following:
In Montreal, Judicial District of Montreal, elsewhere in Canada and abroad
- Between on or about August 16, 2001 and on or about September 20, 2011, the SNC-Lavalin Group Inc., its division SNC-Lavalin Construction Inc. and its subsidiary SNC-Lavalin International Inc., did, in order to obtain or retain an advantage in the course of business, directly or indirectly give, offer or agree to give or offer a loan, reward, advantage or benefit of any kind of a value of CAN$47,689,868 or more, to one or several public officials of the “Great Socialist People’s Libyan Arab Jamahiriya” or to any person for the benefit of a public official of the “Great Socialist People’s Libyan Arab Jamahiriya”, to induce these officials to use their positions to influence any acts or decisions of the “Great Socialist People’s Libyan Arab Jamahiriya” for which they perform their duties or functions, thereby committing an indictable offence contrary to paragraph 3(1)(b) of the Corruption of Foreign Public Officials Act.
- Between on or about August 16, 2001 and on or about September 20, 2011, the SNC-Lavalin Group Inc., its division SNC-Lavalin Construction Inc. and its subsidiary SNC-Lavalin International Inc. did, by deceit, falsehood or other fraudulent means, whether or not it is a false pretense within the meaning of the Criminal Code, defraud the “Great Socialist People’s Libyan Arab Jamahiriya”, the “Management and Implementation Authority of the Great Man Made River Project” of Libya, the “General People’s Committee for Transport Civil Aviation Authority” of Libya, Lican Drilling Co Ltd, and the “Organization for Development of Administrative Centers” of Benghazi in Libya of property, money or valuable security or service of a value of approximately CAN$129,832,830, thereby committing an indictable offence contrary to paragraph 380(1)(a) of the Criminal Code.
“Corruption of foreign officials undermines good governance and sustainable economic development. The charges laid today demonstrate how the RCMP continues to support Canada’s international commitments and safeguard its integrity and reputation,” said Assistant Commissioner Gilles Michaud, Commanding Officer of the RCMP’s National Division.
These charges stem from Project Assistance which was first initiated in 2011. Three individuals have already been charged in relation to this investigation.
As this case is now before the courts, the RCMP will not comment any further.
Gwyn Morgan, chairman of SNC-Lavalin for six years til this past May, portrayed the beleaguered company in his recent July G&M article as “the victim of embezzlement by two trusted, long-time executives.”
There are several long-time execs to choose from here so I’m not sure exactly which two he is referring to. Morgan, you will recall, was Harper’s pick to head up his 2006 ethics and accountability commission.
Helping SNC-L out during this period of victimhood is the Harper Government, who just extended them a defence contract worth $400 million over up to ten years to provide Canadian troops overseas with military logistical support. An SNC-L exec VP said they were proud to support the Canadian Forces.
The World Bank might have banned SNC-L and its affiliates from bidding on their aid projects for 10 years due to allegations of engaging in corrupt or fraudulent practices across four continents – and CIDA has followed suit – but the Public Works Dept. has its own criteria.
Likewise the crown corporation, Canadian Commercial Corporation, best known for its primary job of selling $1.4-billion of Canadian military technology to the US Department of Defense, will soon decide whether to award SNC-L the contract to build a children’s hospital in Trinidad Tobago. SNC-L has already finished designing it as part of a joint Canada/Trinidad Tobago venture and like the SNC-L MUHC hospital deal in Canada, it’s a public-private partnership.
People in T&T are understandably concerned about dealing with a company caught up in the largest corporate corruption case in Canadian history, with fraud and bribery charges pending in Libya, Algeria, Cambodia, Bangladesh, and Montreal, but as T&T High Commissioner to Canada and former SNC-L exec Philip Buxo explained :
”The T&T Government is not involved in the decision-making process to hire any Canadian company to construct the hospital. The full responsibility for the selection of any company is the exclusive responsibility of the Canadian government’s designated co-ordinator, the CCC.”
It’s a small, small, small world …
In December 2003, Philippe Couillard, then-Quebec Health Minister and now newly-crowned Quebec Lib leader, appointed Brian Mulroney to head up the feasibility study for MUHC superhospitals. A decade earlier Mulroney had appointed David Angus, director of Conservative Fund Canada, to the Senate.
Senator Angus was a director-at-large of the MUHC board that approved the recommendation of the search committee and hired Dr. Arthur Porter as CEO in Jan 2004. Angus became MUHC chair in 2007.
In Sept 2008 Harper appointed both Porter and Couillard to SIRC.
The MUHC board ratified the choice of SNC-L to build the $1.3 billion mega-hospital in a public-private partnership in April 2010. Three weeks later, SNC-L payments of $22.5-million in consulting fees to Porter’s Sierra Asset Management began rolling in, continuing six months after Porter left MUHC.
Senator Angus continued to stand by Porter publicly, no matter how damning the news about him. In Nov 2011 Arthur Porter stepped down as MUHC director general, followed by Senator Angus’ exit as chair of MUHC a month later.
Fun fact : When SNC-L decided to conduct an internal audit into all this in 2012, it hired Senator Angus’ law firm Stikeman Elliott LLP, from which he retired in 2009 as a senior partner after four and a half decades.
Update : Excellent piece on the SNC-L/T&T deal from economists Patricia Adams and Brady Yauch :
“The injudicious decision by one Canadian federal government agency to arrange an untendered, closed-door deal for SNC-Lavalin while another, the federal police force, investigates the company for wrongdoing seems lost on government officials. Canadian taxpayers would be right to charge, as are Trinidadian and Tobagonians in their own country, that our government is failing to maintain proper standards in the handling of public projects.
More fundamentally, untendered, closed-door deals arranged by the Canadian government for any company can’t help but create the very environment in which bribery, corruption, and conspiracy to defraud taxpayers and ratepayers thrives.
Arthur Porter arrested in Panama
Stephen Harper’s pal, Arthur Porter stepped down as chair of the CSIS watchdog committee November 2011 after his ties to an Israeli Iran contra arms dealer went public. February 2013 an arrest warrant was issued for him as well as Pierre Duhaime, the former CEO of SNC-Lavalin for their alleged involvement in a massive fraud and conspiracy. Today MSN News is reporting Porter has been arrested in Panama.
Porter faces charges of fraud, conspiracy to commit fraud, fraud against the government, breach of trust, laundering the proceeds of crime, and participating in a secret commission. His wife faces charges of laundering criminal proceeds and conspiracy.
January of this year, SNC-Lavalin was awarded the contract for the Evergreen Sky Train line in Vancouver. That deal was done when Harper and Christy Clark’s advisor, Gwyn Morgan was CEO. As the saga unfolds, SNC-Lavalin is offering amnesty to whistleblowers.
Laundering the proceeds of crime hiding out in Panama. Sounds like an old Van Halen song. That brings back memories of when George Bush Sr. had Noriega working for the Agency in Iran Contra under Operation Watchtower. Explain to me again why they sent Manuel Noriega to jail but made Oliver North a Fox TV News host. That one still baffles me.
Accused in McGill Hospital fraud totalling $22.5M
CBC News Posted: Jan 17, 2015 11:54 AM ET Last Updated: Jan 17, 2015 5:26 PM ET
Panama and Canada have reached an agreement for the extradition of former McGill University Health Centre director Arthur Porter, according to Radio-Canada.
SRC has confirmed from a source that a deal was reached but no date has been set for him to be sent back to Canada. He has been in a Panamanian jail since May 2013 when he was arrested at the Panama airport on an international warrant. Porter is being extradited to Canada to face the corruption charges against him.
Porter can still challenge the extradition order.
Porter’s family told CBC on Saturday that they had spoken with Arthur and he says the report on his extradition is untrue.
- Arthur Porter on political ‘friends’ and life in a Panama prison
- Arthur Porter interview with CBC News
- IN DEPTH: Who’s Who in the McGill bribery case
Porter’s wife, Pamela, did not fight her extradition and has since pleaded guilty to two counts of money laundering.
A shell company in her name was used to purchase eight homes, several bought for more than $1 million.
Arthur Porter has repeatedly denied that he received kickbacks for awarding an SNC-Lavalin consortium a $1.3-billion contract to build a super-hospital at McGill.
He has said that $22.5 million in payments from SNC-Lavalin was his reward for years of international consulting work.
Porter said he began discussions about future work with SNC-Lavalin as far back as 2005, which would be shortly after he was appointed CEO of the McGill University Health Centre.
In an interview with CBC News last September, he called it a “loose agreement” with the Montreal-based engineering giant.
“We were not actually conducting business,” said Porter. “We never actually started anything. We passed some letters.”
SNC-Lavalin issued a statement to CBC News that “we do not have any information that supports the claims Mr. Porter has made regarding SNC-Lavalin and a contract in 2005.
“If there was a contract, we would be interested to see it and begin an internal investigation on the subject.”
Former McGill University Health Centre director Arthur Porter is being extradited to Canada to face the corruption charges against him, according to news reports Saturday morning.
La Presse is reporting that Panama has agreed to Porter’s extradition, where he has been in jail since his arrest in May 2013.
Unlike Porter, his wife, Pamela, did not fight her extradition and has since pleaded guilty to two counts of money laundering. A shell company in her name was used to purchase eight homes, several bought for more than US$1 million.
I have written this piece in an attempt to evaluate the actual contribution to society of a prominent Canadian who espouses extreme right-wing views. I feel it is important, from time to time, to compare actual performance to stated principles. If you find this critique of interest, please send the link to others. Nick
One of the champions of Canada’s right-wing corporate elite is finally calling it quits.
Gwyn Morgan, 66, is stepping down in May as Board Chairman of SNC-Lavalin, the troubled, giant engineering and construction firm trying to survive a series of scandals, a lack of public confidence, and fluctuating share values.
SNC-Lavalin, a monster corporation with more than 30,000 employees in over 100 countries, is embroiled in bribery scandals stretching from Libya, to Algeria, to Bangladesh, to Quebec and Alberta, and who knows where else.
Morgan’s handling of the crisis at SNC-Lavalin – and his apparent retirement from big business – provides an excellent opportunity to review the 45-year career of a high-profile, powerful man, born dirt-poor on an Alberta farm only to become an energy industry multi-millionaire and a strong voice for the radical right.
A highly-decorated member of Canada’s corporate elite, Morgan is a former Canadian CEO of the Year (2005), the recipient of six university honorary degrees, and a member of the Order of Canada (2010). He is a trustee of the far-right lobby group, the Fraser Institute, and is connected to 62 board members in two different organizations across seven different industries. He also writes right-wing columns for The Globe and Mail’s Report on Business and other papers.
Considering Morgan’s prominence on the right, how does his performance in business and politics over the years compare to his stated principles, and is he leaving a legacy that will be of value to Canadians?
Questions about Morgan’s effectiveness
Within hours of the announcement that Morgan would be resigning from SNC-Lavalin next month, the man’s influence with corporate media became evident. One of the corporate community’s propaganda machines, The Financial Post, quickly reported that – according to “his defenders” – Morgan was not pushed out.
“ . . . . the past 14 months have certainly been a tough blow for Mr. Morgan,” wrote Times’ reporter Nicholas van Praet. “But his defenders would say he bucked up — moving quickly to uncover and disclose the ethical transgressions of former senior employees and report them to law enforcement authorities . . . .”
But the evidence raises questions about how well Morgan has performed.
In addition to being Board Chairman, Morgan has been Chair of the company’s Governance Committee, which monitors ethics, business conduct, and assesses the effectiveness of the Board.
The question is: How could Morgan and the other board members be so centrally involved in controlling SNC-Lavalin but not know that senior offices were paying millions of dollars in bribes to win contracts for the company?
Corporations should be set up in a way that allows Board members to have full oversight of how large amounts of money are handled. This is not the way things have been done at SNC-Lavalin.
The multi-million-dollar division from where the largest bribes appear to have come “was not required to break out individual projects in its financial accounting to the Board.”
With all the knowledge accountants and lawyers have concerning setting up corporate structures, it is no less than shocking that the SNC-Lavalin structure is so seriously flawed.
Given his stated concern for business ethics, why would Morgan head a SNC-Lavalin Board that had a structure that practically welcomed illegal payments?
The company’s largest shareholder is raising similar questions. “We have a board that didn’t keep its eye on things,” Stephen Jarislowsky told Bloomberg News. “And the executive more or less operated on its own.” His company owns about 14 per cent of SNC-Lavalin stock.
Ethics professor Chris MacDonald of the Ted Rogers School of Management was a little more direct: “The company needs to get past its apparent belief that bribery is just part of doing business.”
At SNC-Lavalin, as at other businesses, self-regulation is the preferred mechanism for policing corruption and wrong-doing. Had there been full government oversight of SNC-Lavalin’s financial dealings, the payments might not have occurred.
While the massive collapse and corruption inside SNC-Lavalin is a significant international story, no one in the mainstream corporate media has published an investigative story of what happened behind the scenes.
In a twist that says a lot about the credibility of business awards, less than a week before the SNC-Lavalin’s former CEO was arrested, the company received an award for excellence in corporate governance from the Canadian Institute of Chartered Accountants—the seventh time it won the award in recent years.
Tough upbringing, but wealth came quickly – and easily
In sermon-like speeches, Morgan likes to talk about how he overcame a difficult upbringing in rural Alberta. He receives standing ovations after explaining how he and his father dug a ditch to their home in the early 1960s so they could lay a pipe to get running water.
Now he kneels at the throne of Big Business. “Free enterprise business is the world’s greatest force in advancing human progress,” Morgan told a hand-selected roomful of Canadian elites. “Almost all the great technological progress which has transformed the way we live has been created or harnessed and made available to people by private enterprise.”
The multi-millionaire feels that everyone should have to work for what they get and that nothing should be free.
However, what he fails to mention is that, while he no doubt worked very hard he was handed much of his own great wealth by his life-long ideological nemesis – government.
In 1975, Alberta Premier Peter Lougheed created the Alberta Energy Company (AEC), a hybrid company half-owned by the government. Morgan began working with the new company after graduating with a degree in petroleum engineering.
Lougheed gave AEC “some of the best natural gas and oil resources in the province,” writes energy journalist Andrew Nikiforuk.
As AEC flourished, Morgan worked his way up the chain of command. In 1993, a year before Morgan became CEO, Premier Ralph Klein decided to more or less give AEC to the private sector to cover Alberta’s deficit.
“Without so much as a public evaluation of the company’s true net value,” writes Nikiforuk, “Klein gave away the province’s remaining shares for less than $500-million. . . . . Just five years later the company was earning $2-billion a year and was worth more than $6-billion in the market place.”
In 2002, Morgan led the campaign to bring together AEC and other energy companies into one giant one – Encana. Then in 2004, Morgan got another huge gift, this time from the U.S. government. When the company bought a large U.S. gas firm, it was given $14-billion in tax relief by the oil-friendly Bush administration.
With the added bonuses of the Lougheed and Klein “gifts”, and the huge U.S. tax deduction, Morgan was able to “earn” a whopping $36.5-million between 2002 and 2006.
It seems that this “self-made man” wasn’t all self-made after all.
Encana’s $-billions in fracking a downside for the public
It’s well known within the energy industry, but not by the general public, that Gwyn Morgan was a pioneer of fracking.
“As a young engineer in 1975,” Morgan wrote in a Vancouver Sun column. “I directed the fracking of the very first well drilled by the company that eventually grew to become Encana Corporation. Since then, Encana has safely fractured tens of thousands of wells on its way to becoming North America’s largest natural gas producer.”
Millions of people throughout the Canadian and the U.S. west disagreed with him. While the company and Morgan made millions of dollars from fracking, the profits came at the cost of water contamination, air pollution, and hundreds-of-thousands of nauseated and unhealthy families.
Encana broke the law and violated regulations hundreds of times when Morgan was at the helm. In 2004, in just one Colorado county, the company violated laws in connection with 17 wells and was fined $454,200. It was found guilty of drilling a well without a permit and recompleting seven wells without permits. Elsewhere in the state, gas bubbled to the surface of a stream after Encana fracking.
Morgan, it seems, is incapable of acknowledging that any environmental damage occurred during his years at Encana. In 2004, when the company was getting ready to build a pipeline through an ecologically sensitive slice of the rain forest, Morgan boasted that the company would “leave the environment in Ecuador in better shape than we found it.”
However, a much different situation developed. The project came under fire from Greenpeace and the David Suzuki Foundation, as well as groups in Ecuador, which documented the destruction and the damage inflicted on native peoples.
Morgan has often been a target of environmentalists. A decade ago he said there needs to be more debate about whether greenhouse gas emissions are causing global warming, or if it is a part of a natural cycle of the earth’s warming and cooling. He strongly opposed Canada’s signing of the Kyoto accord on the environment.
During the 2008 election campaign he donated $20,000 to the National Citizen’s Coalition to help purchase attacks ads aimed at Liberal Leader Stephane Dion, who wanted to bring in environmental protection laws.
A Board member of HSBC? What gives?
Morgan likes to brag about the values that he says helped him become an astute businessman.
“Perhaps the most important business trait that my value system gave me was an instinctive wish to work with quality people,” a pompous Morgan boasted to the 2008 Governor General’s Canadian Leadership Conference.
In view of his comment, Morgan’s most puzzling adventure has been his involvement with the most corrupt and immoral bank in the world – and that’s saying something.
The Hong Kong and Shanghai Banking Corporation (HSBC) has admitted to laundering billions of dollars for Colombian and Mexican drug cartels, and moving tainted money for Saudi banks tied to terrorist groups.
Morgan served as a Director on the Board of the HSBC Bank Canada from 1996 to 2006, and as its Lead Director. Then, from 2006 until last May, he was as an Independent Non-Executive Director of London-based HSBC Holdings.
While there is no indication that Morgan himself did anything wrong, it is surprising that a person who so strongly claims he guards his reputation and the character of those he works with, would have his name associated with HSBC in any way.
Bad adventures in the political world
Morgan is friends with many of Canada’s right-wing politicians, including Stephen Harper. Both times Morgan ventured close to the centre of political power, he was burned.
One of his most embarrassing moments occurred in a House of Commons Committee room in 2006.
Prime Minister Stephen Harper personally selected the then-Calgary businessman to take on the powerful position of chairing a new review board for federal government public appointments. Morgan would have a huge say in naming the heads of many major government posts across the country.
However, committee members objected to Morgan’s earlier negative comments about immigrants and multiculturalism. A motion by NDP member Peggy Nash denied Morgan the plum job, which he had, not surprisingly, offered to hold for the sum of $1 a year.
Morgan didn’t understand how strongly people objected to his opinions. He said it was painful to see “a couple of sentences taken out of context from one of my speeches and leave such an untrue impression of my beliefs.”
In a lengthy Macleans interview with Linda Frum, who would later become a Conservative Senator, Morgan quipped, “Well . . . I’m going to have a lot more time to spend on my boat this summer . . . . ”
In his other venture into politics, Morgan crossed the line, violating his personal principles.
Morgan was close to Christy Clark, who won the B.C. Liberal leadership in 2011, becoming Premier. He donated money to her campaign, helped her win the leadership, and became her special “transition” advisor.
However, neither Clark nor Morgan seemed concerned about the conflict of interest: Morgan had a large financial stake in SNC-Lavalin and the company was benefiting from millions-of-dollars in projects in B.C., with hopes of obtaining many more.
Despite the conflict, Morgan served out his time and continued to occasionally advise Clark.
Quipped Province columnist Ethan Baron: “If I were the chair of a corporation that was making a mint off B.C., there’s no place I’d rather be than by the premier’s side, steering her along.”
And was it Morgan, the individual, or Morgan, the head of SNC-Lavalin, who donated $50,000 to the B.C. Liberals in 2012?
In January 2013, SNC-Lavalin announced it was heading a consortium that would receive $889-million from the B.C. government for the design and construction of the Evergreen Line rapid transit project in Metro Vancouver.
Too many of Canada’s corporate elites have a dossier similar to that of Gwyn Morgan. They are heralded as heroes, when in actual fact, they are wreaking havoc on the rest of us. These powerful men are running our economic and political agenda.
Only when we are ready to address the disproportionate amount of power they hold will we will be able to return to economic policies and life that works for most Canadians.
Following a court challenge initiated by several local media outlets, the Montreal Gazette can now report new details regarding what the wife of former McGill University Health Centre director Arthur Porter admits she did to help funnel $22.5 million in bribe money from executives at the engineering giant SNC-Lavalin.
The summary of facts states that Pamela Porter opened a bank account related to a new company — Regent, Hamilton, Lumley & Associates Ltd. — in mid-July 2009 at the request of her husband. Porter, who had “no experience in business management,” would become the sole executive and secretary of the company, which “has no known business activity.”
Regent, Hamilton, Lumley & Associates Ltd. was, according to the statement of facts, a shell company that received a total of $9.92 million in transfers from Arthur Porter’s company, Sierra Asset Management, between May 2010 and February 2012.
“Pamela Porter is the only person who transferred or authorized money transfers from Regent Hamilton’s account,” the statement of facts states, adding that Porter made six cash withdrawals totalling US$61,000 from the company account.
“Pamela Porter also authorized money transfers in order to acquire a number of properties.”
Details of those property transactions remain under a publication ban. The statement of facts also notes that Porter “wilfully blinded herself” and disregarded concerns raised by bank officials regarding the transactions.
None of the facts outlined in the summary have been tested before a court.
In December, Porter pleaded guilty to two counts of money laundering and was sentenced to two years in prison, minus a day. She was also ordered to perform 240 hours of community service upon her release. Porter and her lawyer, Marc-Antoine Carette, had negotiated a plea agreement with the Crown.
Arthur Porter, who was arrested with his wife in May 2013, remains in a Panamanian jail awaiting extradition to Canada. He is alleged to have orchestrated a complex series of financial transactions that allowed bribe money from SNC-Lavalin executives to be transferred to companies registered to Porter, his wife, MUHC administrator Yanaï Elbaz and the latter’s brother, Yohann Elbaz. The bribe was allegedly paid in exchange for SNC-Lavalin’s securing of the contract to build the MUHC’s new superhospital.