SNC dodged donation laws, probe told

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SNC-Lavalin deliberately circumvented Quebec's political financing rules in the past decade, culminating in a flurry of donations to the governing Quebec Liberal Party in 2009 as the engineering firm was bidding on a major hospital project, a commission of inquiry has heard.

In addition, a vice-president of the major engineering firm said he gave a secret donation of $125,000 cash to a fundraiser for Montreal's governing party before the 2005 municipal election. SNC-Lavalin vice-president Yves Cadotte said he debated making the one-time payment with two senior colleagues at the firm, and that a decision was made to go ahead based on a desire to obtain further municipal contracts.

"It was done with the optics of continuing to do business in Montreal," Mr. Cadotte told the Charbonneau commission into the Quebec construction industry.

Mr. Cadotte explained that he does not know how the large amount of cash was put together, but said it was provided to him by Pierre Anctil, an SNC-Lavalin employee at the time who had previously been an adviser to Quebec premier Robert Bourassa.

The fundraising allegations are the latest in a torrent of scandals that have swept over SNC-Lavalin, one of the world's biggest engineering firms, which is facing criminal probes in Canada and abroad.

Overall, Mr. Cadotte said SNC-Lavalin knowingly reimbursed its senior staff for their political donations every year, offering bonuses that directly offset the cost of the payments to political parties on both the provincial and municipal stages. Political fundraising rules in Quebec that forbid companies from donating to parties or reimbursing employees for their donations, Mr. Cadotte acknowledged.

The push to boost donations to the Quebec Liberal Party was made at the behest of Riadh Ben Aissa in 2009, Mr. Cadotte said. The former SNC-Lavalin vice-president is detained in Switzerland as part of a foreign bribery probe.

"In 2009, he said that we had to make a supplemental effort for the Liberal Party, which led to a much higher level of donations than what we had seen in 2008," Mr. Cadotte said. "We wanted to show a visible increase in donations to the party."

That year, SNC-Lavalin submitted its technical proposal for the construction of the massive McGill University Health Centre. The firm won the $1.3-billion contract in 2010.

SNC-Lavalin staff gave a total of $1-million to the Quebec Liberal Party and the Parti Québécois between 1998 and 2009, according to numbers compiled by the inquiry. Most years, the donations to both of Quebec's major parties were almost equal. In 2009, however, the Quebec Liberal Party received $101,200 from 35 SNC-Lavalin employees, compared to $36,000 for the PQ from 12 employees.

Mr. Cadotte added that he gave cash donations of $5,000 to $15,000 a year to Bernard Trépanier, a major fundraiser for Union Montréal, through much of the 2000s. There was a major boost in donations ahead of the 2005 election. In addition to the $125,000 cash payment to Mr. Trépanier, Mr. Cadotte said the firm paid a $75,000 "fake invoice" that it received from a firm called Morrow Communications that had actually worked for Union Montréal.

SNC-Lavalin faces legal problems at home and abroad. Mr. Ben Aissa has been jailed since April in Switzerland, where investigators are probing allegations that he used the country's secretive banking system to funnel an estimated $160-million to Saadi Gadhafi, the son of the late Libyan dictator, to influence the awarding of contracts.

He has also been charged in Montreal with more than a dozen fraud and corruption-related offences. He is accused of arranging the transfer of $22.5-million to health-care administrators in an effort to secure the $1.3-billion contract to build Montreal's massive English-speaking hospital complex. SNC's former chief executive, Pierre Duhaime, has also been charged criminally in connection with those alleged payments.

The company is also facing law enforcement investigations related to bribery allegations in Bangladesh and Algeria, and class-action lawsuits in two provinces.

Mr. Cadotte is vice-president of the transport and infrastructure division of SNC-Lavalin. He repeated throughout his testimony there was no "direct link" between political donations to provincial parties and contracts from the Quebec government. Still, he acknowledged the firm wanted to maintain good relations with its clients and did not want to "run the risk" of alienating political parties.

Mr. Cadotte said the firm decided in 2010 to end its indirect political donations as the practice came under growing scrutiny from the media and law-enforcement authorities.

Still, the fact that the firm knowingly broke provincial rules earned rebukes from the Charbonneau commission's counsel, Denis Gallant, who reminded the witness that SNC-Lavalin's clients were governments, and not any political party.

In a statement, SNC said that it has launched an internal investigation into the alleged scheme described by Mr. Cadotte, and that he is co-operating with both the company's investigation and the inquiry's probe.

Mr. Cadotte's testimony resumes on Monday.