In September, 2010, an SNC-Lavalin project manager walked into a Nigerian bureaucrat’s office and handed him 1.2 million naira in cash – equivalent to nearly five times the average annual salary in that country.
The SNC engineer, Chalamakunta Muralidhar Reddy, said he was acting on instructions from his home office in Oakville, Ont. “It was definitely not proper,” Mr. Reddy said in an interview, explaining that the payment – worth about $8,000 – was arranged by Ramesh Shah, a former SNC vice-president in Canada.
“I am just a courier, that’s all I can say.”
According to a trove of internal documents, the engineering firm did not record the transaction as a cash payment. Nor was there mention that the recipient, Usman B. Alhaji, is a Nigerian bureaucrat in the state of Bauchi. Rather, the company used a common SNC shorthand for the transaction: “consultancy cost.”
That term and its variations at SNC – project consultancy cost, project commercial cost, or PCC and CC – appear throughout hundreds of pages of internal documents obtained by The Globe and Mail and the CBC.
The joint investigation uncovered instances of PCC or CC in connection with 13 international development projects.
It also revealed how the breakdown in controls that has shaken the highest orders of the blue-chip firm extends even to one of its smallest divisions – an Ontario-based unit that routinely incorporated illicit payments into its bookkeeping.
Whether the division was designing a highway in Kazakhstan, planning new bridges in rural Nigeria or supervising plans for a 75-kilometre road in Uganda, a portion of its costs, usually between 5 and 10 per cent, was recorded as PCC or CC. Leslie Quinton, a spokeswoman for SNC, told The Globe and the CBC that the term was “not legitimate” and that it was used only by this particular division, which has been largely disbanded since the company reviewed its code of ethics.
For more than a year, the 102-year-old company has been besieged with allegations of corruption and fraud, sparking an overhaul of its executive ranks. Quebec’s anti-corruption task force has laid more than a dozen criminal charges against the firm’s former chief executive, Pierre Duhaime, alleging that he was involved in a scheme to funnel $22.5-million to health-care administrators to secure a construction contract for a new hospital in Montreal.
A former executive vice-president, Riadh Ben Aissa, has been jailed in Switzerland for more than a year while prosecutors there trace an estimated $160-million that allegedly flowed from SNC to Saadi Gadhafi, son of the late Libyan dictator.
The cache of records shows that this alleged culture did not apply only to high-stakes construction deals involving far-flung dictators and billion-dollar projects. The Oakville office of SNC-Lavalin International employed about 20 people worldwide and bid primarily on engineering consulting jobs funded by development agencies such as the World Bank. SNC was unable to say how much the division earned, but sources estimated that on average, the unit booked about $12-million worth of jobs per year – about 0.15 per cent of SNC’s 2012 revenues.
But even though the division had almost no impact on the company’s bottom line, and its contracts aim to improve life in impoverished African and Asian countries, it still regularly let suspicious payments through – even when supporting documentation made it clear that some of the money was intended for government officials, or in one specific transaction, when the money took a circuitous route to the personal bank account of an SNC vice-president.