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Logo of Bombardier is seen at an office building in Zurich, Switzerland, February 28, 2019. REUTERS/Arnd Wiegmann/File PhotoArnd Wiegmann/Reuters

Top management at Bombardier Inc.’s Canadian headquarters vetted and approved Russian partners now enmeshed in bribery allegations against one of the transportation company’s former employees, prosecutors in Sweden allege.

In comments ahead of the start of a trial in Stockholm Thursday for Thomas Bimer, Bombardier’s former vice-president of rail control solutions, prosecutor Staffan Edlund says the evidence produced in the case leads him to conclude that executives at Bombardier’s head office in Montreal signed off on commercial partnerships in Russia whose activities have since come under legal scrutiny.

The alliances Bombardier formed with the partners were made as part of the company’s 2010 agreement to purchase a minority stake in rail signalling equipment manufacturer Elteza, a subsidiary of Russian Railways. Chief among them is a relationship the company forged with the principals of Multiserv Overseas Ltd., a murky entity founded by an associate of former Russian Railways boss Vladimir Yakunin.

Multiserv was a shell company used to funnel multimillion-dollar bribes that helped Bombardier win a US$340-million contract in Azerbaijan, according to preliminary findings from the World Bank, which is conducting its own audit of the matter. Multiserv was also involved in Bombardier projects in Russia, Mongolia, Kazakhstan and Turkmenistan. At the time, Bombardier’s railway business operations in former Soviet states were largely run from Sweden.

“That was a huge deal,” Mr. Edlund said of the Elteza agreement, which was signed at a ceremony in Moscow by Russian Railways head Vladimir Yakunin and Bombardier chairman Pierre Beaudoin, whose family controls the Canadian transportation equipment manufacturer. “It was too big for Stockholm. It was done at the corporate level,” Mr. Edlund said.

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Bombardier has always maintained that neither the company nor any of its officers were involved in any corrupt transactions related to the Azerbaijan project. The same deal is also under investigation by the U.S. Department of Justice.

Asked to comment on the case before the Swedish court, Bombardier spokeswoman Anna Cristofaro said, “Based on information currently known by the corporation, Bombardier has found no evidence that suggests a corrupt payment was made or offered to a public official. Bombardier’s internal review remains ongoing.”

The charges against Mr. Bimer are the result of a five-year investigation by Sweden’s National Anti-Corruption Unit in one of the biggest corruption cases the country has seen.

Mr. Bimer is accused of aggravated bribery in connection with the 2013 contract won by Bombardier Transportation Sweden to install sophisticated signalling systems along the main railway line in Azerbaijan. Swedish police have said as much as US$100-million was paid as a bribe to ensure that a Bombardier-led consortium won the contract.

Mr. Bimer denies any wrongdoing in the Azerbaijan project, his defence lawyer, Tomas Nilsson, told The Globe.

Bombardier forged ties to Russian businessmen Alexey Krapivin and Yuriy Obodovsky with the Elteza agreement, with all three becoming shareholders in the venture. Messrs. Krapivin and Obodovsky were the main beneficiaries of Multiserv. Bombardier’s other Russian partners have been named as Valery Markelov and Boris Usherovich.

At the time it was announced, the Elteza deal was heralded by a Bombardier executive as a “landmark” agreement for the company. Yet little to nothing has been said about the role of the partners.

Transcripts of testimonies in the Swedish criminal investigation give new insights into how the deal went through and who was responsible for bringing the partners on. The documents suggest much of the background checking was done by staff at Bombardier’s corporate headquarters in Montreal.

Peter Cedervall, the former president of Bombardier in Stockholm, told Swedish police the negotiations with the Russian partners in the Elteza deal were handled by the company’s mergers and acquisitions team in Canada. “That kind of project is always run by owners and group management,” he said in a statement filed with the court, adding that major deals and partnerships always had to pass through the European regional headquarters “in Berlin as well as Montreal.”

Mr. Cedervall said the Elteza deal was a project led by Marie-Lise Gauthier, Bombardier’s global head of mergers and acquisitions from 2007 to 2015. She reported to senior vice-president Richard Bradeen, he said.

Contacted by The Globe, Mr. Cedervall said he had nothing to add. Ms. Gauthier did not reply to a request for comment, nor did Mr. Bradeen.

The interest shown by the parent company underscores how important the deal was, Mr. Cedervall told police in filings that have become part of the prosecution’s evidence. “Clearly this was not just about a single deal, but more of a long-term platform or partnership,” he said.

Carolina Lonn, head of legal affairs at Bombardier Transportation in Stockholm, was also questioned by police. When asked what she knows about Multiserv, she said due diligence on that company was done by Bombardier’s corporate head office in 2010 when Bombardier was preparing to do business with Multiserv for the first time, according to a summary of her statement filed with the court.

When asked what role Multiserv played in the Azerbaijan project, Ms. Lonn said it is a so-called “approved vendor” in the deal with Elteza and handled the import and sales to Russia and other countries in the Commonwealth of Independent States. She said this was set up when Bombardier became an owner in Elteza.

Ms. Lonn did not reply to a request for comment from The Globe.

An internal Bombardier memo filed with the Swedish court also confirms the Russian partners, including Mr. Obodovsky and Mr. Krapivin, had “passed through [the] corporate due diligence process.” The memo was sent in November, 2014, by Mr. Cedervall to then president of Bombardier Transportation in Berlin, Lutz Bertling.

Mr. Cedervall and Ms. Lonn were previously suspects in the investigation, but the case against them was dropped.

A Swedish Court heard allegations in 2017 that Bombardier concealed the presence of Multiserv from its submission to the World Bank by keeping a separate set of bid books for the Azerbaijan contract. The World Bank funded 85 per cent of the total project cost. That information was heard as part of a trial against another former Bombardier employee, Evgeny Pavlov, who was charged with bribery and acquitted.

In an investigative report on Multiserv in 2016, The Globe and Mail found the company has no office, no website, no phone number and no employees, just a shared registered address at a law firm in London.

The company was one of several partner companies controlled by the same individuals in Bombardier Transportation’s deals in former Soviet bloc countries, and they served as middlemen in projects worth hundreds of millions of dollars, according to internal Bombardier documents filed in the Bimer case.

In response to The Globe’s report, Mike Nadolski, Bombardier’s then vice-president of communications and public affairs, wrote that the company had hired a “prestigious international law firm” to conduct due diligence, then conducted several additional reviews, before it entered into a relationship with Multiserv. “All of which came to the same conclusion: Multiserv remains in good standing as a corporation and there are no prohibitions – in any jurisdiction – for doing business with the company or its owners,” Mr. Nadolski wrote in 2016.

When Swedish investigators asked Bombardier to provide the original due diligence on Multiserv, the company did not give it to them, a source with knowledge of the investigation told The Globe. The Globe is not naming the source because they are not authorized to disclose that information. Mr. Edlund would not comment.

In their own investigation of Multiserv, Swedish police unearthed even more curious circumstances about the company. Police found that its registered director in 2015 and 2016, a Russian woman in Cyprus, was merely a proxy, according to a memo filed by law enforcement authorities.

The memo says the woman came to the Mediterranean country “as a dancer and worked the first years there at nightclubs” before she began running a multimillion-dollar railway operation. The woman told Swedish police she was merely a nominee director and her previous work experience was “irrelevant.” When she did paperwork for Multiserv, she “was only acting on the instructions received from the [company] representative,” she said.

Swedish police followed the money paid to Multiserv to figure out if the company, in fact, used any of it in the Azerbaijan project, such as for installing equipment. But they found nothing of that kind.

Instead, they saw that money was funnelled through the partners’ companies offshore. Some of the money appears to have sponsored the Formula 2 car-racing career of Artem Markelov, the son of one of the Russian partners, Valery Markelov.

“Why should the Azeri taxpayers’ money end up there? That feels strange, but then again, there is so much that is strange about this,” Mr. Edlund, the prosecutor, said.

Valery Markelov was arrested in Russia in 2018 on suspicions of paying bribes in relation to railway deals and contracts for the Olympic Winter Games in Sochi in 2014. Russian media recently reported that Mr. Markelov was still in pretrial detention and his – and Bombardier’s – partners Mr. Krapivin and Mr. Usherovich were wanted in the same case.

Bombardier’s Russian partners, through the company 1520 Group, where Mr. Krapivin is CEO, did not respond to a request for comment.

Bombardier sold its railway division to French train maker Alstom last year, but according to Bombardier’s most recent annual report, it remains liable to Alstom in the event any damages are awarded in the bribery case. “There is no evidence that suggests a corrupt payment was made or offered to a public official or that any other criminal activity involving Bombardier took place,” the annual report says.

Conducting business with integrity and the highest ethical standards is a top priority for the company and its 13,000 employees, Ms. Cristofaro said. “We take these matters very seriously and are co-operating with the relevant regulatory authorities.”

Mr. Edlund has previously said that Mr. Bimer would likely be the highest-ranking official charged in the affair, and that the National Anti-Corruption Unit had no evidence to support charges against Mr. Bimer’s superiors in Montreal.

Swedish police spent years investigating Multiserv, Mr. Edlund said. And while the transactions involving the Russian partners were part of the structure of the Azerbaijan project, and helped Bombardier in obtaining the contract, Mr. Edlund said he was not able to indict anyone in Sweden for the deal with Multiserv.

A verdict in Mr. Bimer’s case is expected toward the end of this year or in early 2022. If convicted, he faces up to six years’ imprisonment.

Bombardier will refrain from providing additional comments because the matter is under review by regulators and Mr. Bimer’s case is before the Swedish courts, Ms. Cristofaro said.

With reports from Nicolas Van Praet in Montreal

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