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The SNC-Lavalin headquarters, in Montreal, on Feb. 12, 2019.

Paul Chiasson/The Canadian Press

The World Bank has given SNC-Lavalin Group Inc. an early reprieve on a decade-long ban for corruption tied to contracts in Bangladesh and Cambodia, a potential boost for the Canadian engineering giant as it tries to rebuild its business after years of crisis.

The global lender ended its sanction on SNC-Lavalin and about 100 affiliates after the engineering company served eight years of a 10-year ban imposed in April, 2013, Montreal-based SNC-Lavalin confirmed in a statement early Tuesday morning. At the time, the bank said it was the longest ban that has ever been agreed to in its settlements.

The discharge means SNC-Lavalin is now free to bid on projects funded by the international development co-operative, which expects to deploy up to US$160-billion through the end of June, 2021, to help countries deal with the blow from COVID-19 and stoke their long-term growth. But the bigger impact could be to SNC-Lavalin’s reputation and credibility on ethics and compliance matters as it claws its way back from global ostracism.

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“In terms of credibility, image, reputation, this is a good thing,” said Louis Hébert, a corporate strategy specialist at Montreal’s HEC business school. “SNC has managed to survive years without going under or being taken over, and long enough to be rehabilitated to a certain extent. They’ve been astonishingly resilient. Still, rehabilitation takes time. And my feeling is that in the eyes of the public, they’re not fully rehabilitated yet.”

SNC-Lavalin’s misconduct “involved a conspiracy to pay bribes and misrepresentations when bidding for bank-financed contracts,” in violation of World Bank procurement guidelines, the lender said in a 2013 news release. The 10-year penalty could be reduced to eight if the company complies with unspecified conditions, the bank had said.

The ban came as part of a negotiated settlement between the company and the financial group, which investigated allegations of bribery involving SNC-Lavalin and officials in Bangladesh on a project to build the Padma Bridge and elevated expressway connecting the country’s southwest to northern and eastern regions. The bank said while that probe was under way, it also learned of wrongdoing by the company in connection to a separate bank-financed project for rural electrification in Cambodia.

SNC-Lavalin pledged to improve its internal compliance program under the agreement with the World Bank and it was subject to third-party monitoring to make sure it was following through, the corporation said. The bank recognizes the “constructive engagement” of SNC-Lavalin and the company’s “efforts to improve their internal policies and business practices to deter the risk of such misconduct from happening in the future,” a bank spokesman said in an e-mail.

Two former SNC-Lavalin executives and a Bangladeshi-Canadian businessman were charged in Canada in connection with the Padma Bridge contract. But an Ontario Superior Court judge excluded wiretap evidence key to the case and the men were acquitted.

SNC-Lavalin today isn’t the same company involved in wrongdoing years ago, said its chief compliance officer, Hentie Dirker – both in terms of the tone set by its senior leadership and the internal controls implemented. The board and C-suite has been entirely renewed. Of 120 other top managers in place a decade ago, only two or three individuals remain, he said. The company does deep due diligence on third parties that act on its behalf, he added. All employees can get instant answers on details of SNC-Lavalin’s code of conduct through a chatbot nicknamed Scotty.

Other companies are seeking advice from SNC-Lavalin now on how to implement integrity programs, Mr. Dirker said. But to be able to fully move on from its legal woes, many outside observers have suggested the company needs to change its name to achieve a break from the past, just as Montreal-based engineering peer Genivar became WSP Inc.

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“We will no longer let yesterday’s events define who we are today and what we intend to achieve tomorrow,” SNC-Lavalin chief executive officer Ian Edwards said in a statement. “Since 2012, SNC-Lavalin has done its homework. Over nearly 10 years, we evolved through honest reflection, hard work and a sustained commitment by and toward all our employees.”

Padma Bridge is only one of several corruption scandals that has battered SNC-Lavalin’s standing among global engineering companies in recent years.

The biggest case for SNC-Lavalin erupted in early 2012, after Swiss and Canadian police discovered mysterious payments from the company running through bank accounts in Switzerland and other countries – payments that were later discovered to be bribes to win projects in Libya. The late dictator Moammar Gadhafi controlled the country at the time, and SNC-Lavalin was eager for a share of lucrative contracts his government offered.

Mr. Gadhafi was an international pariah over human-rights abuses, provoking military conflict and backing terrorist attacks, including the 1988 Lockerbie airliner bombing that killed 270 people. In 2015, the RCMP laid bribery and fraud charges against SNC-Lavalin Group Inc., SNC-Lavalin Construction and subsidiary SNC-Lavalin International. Police and prosecutors alleged the company was part of a complex scheme to pay bribes in Libya between 2001 and 2011 to secure contracts while participating in a $130-million fraud.

SNC-Lavalin then pursued an intense lobbying campaign with the federal government to win a settlement called a deferred prosecution agreement as an alternative to criminal prosecution that would allow it to avoid damage to its business from a lengthy trial and potential conviction. Allegations that Prime Minister Justin Trudeau and other members of his government improperly pressed then-justice minister and attorney-general Jody Wilson-Raybould to order a settlement dogged the Liberals for months.

In the end, SNC-Lavalin struck a deal with prosecutors in December, 2019, in which the company’s construction division pleaded guilty to a single charge of fraud while the potentially more-damaging bribery charge was dropped. The company agreed to pay a $280-million fine and received a three-year probation order, which includes oversight by an independent monitor. The Quebec judge who approved the agreement called it “reasonable” and said without such plea deals Canada’s justice system “would collapse under its own weight.”

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In corporate filings, SNC-Lavalin states it is aware of investigations by authorities that “may remain ongoing” in connection with its past business dealings in various jurisdictions, including Algeria. An RCMP investigation relating to alleged payments in connection with a 2002 contract for the refurbishment of Montreal’s Jacques Cartier Bridge by a consortium including SNC-Lavalin continues and its scope might include the company, according to SNC-Lavalin’s annual information form.

Michel Fournier, the former head of Canada’s Federal Bridges Corp., pleaded guilty in 2017 to fraud-related charged for accepting more than $2.3-million in kickbacks from SNC-Lavalin in the Jacques Cartier bridge case and laundering the funds he received. He received a sentence of 5½ years but has since won full parole.

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