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business scandal

An early photo of Riadh Ben Aissa.

SNC-Lavalin Group Inc. had a name for Riadh Ben Aissa. He was one of the company's "firemen."

Mr. Ben Aissa, a Tunisian-born executive, had a knack for getting the company out of sticky situations in far-off countries where few western multinationals dared go. Whether it was persuading a client in Tunisia to drop a lawsuit against SNC or cozying up to Moammar Gadhafi to win lucrative contracts in Libya, Mr. Ben Aissa found a way to make things work. SNC valued his talents enough that the engineering giant put him in charge of its global construction division, which included projects in dozens of countries and more than 10,000 employees.

Everything changed in February: suddenly the fireman was extinguishable. Mr. Ben Aissa was drummed out of SNC, accused of allegedly making $56-million in payments to unknown commercial agents to help win contracts. By then he'd also been in the eye of the storm over his close ties to the Gadhafis, now out of favour in the West after a popular rebellion in Libya.

The scandals continued. The company recently forced out chief executive Pierre Duhaime over his alleged role in the payments to agents. An RCMP investigation is under way and the company has been scrambling to reassure investors. Its Montreal headquarters was raided last week.

SNC said it's co-operating with the RCMP and has insisted that most of the problems were isolated to Mr. Ben Aissa and a small group of insiders. The company "has provided information to the appropriate authorities and is co-operating fully with them on these and any other matters," spokesman Leslie Quinton said.

A key issue, according to someone familiar with the probe, is that Mr. Ben Aissa and Stephane Roy, a division controller who has been dismissed, had the power to authorize large expenditures because of the nature of construction projects. Mr. Roy was supposed to act as a check on Mr. Ben Aissa, but the board alleges the two worked in concert for years. Investigators are now trying to piece together how various expenditures were booked in the division and where the money actually ended up. The board also learned about some of the unusual business connections between the company, Mr. Ben Aissa and some family members. The investigation is continuing and the improper payments could yet exceed $56-million, a source said. Mr. Ben Aissa has denied any wrongdoing and has threatened to sue the company over his dismissal.

The company has depicted Mr. Ben Aissa as a rogue operator, acting outside the ethical code of the company. For decades, however, he has very much been a creature of the company that benefited from the fruits of his ambition.

Former and present SNC-Lavalin employees are divided about Mr. Ben Aissa's legacy, some reverent, others cautionary. Some executives describe him as driven and adept in an area of the world where most Westerners flounder. Another former executive credited Mr. Ben Aissa with almost single-handedly landing a lucrative contract with Saudi Arabia's state-run oil giant Aramco. "All of this takes years to get it said and done – to develop the contacts, the opportunities, etcetera. I give him credit for that, because many tried before." Another vice-president who worked closely with Mr. Ben Aissa described his approach as using "all means necessary."

But an SNC official who worked closely with Mr. Ben Aissa after the merger said the company's man in the Middle East was like a lone wolf and his success made him less accountable. The former executive, who agreed to speak on the condition that he was not identified by name, said that in the mid-1990s he was alarmed to learn that Mr. Ben Aissa's then brother-in-law was a shareholder in the firm's Saudi subsidiary – meaning he shared in profits earned by the company in that country. When the executive made inquiries about how the Saudi subsidiary had been structured, he received an explicit warning from a colleague: "Don't you dare badmouth or lay a finger on this guy Ben Aissa."

Mr. Ben Aissa has since divorced that wife and the agreement is no longer in place.

A company spokeswoman confirmed the arrangement and said it complied with the company's ethics policy at the time.

Mr. Ben Aissa, who has an MBA from the University of Ottawa, got his start in 1985 with Lavalin before it merged with SNC in 1991. Lavalin had a proud history as one of Quebec's leading engineering firms, notably helping build the James Bay hydroelectric development project and the fabric roof on Montreal's Olympic Stadium. But it also had a reputation as a hard-charging risk taker with a penchant for aggressively pursuing work overseas.

Initially confined to selling the firm's services in North Africa and the Middle East, Mr. Ben Aissa's breakthrough came two years later, when he received a phone call from Marcel Dufour, one of Lavalin's co-owners, according to a recently published book commemorating SNC's 100th anniversary. "I hear that you are a capable Tunisian," Mr. Dufour told the young marketer.

By the next day, Mr. Ben Aissa was back in his native country, persuading a client to drop a $3-million lawsuit and give Lavalin an extension on a contract.

Mr. Ben Aissa's status soared with lucrative contracts. One former executive said that Mr. Ben Aissa's first major success involved a $610-million deal for a subway system, awarded by the Turkish government in 1988. "That was his first shining star," the former company official said. He collected more such victories in Saudi Arabia, Algeria, and Tunisia, but over the next decade he became increasingly focused on cracking the Libyan market.

A former resident of the eastern city of Benghazi recalled seeing Mr. Ben Aissa during an early visit to the country, feeling pity for him because no government officials would sit down with him for a meeting. "He couldn't get in the door," he said.

In 1995, though, he nailed down a role for SNC in Libya's Great-Man Made River project in 1995, a $230-million job noted in the anniversary book as "a maddening contract, fraught with challenges." This was just before detente was reached between Col. Gadhafi's regime and Western governments, who had distanced themselves from his dictatorship. According to the company's anniversary book, the contract opened the door in Libya to further work. "Now that the company had the Libyans' trust, Ben Aissa was in an excellent position to secure other contracts for the project."

Not long after the international community warmed to Libya after Col. Gadhafi agreed in 2003 to pay billions of dollars in compensation for the Lockerbie bombing, , Mr. Ben Aissa started helping Colonel Moammar Gadhafi's sons with their personal ambitions.

He assisted with a 2005 exhibition of Saif Gadhafi's paintings in Montreal, sponsored by SNC-Lavalin but panned by critics ("a triumph of banality," said a British newspaper). He gave regular cash payments to Saadi Gadhafi, sponsored a Gadhafi soccer club in Tripoli and arranged to cover the costs of a lavish trip Saadi made to Toronto in 2008, where he once owned a condominium and enjoyed a playboy-like lifestyle. Mr. Ben Aissa's involvement with the Gadhafis went much further. He formed a joint-venture with Saadi's Libyan Corps of Engineers to funnel projects to SNC. That led to work on a new airport and a massive prison in Tripoli, expected to house up to 5,000 inmates.

The company confirms that its headquarters in Tunisia sits on property owned by the former executive's family. It also acknowledges it is aware of unusual financial arrangements between the firm, his mother and former brother-in-law.

When asked about the fact that Tunisian land records show that SNC's offices in Tunis are located at an address owned since 1997 by "Benaissa Land," Ms. Quinton, the SNC spokeswoman, did not comment on the appropriateness of the arrangement. "The property rented by SNC-Lavalin is paid at fair market terms," she said.

That office is a modern three-storey building with opaque blue windows about a 15-minute drive from the centre of Tunis. It adjoins a smaller, cream-coloured storefront that houses Orbit Media, a company selling computers, paper shredders, and other office products. The two businesses, Orbit and SNC-Lavalin, share the same address.

A former SNC-Lavalin official in North Africa said it was widely known within the company that Mr. Ben Aissa hired his relatives. "That's common," the former official said. "You hire people you know, people you trust. Nepotism is part of the tradition in our culture."

Mr. Ben Aissa's brother, Dr. Rafik Benaissa, also tried to do business in Libya. Dr. Benaissa, an orthopedic surgeon who practices in Minot, N.D., also runs a company that specializes in oil exploration and the sale of defence equipment.

In 2009, his company, Benaissa Oil, operated a booth at a defence expo in Tripoli, where, alongside a sea of vendors hawking surveillance systems and night vision goggles, Dr. Benaissa promoted U.S. and UK security products.

Dr. Benaissa declined an interview request and referred questions to a Montreal lawyer, Anthony Karkar. Mr. Karkar said his client had no relationship with the Gadhafis or SNC-Lavalin, and that he had never used his brother's ties to the regime to secure business. The fact that Dr. Benaissa had to attend a public exposition is evidence that he had no relationship with the Gadhafis, Mr. Karkar said.

"He wouldn't need to make a stand [at an exhibition]if he was close to the Gadhafis – let's face reality. All he would do is go and speak with the brother and he has the contact. He doesn't have to go and sell or show his stand," the lawyer said, repeatedly pointing out that his client had obtained all the necessary approvals from the U.S. State Department to sell defence equipment abroad.

At times, Benaissa Oil has listed as its address the same Tunis office building that houses SNC-Lavalin's local headquarters but Mr. Karkar said his client effectively used the office as a mailbox.

When a correspondent for The Globe arrived to the address unannounced, a petite woman in her 70s, Baya Ben Aissa, identified herself as the owner of Orbit and mother of Riadh Ben Aissa. She said that her company has been supplying technology to SNC for years, but suggested that the business relationship recently broke down. (Orbit remains listed as an official supplier of the company.) "They are very badly organized at SNC," Ms. Ben Aissa. "I don't want to work with SNC any more." She would not go into details.

She stood erect with arms crossed, raising her voice as she complained about the way her son has been portrayed as the key figure in a corruption scandal. It was not Mr. Ben Aissa, but the company's leadership in Montreal, that made final decisions about deals in Libya, she said.

"There are false rumours in the Canadian press about him," she said. "Very false."