The Libyan prison that SNC-Lavalin Group agreed to build for the former Gadhafi regime was so large, it was expected to house 4,000 inmates and occupy a swath of desert larger than the Plains of Abraham.
And when the Canadian engineering giant needed someone to design the complex, it turned to a relative of Riadh Ben Aissa, the SNC executive in charge of the company's international construction – and whose familial wealth was inextricably linked to the company's operations in North Africa and the Middle East.
Ramla Benaissa Architects, the Philadelphia firm owned by Mr. Ben Aissa's sister, was not only hired by SNC to plan the $275-million prison, the company also enlisted her firm to rehabilitate lakes in the Libyan city of Benghazi – contracts that highlight a breakdown in controls at the embattled company and have exposed a divide between what was known inside SNC about Mr. Ben Aissa and what information was passed to its board of directors.
After more than a quarter-century of service, the high-ranking executive parted ways with the company in February, shortly before an internal investigation accused him of making $56-million in improper payments that it cannot trace – a revelation that has spawned an RCMP probe as well as a class-action lawsuit by shareholders. Mr. Ben Aissa's sister is one of three of relatives who stood to profit from SNC-Lavalin during his meteoric rise within the company.
Although a company spokeswoman said that Ms. Benaissa's firm was properly hired "at fair market terms," a source close to the internal investigation at SNC begs to differ. "You can't do that at a public company," said the source, explaining that the contracts and their potential for conflict of interest were never brought to the attention of SNC's corporate overseers. "We're learning things that we are astounded by."
In a report on Saturday, The Globe and Mail detailed many of the financial links between the Ben Aissa clan and SNC: how a company owned by Mr. Ben Aissa's mother sells computers and printers to SNC's Tunisian subsidiary; how SNC rents an office in Tunis that, according to property records, is registered to "Benaissa Land;" how SNC's former Saudi Arabian subsidiary listed Mr. Ben Aissa's then brother-in-law as a shareholder.
But the fact that Mr. Ben Aissa's sister had a stake in the prison project had not been publicly disclosed – even if it was well known within the company. When it emerged last year that SNC had been hired to build the "Judicial City," which is what the Gadhafi regime dubbed the prison project, it sparked a public backlash, with one member of the Quebec legislature calling for the company to immediately withdraw. The company defended the project as an effort to modernize and improve Libya's justice system.
Ramla Benaissa's involvement in the prison was hardly a secret to SNC employees. Internal records from the company's Libyan operations show that Ms. Benaissa was given an @snclavalin.com e-mail address. She was repeatedly identified in SNC paperwork as the prison's lead architect. The name of her design firm appeared on hundreds of SNC-Lavalin documents: floor plans, cell wall details, prison layout diagrams, and many others. (Ms. Benaissa transliterates her name from Arabic slightly differently from the version preferred by her brother, but her mother confirmed their relationship in an interview with The Globe.)
Ms. Benaissa declined to answer questions about how much she was paid for her work and how much experience her firm has designing correctional facilities. According to her firm's website, the company is also involved in a project to transform a historical Philadelphia building into a multi-unit residential complex.
She defended the proposed prison in a statement, explaining that aspects of the design exceeded standards set by the United Nations. The prison's design "is ethical, is right and it makes us proud," the statement said.
Some SNC-Lavalin employees who worked closely with Mr. Ben Aissa, who was born in Tunisia, said they believed the company turned a blind eye to these relationships because nepotism was considered culturally acceptable in that region of the world. That explanation should not placate shareholders, said Chris MacDonald, an expert in business ethics and a visiting professor at the Ted Rogers School of Management at Ryerson University. (The company's stock has dropped in value by nearly 40 per cent over the past year.)
"It's still a Canadian company, accountable to Canadian shareholders, Canadian regulators, and Canadian governance standards," said Mr. MacDonald. "Sometimes working within foreign cultures necessitates some careful work to combine respect with integrity. But that doesn't mean throwing integrity or loyalty out the window."
There are occasions in business when hiring a relative is acceptable, but the process needs to be completely transparent, Mr. MacDonald said. In the case of SNC, the number of financial links between the Ben Aissa family and SNC-Lavalin "raises red flags," he said.
SNC-Lavalin's code of ethics states that employees must immediately inform management of potential conflicts, including "ownership by an employee, or a family member, of a significant financial interest in an outside enterprise, which does or seeks to do business with … SNC-Lavalin."
The company did not say whether Mr. Ben Aissa informed anyone about his family's arrangements with SNC. Mr. Ben Aissa declined to comment through his Ottawa-based lawyer, Michael Edelson.