Penny Collenette, a former senior fellow at the Kennedy School of Government, is an adjunct professor in the University of Ottawa's faculty of law.
What do we make of the second round of new charges, laid yesterday by the RCMP, against engineering giant, SNC-Lavalin? Are former employees not already facing charges? In fact, didn't a Swiss court find that SNC itself was a victim of reprehensible misdeeds, to the tune of $16 million? Hasn't there already been a huge shakeup at the top?
The new CEO, Robert Card, has been very vocal in his assurance that the company, which was founded in 1911 and employs approximately 45,000 people in 50 countries, has co-operated fully with investigating authorities.
In addition, Mr. Card has mentioned the lengths to which the company has gone to assure officials that his company lives up to the highest ethical standards. Embedded in SNC-Lavalin's current website are links to first-class, influential global forums which promote exemplary corporate behaviour in good governance and ethical training. The company now employs top-of-the-line best practices to fight corruption – practices which include in-person corruption training for 3000 employees as well as an Ethics Point Hotline (also known as a whistleblower line but more commonly seen as ethical reporting).
So what is going on? Why might SNC be barred for 10 years from bidding on contracts related to the federal government's Public Works Department? Does it seem fair that a company be held to account for past actions which could jeopardize its future survival?
Whatever side of the argument you may philosophically favour, global attitudes towards corruption have radically shifted in the last decade. Gone are the days when a bribe or gift was regarded with a "nudge, nudge, wink, wink" shrug of the shoulders. That was simply the cost of doing business. Oh, and if there was a fine for the company? Well, that too was just part of the way business was done. The bottom line could absorb it.
No longer. Powerful business and government leaders now realize that the cost of corruption does more harm than they had ever imagined.
For years, activists held protests and invaded shareholder meetings to highlight corporate misdeeds. But the tipping point was not reached until several key organizations – the United Nations' Global Compact founded by Kofi Annan in 2000, Transparency International, the Organization for Economic Co-operation and Development, and the G20, aided by the advocacy group ONE – began to sound the alarm bells with concrete figures that were shocking.
A recent CBC report stated that the UN estimates that more than $1-trillion is paid in bribes each year. The cost of that corruption to the world's economy is estimated to be a massive $2.6 trillion. These are huge numbers which are almost too much to absorb. What is the actual impact? What are the consequences?
Modern studies are smart. They follow the lost money along an infrastructure trail of what could have been built (i.e., hospitals and schools) if only the money had found its way into the correct coffers. These studies link what 'could have been' with 'what is' and even more compelling, they link human life to the cost of corruption.
ONE's research, published as The Trillion Dollar Scandal , found that more than 3.5 million lives a year could be saved if the G20 became serious about punishing corruption, including bribery, money laundering and tax evasion.
The evidence became too compelling to ignore. Fuelled not only by statistics but by instant communications and social media, governments began to act, either with new legislation or by strongly enforcing laws which were already on the books but perhaps had not been enforced with vigour.
In 1998, Canada (which had lagged behind the US in this regard) enacted The Corruption of Foreign Public Officials Act. Companies had fair warning that this law was in effect, and corporate training programs should have been implemented. But it was not until 201l that the first prosecution of Niko Resources was successful and resulted in a $9.5-million fine for the guilty company. In 2013, another prosecution, this time for Griffiths Energy International, followed. A fine of $10.35-million was levied on the company. In 2014, Nazir Karigar was sentenced to three years in prison for paying bribes on behalf of his company Cryptometrics Canada – the first individual to be imprisoned under the law.
In November 2014, the federal Public Works department announced a new and tough program called the Integrity Framework. It means that a company that has been convicted of fraud, bribery or similar offences will be barred from bidding on proposals for federal government projects. In other words, not only is this a punitive consequence, but it is also a huge reputational slap in the face for any company.
So where does this leave SNC-Lavalin? Their timeline (2001-2011) of the allegedly very serious fraud and corruption acts falls right in the decade of changing attitudes toward corruption, not only globally, but here at home. To compound matters, the allegations against former employees of the company are not only said to have taken place in Libya, Algeria and Bangladesh, but also in Montreal.
Since then, the company has changed its leadership and has implemented the best programs possible. We can't predict the outcomes of the new allegations and therefore we don't know the consequences for SNC. The charges raise fascinating questions which dramatically peel off the corporate veil.
Who is responsible for "rogue employees?" Who should be held accountable for corruption, fraud and bribery? Only the individuals who committed the acts? Or the company as a whole, even if it may mean loss of business and possibly loss of jobs?
Is this fair? All I know is that it is fair to ask the questions. Not only fair, but right. It would be unfair not to.