A $33.5-million (U.S.) payment that led to corporate upheaval at SNC-Lavalin Group Inc. was portrayed as a payment related to an Alberta oil-sands treatment plant project, sources close to the company have said in interviews. The funds were in fact destined for somewhere in the Middle East, The Globe and Mail has learned.
In December, 2011, SNC's former head of construction, Riadh Ben Aissa, persuaded SNC's then-chief executive, Pierre Duhaime, to sign off on the transfer of $33.5-million in relation to a bitumen froth treatment plant that the company had recently been contracted to build for Canadian Natural Resources Limited, two sources close to SNC have said in interviews.
But internal investigations at SNC, sources said, reveal the money had nothing to do with the froth treatment plant – which was cancelled in December, 2012 – and the respected engineering firm is struggling to understand why Mr. Duhaime approved the transfer and where the funds ultimately ended up.
A Canadian National Resources spokesman said that they dealt directly with SNC, not through a third party. And there is no suggestion that anyone from Canadian Natural Resources received any funds or has done anything improper.
It has been nearly a year since SNC, Canada's largest engineering company, released the results of a forensic audit that led to the departure of Mr. Duhaime, rattled investor confidence and prompted class-action lawsuits in two provinces.
The audit highlighted two payments totalling $56-million that SNC said had been disguised in its books as legitimate, when in fact they were used for some other purpose.
Since then, only one of the two payments has been publicly explored.
Quebec's anti-corruption task force alleges that the lesser of the transfers – $22.5-million – was used to bribe administrators with Montreal's English-speaking health-care network in an effort by SNC to secure a contract for the construction of a new hospital. The circumstances of the larger payment – which auditors referred to as the "A Agreement" in a redacted report – have remained a mystery.
The audit, the results of which were publicly released in a redacted report, alleged that Mr. Ben Aissa persuaded Mr. Duhaime to approve the $33.5-million transfer after two other SNC executives refused to record the payment as an expense for two foreign projects. In interviews, sources said that, by the time the request was approved by Mr. Duhaime, the payment became linked within SNC to the Fort McMurray treatment plant. Canadian Natural Resources, one of Canada's largest oil and gas suppliers, "was really just being used as name," one source close to the internal probe said. The cancellation of the Canadian Natural Resources contract, which was worth $650-million, had nothing to do with the $33.5-million payment, two sources said.
At least some of the money was first sent to the Middle East, said one source, who declined to specify which country. "As we piece through the transit points of the SNC system, it becomes increasingly known how this stuff was working – but its ultimate destination outside SNC and its uses are still unknown," another source said.
Michel Massicotte, Mr. Duhaime's lawyer, declined to comment for this story, as did Mr. Ben Aissa's lawyer, Michael Edelson.
Mr. Duhaime provided an explanation during the internal investigation at SNC, sources interviewed for this story said, but they declined to detail precisely what he told investigators. Two of those sources, both of whom had intimate knowledge of the internal probe, said they were confident that Mr. Duhaime did not stand to profit from the transfer.
Both Mr. Duhaime and Mr. Ben Aissa have been charged with more than a dozen fraud and corruption related offences in relation to the alleged payments made in connection with the hospital contract. Mr. Ben Aissa has been jailed for nearly a year in Switzerland, where prosecutors are tracking the estimated $160-million he is alleged to have funnelled to Saadi Gadhafi, the son of the late Libyan dictator Moammar Gadhafi, in return for infrastructure contracts. A team of RCMP officers dedicated to investigating Canadian companies accused of paying foreign bribes has also launched an investigation into SNC contracts in North Africa going back to 2001.
The $33.5-million payment could not have been detected without the co-operation of two other SNC executives – chief financial officer Gilles Laramée and the former chairman of SNC-Lavalin International, Michael Novak – who had originally turned down Mr. Ben Aissa's efforts to transfer the funds, one source said. It is unknown, however, why this particular transfer of money raised alarm bells for both executives. Mr. Laramée and Mr. Novak did not respond to a request for comment.
Since the RCMP and Quebec's anti-corruption task force launched investigations into the company, it has emerged in court documents and media reports that the company often transferred millions of dollars to corporations in offshore jurisdictions, such as the British Virgin Islands and the Bahamas, who were purportedly acting as sales "agents" for projects in other countries. Since the scandal has erupted, the company has launched a public-relations blitz, hiring an executive specialist in ethics and reviewing how it pays such agents.