In a widely publicized move, on December 18, 2019, SNC-Lavalin Construction Inc. pleaded guilty to fraud over five thousand dollars. The guilty plea was the result of protracted settlement discussions between SNC-Lavalin and the Crown.
As part of SNC-Lavalin’s plea deal, all charges against SNC-Lavalin Group Inc. and its international marketing arm, SNC-Lavalin International Inc. were withdrawn. SNC-Lavalin Construction will pay a fine of $280 million, payable in instalments over the next five years. The deal also includes a recently released probation order that requires SNC-Lavalin Construction to cause SNC-Lavalin Group to strengthen its compliance program, record keeping, and internal control standards.
Pursuant to the probation order, SNC-Lavalin must report to the court and the Public Prosecution Service of Canada through a monitor. The monitor will prepare an initial report on SNC-Lavalin’s remediation efforts and proposals to improve compliance policies, followed by subsequent reviews incorporating comments provided by the court on the initial report. SNC-Lavalin must also publish a press release detailing the offence for which SNC-Lavalin Construction was convicted, the sentence imposed by the court, and the appointment and responsibilities of the monitor. Executive summaries of the monitor’s reports will be posted online throughout the probationary period.
The monitor or the court may also require SNC-Lavalin to adopt specific key internal controls, policies and procedures, listed in an appendix to the probation order. These policies and procedures include:
- a system of internal accounting controls designed to ensure that SNC-Lavalin makes and keeps fair and accurate books, records and accounts;
- a rigorous anti-corruption compliance code, standards and procedures designed to detect and deter violations of the Corruption of Foreign Public Officials Act and other applicable anti-corruption laws;
- compliance standards and procedures, including internal controls, ethics and compliance programs on the basis of risk assessment addressing the individual circumstances of SNC-Lavalin;
- annual review and updates of anti-corruption compliance standards and procedures including internal controls, ethics and compliance programs, taking into account relevant developments in the field and evolving international and industry standards;
- a system of financial and accounting procedures including a system of internal controls, reasonably designed to ensure the maintenance of fair and accurate books, records and accounts to ensure that they cannot be used for the purpose of bribery or concealing such bribery;
- mechanisms designed to ensure that anticorruption policies, standards and procedures are effectively communicated to all directors, officers, employees and, where appropriate, agents and business partners;
- an effective system for providing guidance to individuals and confidential, retaliation free, reporting by employees, directors, officers, agents and business partners; and
- an effective system for oversight of all agents and business partners.
SNC-Lavin Group, SNC-Lavalin International, and SNC-Lavalin Construction were initially charged with bribery of a foreign official under the Corruption of Foreign Public Officials Act, as well as fraud under the Criminal Code. The Crown’s allegations relate to SNC-Lavalin’s dealings in Libya with the government of Muammar Gaddafi. Just a few days prior to the guilty plea, a Quebec jury found Sami Bébawi, a former SNC-Lavalin executive, guilty of fraud and corruption charges in connection with the same allegations.
The deal allows SNC-Lavalin to avoid debarment under the Canadian Integrity regime. Pursuant to the Integrity Regime, a company may be debarred (i.e. banned from obtaining government contracts) as a result of a conviction for certain offences. Had SNC-Lavalin been found guilty under the Corruption of Foreign Public Officials Act, the company would have been unable to obtain government contracts for a minimum of five years and up to ten years. Additional convictions may have also resulted in SNC-Lavalin being prevented from obtaining contracts with foreign governments.
This deal follows controversy surrounding the decision to refrain from offering SNC-Lavalin a Remediation Agreement (also know as a Deferred Prosecution Agreement). SNC-Lavalin had asked for a Remediation Agreement on the grounds that it had removed all executives in charge at the time of alleged events and implemented significant changes to its ethics and compliance systems.
Despite the Crown’s decision to proceed with the charges against SNC-Lavalin and its subsidiaries, the final result closely resembles a Remediation Agreement and allows the company to put these allegations to rest