SNC-Lavalin claims most rivals were granted deals to avoid convictions ‚ÄĒ is that true?
|globalnews.ca 11 Apr 2019 at 11:16|
MONTREAL ‚ÄĒ¬† It was a sunny Wednesday in March, and Neil Bruce was making his case for why SNC-Lavalin Group Inc. deserved a negotiated settlement over corruption charges tied to alleged dealings in Libya.
After spending six weeks in the eye of a political storm over the actions of top government officials who had pushed to head off a criminal prosecution in the case, the CEO of Canada‚Äôs most renowned engineering and construction firm went on a press offensive.
Flanked by a public relations team in a downtown Toronto boardroom, Bruce shared some internal data on the use of deferred prosecution agreements (DPA) by SNC-Lavalin‚Äôs rivals to illustrate the competitive disadvantage his firm faces.
In the U.S. and United Kingdom, just one of SNC-Lavalin‚Äôs 16 main competitors listed in its 2018 annual information form is named as a DPA recipient, according to the databases that go as far back as 1992.
Of 216 DPAs and non-prosecution agreements ‚ÄĒ which are similar, but more lenient ‚ÄĒ in the U.S. since 2014, only eight were granted to construction or design firms, and only three of those companies qualified as global players, according to figures in annual reports by law firm Gibson, Dunn & Crutcher.
The U.K. has granted only four DPAs since legislation was passed in 2013, records from Fieldfisher law firm show.
‚ÄúMost of the activity in DPAs is extremely recent,‚ÄĚ said Jennifer Quaid, a criminal law professor at the University of Ottawa. ‚ÄúThere isn‚Äôt necessarily a long tradition of holding companies criminally liable in many European jurisdictions.‚ÄĚ
When asked about the discrepancy in the numbers, SNC-Lavalin stood by its figures.
‚ÄúSNC-Lavalin did internal research on the topic and calculated that about 75 per cent of its rivals have concluded DPAs in their host countries,‚ÄĚ spokesman Nicolas Ryan said in an email.
While none of SNC-Lavalin‚Äôs 16 competitors appear to have received DPAs in the U.S. or U.K. in the past five years, a few of their subsidiaries have, and several rivals accepted deals prior to 2014.
In 2012, Tokyo-based Marubeni Corp. agreed to pay US$54.6 million in a DPA linked to its participation in a decade-long scheme to bribe Nigerian government officials, according to the U.S. Department of Justice.
Montreal-based engineering firm WSP Global Inc. bought Louis Berger in 2018 ‚ÄĒ three years after that company paid US$17.1 million to resolve charges it bribed officials in India, Indonesia, Vietnam and Kuwait.
Aecon Group Inc.‚Äôs Tishman Construction Corp. accepted in 2015 a US$20.2-million DPA tied to an overbilling scheme. And SNC-Lavalin‚Äôs own WS Atkins, which it bought in 2017, acquired a subsidiary seven years earlier that reached a US$3.4-million DPA following allegations of bribing Qatari officials in 2009.
In 2008, British construction company Balfour Beatty admitted to ‚Äúpayment irregularities‚ÄĚ and paid a 2.25-million-pound penalty following a bribery investigation by the U.K.‚Äôs Serious Fraud Office, avoiding charges in the process. Instead it got a plea bargain, which unlike a DPA involves a legal admission of guilt along with the bidding bans and steeper penalties that can come with it.
The goal of a DPA, also known as a remediation agreement, is to encourage voluntary disclosure of criminal misconduct that might otherwise fly under regulators‚Äô radar. By entering into a DPA, a company avoids prosecution while taking responsibility for breaches such as fraud or bribery of foreign officials and agreeing to conditions like overhauling its board and senior management, adopting a compliance program and accepting third-party oversight.
DPAs also aim to slash costs and time for investigators in what can be lengthy, exhaustive criminal probes by cash-strapped government bureaus.
‚ÄúThe big thing that corporations are worried about is stigma. They don‚Äôt like the stigma of being considered a corporate criminal, because that affects their sales and their public reputation,‚ÄĚ said Russell Mokhiber, a corporate crime journalist and author.
‚ÄúLarge companies tend to get away with DPAs and the smaller companies get prosecuted criminally,‚ÄĚ she said.
She points to Rolls-Royce PLC, with which U.K. prosecutors pursued an agreement ‚Äúfor corrupt conduct spanning three decades,‚ÄĚ as the state‚Äôs Serious Fraud Office director put it in February. The settlement ‚ÄĒ which emerged only after Rolls-Royce had been ‚Äúfound out,‚ÄĚ Hawley said, not after self-reporting ‚ÄĒ drew renewed scrutiny of the practice.
‚ÄúBecause the large corporations have the power, they have the power to demand and secure these agreements,‚ÄĚ said Mokhiber. ‚ÄúYou lose so many jobs in the economy, shareholders get hurt, innocent employees are punished, and so forth.‚ÄĚ