The former executive, Pierre Duhaime, was arrested at his home and charged with fraud, conspiracy to commit fraud and knowingly using a false document, said Anne-Frédérick Laurence, a spokeswoman for a special police squad responsible for public contracting corruption in Quebec. She said the unit was also seeking the extradition of Riadh Ben Aïssa, the former executive vice president of SNC-Lavalin’s construction and infrastructure division, who is jailed in Switzerland.
Several Canadian news outlets, citing an arrest warrant, reported that the charges related to a $1.3 billion contract obtained by the company, with two partners, for an expansion of the McGill University Health Center in Montreal. La Presse, a Montreal newspaper, reported last month that SNC-Lavalin may have made $22 million in illegal payments to secure the contract.
With sales of $7.2 billion in 2011, SNC-Lavalin is one of Canada’s largest engineering and construction companies. Its recent acquisitions include the nuclear power reactor manufacturing business of government-owned Atomic Energy of Canada.
But the company’s lucrative relationship with the family and government of Col. Muammar el-Qaddafi, the former Libyan dictator, put SNC-Lavalin in crisis mode this year. The new claims that it may have defrauded Quebec’s leading publicly financed hospital only add to the situation.
“We are unequivocal that no unethical behavior or illegal acts must ever be tolerated,” SNC-Lavalin said in a statement, which did not specifically address the latest allegations. “The company remains committed to maintaining ethical standards of business conduct.”
Mr. Duhaime stepped down in March after the company concluded he had improperly authorized, and then hidden, $56 million in payments to agents who obtained contracts for the company. SNC-Lavalin asked the Royal Canadian Mounted Police to investigate those payments, as well as claims that former employees and contractors were involved in a plan to smuggle Colonel Qaddafi’s son into Mexico. A Canadian contractor once employed by the company is jailed in Mexico in connection with that plot.
SNC-Lavalin fired Mr. Ben Aïssa and the chief financial officer of its construction unit in February, apparently in connection with the company’s dealings in Libya, which included the construction of a prison. In April, Mr. Ben Aïssa was arrested in Switzerland, where he was living. The Canadian Broadcasting Corporation and Radio Télévision Suisse reported jointly on Sunday that authorities in Geneva were reviewing $139 million related to Libyan contracts that passed through Swiss bank accounts.
The latest charges come in the middle of a broad public inquiry into corruption related to government contracts in Quebec. Testimony has shown links among contractors, organized crime, politicians and other officials, as well as widespread bribery.
Montreal’s mayor, Gérald Tremblay, resigned this month after testimony indicated that his political party had received so much illegal campaign cash that it was unable to close the door of a safe at one point. The mayor of Laval, the province’s third-largest city, also quit because of evidence in the inquiry.
Richard Fahey, a spokesman for McGill University Health Center, said the hospital was “deeply troubled” by Wednesday’s allegations. “Being the victim of a fraud, for a publicly funded institution, is disconcerting,” he said.
Article source: http://www.nytimes.com/2012/11/29/business/snc-lavalins-legal-troubles-expand-with-arrest-of-former-chief.html?partner=rss&emc=rss