Canada now dominates World Bank corruption list, thanks to SNC-Lavalin
Thursday, 19 September 2013 22:32, Source - Guyana Chronicle
(Financial Post) CANADA’S corporate image isn’t looking so squeaky-clean in the World Bank’s books — all thanks to SNC-Lavalin. Out of the more than 250 companies year to date on the World Bank’s running list of firms blacklisted from bidding on its global projects under its fraud and corruption policy, 117 are from Canada — with SNC-Lavalin and its affiliates representing 115 of those entries, the World Bank said.
“As it stands today, the World Bank debarment list includes a high number of Canadian companies, the majority of which are affiliates to SNC Lavalin Inc.,” said the bank’s manager of investigations, James David Fielder.
“This is the outcome of a World Bank investigation relating the Padma Bridge project in Bangladesh where World Bank investigators closely cooperated with the Royal Canadian Mounted Police in an effort to promote collective action against corruption.”
As a result of the misconduct found during the probe, the Montreal-based engineering and construction firm, and its affiliates as per World Bank policy, were debarred in April 2013 for 10 years, as part of a settlement with SNC-Lavalin. And in one fell swoop, 115 Canadian firms were blacklisted by the World Bank, making Canada seemingly look like the worst offending country.
It’s quite the jump from 2012, when no Canadian companies were barred.
The long list of debarments mainly stems from just one large Canadian firm, but it still prompted some headlines around the world to point to Canada as being home to the most corrupt companies in the world.
“It is a little surprising,” said Tim Coleman, a global investigations partner at law firm Freshfields Bruckhaus Deringer in New York. “Because you do expect that the companies that are going to be highest up on the list, are going to be companies that have a reputation of corruption. And Canada is not one of those countries.”
Overall, Canada had 119 total companies on the list (including two permanently debarred since 1999). United States had the second largest number, with 44 companies on the debarment list (among which are several SNC-Lavalin companies), and Indonesia came in third with 43.
SNC-Lavalin did not respond to a request for comment.
The World Bank has been stepping up its fraud investigations in recent years, with four times more debarments than in 2012, and compared to the past seven years combined, said Mr. Coleman.
Canadian firms may be at higher risk of being sanctioned by the World Bank, he added, because Canadian authorities have not been as aggressively enforcing its anti-corruption laws as its U.S. counterparts.
“The result of that is that Canadian companies may have been lulled into a false sense of security, because their own national authorities were not closely scrutinizing their global operations, that nobody else would either,” he said.
There were 89 SNC-Lavalin affiliates, however, that were instead given a conditional non-debarment by the World Bank for 10 years. This is essentially a probation of sorts that requires these companies to adhere to compliance standards, but are still allowed to bid on the World Bank’s development projects around the world.
These sanctions were handed down instead of debarment, in part, because these companies had come forward to the bank had demonstrated concrete steps towards anti-corruption practices, said a World Bank spokesperson.
That is a sign that SNC-Lavalin has begun taking compliance more seriously. said Milos Barutciski, Bennett Jones senior partner and co-chair of the firm’s international trade and investment practice.
“The fact that it didn’t [debar] the whole group is also, I think, an indication of what I believe is that SNC-Lavalin, by the time it resolved the case last spring, had started to take the issues and the investigation seriously. I don’t think SNC’s then leadership, corporate and board, were taking the matter nearly as seriously two years ago.”
