SNC Lavalin hit with 10-year World Bank ban

By Helen Wright22 April 2013

World Bank

World Bank

The World Bank has banned subsidiaries of SNC Lavalin from any involvement in projects it finances for a decade – the longest debarment period it has ever imposed.

The unprecedented sanction followed an investigation into the alleged bribery of officials in Bangladesh in connection with the troubled Padma Bridge project, which was initially due to be financed with a World Bank loan.

During the course of this investigation, the World Bank said it also uncovered further allegations of misconduct by SNC Lavalin – this time in relation to a World Bank-financed rural electrification project in Cambodia.

The Canadian contractor said it had worked closely with the World Bank throughout the negotiated settlement process.

“The company’s decision to settle signals our determination as we go forward to set standards for ethics in business conduct and for good governance that are beyond reproach,” said Robert G Card, president and CEO. “The company has already taken, and will continue to take, measures to ensure rigorous compliance and control procedures are in place.”

Conspiracy to bribe

“SNC-Lavalin’s misconduct involved a conspiracy to pay bribes and misrepresentations when bidding for Bank-financed contracts,” The World Bank said. It added that the ban – which affects SNC Lavalin Inc and over of its 100 affiliated companies – also qualifies for
cross-debarment by other development banks.

However, the 10-year ban could be reduced to eight years if the companies adhere to all conditions of the agreement, which include co-operating with the World Bank on compliance matters in the future.

In addition, the terms of the settlement state that some of SNC Lavalin’s other affiliate companies could still bid on Bank-funded projects as long as they comply with all of the terms and conditions imposed.

Leonard McCarthy, World Bank integrity vice president, said the sanction was testimony to collective action against global corruption.

“Once we had evidence of the company’s misconduct, we referred the matter to the Royal Canadian Mounted Police whilst the World Bank finalised its investigation. Going forward, I hope that SNC-Lavalin’s commitment under this agreement represents meaningful action in deterring the risks of fraud and corruption to development projects.”

SNC Lavalin added that development bank-financed projects in the affected subsidiaries have historically represented about 1% of its annual revenues.

Torrid year

The World Bank’s action comes after a
torrid year for SNC Lavalin, which is also under investigation by Canadian and Swiss authorities over suspect payments in Libya, and is facing a string of class action lawsuits. The contractor – which has also had to contend with the arrest of its former CEO Pierre Duhaime on charges of fraud – has made sweeping changes to its board.

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