By Canadian Press

SNC-Lavalin violated federal Elections Act with contributions to Liberals, Tories

Sep 8, 2016 | 6:30 AM

OTTAWA — Montreal-based global engineering giant SNC-Lavalin continues to dig out from a series of corporate governance scandals, this time involving improper donations to federal political parties over a seven-year period ending in 2011.

A compliance agreement with the federal elections commissioner, announced Thursday, details almost $118,000 in donations to the Liberal and Conservative parties through company employees or their spouses who were then reimbursed by SNC-Lavalin.

This illegal practice for skirting corporate donation limits was identified by a Quebec anti-corruption inquiry as a widespread problem in municipal and Quebec provincial politics, although the provincial Charbonneau Commission’s mandate prevented it from following federal political threads.

Not so federal Elections Commissioner Yves Cote, whose office says it continues to pursue the matter.

“The compliance agreement that was made public today is part of that investigation, but the investigation continues,” said spokeswoman Michelle Laliberte. “It is not completed yet.”

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According to the agreement entered into by SNC-Lavalin, former senior executives approached employees to make political contributions and, in some cases, those employees were reimbursed with refunds for false personal expenses, fictitious bonuses or other benefits.

The improperly donated sums included: $83,534.51 to the Liberal Party of Canada; $13,552.13 to various Liberal riding associations; $12,529.12 to four contestants in the 2006 Liberal leadership race, including $5,000 each to Michael Ignatieff and Bob Rae; $3,137.73 to the Conservative Party of Canada; and $5,050 to various Conservative riding associations.

All the funds have been repaid to the federal treasury by the respective national parties, both of whom disavow any knowledge of the scheme.

“As soon as LPC was made aware of the issue last month by Elections Canada, the party acted immediately to fully reimburse all of the amounts involved, including those pertaining to 2006 leadership campaigns (which have long since closed their accounts),” Liberal spokesman Braeden Caley said in an email.

Conservative party spokesman Cory Hann said the improper funds “were returned to the receiver general as soon as we were notified these individuals’ donations were reimbursed by a corporation,” adding the party expects donors to act truthfully and within the law.

The independent elections watchdog said SNC-Lavalin co-operated fully with its investigation, accepts responsibility for the improper payments and acknowledges the contributions were made on the company’s behalf. The compliance agreement, however, does not constitute an admission of guilt under criminal law.

The deal includes SNC-Lavalin hiring an in-house ethics watchdog, putting in place new “compliance and governance policies to detect, curb and prevent ethically problematic practices” and updating its corporate code of conduct to specifically deal with political donations. 

“I am pleased that this agreement was reached,” SNC-Lavalin CEO Neil Bruce said in a statement. “It once again shows our desire and commitment to resolve past issues.”

Earlier this year, SNC-Lavalin announced it was making restitution to municipalities and other public bodies in Quebec for obtaining contracts through questionable means. The provincial government started a program last year to recover money paid in connection with public contracts obtained as a result of fraud or fraudulent tactics.

Last December, the company signed a confidential “administrative agreement” with the federal Public Works Department that allows it to continue bidding on government contracts while overseas corruption charges against former SNC-Lavalin executives work their way through the courts. Under new rules introduced just before last year’s federal election,  companies facing corruption charges can be barred from bidding on government work for 18 months — or for 10 years upon conviction.

Analysts estimate as much as 20 per cent of SNC-Lavalin’s business is with Canadian governments.

Back in 2004, when the compliance agreement says the first improper party donations were occurring, SNC-Lavalin was a partner in one of the principal private supply contracts for the Canadian military in Afghanistan, operating on a 10-year contract worth as much as $700 million, according to one report.

The Charbonneau Commission, which began its work in 2011, heard allegations about the existence of an illegal political fundraising system that was controlled, municipally and provincially, by engineering companies that were also active in political financing at the federal level.

One witness, former construction boss Lino Zambito, testified that bigger engineering companies often demanded he deliver cash donations to provincial parties in amounts far exceeding the legal fundraising limit. Zambito said he would split up the donations and filter them through friends, family and employees.

SNC-Lavalin vice-president Yves Cadotte testified the company helped raise money for Quebec political parties despite a three-decade-old law against corporate donations. He told the commission dozens of SNC executives donated just over $1 million to the Quebec Liberal party and the Parti Quebecois between 1998 and 2010.

— Follow @BCheadle on Twitter

Bruce Cheadle, The Canadian Press