SNC-Lavalin hopes Algeria police raid will help to shed light on wrongdoing

MONTREAL – SNC-Lavalin hopes a recent raid of its headquarters in Algeria will shed light on a global corruption scheme that has sullied the Canadian engineering company’s reputation.

“Every investigation gets us closer to the truth because clearly the company’s been deceived about a lot of things from certain ex-employees,” spokeswoman Leslie Quinton said in an interview Monday.

The embattled Montreal-based company said it expected police investigations and searches would flow from it handing information to the RCMP in March 2012.

An internal investigation uncovered $56 million in payments to undisclosed foreign agents. Former chief executive Pierre Duhaime was “relieved of his duties” and was later charged with fraud involving $22.5 million of payments to the construction of a Montreal hospital.

“It wasn’t unexpected that authorities would take this to the next level,” Quinton said Monday.

“What we did not know at the time is just how deep the deception went in some cases.”

SNC-Lavalin (TSX:SNC) confirmed that authorities searched its Algerian headquarters on May 27.

Quinton said police have not provided the company with any details of its search.

Algerian media say police are investigating an $825-million contract SNC-Lavalin won in 2005 to build the Hadjret Ennous power plant near Algiers.

They carted away computers, files and other material after locking down the building for eight hours.

It was the third raid of SNC-Lavalin offices and the first outside of Canada.

The RCMP previously raided company offices in Oakville, Ont., related to alleged bribes in Bangladesh and its headquarters in Montreal at the request of Swiss authorities.

The Algerian investigation flows from information gathered by the Swiss examining former SNC vice-president Riadh Ben Aissa, who has been jailed for more than a year without formal charges.

They linked Ben Aissa to Algerian consultant Farid Bedjaoui, who allegedly transferred about $200 million to Algerian leaders to help several firms win contracts with the country’s state-run petroleum company Sonatrach.

Bedjaoui was educated at Montreal’s HEC business school and is the nephew of former Algerian foreign affairs minister Mohammed Bedjaoui.

Quinton said SNC-Lavalin had no direct relationship with him, but later learned that work was subcontracted to his companies.

“We did not know that Bedjaoui had any business interests with us until the Swiss police revealed their findings.”

Senior SNC management is in touch with the Algerian government “on an almost daily basis,” Quinton added.

It sent an open letter to Algerian media in April saying it was co-operating with police and hoped that those who committed illegal acts are brought to justice.

The company said it was committed to turn the page on this unfortunate chapter in its 102-year history.

In the letter signed by new CEO Robert Card and senior vice-president Charles Chebl, SNC-Lavalin said its “commitment to Algeria remains constant.”

SNC-Lavalin has built its presence in Algeria over more than 40 years and secured billions of dollars worth of projects.

Its latest contract worth $1.2 billion was in 2009, to design and build natural gas process facilities in the Sahara desert with Sonatrach.

Subsidiary SNC-Lavalin Inc. and more than 100 affiliates have been barred from bidding on World Bank Group-financed projects for 10 years following allegations of bribery involving a bridge contract in Bangladesh.

SNC-Lavalin’s acceptance of the bidding ban will also exclude it from work with Canadian International Development Agency and several other global development agencies.

On the day of the Algerian raid, SNC-Lavalin announced a three-month “amnesty” to employees willing to report on corruption.

The said it won’t seek damages or unilaterally fire employees who voluntarily report violations of its code of ethics.

The amnesty won’t cover executives in SNC’s office of the president, its management committee groups or anyone who directly profited from a violation.