King Abdullah Petroleum Studies and Research Centre in Riyadh
MONTREAL — SNC-Lavalin says it was justified in firing a former executive last year because it claims he acted illegally to help smuggle the son of Libya dictator Moammar Gadhafi to Mexico.
The engineering giant is defending itself against a nearly $1-million wrongful dismissal lawsuit filed by former controller Stephane Roy.
In a 16-page statement of defence filed in Quebec Superior Court, SNC-Lavalin said Roy and former executive Riadh Ben Aissa plotted to help Saadi Gadhafi and his family to flee Libya without its knowledge.
“They committed serious acts, outside their normal duties and without the knowledge of their superiors, in violation of SNC-Lavalin’s code of conduct and in the blatant and total disregard of the policies and controls in place,” it said.
It is seeking more than $1.8-million from Roy to cover expenses it says it later learned were paid by the company.
The engineering firm said its reputation was tarnished by illegal actions by Roy.
The government of Saudi Arabia has awarded a $135-million contract to Montreal-based engineering giant SNC-Lavalin.
The 10-year deal would see the firm manage the construction of a 65,000-square-metre complex for the King Abdullah Petroleum Studies and Research Centre in Riyadh. SNC-Lavalin would also oversee the management of the complex, which is to include research facilities, an office building and a residential community housing 1,000 people It will conduct research in energy economics, policy, technology, and the environment.
Former SNC CEO Pierre Duhaime stepped down in March, amid a scandal over millions of dollars in dubious payments in Libya and Tunisia. It remains unclear if payments authorized by Duhaime were used to bribe officials in the North African countries. An internal investigation into the payments is under way.
The RCMP are also investigating potential links between a former SNC-Lavalin consultant and the regime of deposed Libyan dictator Moammar Gadhafi. Cynthia Vanier, who worked as a consultant for the firm, was arrested in Mexico while allegedly trying to smuggle members of Gadhafi’s family into that country.
[June 29]Ontario Superior Court of Justice ruled on June 25 that the plaintiffs Riadh Ben Aissa and Stéphane Roy,can resort to a “substituted service,” meaning the defendants do not have to be served in-person with the law suit as is normally required.
Mr. Ben Aissa could not be served because he is jailed in Switzerland, where he was arrested on allegations of corruption, bribery and money laundering in North Africa, according to a court document. Lawyers have been unable to locate Mr. Roy –he “may be avoiding service” or not cooperating.
Mr. Ben Aissa and Mr. Roy left the company in February after auditors were unable to account for $56-million in payments to mystery agents. The two were also responsible for awarding a contract last year to Cynthia Vanier.
Interim CEO Ian Bourne
SNC-Lavalin said in a statement that Ian A. Bourne will step in as vice-chairman and interim chief executive officer while the search begins for a new CEO.
SNC Lavalin former executive vice president Riadh Ben Aissa
[March 26]SNC-Lavalin Group Inc. (SNC-T41.282.015.12%) has announced the departure of chief executive officer Pierre Duhaime amid allegations he allowed a series of unauthorized payments totalling $56-million (U.S.) to be made by a former vice president. The company cannot properly account for $56-million in payments, some of which went to “agents” working on various projects. The payments were directed by former executive vice president Riadh Ben Aissa, who headed the company’s operations in Libya and elsewhere. SNC dismissed Mr. Ben Aissa in February although he has insisted he resigned.
The company said, however, it did not believe the payments in question were related to its Libyan operations.
“The company intends to separately report these matters to the appropriate authorities and to co-operate fully with such authorities with respect to these or any other matters,” it said.
“In the absence of direct and conclusive evidence, the use and purpose of the payments or nature of the services rendered or actions taken under the agreements cannot be determined with certainty,” SNC added in a statement.
The following table summarizes these findings:
|Presumed agents hired
||In 2011, the Former EVP Construction said that he had hired an agent to help secure work in respect of Project A.
The Independent Review has found no direct and conclusive evidence establishing the nature of the services or actions undertaken by, or the true identity of, any presumed agent. The counterparties named in the A Agreements appear to be without substance, and any individual named on the public registers in relation to the corporate counterparties does not appear to be a true principal.
|In 2009, the Former EVP Construction said that he had hired an agent to help secure work in respect of Project B.
The Independent Review has found no direct and conclusive evidence establishing the nature of the services or actions undertaken by, or the true identity of, any presumed agent. The counterparty named in the B Agreement appears to be without substance, and any individual named on the public registers in relation to the corporate counterparties does not appear to be a true principal.
|Decisions to attribute to other projects
||At the same time, a decision was made not to charge the presumed agents’ fees to Project A, and not to otherwise associate the presumed agents with Project A.
||At the same time, a decision was made not to charge the presumed agent’s fees to Project B, and not to otherwise associate the presumed agent with Project B.
|Execution of improper documents
||The Former EVP Construction co-signed and instructed a senior officer of SLII to co-sign the A Agreements on behalf of SLII. The A Agreements were improperly documented in respect of Projects 1 and 2.
||The Former EVP Construction instructed a senior officer of SLII to sign the B Agreement on behalf of SLII. The B Agreement was improperly documented in respect of Project 3.
||The Agents Policy was not complied with in various respects in connection with the A Agreements, including the authorized signatories and the aggregate corporate limits on fees attributable to the attributed projects.
||The Agents Policy was not complied with in various respects in connection with the B Agreement, including the authorized signatories and the aggregate corporate limits on fees attributable to the attributed project.
||The A Agreements contemplated fees of US$33.5 million in the aggregate. In December 2011, payments of US$33.5 million under the A Agreements were requested of SLII by the Former EVP Construction. The required signatories (the Chairman of SLII and the CFO) refused to approve the payments. The requests were brought to the Company’s Chief Executive Officer (the “CEO”), who authorized or permitted the Former EVP Construction to make the payments through his division.
||The B Agreement contemplated fees of $30 million. Payments aggregating approximately US$22.5 million were made in 2010 and 2011 through SLII (Tunisia), but were improperly approved on its behalf by the Former EVP Construction and someone within his division.
|Use of payments, etc.
||The Independent Review has found no direct and conclusive evidence establishing the exact use, purpose or beneficiaries of payments made under the A Agreements. However, as noted above, the decision to hire presumed agents was based on the understanding at the time that it would help secure work in respect of Project A.
||The Independent Review has found no direct and conclusive evidence establishing the exact use, purpose or beneficiaries of payments made under the B Agreement. However, as noted above, the decision to hire a presumed agent was based on the understanding at the time it would help secure work in respect of Project B.
||Payments were to be accounted for in respect of Projects 1 and 2 in accordance with the improper documentation. Accounting entries were not made or were made and reversed in short order in relation to Projects 1 and 2.
||Payments were accounted for in respect of Project 3 in accordance with the improper documentation. Accounting entries were made in relation to Project 3 in 2010 and 2011. The entries were subsequently detected in February 2012 as an anomaly and reported to the Senior Vice-President and Controller of the Company.
||The agencies on Project A were neither properly disclosed within the Company, nor were they disclosed to its internal or external auditors until shortly before the Independent Review began.
In late 2011, the CFO was told at a meeting with the CEO and the Former EVP Construction that agents had been hired on Project A. The CFO objected to any involvement.
|The agency on Project B was neither properly disclosed within the Company, nor to its internal or external auditors until shortly before the Independent Review began.
In 2010, the CFO was told at a meeting with the CEO and the Former EVP Construction that an agent had been hired on Project B and that its fees would be charged to other projects. The CFO objected to this at the meeting.