The Canadian Broadcasting Corporation has done a tremendous job of detailing the fall from grace of engineering giant SNC-Lavalin’s former $5 million-per-annum CEO, Pierre Dunhaime, after the company become mired in a major corruption scandal which has gripped Canada and already claimed political scalps.
Dunhaime was recently sentenced to 20 months’ house arrest and 240 hours of community service, as well as handing over a $200,000 cheque, after pleading guilty to a charge of helping a public servant commit a breach of trust. When he was arrested back in 2012, at least five other SNC-Lavalin executives were also charged in connection with alleged bribery schemes in Libya and Bangladesh and, later, with illegal political donations in Canada, as well.
The author of the CBC article, Jonathan Montpetit, captures each twist and turn so well that there is no point in me raking over old ground. Instead, as a Canadian who works as a lawyer based in the British Virgin Islands, focusing on the investigation of international fraud, corruption and multi-jurisdictional asset recovery, I’d like to speak generically in regard of the problem of “willful blindness.”
In many instances, such as the events leading up to Mr. Dunhaime’s guilty plea, it is the people at the very top of these large organisations who employ tunnel vision whenever it suits them. These people are shrewd and experienced businesspeople, whose ability to see the “bigger picture” miraculously disintegrates when winning contracts is concerned.
SNC-Lavalin senior managers were allegedly aware of the shenanigans afoot in their company, with some individuals operating offshore companies as a means to “facilitate” certain payments and launder funds. Indeed, if some of the allegations are true, including an historical plot to smuggle Colonel Gadhafi’s son to a safe place in order to avoid capture, then we have the makings of a Hollywood blockbuster here.
Few enjoy seeing these amazing falls from grace, so when one occurs it is food and drink to those who see big business as a dark, capitalist money-making machine. This means that SNC-Lavalin’s actions (or lack of them) does damage to the reputation of the world’s corporate businesses, let alone those directly associated with the company itself.
In fairness to Mr. Dunhaime, he is not alone. Despite increased regulation and anti-bribery and corruption legislation being enacted across the globe, there are still those who believe that ignorance is bliss — especially when doling out dividends to eager shareholders.
Ignorance is no longer a defense, though. The laws and regulatory improvements being made worldwide, including Canada, make the wearing of blinkers much riskier attire. The boards of directors who sit in perceived isolation in their ivory towers must accept that, as figureheads, they are now responsible for the actions of their employees.
A nod and a wink in the boardroom is no way to summarize how the latest contractual negotiations are developing. Only a determined drilling down into the facts can ensure that those on the board are maintaining a handle of what their underlings are doing in their name. The eye drops that can cure willful blindness do not emanate from the other side of the chemist’s counter. They come in the form of law enforcement agents, handcuffs and judges who are prepared to apply the law to those who would seek to undermine it.
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As a postscriptum to this piece since I first drafted it, there is this astonishing news. Minister of Justice and Attorney General of Canada, Jody Wilson-Raybould, was recently demoted by Prime Minister Justin Trudeau to the lesser portfolio of Minister of Veteran Affairs.
The Globe & Mail newspaper broke a story saying that she was demoted because she had declined to be pressured by the Prime Minister’s Office (PMO) into removing the prosecution of SNC-Lavalin by the Director of Public Prosecutions’ office (and also in reaching a plea agreement with SNC-Lavalin on terms that would ensure that the company would survive with its thousands of jobs being left intact) because the Liberal Party of Canada’s chances to win a national election in the Fall of this year depended in large measure on the Quebec vote.
The Prime Minister, Justin Trudeau, denied that he had “directed” the former Attorney General to throw the government’s corruption case against the company. Trudeau pointed to Wilson-Raybould’s continuing presence in Cabinet (albeit in a lesser position) as proof that the story in The Globe was rubbish. In response, Wilson-Raybould immediately resigned from Cabinet without explanation, citing solicitor-client privilege for not commenting on the accuracy of the Globe & Mail’s report.
Then, on February 18, Gerry Butts, the senior most official in the PMO — and Trudeau’s closest friend and advisor, as well as being the second most powerful man in Ottawa — resigned. To say that the scandal which has erupted is of epic proportions, in what is ordinarily quiet and genteel Canada, would be an understatement. Stay tuned to this story: SNC-Lavalin may yet be the undoing of Trudeau’s government.
With thanks to Tony McClements, Senior Investigator at Martin Kenney & Co, for his assistance with this post.
Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com | @MKSolicitors. In 2014 he was the recipient of the ACFE’s highest honor: the Cressey Award for life-time achievement in the detection and deterrence of fraud. He was selected as one of the Top Thought Leaders of the Legal Profession in 2018 and 2019 by Who’s Who Legal International and as the number one offshore lawyer for asset recovery in 2017 and 2018.