New corruption allegations hit SNC-Lavalin

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Bangladeshi authorities are accusing a senior executive at SNC-Lavalin Group Inc. of conspiring to bribe government officials, formal allegations that come days after that executive left the company.

Kevin Wallace, who up until early December had been the president of SNC's wholly owned subsidiary, Candu Energy Inc., is the latest in a growing number of senior SNC officials who have either left the company or been fired amid allegations of corruption. Since early this year, when SNC chairman Gwyn Morgan assured shareholders that "the actions of a relative few do not reflect" on the company as a whole, at least six officials have left the company under a cloud, including former chief executive officer Pierre Duhaime, who was charged with fraud in Quebec in November.

The series of departures highlights the difficulty the Montreal-based company is having containing the scandal, which has shaken investor confidence. Last week, SNC launched a public relations blitz that highlighted new measures it was taking to curb fraud and unethical behaviour, including updates to its ethics policy and required training for its international agents. The company also said some of its directors would not stand for re-election. Almost a week before that, SNC named Mr. Wallace's successor at Candu Energy, but that internal e-mail sent on Dec. 7 did not say why Mr. Wallace had left.

The Bangladeshi investigation originated with the World Bank a number of years ago after the international agency became concerned that a six-kilometre bridge it was financing with a $1.2-billion loan had been tainted by bribery. The project, known as the Padma bridge, was designed to link the country's southwestern districts with the capital, Dhaka, but was stalled after the bank referred the matter to both the RCMP and the Bangladeshi government.

The Mounties executed a search warrant at SNC's Oakville, Ont., office in September, 2011. One source who was present for the search that day described how the RCMP towed and searched Mr. Wallace's car, a 2011 grey Mercedes-Benz. Several months later, in April, the RCMP charged two Canadians and former SNC employees, Ramesh Shah and Mohammad Ismail, with violating the Corruption of Foreign Public Officials Act, the statute that outlaws foreign bribery. Mr. Wallace, who before taking the top office at Candu had been in charge of several international SNC construction projects, has not been charged, or accused of any wrongdoing, in Canada. He could not be reached for comment.

Following its initial warning to the Bangladeshi government over its concerns over the Padma bridge, the World Bank became discouraged by what it called an inadequate response. In the summer, the World Bank announced the loan would be terminated. Since then, Bangladesh's Anti-Corruption Commission has launched a probe, and on Monday officially filed the results of its investigation, recommending the prosecution of several Bangladeshi officials, as well as Mr. Wallace, Mr. Shah and Mr. Ismail.

In a summary of the evidence, investigators allege that a diary, kept by Mr. Shah and seized by the RCMP as part of their probe, includes an entry that indicates several Bangladeshi government officials, including a foreign affairs minister and a communications minister, were in line for a percentage of the deal. The summary also cited a meeting that took place in Dhaka on June 19, 2011, between Mr. Wallace, an official with the Bangladeshi Bridge Authority and the Communications Minister, Syed Abdul Hossain. Shortly after the meeting, the government recommended SNC for the job, according to the report.

The contract was ultimately never awarded, and its value has never been publicly revealed. In a statement, an SNC spokeswoman said: "None of these employees currently work for the company. We continue to co-operate fully with the authorities in order to shed light on the situation."

The Bangladeshi investigation is just one of several law enforcement operations that have involved Canada's largest engineering firm. Since April, Swiss authorities have detained a former senior vice-president, Riadh Ben Aissa, on allegations that he used the country's banking system to dispense bribes in North Africa. In Quebec, the province's anti-corruption task force has charged both Mr. Ben Aissa and Mr. Duhaime with defrauding the McGill University Health Network in connection with SNC's $1.3-billion contract to build its new superhospital.