Montreal

Federal agency staff cleared of wrongdoing in internal SNC-Lavalin bribery investigation

Staff at Export Development Canada were unaware that money it was lending to engineering giant SNC-Lavalin could have financed bribes in Angola, the Crown corporation said Thursday.

An SNC insider said EDC officials should have known loans could have financed bribes

Export Development Canada is a federal agency that provides financing and insurance to Canadian businesses operating abroad. Its provided as much as $4.7 billion in loans to SNC-Lavalin over the past 25 years. (CBC)

Staff at Export Development Canada were unaware that money it was lending to engineering giant SNC-Lavalin could have financed bribes in Angola, the Crown corporation said Thursday.

EDC commissioned an internal review of its dealings with SNC-Lavalin after a high-level source in the company alleged loans from the federal agency were used to improperly secure international contracts.

The source told CBC News it was an "open secret" within SNC-Lavalin that its budget proposals submitted to EDC included "technical fees" that could total millions of dollars.

The term "technical fees," the source said, were part of a larger "lexicon of bribes" used within SNC-Lavalin. The source also said EDC's internal due diligence policies should have detected something suspicious was going on.

Following those revelations in April, EDC asked the law firm Fasken to look at an insurance policy the agency provided to the engineering company in 2011. The policy was part of a $250-million project to refurbish the Matala hydroelectric dam in Angola.

SNC-Lavalin announced it was undertaking a major shakeup as it continues to struggle financially under the weight of risky contracts and impending criminal prosecution in Canada for bribes that were allegedly paid in Libya. (Paul Chiasson/The Canadian Press)

As part of its review, the law firm examined around 1.7 million EDC records related to the Angola project and interviewed current and former staff involved in the transaction, the agency said in a statement.

"Fasken did not find any evidence that EDC personnel had knowledge of, or were willfully blind to, bribery and corruption in relation to the project as had been alleged," the statement said.

Todd Winterhalt, EDC's vice-president of communications, said the agency will not expand its review of its dealings with SNC-Lavalin beyond the Angola deal. 

Over the past 25 years, EDC has provided as much as $4.7 billion in loans to SNC-Lavalin for ventures in Europe, Africa and Latin America, making the company one of the largest recipients of taxpayer-backed loans.

"EDC takes all allegations of corruption seriously and we would not hesitate to take further action if required," Winterhalt said in an email.

The law firm is also conducting a review of EDC's due diligence measures. The results of that review are still pending. EDC said it will to make immediate changes if any shortcomings are found.

Controversial project

Questions have long surrounded how SNC-Lavalin secured the Angola dam project.

In 2013, a former SNC-Lavalin employee filed a lawsuit that claimed the company had covertly paid a 10 per cent commission to win the contract. SNC-Lavalin settled the suit out of court.

SNC-Lavalin has, in the past, blamed rogue employees for problems with the Angola project. This spring the company declined to answer a list of questions from CBC News about its use of technical fees on other EDC-backed projects.

It refused to comment Thursday on the results of the EDC internal review.

Earlier this week, the Montreal-based company announced it was undertaking a major shakeup as it continues to struggle financially under the weight of risky contracts and impending criminal prosecution in Canada for bribes that were allegedly paid in Libya. 

Federal prosecutors allege SNC-Lavalin paid around $48 million in bribes to Libyan officials between 2001 and 2011, a violation of the Corruption of Foreign Public Officials Act. The company has pleaded not guilty to the charges.

If found guilty, SNC-Lavalin could face a 10-year ban on receiving federal government contracts.

SNC-Lavalin said Monday it will take a $1.9 billion writedown on its quarterly earnings to reflect the changes it plans to make, which include pivoting away from the oil and gas industry and back toward engineering work.

With files from Dave Seglins, Rachel Houlihan and Luc Fortin