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Former SNC-Lavalin CEO rejects allegations firm paid bribes with EDC money

Former SNC-Lavalin CEO rejects allegations firm paid bribes with EDC money


The former CEO of SNC-Lavalin has lashed out at allegations made by an unnamed company insider, denying taxpayer-backed loans from Canada were ever used to pay bribes under his watch.

“People who talk behind the scenes — they are just chicken,” said Jacques Lamarre in an interview with CBC News. 

CBC News is not naming the SNC-Lavalin insider, who worked on numerous EDC-backed projects, as he fears for his job.

On Wednesday, CBC News reported claims from the insider that it was an “open secret” in the company that money intended for bribes overseas was buried in budgets, disguised as “technical fees” in applications for financing from Export Development Canada

EDC is a Crown agency that provides financial backing and insurance to Canadian companies operating in other countries. Over the past 25 years, EDC has provided up to $4.7 billion in loans to SNC-Lavalin.

The agency says the claim from the insider has prompted it to hire outside legal counsel to review at least one former deal with SNC-Lavalin.

Lamarre was CEO of SNC-Lavalin from the mid-1990’s until 2009. The Quebec business mogul was in charge of thousands of projects — some of which became mired in corruption and bribery allegations, resulting in numerous police investigations and, in 2014, the conviction of the head of the company’s construction division.

He says “technical fees” were often used to hire local staff in foreign countries where it was “very difficult” for SNC-Lavalin to establish operations. According to Lamarre, all contractors were required to sign agreements stating they were not to use money for illegal payments such as bribes or kickbacks.

“It is written in the contract, that they cannot pay bribes. It says it in black and white.”

Lamarre insists paying bribes was not necessary, despite operating in some of the world’s most notoriously corrupt countries.

“No. No. No. For me, I’m not in that business. If we have to pay bribes, I prefer not to bid on that job.”

EDC wants to meet with insider

Export Development Canada has hired outside lawyers to probe allegations from the insider that EDC turned a blind eye to SNC-Lavalin’s abuse of “technical fees.”

Out of the 26 SNC-Lavalin projects EDC has backed since 1995, the agency is reviewing one project in Angola flagged by the insider as involving illicit payments. EDC provided political risk insurance to SNC-Lavalin on a $250-million deal to repair the Matala hydroelectric dam.

“Based on any outcomes of the review, we will carefully examine whether we need to expand the scope,” wrote EDC spokesperson Jessica Draker.

Quebec-based SNC-Lavalin is a construction and engineering giant, with thousands of employees and projects around the world. (Paul Chiasson/Canadian Press)

“We would welcome the opportunity to meet with your source regarding his or her concerns,” Draker added.

It’s unlikely EDC will make its findings public, as the agency says it doesn’t discuss details of its agreements with clients, including how much money SNC-Lavalin currently owes EDC. 

The insider also alleges EDC signed off on SNC-Lavalin’s technical fees, counting them as Canadian expenses, while knowing the payments were destined for foreign contractors.

(EDC requires projects to meet certain “Canadian content” quotas to be eligible for financing, as the agency exists to support Canadian exports).

EDC has not directly answered questions put to it by CBC News about this claim.

SNC-Lavalin, this week, declined to comment.

Former CEO Jacques Lamarre acknowledges the foreign payments were counted as Canadian expenses.

“I have no good answer for that,” Lamarre said, insisting EDC was fully aware of SNC-Lavalin’s budget details.

Criminal case

In recent years, SNC-Lavalin has faced a string of bribery scandals both in Canada and abroad, including corruption allegations tied to EDC-backed projects in India, Angola and Algeria. 

The company is also facing criminal prosecution in Canada for alleged offences in Libya between 2001 and 2011. One company executive has already pleaded guilty to bribery and fraud in connection with contracts in that country. A judge in Montreal will rule next month on whether the Quebec-based engineering giant itself should stand trial.  If convicted, SNC-Lavalin could face a 10-year ban from bidding on federal contracts.

Lamarre says he never knew of — or sanctioned — bribery and says any instances where it occurred were isolated, and the result of lone, corrupt employees.

“We never took any chances. We were always black and white,” Lamarre said. “But on the other hand, I cannot say that with 10,000 projects, [that] once and a while we didn’t have problems.”

The company has been lobbying for a deferred prosecution agreement, which former attorney general Jody Wilson-Raybould opposed.

Prime Minister Justin Trudeau replaced her in January with a new attorney general who could still intervene and impose a settlement that would not bar the company from federal work.

(CBC )

Send tips to dave.seglins@cbc.ca or rachel.houlihan@cbc.ca



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Musk safe for now as U.S. judge urges Tesla CEO, SEC to resolve tweet dispute

Musk safe for now as U.S. judge urges Tesla CEO, SEC to resolve tweet dispute


Elon Musk’s job as Tesla Inc’s chief executive appeared safe on Thursday as a federal judge in Manhattan urged the billionaire to settle contempt allegations by the U.S. Securities and Exchange Commission.

At a hearing in Manhattan federal court, U.S. District Judge Alison Nathan gave both sides two weeks to work out their differences, and said she could rule on whether Musk violated his recent fraud settlement with the regulator if they failed.

Musk declined to comment about the hearing as he left the courthouse, surrounding by reporters, photographers and television cameras.

Nathan had been asked by the SEC to hold Musk in contempt over a Feb. 19 tweet where the regulator said he improperly posted material information about Tesla’s vehicle production outlook without first seeking approval from company lawyers.

The SEC said pre-approval had been a core element of the October 2018 settlement, which resolved a lawsuit over Musk’s tweet last Aug. 7 that he had “funding secured” to take Tesla private at $420 US per share.

That settlement called for Musk to step down as Tesla’s chairman, and levied $20 million civil fines each on Musk and the Palo Alto, California-based company.

Possible drag lifted

Legal experts had said Musk could have faced penalties as severe as removal from Tesla’s board or as chief executive if held in contempt.

But at Thursday’s hearing, the SEC stopped short of recommending such sanctions.

That lifted a potential drag on Tesla’s share price, which recouped some early losses stemming from its Wednesday night report of lower-than-expected vehicle deliveries.

The shares closed down 8.2 per cent, after earlier falling as much as 10.7 per cent.

SEC lawyer Cheryl Crumpton said if Musk were held in contempt, the regulator might ask Nathan to require regular reports about his oversight by Tesla lawyers, including whether they were vetting his statements and if not why.

Noting that Musk had called his $20 million fine “worth it,” she also said higher fines for future violations might be needed to ensure that further backsliding would be “not worth it.”

Crumpton also faulted what she called Tesla’s “troubling” conduct. “Tesla still appears to be unwilling to exercise any meaningful control over the conduct of its CEO,” she said.

The SEC did not accuse Tesla of contempt.

Musk’s lawyer, John Hueston, countered that the “ambiguity” of the settlement made further punishment for his client unfair.

“There simply is not a clear enough standard to use the hard penalty of contempt,” he said.

Musk sat quietly with his lawyers, sometimes staring down at paperwork, during oral arguments.

SEC  calls tweet ‘obviously different’

The battle concerns a tweet that Musk sent to his more than 24 million Twitter followers: “Tesla made 0 cars in 2011, but will make around 500k in 2019,” meaning 500,000 vehicles.

Four hours later, Musk corrected himself, saying annualized production would be “probably around” 500,000 by year end, with full-year deliveries totaling about 400,000.

The SEC called the earlier tweet “obviously different” from Tesla’s Jan. 30 outlook, when it targeted annualized Model 3 production exceeding 500,000 as soon as the fourth quarter, and projected 360,000 to 400,000 vehicle deliveries this year.

Musk’s lawyers countered that the earlier tweet merely restated a forecast he had given on Jan. 30, and that the SEC conceded during settlement talks that Musk did not need pre-approval for all tweets about his company.

Tesla, which built its reputation on luxury cars, has faced several production challenges with its Model 3 sedan, which it is counting on to reach the mass market, recently offering a version starting at $35,000.

On Wednesday night, Tesla repeated its Jan. 30 vehicle delivery forecast, but said first-quarter deliveries had fallen 31 per cent from the prior three months to about 63,000.

Respect for justice system 

The “funding secured” tweet had sent Tesla’s share price up as much as 13.3 per cent. Musk’s privatization plan was at best in an early stage, however, and financing was not in place.

The legal battle has not stopped Musk from being an outspoken critic of the SEC.

Since it began last September, he has labeled the SEC the “Shortseller Enrichment Commission,” recalling his attacks on investors who sell Tesla stock short, and told CBS’s 60 Minutes he did not have respect for the SEC.

And in the early morning of Feb. 26, after the SEC filed its contempt motion, Musk tweeted: “Something is broken with SEC oversight.”

As he prepared to enter the courthouse. Musk told reporters: “I have a great respect for the justice system.”

Asked whether he also respected the SEC, Musk laughed, before turning to go inside.



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