World bank alleges SNC Lavalin also commited misconduct in Cambodia

MONTREAL—The World Bank has added Cambodia to the list of countries where SNC-Lavalin is alleged to have committed misconduct, as the Montreal-based company agreed to the longest bidding ban in the global agency’s history.

The bank didn’t provide details of the Cambodia project in question, but SNC-Lavalin was awarded a $5-million contract in late 2009 to design and build an energy management system and control centre in Phnom Penh.

The project was part of a World Bank-financed project completed in 2011 that provided electricity to a large portion of Cambodia’s rural population.

The World Bank initially suspended SNC-Lavalin from bidding on projects it finances over allegations of bribery involving a bridge contract in Bangladesh.

The agency said it learned of misconduct in Cambodia during its investigation.

The World Bank said SNC-Lavalin’s misconduct were related to a conspiracy involving bribes and misrepresentations when bidding on bank-financed contracts.

As part of a deal involving the two countries, subsidiary SNC-Lavalin Inc. and more than 100 affiliates are barred from bidding on World Bank Group-financed projects for 10 years.

However, the suspension could be lifted after eight years if the terms and conditions of the settlement agreement are complied with fully.

“This represents the longest debarment period that has ever been agreed to in a World Bank settlement,” the bank said in a statement Wednesday.

No financial penalty was imposed and other SNC-Lavalin Group subsidiaries will be able to bid on such contracts if they meet the terms of the agreement, SNC said in a news release.

The company is obliged not to do anything to evade the sanction.

The World Bank said the barred SNC subsidiaries account for 60 per cent of the company’s overall annual revenues that reached US$8.09 billion last year.

The company said revenues to the affected subsidiaries that are financed by the World Bank and other multilateral development banks have historically represented about one per cent of annual revenues.

SNC-Lavalin said the Cambodia allegations involve a bribe supposedly paid on a “relatively small project” that is no longer being worked on.

Pierre Lacroix of Desjardins Capital Market said the settlement puts this case to rest but doesn’t eliminate the risk that SNC-Lavalin could eventually be barred from bidding on contracts by other agencies or governments.

Quebec’s anti-corruption legislation calls on the province’s securities regulator, the AMF, to vet companies vying for any provincial and municipal contracts.

Lacroix said the settlement doesn’t handicap SNC because it represents a small part of its revenues.

nts meaningful action in deterring the risks of fraud and corruption to development projects,” stated Leonard McCarthy, World Bank integrity vice-president.