Canadian Manufacturing

Ottawa begins consultations on revising corporate wrongdoing rules

Infrastructure firm SNC-Lavalin has led the charge for the federal government to adopt a different way to address corruption


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MONTREAL—The federal government kicked off nearly two months of public consultations this week on revising efforts to address corporate wrongdoing, including the possible introduction of a deferred prosecution agreement regime.

Engineering and construction firm SNC-Lavalin has led the charge for deferred prosecution agreements (DPA) found in other countries as a way to resolve criminal fraud charges it faces.

The Montreal firm has argued that the agreements would allow companies to settle corporate corruption cases and avoid being put at a disadvantage when competing against rival firms in other G7 countries.

Chief executive Neil Bruce has said the company lost two foreign contracts because competitors used these agreements.

SNC-Lavalin has pleaded not guilty to the one fraud and one corruption charge filed by the RCMP against SNC-Lavalin and two of its subsidiaries.

The RCMP alleges SNC-Lavalin paid nearly $47.7 million to public officials in Libya between 2001 and 2011 to influence government decisions.

It has also charged the company, its construction division and its SNC-Lavalin International subsidiary with one charge each of fraud and one of corruption for allegedly defrauding various Libyan organizations of about $129.8 million.

Convictions could result in companies losing the ability to compete for government business.

On its website, the Liberal government says it will continue to hold companies accountable for misconduct but is seeking input on “potential enhancements” to rules put in place by its predecessor.

“The Integrity Regime is designed to ensure that the government does business with ethical suppliers and incents further efforts by suppliers to ensure strong ethics and effective compliance frameworks,” it said.

Deferred prosecution agreements would suspend criminal prosecution on the accused company in exchange for, among other things, admitting wrongdoing, paying a significant financial penalty and co-operating with authorities.

The government says DPAs may mitigate unintended consequences of a criminal conviction for blameless employees, customers, pensioners, suppliers and investors. Convictions could result in job losses and wider negative economic implications.

Online comments can be submitted until Nov. 17.

Benoit Poirier, an analyst with Desjardins Capital Markets, said the consultations could be positive for SNC-Lavalin shares.

“We believe this announcement is a step in the right direction given the benefits a DPA can bring if properly implemented,” he wrote in a report.


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