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May 28, 2013

Canadian company offers amnesty for reporting corruption

SNC-Lavalin Group, the engineering and construction giant is offering its employees 'amnesty' for reporting information about potential corruption or anti-competitive practices.

At a time when the spotlight on corruption of foreign officials is brighter than ever, it’s rare for a global company working on projects in over 100 countries to not have a chief compliance officer. SNC-Lavalin Group, the engineering and construction giant based in Montreal celebrated its centenary in 2011 but hired its first chief compliance officer in late February to help manage fallout from a bribery scandal regarding an infrastructure project that has drawn strict sanctions from the World Bank.

On May 27, SNC-Lavalin said it would offer amnesty to any current employee who reported information about potential corruption or anti-competitive practices of which they have direct or indirect knowledge. To qualify, an employee must file a request with the company’s chief compliance officer within the 90-day period from June 3 to August 31, 2013. SNC-Lavalin guaranteed it ‘will not make claims for damages or unilaterally terminate employees who voluntarily, truthfully and fully report violations of its Code of Ethics and Business Conduct during this period.’ Excluded from the offer are members of the president’s office and the management committee, as well as anyone who may have directly profited from misconduct.  

The company said in a news release that it believes an offer of amnesty can quickly get to the bottom of any remaining compliance issues and that its goal is ‘to turn the page on a challenging chapter in the company's history.’

A more detailed description of the policy published on the company website clarifies that amnesty doesn’t preclude ‘prescribing less severe disciplinary and/or remedial measures as necessary; nor does it provide support or protection to employees against potential law enforcement actions or civil litigation.’ The new chief compliance officer, Andreas Pohlmann, who previously presided over Siemens’ compliance program, was not immediately available for comment. 

After SNC-Lavalin agreed not to dispute charges of conspiring to bribe several public officials in Bangladesh in order to win a $50 million bridge contract, the World Bank disqualified the company and 100 of its subsidiaries from bidding on any World Bank development project for the next 10 years, as reported by the Canadian daily, The Globe and Mail. Bribes allegedly offered in code by senior company officials to a Bangladeshi minister resulted in SNC-Lavalin being elevated to the top contender for the contract, according to a World Bank letter leaked to news sources in Dhaka. At least four senior executives at SNC-Lavalin have been arrested and charged with fraud and other crimes, including former CEO Pierre Duhalme, who was arrested by Canadian police in November forfraud and forgery.

SNC-Lavalin’s amnesty program follows close on the heels of a similar program that ThyssenKrupp launched that runs from April to June 15. 

‘Normally, the approach would be to provide awareness of your reporting mechanisms whatever they might be, like a compliance hotline,’ says Randy Stephens, head of the  Ethical Leadership Group, the advisory services division of NAVEX Global. ‘It’s unusual to have this as a distinct element of a compliance program.’ 

Although he understands SNC-Lavalin’s desire, by offering amnesty, to quickly get all the information it can and wipe the slate clean, that’s unlikely to be as effective as a fully applied program operating 24 hours a day, seven days a week and readily available to employees, says Stephens. 

It’s too early to gauge the impact of ThyssenKrupp’s program, but a bigger concern that people overseeing these programs need to monitor is whether amnesty offers start to become more frequent. That could set a precedent that convinces employees to not report anything they know until amnesty has been offered, he warns. 

What’s most critical is that the company communicates clearly to employees the reasons it is taking such an extraordinary step and why it believes it will be able to garner additional information through the program, he adds. The offer entails some risks such as ensuring employees they won’t be terminated or demoted. If the company decides to restrict their access to certain information, and by doing so it impedes their ability to do their jobs, those employees could claim retaliation. 

The Canadian government in recent months has ratcheted up enforcement of the Corruption of Foreign Public Officials Act (CFPOA), its equivalent of the Foreign Corrupt Practices Act (CFPA) in the United States. It imposed a fine of $9 million CAD and an additional 15 percent victim fine surcharge on Griffiths Energy International in January and said it will double its efforts to fight corruption and make Canadian companies play by the rules. As part of this, Canada will make significant changes to the CFPOA, including eventual elimination of facilitation payments and the addition of a books-and-records provision to the CFPOA. SNC-Lavalin could also face charges from the Securities and Exchange Commission under the FCPA as a result of the company’s US subsidiary operations. 

David Bogoslaw

Associate Editor and Online features producer for Corporate Secretary