Canada Moderates 'Integrity' Rules for Federal Contractors
Facing an expected broad business backlash and potential impacts on completion of big federal infrastructure jobs, the Canadian government released a toned-down version of its “integrity guidelines” for federal contractors.
The revision moderates penalties, that were set in 2014 for corruption infractions in the wake of unfolding bribe allegations against giant Montreal contractor SNC-Lavalin. The firm, which does much federal work, was criminally charged in February of bribery and fraud, based on actions of long-gone executives and despite cleanup efforts since 2012 by CEO Robert Card.
The guidelines, released on July 6, retain the 10-year debarment for a contractor convicted of select crimes within a three-year period but now halve the penalty if misconduct was addressed. The revision also no longer automatically bans contractors for
illegal actions by affiliates or units, unless parent firm involvement is shown.
It also creates some due process—which even critics, such as Transparency International, said was lacking—that includes third-party mediators. “It’s not a free pass, but the government listened,” says John Gamble, CEO of Canada’s consulting engineers’ association.
But an SNC-Lavalin spokesman says the rules still don’t allow approaches, such as deferred prosecutions, that exist in the U.S. and U.K. He also objects to terms that now allow firm suspensions from federal jobs for up to 18 months if charged with or admitting guilt to some offenses. "This raises, among others, issues relating to the presumption of innocence," he says.
SNC-Lavalin has said it will plead not guilty to the federal charges at an October hearing, but the controversy surrounding bribery allegations in Libya, Bengladesh and Montreal involving former executives has been a key distraction for the firm's new leadership for the past three years, with continuing bottom-line impacts and the CEO's prediction that a conviction would likely end the firm's existance.
Says Gamble: "There's no more ruthless regulator than the marketplace."
In an editorial last month, Canada's Globe and Mail newspaper noted SNC-Lavalin's efforts "to rehabilitate itself... and credibly, that it is uncovering past wrongdoing and putting in place policies to prevent a repeat." The editorial also noted the firm's "depth of skill and knowledge, particularly in infrastructure, that Canada is in need of and which can’t be easily replicated."
The government awarded the company and team members two multi-billion-dollar transportation upgrade projects in Montreal and Toronto earlier this year.
Last month, the firm, along with CH2M, Fluor and EnergySolutions, also were named the preferred bidder to manage Canadian Nuclear Laboratories in Ontario, a nuclear research site that also is set for decommissioning in 2018.
The site is a unit of Atomic Energy of Canada Ltd., which the government is restructuring into a government-owned, contractor-operated approach similar to what is done for nuclear site management in the UK and US. Previously, in 2011, the government sold its nuclear reactor division to SNC-Lavalin, which is pursuing additional nuclear design work globally.
Gamble notes the efforts made by SNC-Lavalin to develop "some of the most sophisticated integrity-management approaches" in business, influencing other sector firms to take "decisive steps" to improve ethics.
Gamble says that, this fall, Canada also is set to release the long-awaited report of the Charbonneau Commission’s two years of hearings, beginning in 2013, into construction-industry corruption in Quebec.
He says his group’s members also are looking to see how the report addresses ethics problems on the “demand side,” as well. He notes that more AE firms are improving client selectivity, "doing away with 20% of their worst clients."
