A Canadian federal panel probing the extent of public works construction corruption in Quebec heard from its last witness on Sept. 9 after two years of testimony from industry executives, union leaders and government officials.
Since then, several Quebec-based engineering and construction firms including Dessau, SNC Lavalin, WSP Global, Pomerleau and EBC Inc., were accused of, or confessed to, involvement in a province-wide conspiracy of price colluding, campaign contibution fraud and bid rigging.
Post scandal, the firms quickly began the process of rebuilding and rebranding, says David Wilkins, newly appointed chief compliance officer at Montreal-based SNC Lavalin.
The Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry—known as the Charbonneau Commission–was created by the provincial government in November 2011. This was just months after former Montreal police officials reportedly leaked a report on Quebec’s construction sector to Radio Canada.
Chaired by Justice France Charbonneau, public hearings began in May 2012.
While the commission has yet to release its final report, Maxim Sytchev, construction sector analyst, Dundee Capital Investments, says its already back to “business as usual” for many of Quebec’s construction firms. “Other companies that have been accused of wrongdoing in the construction sector,--Seimens, KBR, Halliburton—if they have the size and the balance sheet, they can survive,” he says. “For now the market has moved on from Charbonneau.”
This may be true, but it comes after some major shifts in the Quebec engineering world. One firm at the center of the corruption inquiry, Genivar, is no more. After allegations about improper accounting and political donations were made at the commission, and one of its chief officers was arrested, the company embarked on an ambitious acquisition and rebranding scheme to “reposition itself” in the global market. Now known as WSP Global, the company recently purchased Parsons Brinckerhoff as a “transformational acquisition,” moving as far as possible from the company’s “Genivar” past and brand.
Like WSP Global, SNC made major acquisitions—also for brand rebuilding and repositioning in international markets— over the past two years. The company is working hard to assure clients that wrongdoers are gone from the company and much more comprehensive controls against corruption have been put into place, Wilkins says.
While analysts say the mega companies involved in Charbonneau are on their ways to full recovery, ironically, it’s small and medium size enterprises (SMEs) throughout Canada—most not even involved in the Charbonneau inquiry— that could be compromised by a rehaul of procurement criteria.
“My worry is that there are going to be mandates for integrity management systems adopted and they will be written with large corporations in mind,” says John Gamble, president of Canada's Association of Consulting Engineering Companies. “I would hate to see small and medium size firms not be able to get work because they have to comply with mandates that aren’t relevant" to firms of their size, he adds.
Further, Gamble says he expects Canada to adopt “competitive selection” legislation as a result of the commission’s findings and recommendations. He points to a Canadian program, “Infraguide,” to represent best practices for public procurement in Canada.
Created via partnership between the Federation of Canadian Municipalities, the National Research Council and Infrastructure Canada, these qualifications-based selection rules move professional services away from priced contracts – more subject to manipulation and corruption, Gamble says.
While Infraguide is a voluntary program, Gamble says Canada should follow the lead set by the U.S. with enactment of the Brooks Act of 1972, which requires public announcement of services to be solicited and further evaluation of consulting engineering firms when contracts are awarded. “My heart is heavy that we didn’t do this ten, twenty years ago,” he says.
Going forward, there is no regulator more ruthless than the market, which is starting to demand transparency. “The market—our clients— want assurances as to what we’ve done to eradicate the problem, and we know because we’ve been talking with them,” says Wilkins, who joined the firm in tktk from a previous ethics management role at tktktktktk.
“Developing integrity management systems is smart business because markets are demanding that companies play and compete fairly," he says. "From this we want an ethics program at the forefront of engineering and construction companies, of Canadian companies.”