4/22/13

Are Ontario P3 projects plagued by corruption?


A commission of inquiry has heard that SNC-Lavalin deliberately went around Quebec's political party financing rules, leading to a flurry of donations to the governing Quebec Liberal Party in 2009. The donations came as the engineering firm was bidding on a major hospital construction project, the media reports.

What is not reported, however, is that this is a privatized P3 project.

One of the biggest in fact. These privatized P3 projects are designed so private sector corporations get their mitts on a much larger share of the booty than they would under normal procurement (e.g. billions of dollars in financing for the projects).

Former SNC-Lavalin vice-president, Mr. Yves Cadotte said SNC-Lavalin knowingly reimbursed its senior staff for their political donations. (Corporations are not allowed to make donations, or to reimburse their executives for their donations to political parties in Quebec.) SNC-Lavalin employees gave $101,200 to the Quebec Liberals in 2009, just as the P3 contract was being decided.

The firm won the $1.3 billion bid for the McGill University Health Centre project.

This is just the latest issue regarding the same P3 project. The (now) former SNC-Lavalin CEO and another former SNC-Lavalin vice-president have been charged in connection with the alleged transfer of $22.5 million to hospital bosses for the P3 project.

The (now) former top McGill hospital boss (who was also Stephen Harper’s CSIS oversight man) remains at large, having left the country before police could arrest him.

The McGill University Health Centre is now laying off staff in an effort to cut $50 million.

These aren't the first problems for SNC-Lavalin. The same VP implicated in the Quebec P3 hospital is now languishing in a Swiss jail for allegedly bribing the son of deceased Libyan leader Moammar Ghadafi. SNC-Lavalin won over a billion dollars in contracts in Libya, reportedly.

SNC-Lavalin is not exactly unknown to the Ontario P3 market either.  Indeed, a consortium involving SNC-Lavalin  won a $2.1 billion P3 privatization project for an Ottawa light rapid transit project in December. This was just days after its former CEO was arrested on the charges connected to the Quebec P3.

Despite the timing, there was little commentary in the media about this, even though the Ottawa P3 deal was announced by our then Liberal premier, Dalton McGuinty. There are dozens of P3 projects planned or underway in Ontario, involving billions of provincial tax dollars.

There have been multiple scandals in recent years as the Liberals expanded the scope of privatization (e-Health, Ornge, lax private clinic oversight, chemotherapy drug preparation problems, the extra costs associated Brampton hospital P3, and, last week the P3 gas plant problems exposed by the Auditor General).  Is another brewing?

Is it likely that similar practices have been avoided in Ontario? How was the Ontario government able to move ahead with the Ottawa LRT P3 project so soon after charges were laid against the former SNC-Lavalin CEO? What steps have they (or did they) take to avoid such problems?

Presumably, the government has developed some speaking notes to respond to concerns that might be raised by the media about these latest P3 scandals, but no one, as far as I know, has asked. And, in any case, if they do have a rationale, does it pass the sniff test?

Last week SNC-Lavalin Inc. agreed to a ten year suspension from bidding on projects funded by the World Bank because of another scandal (allegations of bribery in Bangladesh). The World Bank reportedly said the case against SNC-Lavalin is "testimony to collective action against global corruption." 

 But we are good to go in Ontari-ari-ario.

Photo 1 SNC-Lavalin by boldorak2208Photo 2: Hassan_MadhounThe Ottawa O-Train will connect to the Ottawa LRT project.
Photo 3: Voters at Kingston Health Coalition P3 Plebiscite 13 April 2013 by Doug Allan;

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