SNC-Lavalin paid $22M to secret offshore company to get Algeria contracts: Panama Papers

SNC-Lavalin paid a secret Caribbean-registered company to intercede on its behalf to obtain hundreds of millions of dollars in business in Algeria, the Panama Papers show, in a similar pattern to how the engineering giant operated in Libya, for which it is facing charges of paying bribes and committing fraud.

• SNC-Lavalincharged in Libyan business probe
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Montreal-based SNC landed at least $4 billion in contracts in Algeria during a prosperous decade for the company in North Africa. The Panama Papers reveal a number of those deals were obtained through the services of a shadowy firm called Cadber Investments SA registered in the British Virgin Islands.

The revelations, from a joint investigation by CBC's French-language service Radio-Canada and the Toronto Star, call into question SNC insiders' dealings in yet another country, contributing to a mounting toll of evidence that some staff at Canada's premier engineering firm repeatedly engaged in suspicious commercial practices.

Cadber Investments was set up in 1999 through Mossack Fonseca, the Panamanian law firm that is the source of the massive Panama Papers data leak, and was administered by a Royal Bank of Canada arm in Switzerland, leaked records show.

However, the true owner behind the company is a secret. All of Cadber's contracts and correspondence with SNC is signed by the offshore company's two "nominee" directors people who worked for Mossack Fonseca and served as fronts for thousands of offshore companies to shield the true owners.

When Cadber Investments needed to formally communicate with SNC or authorize an official document, the Panama Papers show, RBC's Swiss employees would email the letter or document to Mossack Fonseca, where the nominee directors, based in Panama, would sign it and email it back to Switzerland.

The Radio-Canada/Star investigation found that one of those directors lived in more than modest digs in the countryside 30 kilometres outside Panama City despite being an official of an offshore company that was in line to receive a total of $22 million in payments from SNC-Lavalin over a four-year period.

The identity of the offshore company's true owner may soon come to light, though, because RBC indicated earlier this month it will co-operate with a Canada Revenue Agency probe of the Panama Papers and hand over its files on all its clients named in the leak.

6 contracts with shadowy firm

Payments to Cadber Investments, to be wired to an RBC branch in Geneva, stemmed from six contracts with SNC from 2000 to 2004 for services as a representative and commercial agent. The contracts covered hundreds of millions in infrastructure deals SNC was seeking in Algeria, including a $750-million contract it obtained to build a water treatment plant in Taksebt.

• See the contracts (in French)

The contracts are part of the Panama Papers leak and were signed by combinations of three different former executives from the engineering giant's SNC-Lavalin International unit.

All three men said in interviews that they had no idea who was behind Cadber Investments and only verified and signed contracts that SNC's construction division sent their way.

"The division found the commercial agents, and we trusted them. We didn't have a choice," KamalFrancis, a former senior vice-president at SNC-Lavalin International, said in an interview.

Questioned at a news conference following his company's annual general meeting earlier this month, SNC CEO Neil Bruceacknowledged it is not usual business practice to enter into such contracts where the counterparty signing is a figurehead director. He added that SNC has spent considerable time and energy to clean up its past contracting practices and that it doesn't do business this way anymore.

The company ceased using commercial agents in Algeria in 2013.

Similar pattern to Libya

The dealings with Cadber Investments mirror similar arrangements SNC made in Libya, where it reaped billions of dollars in revenue over many years, building dams, an airport, a prison and other major works.

There, it also dealt with mysterious commercial agents based in the British Virgin Islands. A Swiss investigation later determined the commercial agents were really a guise for former SNC-Lavalin executive vice-president Riadh Ben Assa to pay bribes to Saadi Gadhafi, son of the late Libyan dictator Moammar Gadhafi.

Ben Assa pleaded guilty to corruption, money laundering and fraud in Switzerland in 2014. Having spent 29 months in prison there, he was extradited to Canada, where he faces further charges related to a Montreal superhospital project.

SNC itself and its international and construction subsidiaries each face one charge of corruption and one count of fraud in Canada related to the companies' business in Libya between 2001 and 2011.

The company has pleaded not guilty and says the allegations against it are without merit.

Search the Panama Papers:

• Who's in the Panama Papers? Search the database here
• What's in the Panama Papers database and how to search it

MorePanama Papers coverage:

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• Panama Papers names go public
• RBC to turn over files onPanama Papers clientsto taxman
• Iceland PM steps aside over offshore revelations
• Canada's top offshore middleman linked to fraudster

Send tips on this or any other Panama Papers story tozach.dubinsky@cbc.ca