SNC-Lavalin replaces CEO amid more allegations

SNC-Lavalin Inc. announced this morning it has replaced president and CEO Bob Card with Neil Bruce, and told CBC News the move is "completely unrelated" to new allegations, published today, in a civil suit that claims giving bribes to win contracts was part of the past practices of the company.

The Montreal-based engineering firm, which Card took over in the spring of 2012 to clean up past issues,faced new allegations Mondayfrom a formerexecutive who claims the company has made hima "scapegoat,"and allegesother top executivesfor years endorsedbribes and lavish gifts including a yachtand even prostitutes to win contracts from Libya'sGadhafiregime.

The serious allegationsbyRiadhBenAssa,SNC'sformer executive vice-president of construction, are contained in a newly filed court pleading as he defends himself against one of a number of civil lawsuits by the company, which itself isfacing criminal charges of foreign corruption.

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"SNC is only trying to use Ben Assa as a scapegoat by presenting him as solely responsible for acts that SNC was fully aware of, accepted and encouraged," the court pleading states, naming alist of former CEOs, executive vice-presidents and the former chief financial officer.

"After having behaved as such for many years, SNC now tries to escape unscathed by blaming all its acts on Ben Assa."

An SNC press release Mondaymorning said the transition from Card to Bruce, the chief operating officer who came to SNC in January 2013, is part of a"smoothtransition" at an "important stage in SNC-Lavalin's development," stated Lawrence Stevenson,SNC'sboard chair.

"Bob's tenure left a strong legacy during a critical time for the company, with a far-reaching transformation that changed the face of the executive team, repositioned the company strategically ... as well as turned its ethics and compliance system into a benchmark for the industry."

Bribes won billions in work

Ben Assa is back in Canada after serving 2years in a Swiss jail, havingadmittedto corruption and money laundering tied to SNC projects in Libya. He's awaiting trial alongside former CEO Pierre Duhaime on charges of fraud for $22.5 million in alleged bribes paid to win SNC the contract to build a Montrealsuperhospital.

SNC-Lavalin, which was heavily invested in Libya, has been embroiled in controversy sincethe violent overthrow of the Gadhafidictatorship in 2011, and has suedBenAssa, blaming him for many of its troubles.

This pleading fromthe Tunisian-born executive offers thefirst extensive account of his actions atSNC and marks amajorcounterattackagainst his former company. None of the allegations in it have been tested in court.

SNCisseeking to reclaim $2 million from him, former vice-president of finance Stphane Roy and consultant Cyndy Vanier, allegingthey defrauded the company and conspired ina secret, illegal plot to move MoammarGadhafi's sonSaadiand his family to Mexico, contrary to UN travel bans at the time. BenAssa flatly denies any such plot.

Ben Assa is also named in a second lawsuit by SNC seeking $127 million from him and his predecessor, alleging embezzlement.

In the newstatement of defence, Ben Assa describes being tasked in 1995 under then-CEO Jacques Lamarre to develop new markets in North Africa, and then using hiswidely known friendship withSaadiGadhafito help SNC enter into a "50-50 joint venture" with aLibyan government agency known as theGreat Man Made River Authority.BenAssa sets outa long list of SNC contracts in Libya,worth billions, that arose from the partnership and that he allegeswere wonthrough kickbacks paid to side agents.

"Most of SNC's senior executives knew that the so-called agency contracts were in reality bribes paid to Libyan foreign officials in exchange for the award of the sole-source contract," the former construction executive alleges.

What's more, Ben Assa declares themoney was "fraudulently charged back" to the Libyan government by embedding the costs in the project before SNC submitted its offers.

Gifts: yacht, prostitutes, Spice Girls

Ben Assa claims SNC's senior management including Lamarre, Duhaime, formerchief financial officer Gilles Larame, ex-chairman of SNC-Lavalin International Michael Novakand former executive VPSami Bebawi knew about Saadi' Gadhafi's "importance in helping SNC securing lucrative contracts in Libya for a long time."

To cement ties, Ben Assa alleges specific SNC executives signed off onor approved numerous favours to help Gadhafi, including:

• providing SNC staff and hiring university professor as tutors;
• helping to obtain a Canadian visa;
• considering appointing Saadi Gadhafi an SNC vice-president;
• officially sponsoring his Italian SerieA professional soccer team.

One of the largest expenses includedthe purchase of a Palmer Johnson yacht worth $38 million for SaadiGadhafi"organized and validated by CFO Larame and approved by the then CEO Lamarre," Ben Assa alleges in the court document.

Saadi Gadhafivisited Canada in 2008, and SNC Lavalin picked up the bill more than $2million, Ben Assa claims. Expenses included hotels, restaurants, limousines andsecurity.

Ben Assa alleges some of thoseexpenses were invoiced through security company Garda, and then submitted and paid by SNC, including bills formore than $25,000 in clothes from Harry Rosen,"services of prostitutes andtickets to a Spice Girlsconcert."

The Gadhafi son visited again the following year, and SNC hired American rapper 50 Cent to entertain at a party for Saadi and SNC employees, which cost the company $550,000, Ben Assa states.

Beyond covering travel expenses, Ben Assa alleges SNC paid for a Toronto condo for Gadhafi and that Toronto employees were "mandated by the then CEO Lamarre to take charge of the design and decoration fees."

"Many of SNC'ssenior executives were aware, encouraged, and accepted Ben Assa's actions, which were all done for SNC's benefit," the pleading states.

CBC/Radio Canada attempted tocontact the various executives named, all of whom are no longer with the company. Most declined to comment.Duhaime and Larame declined to comment.FormerCEO Lamarre would only sayhe stands by previous comments to CBC thathe was betrayed byBen Assa. Michael Novak, former head of SNC-Lavalin International,denied knowing the details of financial arrangements in SNC's construction division and rejected his former colleague's claims.

Denies smuggling plot

In the summer of 2011 as civil war was toppling Libya's Gadhafi regime, Ben Assa states the company "was going through extraordinary lengths to accommodate and compensate members of Saadi Gadhafi's family," includingplacing hiswife temporarily on the payroll of SNC's offices in Morocco. "Duhaime and Larame, then CEO and CFO of SNC, were aware of and accepted this," he alleges.

In early 2012, Ben Assaand VP finance Roy wereforced out of SNC, after allegations surfaced they were connected to an allegedplot to smuggle Saadi Gadhafi's familyout of Libya to Mexico.They had hired a Canadian mediator Cyndy Vanier who in November 2011 was arrested and jailed in Mexico accused of arranging planes, fake passports and safe houses. She wasreleased after a court ruled herrights had been violated and she has returned to Canada.

Ben Assa, in his lawsuit pleading, flatly denies involvement in any such conspiracy.

He admits to meeting Vanier to hire her for a "fact finding"mission to Libya during the conflict. But he claims it was a legitimate contract for on the ground information gathering and advice as SNC scrambled to deal with 4,500 employees affected by the civil war.

Ben Assa's legal defence concludes by calling SNC's suit against him "nothing less than an after-the-fact re-writing of history,...ablame-shifting exercise by SNC made solely for public relations purposes."