In 2011, the Harper government sold the government?s CANDU nuclear reactor division for a mere $15 million. The buyers?the logistics and engineering company SNC-Lavalin?are now bringing fresh grief to Justin Trudeau?s Liberals. Erika Simpson reviews the company?s recent history.
The SNC-Lavalin allegations are shaking the halls of power in Ottawa and invite us to follow the big money. A decision to disallow the nuclear giant SNC-Lavalin from entering into a Deferred Prosecution Agreement (DPA) could affect the company’s ability to meet and make new contractual obligations with Atomic Energy of Canada Limited (AECL), Bruce Power, China National Nuclear Corp, Hydro One, Ontario Power Generation (OPG) and Ontario’s Bruce, Darlington and Pickering nuclear power stations.
To disallow a DPA could also delay refurbishment of Ontario’s nuclear stations and affect construction of the Deep Geologic Repository (DGR) for nuclear waste under the Bruce station, the world’s largest operating nuclear power plant, located in Kincardine municipality approximately one km from the shore of Lake Huron.
As the only Canadian company so far to register in Ottawa to lobby for a DPA, SNC-Lavalin representatives extensively lobbied federal government ministers and top staffers, including the prime minister’s principal secretary Gerald Butts. SNC discussed ‘justice and law enforcement’ on January 31, 2017 with Butts, and met with Environment Minister Catherine McKenna in the prime minister’s office that same day, according to The Hill Times in Ottawa.
Treasury Board president Jane Philpott resigned from the federal cabinet last month, saying she had lost confidence in the way the Trudeau government was dealing with the SNC-Lavalin affair. Butts abruptly resigned in February, in the wake of Canada’s Attorney-General Ms. Wilson-Raybould being shuffled out of the Justice portfolio in January.
Butts was the senior advisor to Dalton McGuinty in 1999 who strongly advised replacing coal-fired power generation with a combination of conservation, natural gas, renewable energy and nuclear power. Now Ontario relies on nuclear reactors for about half of its electricity. The refurbishment announcements by Kathleen Wynne’s cabinet, in its last year in power, meant nuclear power would be Ontario’s single largest source of electricity for decades to come.
In Butts’ resignation letter, he writes: “I also need to say this (and I know it’s a non sequitur). Our kids and grandkids will judge us on one issue above all others. That issue is climate change.” As a longtime environmental activist, Butts was not a critic of nuclear power but a proponent.
Notably, SNC included the president of AECL Richard Sexton in its lobbying campaign for a DPA on Oct. 26, 2018. The Harper government sold the CANDU sector of AECL to SNC for $15 million dollars in 2011, a fire sale price that critics charged was much too low. “We are shocked and angry that the Harper government conducted this sale behind closed doors without any input from the Canadian public or parliament,” said Michael Ivano, Vice-President of the Society of Professional Engineers and Associates.
With its purchase, Montreal-based SNC created a wholly Canadian subsidiary called SNC-Lavalin Nuclear Inc. and Candu Energy, based in Mississauga. On behalf of SNC’s nuclear energy affiliate, a former adviser to Stephen Harper during his time as opposition leader Ken Boessenkool registered to lobby the Harper government for two months in 2010.
A former chief of staff to then-Progressive Conservative leader Joe Clark in 2000 and 2001, Goldy Hyder, registered to lobby the Harper government on nuclear policy on behalf of SNC from 2012 to 2014. A former cabinet minister in Jean Chrétien’s Liberal government, Don Boudria, registered to lobby the Conservative government for SNC between 2007 and 2009 on nuclear policy, according to The Hill Times’ listing of registered lobbyists.
SNC-Lavalin Nuclear Inc. announced it signed a formal memorandum of understanding with China National Nuclear Corporation in Vancouver last July. The partners plan to develop nuclear reactors using Advanced Fuel Candu technology, and pursue billions of dollars for the Canadian and Chinese economies in nuclear-related projects.
With joint venture partners Aecon Group Inc. and AECOM, SNC-Lavalin Nuclear announced last June it was awarded the centrepiece of Bruce Power’s Major Component Replacement Project. According to its president Sandy Taylor: “SNC-Lavalin will use what we already know from our deep knowledge base and decades of CANDU experience to confidently fulfil the refurbishment needs.” The province’s plans are to refurbish six nuclear reactors at Bruce Power at a cost of about $13 billion.
In August 2017, federal Environment Minister Catherine McKenna delayed a decision by the Trudeau cabinet on whether to go ahead with the proposed construction at the Bruce nuclear station of a DGR on Crown-owned and Indigenous territory, pending more input and a possible veto from First Nations. The nuclear-waste bunker decision could be made by the next federal government. Construction estimates vary between $1.5 to $13 billion; the transportation and long-term costs of storing the waste, after the shaft is constructed and abandoned, are unknown.
Meanwhile, OPG plans to refurbish four reactors at the Darlington generating station and extend the life of the Pickering nuclear station to 2024. Refurbishment to extend Darlington’s life could involve more than 180 companies and cost between $6 billion and $10 billion. SNC-Lavalin and Aecon will be the companies responsible for much of the work.
The Darlington nuclear station, originally built beginning in 1978, was completed a decade late at a cost of $14 billion, instead of the original project estimate of $2.5 billion. The reactor refurbishment at Pickering, meant to be completed by 2000 at a cost of $780 million, took until 2003 and cost $1.25 billion.
Green Party of Ontario Leader Mike Schreiner called it “outrageously irresponsible” for the Liberals to commit to rebuild nuclear plants without an independent review on costs. Billions more are needed from Ontario taxpayers to decommission the power plants, transport nuclear waste to Kincardine, and safely monitor it for a hundred thousand years.
Whether SNC is allowed to meet and make new contractual obligations over the next decade is crucial to Canada and the global nuclear industry’s future development.
The Organization for Economic Cooperation and Development warned in March it is monitoring the Canadian government to ensure it abides by its obligations under its anti-bribery convention to safeguard judicial independence in the prosecution of SNC-Lavalin.
The World Bank announced in 2013 it was debarring SNC from any of its contracts for 10 years—its longest debarment period ever—because the company conspired to pay bribes while bidding for projects in Bangladesh and Cambodia.
More charges of corruption followed, yet Canada’s Export Development Agency continued to provide SNC with loans, including $1.7 billion in loans since 2011.
In 2011, the RCMP laid fraud and bribery charges against SNC for work done in Libya, alleging $47.7 million was paid in bribes. In 2012, Swiss prosecutors indicted former SNC-Lavalin executive Riadh Ben Aissa on allegations he laundered vast sums of money tied to at least $130 million Swiss francs ($139 million Canadian). SNC’s chief executive officer Pierre Duhaime abruptly departed due to other revelations that payments of $56 million were directed through SNC’s Tunisian office to unknown sales agents.
Stéphane Roy, a former SNC vice-president, was charged in 2014 with fraud and bribing a foreign public official in relation to SNC’s business with Libya. Quebec Court Justice Patricia Compagnone stayed those proceedings in February because of delays created by the prosecution.
Prosecutors also struck a plea bargain in February just as Duhaime’s trial was set to begin on his role in the McGill University Health Centre super hospital corruption case. After Duhaime admitted SNC executives paid top managers of the McGill University Hospital Centre $22.5 million, in exchange for information that helped the company win a $1.3 billion contract to build the new hospital, he pleaded guilty to breach of trust, and was sentenced to 20 months of house arrest.
During the 2018 provincial election, soaring electricity costs led Douglas Ford to target the salaries of top Hydro One executives. He vowed, if elected, to sideline its CEO Mayo Schmidt, who earned $6 million in annual compensation. Once “the six-million dollar man” departed, Hydro One’s entire board resigned.
The provincial government’s intervention in Hydro One compensation, and its subsequent executive search for new board members, contributed to US state regulators suggesting Ontario was willing to put political interests above those of shareholders. Ford’s intervention led to the cancellation of the utility’s $6.7 billion acquisition bid for U.S.-based utility Avista Corp, followed by a $103 million kill fee, resulting in untold millions in lost share value for Hydro ratepayers, since the province owns the largest stake in the electric utility.
Follow the money. More heads could roll. SNC-Lavalin is a giant developer of the global nuclear industry and a flagship Canadian company that bears closer accountability, scrutiny, and transparency. The 2030 Agenda for Sustainable Development, adopted by all UN member states in 2015, provides a shared blueprint for peace and prosperity for all people and the planet now and into the future. At the heart of the 16th Sustainable Development Goal is an urgent call to substantially reduce corruption and bribery in all their forms, and develop more effective, accountable, and transparent institutions.
Erika Simpson is an associate professor of international politics in the department of political science at Western University, the vice-president of the Canadian Peace Research Association, a past vice-chair of the Canadian Pugwash Group, and a recipient of the Shirley Farlinger lifetime achievement award for peace writings from Voice of Women-Canada.
Peace Magazine Apr-Jun 2019, page 20. Some rights reserved.
Search for other articles by Erika Simpson here