A division of Canadian engineering giant SNC-Lavalin has for years used a secret internal accounting code that former employees say was for bribes on projects across Africa and Asia, a joint investigation by CBC News and the Globe and Mail has found.
Former employees say some of the money was earmarked to help the company win contracts funded by international development agencies such as the World Bank and the African Development Bank.
CBC News and the Globe and Mail have discovered that a division called SNC-Lavalin International Inc. (SLII) that focuses on smaller contracts to design and supervise megaprojects has for years used the code words “PCC” or “CC” interchangeably to describe hidden so-called "project consultancy costs."
“PCC, they interchangeably used the word," said former SNC-Lavalin International engineer Mohammad Ismail. "Sometimes it was 'project consultancy cost,' sometimes 'project commercial cost,' but [the] real fact is the intention is [a] bribe."
Ismail is accused of attempted bribery in Bangladesh and awaits trial in Toronto. The evidence in that case is covered by a publication ban. However, he agreed to comment on internal SLII documents obtained by CBC News and the Globe and Mail from other countries that are not before the courts.
The documents show that from 2008 until 2011, the company included these "consultancy costs" in 13 projects.
The terms “PCC” or “CC” appear as line items on eight of the projects in Nigeria, Zambia, Uganda, Ghana, India and Kazakhstan.
Last month, the World Bank banned SNC-Lavalin Inc. and its 100 subsidiaries for the next 10 years from bidding on projects funded by the development agency, citing company misconduct in Bangladesh and Cambodia.
In a widely publicized letter to Bangladesh's Anti-Corruption Commission, the World Bank stated that PCC was a "euphemism used by SNC-Lavalin to indicate the cost of the bribes to be paid."
PCC 'not legitimate': SNC-Lavalin
According to various company emails, cheques and other accounting records, the money was routinely calculated as a percentage of the total value of contracts, typically around 10 per cent.
The payments were kept hidden from clients and funding agencies in internal spreadsheets, or calculated in the margins of budgets and recouped through artificially inflated salary tables.
Where the money went, who got paid, and for what, is unclear.
“[PCC] was not legitimate,” SNC-Lavalin spokesperson Leslie Quinton told CBC News.
Quinton said that since an RCMP raid on SLII offices in Oakville, Ont., in September, 2011, internal auditors have scoured the division's accounting records and concluded that PCC was improperly factored into a number of projects. SLII has been virtually disbanded, with most of the involved staff now reassigned or fired.
The spokesperson said SNC-Lavalin has been addressing a "variety of issues" raised during external and internal investigations and is improving its whistleblower program and accounting controls to help it get to the root of "non-compliance matters."
Two former SLII employees — engineer Mohammad Ismail and former SLII vice-president Ramesh Shah — are awaiting trial in Toronto on charges of attempting to bribe officials in Bangladesh. A publication ban prevents reporting on evidence presented so far in that case.
But on SLII projects in other countries, the CBC/Globe and Mail investigation has discovered widespread use of “PCC” with payments to consultants, public officials and even, on occasion, to SNC employees themselves.
Cash directed to Nigerian official: ex-worker
An engineer who worked for SNC-Lavalin in Nigeria says he recalls being asked by his boss, Ramesh Shah, to make a number of deliveries of cash to a government official responsible for a World Bank-funded water and sewer project in the northern Bauchi state.
“It was done in cash,” Chalamakunta Muralidharreddy said in an interview from India where he now works with a different company. “I was the courier."
Muralidharreddy said the payments from his own pocket were made to Usman B. Alhaji, a Bauchi state official who was in charge of hiring SLII.
Documents show SLII then reimbursed the engineer with personal cheques worth about $15,000 Cdn in total after Muralidharredy submitted “petty cash” claims on letterhead purporting to be from “SNC Lavalin Nigeria Limited." SNC-Lavalin confirmed that "SNC Lavalin Nigeria Limited" never existed.
Asked whether it was a kickback, Muralidharredy said he was told the payments were to be passed on to a university professor for a "soils investigation."
“It’s definitely not proper. Not only with the World Bank, anywhere in the world where money is being paid directly to the government employee, it’s an offence,” Muraliharreddy said.
“When the boss asks, in that part of the world… what would you do if you were put in my shoes if you were in a remote area of Nigeria?" asked Muraliharreddy. Muraliharreddy's boss, former SLII vice-president Ramesh Shah, and Bauchi state official Usman. B. Alhaji would not comment on the payment.
The Bauchi project and several other SLII contracts in Nigeria included a 10 per cent “PCC” line item in internal accounting spreadsheets.
Documents on several road and bridge repair projects in the northern Kaduna state indicate the 10 per cent was being “paid to Musa Tete” through a local consultant. Musa Tete was a Nigerian Ministry of Roads official who was in charge of the project that hired SNC-Lavalin International.
Tete denied ever receiving such payment.
Emails and invoices show Tete personally submitted bills to SLII on behalf of a company called In Depth Engineering, which was paid about $20,000 US.
Secret payments widely known: former engineer
"To me, this is a bribe," former SLII engineer Ismail told CBC News and the Globe and Mail in an exclusive interview.
The former SLII engineer has firsthand knowledge in preparing technical and financial proposals for the company. He is accused in Canada of attempted bribery in Bangladesh and is awaiting trial alongside his former boss, Shah, on charges under Canada’s Corruption of Foreign Public Officials Act.
Ismail wouldn't comment on the Bangladesh case or evidence presented at the preliminary hearing, which is covered by a publication ban, but was willing to comment on projects in other countries when presented with internal SLII documents obtained by CBC and the Globe and Mail.
Ismail insisted the system of hidden percentages charged to clients and the World Bank was well known within the division from the "office secretary to senior positions."
“Everybody used this term, and all know what that means,” he said.
Another past employee, as well as a current company insider, both of whom spoke on condition of anonymity, confirmed they, too, knew “PCC” was a term used to describe bribes.
SLII accountant Brijesh Jani told CBC he had never heard of “PCC” when reached by telephone last week. Scores of documents and emails arranging payments bear Jani's email address and signature.
The signature of Shah, the former SLII vice-president who was directly in charge day-to-day operations, also appears on many cheques labeled with PCC or CC. He declined to comment.
Others with signatures on the cheques obtained by CBC News include more senior SNC-Lavalin employees, including the division boss Kevin Wallace, who until being fired in December was the senior vice-president and general manager overseeing SNC-Lavalin International's division in Oakville, Ont.
Wallace declined to comment, citing an ongoing wrongful dismissal suit and the pending criminal case involving the Bangladesh contract. His lawyer, Scott Fenton, issued a written statement that Wallace “has not been alleged by the RCMP to have broken any laws.”
Another executive, Patrick Lamarre, resigned, citing personal reasons. He acknowledged to CBC News that the SLII regional office in Oakville fell under his responsibility but said he didn't know about the PCC system.
"Based on the current accusations of wrong doing of some ex-employees working in a small sub business unit ultimately reporting to me, I am outraged that they were engaged in such operations," Lamarre said in a statement. "I find it unacceptable and if I had known this, it would have never been tolerated."
Money for fake invoice wired back to SNC exec
Another bizarre SLII financial transaction includes a 2010 payment to Agema Consulting in Mozambique for an alleged “geophysical survey." But the company's managing director Verona Parkinson says the bill for the survey was a fabrication.
Accounting documents connect the payment to a “Lichinga to Litunde” Road project funded by the African Development Bank.
A $52,522 invoice made the odd request that SLII wire the money in two installments to the United States into the personal accounts of two relatives of Agema's director Verona Parkinson.
But Parkinson, when reached by CBC and the Globe and Mail, says there never was any geophysical survey and that the invoices were fabrications.
She said then SLII vice-president Shah claimed he was out-of-pocket for expenses he’d incurred on behalf of SLII and asked her to submit phoney receipts, accept payment, then wire the funds back to Shah’s own personal bank account at the ICICI bank in Mississauga, Ont.
"I was just doing him a favour," said Parkinson.
Parkinson said she went along with the scheme, but insists she never held on to any money. She provided a copy of a bank wire transfer receipt in support of her claim.
Shah declined to answer questions about the payment.