r v. SNC-LAVALIN CONSTRUCTION INC., 2019 QCCQ 18961

R. c. SNC-Lavalin Construction inc. (Socodec inc.) 2019 QCCQ 18961 COURT OF QUEBEC (Criminal and Penal Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL N O : 500-73-004261-158 DATE : December 18, 2019 BEFORE THE HONOURABLE JUSTICE Claude LEBLOND, J.C.Q. THE QUEEN Prosecutor v.

SNC-LAVALIN CONSTRUCTION INC. (FORMERLY SOCODEC INC.) Accused JUDGMENT ON SENTENCING INTRODUCTION [ 1 ] The representatives of the prosecution and of SNC-Lavalin Construction Inc. (“SLCI”) entered into a facilitation conference supervised by the Court as provided by the Operating Rules of the Facilitation Conference in Criminal and Penal Matters of the Court of Quebec. [ 2 ] In filing for a Facilitation Conference, the parties requested that the undersigned, who presided over the Preliminary Inquiry, heard the evidence on key issues and the legal arguments raised by the parties in the course of that procedure be seized of the facilitation conference. [ 3 ] As defined by the operating rules, the facilitation conference is a process aimed at promoting the progress of a case by facilitating the search for a legal solution that best meets the needs of the parties involved.

In order to assist the parties in reaching an agreement, the procedure is confidential. A facilitation judge would not normally hear the case unless, as is the case here, the parties have come to an agreement and have requested that the undersigned hear the matter in [ 4 ] After having witnessed the progress in the discussions and carefully reviewed the materials provided by both parties, the Court concludes that the joint submission put forth by the parties is reasonable and will so order. [ 5 ] The reasons for judgment incorporate the

(1) Joint Statement of Facts agreed to by the parties; (2) the submissions made on behalf of the prosecution and finally (3) the submissions made on behalf of SLCI. JOINT STATEMENT OF FACTS [ 6 ] In a Joint Statement of Facts, the parties, admit facts in the context of SNC-Lavalin Construction Inc.’s ( SLCI ) guilty plea to a count of fraud committed against various Libyan authorities. The parties agree to the following: I. “

SUMMARY [6.1] The facts stated in this

section are admitted by SNC-Lavalin Construction Inc. (“SLCI”) and are mutually agreed to by the parties. [6.2] Two individuals meet the definition of a “senior officer” of SLCI under

section 2 of the Criminal Code . They also meet the definition of “directing minds” of SLCI as both occupied the position of President and Chief Executive Officer of SLCI. These senior officers committed offences, and SLCI, through the acts and omissions of these senior officers, is therefore responsible for such acts and omissions as a result of the application of the theory of identification at common law and

section 22.2 of the Criminal Code . [6.3] The acts committed by SLCI through its senior officers are exposed in the Joint Statement of Facts as follows. II. OVERVIEW OF SLCI

[6.4] SLCI was incorporated under the CBCA in 1991 and is an indirectly wholly owned subsidiary of SNC-Lavalin Group Inc., which has numerous subsidiaries and affiliates operating around the world. SLCI was called Socodec Inc. until July 21, 2009. For the purposes of this Agreed Statement of Facts, Socodec will be referred to as SLCI for ease of reference. SLCI engages in large-scale construction projects. [6.5] SLCI secured a number of international contracts in Libya that are relevant to the present case. Those contracts were secured through SNC-Lavalin International Inc. (“SLII”).

SLII was created under the CBCA in 1984. It has over 20 subsidiaries in several countries and branch offices in over 40 countries. SLII has traditionally operated as the international marketing arm of SNC- Lavalin Group and is the signatory of international contracts, including projects obtained for and executed by SLCI. [6.6] Since early 2012, the SNC-Lavalin Group Inc., the ultimate parent company of the wider organization, took measures to reduce the likelihood that it, or its affiliates, including SLCI and SLII, would commit a subsequent offence.

Those measures include a complete turnover of the corporate executive team and Board of Directors, the implementation of a robust Compliance and Ethics Program, the adoption of the necessary and appropriate steps to ensure that checks and balances now exist in order to prevent any similar situation or wrongful conduct from occurring again. III. LIBYA (

a) Summary [6.7] SLCI was engaged in construction projects in Libya during the relevant period of 2001 to 2011. These projects generated approximately $1,797,740,022 CAD in revenues for SLCI, $235,258,769 CAD in gross profit and $103,876,000 CAD in pre-tax net profit.

If the amounts paid for the benefit of Saadi Gadhafi were added to the pre-tax net profit the amount would be $154,152,761 CAD. [6.8] The projects that relate to the Great Man-Made River Authority (“GMMRA”) in Libya are: Design Supply and Construction of Wells at Tazerbo; Repair Works for the Sarir-Sirt/Tazerbo-Benghazi Pre-stressed Concrete Cylinder Pipe (“PCCP”) Lines; Sale of the Fleet of Equipment and Drilling Rigs that has been brought in Libya for the execution of Contract 138; Exploratory and Piezometric Wells near Giaghbub; Manufacturing of PCCP at the Sarir PCCP pipe plant (Part 1); the manufacture of PCCP at the Sarir PCCP pipe plant,

part 2; and Kufra Wellfield System Design & GRP Collector Pipeline Installation. [6.9] The project that relates to the General People's Committee for Transport Civil Aviation Authority (“Libyan Civil Aviation Authority”) in Libya is: Construction of the Benghazi Airport. [6.10] The relevant projects for the Organization for Development of Administrative Centers (“ODAC”) in Libya are: Guryan Rehabilitation Institution Project; and Lump Sum Turnkey Project of the Benghazi Lake Rehabilitation – Phase 1. [6.11] The relevant projects for Lican Drilling Co Ltd. (“LICAN”), a joint company between SLII and the GMMRA, in Libya are: Redrilling 48 Production Wells of Sarir Wellfield; and Drilling and Completion of Production and Piezometer Wells at Ghadames Wellfield. [6.12] During this period, Riadh Ben Laroussi BEN AISSA (“BEN AISSA”), a “senior officer” (as defined under

section 2 of the Criminal Code ) of SLCI at the time and also a directing mind, recommended, along with his then direct superior Sami BEBAWI (“BEBAWI”), that SLII enter into contracts with Duvel Securities Inc. (“Duvel”) and Dinova International Inc. (“Dinova”). The contracts were purported to be primarily for services to represent SLCI’s interests in Libya in connection with bids regarding contracts for various projects.

SLII made numerous payments to Duvel and Dinova pursuant to the representative agreements entered into with these entities. [6.13] Monies received by Duvel and Dinova were redistributed, with the knowledge and approval of BEBAWI, to various entities and individuals, including to BEN AISSA, who was the beneficial owner of the two companies’ bank accounts, and to BEBAWI, and Saadi GADHAFI (“GADHAFI”). [6.14] Monies paid to Duvel and Dinova were essentially drawn from the payments received from the GMMRA, ODAC and the Libyan Civil Aviation Authority in relation to projects in Libya that were obtained by SLCI and the work was carried out by SLCI.

From an accounting perspective, these payments were treated as costs attributed to the relevant project, as applicable. [6.15] In 2008 and 2009, SLCI paid (

i) the expenses for 2 visits of GADHAFI to Canada, including security services, hotel, training, private parties and entertainment and personal expenses for GADHAFI and his entourage and (ii) the decoration expenses of a condominium purchased by GADHAFI in Toronto. From an accounting perspective, the expenses for the 2008 visit were booked as costs attributable to the Sarir 2 project, while approximately half of the costs for the 2009 visit and the decoration of the condo were booked as costs attributable to the Sarir 2 project with the balance allocated to the overhead costs of SLCI. They were all approved by BEN AISSA and Stéphane ROY, Vice –President and Financial Director of SLCI. (

b) Relevant Individuals and Entities i. Senior Officers of SLCI and other relevant individuals [6.16] BEN AISSA started working for the SNC-Lavalin group of companies in 1985 as an economist. He worked under the immediate supervision of BEBAWI from 1999 to 2006, as Vice-President. He was based in Tunisia and was responsible for the Libyan market. On January 1, 2007, BEN AISSA was promoted by Jacques LAMARRE, President and Chief executive officer of SNC-Lavalin Group Inc, and thus replaced BEBAWI as the President of SLCI.

He left SLCI on February 9, 2012. [6.17] BEN AISSA signed a number of representative agreements with Duvel on behalf of SLII. He also signed a number of certifications with respect to these agreements. BEN AISSA pleaded guilty to corruption of foreign public officials, disloyal management of funds, fraud, and money laundering in Switzerland in relation to certain events described herein.

[6.18] BEBAWI was the President of SLCI from 1999 to 2006. During his time as President of SLCI, BEBAWI, a “senior officer” (as defined under

section 2 of the Criminal Code ) and also a “directing mind’, was the direct supervisor of BEN AISSA. BEBAWI retired in December 2006, and was replaced by BEN AISSA. BEBAWI had a consulting contract with the SNC-Lavalin group of companies from 2007 to January 2012. [6.19] Roland KAUFMANN (“KAUFMANN”) is a Swiss lawyer at Froriep Renggli, based in Geneva. He arranged for the setup of Duvel and Dinova, each of which are further detailed below. KAUFMANN signed representative agreements with SLII on behalf of Duvel and Dinova.

He was also the authorized signatory on various Swiss bank accounts, including those of Duvel and Dinova. ii. Duvel & Dinova [6.20] Duvel was incorporated on July 25, 2001 under the laws of the British Virgin Islands. Bank accounts for Duvel were opened in Switzerland by lawyer KAUFMANN. Bank accounts were held at Banque Edouard Constant SA, which was later acquired by EFG Bank SA. The sole beneficial owner of Duvel and of the bank accounts was BEN AISSA.

The authorized signing officers of the bank account were BEN AISSA, KAUFMANN, and another lawyer of Froriep Renggli, Nicolas JUNOD. [6.21] Between 2001 and 2010, SLCI, through SLII, paid Duvel $118,571,384 CAD pursuant to the representative agreements. [6.22] Dinova was incorporated on October 27, 2008 under the laws of Panama. A bank account for Dinova was opened in Switzerland by lawyer KAUFMANN at EFG Bank SA. The authorized signing officer of the bank account was KAUFMANN. KAUFMANN signed a declaration on January 6, 2011 that BEN AISSA had signing authority on the bank account.

A letter from BEN AISSA to the bank dated February 15, 2011 indicates that sole beneficial ownership of Dinova was transferred to BEN AISSA and that BEN AISSA had beneficial ownership of the company and the bank account. [6.23] In 2011, SLCI, through SLII, paid Dinova $8,674,553 CAD pursuant to the representative agreements. [6.24] An arrangement was made whereby Duvel and Dinova would make payments to legal entities belonging to and controlled by Saadi GADHAFI and for which he was the beneficial owner, and in return for such payments, Saadi GADHAFI, would use his influence as the son of the Libyan dictator Muammar GHADAFI, to assist SLCI in securing contracts in Libya. iii.

Companies that GADHAFI Benefitted From [6.25] Duvel and Dinova made payments, to companies that were owned or beneficially controlled by Saadi GADHAFI, namely Dorion Business International Ltd., Dorion Business Ltd., Horntown Management Ltd. (BVI) and Horntown Management Ltd. (IOM).

Payments from Duvel to Saadi GADHAFI’s companies were made for Saadi GADHAFI’s benefit, in order for Saadi GADHAFI to use his influence as the son of the Libyan dictator Muammar GHADAFI for securing contracts for the benefit of SLCI and for obtaining payments by the GMMRA of outstanding amounts to be recovered by SLCI. [6.26] Duvel and/or Dinova made payments to the boat manufacturer Palmer Johnson Sports Yacht, for the purpose of financing a portion of a yacht for Saadi GADHAFI’s benefit. (

c) Relevant Projects in Libya [6.27] SLCI was involved in projects in Libya under contracts secured by SLCI through SLII. Libyan projects were obtained and performed under the supervision of a senior officer of SLCI, BEN AISSA as well as his immediate superior BEBAWI. The following is a list of the relevant projects: A.

In 1994, SLCI, through SLII, secured a contract with the GMMRA for the Design Supply and Construction of Wells at Tazerbo Following a dispute between the parties regarding a claim for additional payments, SLII signed an agreement with Duvel on August 16, 2001 to be its representative in reaching a successful settlement of the claim. The agreement indicated that Duvel would be paid on a contingency basis. SLCI, through SLII paid 25,551,500 DEM in fees to Duvel following settlement of the claim. B.

In 2001, SLCI, through SLII, secured a contract worth $40,905,223 USD, with the GMMRA for the Repair Works for the Sarir-Sirt/Tazerbo-Benghazi PCCP Lines. SLII signed a representative agreement with Duvel on August 16, 2001 in relation to this contract. SLCI, through SLII paid $2,454,313.40 USD in representative fees to Duvel. C. SLCI, through SLII, secured a contract with the GMMRA for the Sale of the Fleet of Equipment and Drilling Rigs that has been brought in Libya for the execution of Contract 138. SLII signed a representative agreement with Duvel on November 4, 2002 in relation to this contract.

SLCI, through SLII paid $700,000 USD in representative fees to Duvel. D. SLCI, through SLII, secured a contract worth $17,557,500 USD, with the GMMRA for exploratory and piezometric wells near Giaghbub (also spelled Jaghbub). SLII signed a representative agreement with Duvel in relation to this contract on November 12, 2002. SLCI, through SLII paid $1,229,078 USD in representative fees to Duvel. One payment to Duvel was authorized prior to the representative agreement being signed. E.

On February 20, 2002, SLCI, through SLII, secured a contract worth €314,239,084 with the GMMRA for the manufacture of prestressed concrete cylinder pipes at the Sarir PCCP Pipe Plant (Sarir I). SLII signed a representative agreement with Duvel on November 12, 2002 in relation to this contract, and SLCI, through SLII paid €21,288,647.61 in representative fees to Duvel. Two payments were made to Duvel under the representative contract before it was signed. F.

On April 24, 2006, SLCI, through SLII, secured a second contract worth €687,108, with the GMMRA for the manufacture of prestressed concrete cylinder pipes at the Sarir PCCP Pipe Plant,

Part 2 (Sarir II). The company obtained the contract on a sole source basis. SLII signed a representative agreement with Duvel in relation to this contract on October 19, 2006. SLCI, through SLII paid €38,803,501.32 in representative fees to Duvel. On January 25, 2011, SLII signed a contract amendment to replace Duvel with Dinova

as the representative. SLCI, through SLII paid €1,902,867.01 in representative fees to Dinova. G. SLCI, through SLII, secured a contract worth €320,652,174 for the Construction of the Benghazi Airport in Libya. SLII signed a representative agreement with Duvel in relation to this contract on February 28, 2008. SLCI, through SLII, paid €3,448,573 in representative fees to Duvel. On January 25, 2011, SLII signed a contract amendment to replace Duvel with Dinova as the representative. SLII paid €1,952,958.81 in representative fees to Dinova. H.

On August 18, 2008, the GMMRA entered into a contract with LICAN for the Redrilling 48 Production Wells of Sarir Wellfield. In 2009, SLCI, through SLII, secured a sub-contract with LICAN in relation to this contract. No representative agreement was signed in relation to this contract or sub-contract and no representative fees were paid to Duvel or Dinova. I. On December 25, 2008, the GMMRA entered into a contract with LICAN and Challenger, a Libyan company, for the Drilling Completion of Production and Piezometer Wells at Ghadames Wellfield.

In 2009, SLCI, through SLII, secured a sub-contract with LICAN in relation to this contract. No representative agreement was signed in relation to this contract or sub-contract and no representative fees were paid to Duvel or Dinova. J. On November 2, 2009, ODAC entered into a contract with The Executing Agency for Construction and Engineering Co. for the Guryan Rehabilitation Institution Project. SLCI, through SLII, secured a sub-contract with The Executing Agency for Construction and Engineering Co. in relation to this contract.

No representative agreement was signed in relation to this contract or sub-contract and no representative fees were paid to Duvel or Dinova. K. On September 15, 2010, SLCI, through SLII, obtained a contract for Kufra Wellfield System Design & GRP Collector Pipeline Installation. No representative agreement was signed in relation to this contract or sub-contract and no representative fees were paid to Duvel or Dinova. L. SLCI, through SLII, obtained a contract worth €120,000,000 with ODAC for the Lump Sum Turnkey Project of the Benghazi Lake Rehabilitation – Phase 1 in Libya.

SLII signed a representative agreement with Dinova in relation to this contract on January 25, 2011. SLCI, through SLII paid €2,146,658 in representative fees to Dinova. (

d) Payments to Duvel and Dinova [6.28] Representative fees payable to Duvel and Dinova, on behalf of SLCI, were made pursuant to representative agreements with SLII for the relevant projects in question. BEN AISSA and BEBAWI recommended to SLII that Duvel and Dinova be hired as commercial agents. [6.29] All the representative agreements listed above proposed fees that exceeded the permissible thresholds established under the relevant corporate policies on representative fees at the time.

As such, in each case, additional corporate executive approval of the agreements was required and obtained. [6.30] After their introduction in 2008, Integrity Check Certification forms were an additional requirement requested by SLII for many of these representative agreements.

These forms required certain SLII officers to certify that the company’s representative and integrity check requirements were met, including that the representative in question was not a government official, and that the representative had read and would abide by the “SNC-Lavalin Code of Ethics and Business Conduct”. [6.31] BEN AÏSSA signed many of those Integrity Check Certification forms associated with these representative agreements while the others who signed acknowledged that no underlying verifications were actually made to support their certifications at the time. [6.32] The approval of the representative fees that exceeded the established thresholds without further verifications or questioning of the representative and the failure to verify the underlying integrity of the representative at the relevant time demonstrate that the system of checks and balances within SLII and SLCI at the time was ineffective and complacent. [6.33] Monies received by Duvel and Dinova were generally only paid once payments were received from the GMMRA, ODAC and the Libyan Civil Aviation Authority in connection with the relevant projects and contracts detailed at paragraph 6.27. [6.34] Between September 2001 and January 2011, on behalf of SLCI, SLII paid a total of approximately $127,245,937 CAD to both Duvel and Dinova with respect certain projects listed above at paragraph 6.27 of which (i) $47,689,868 CAD was paid, by Duvel and Dinova, to Saadi GADHAFI for exercising his influence as the son of the Libyan dictator Muammar GHADAFI for securing contracts for the benefit of SLCI, and (ii) $73,582,219 CAD was paid, by Duvel and Dinova, for the personal benefit of BEN AISSA and BEBAWI.

IV. OFFENCES [6.35] BEN AISSA and BEBAWI were “senior officers” and directing minds of SLCI, as defined by the jurisprudence and under

section 2 of the Criminal Code . Pursuant to the theory of identification and

section 22.2 of the Criminal Code , BEN AISSA and BEBAWI were acting within the scope of their respective authorities and were parties to an offence, had the mental state required to be a party to the offence and acted within the scope of their respective authorities to direct the work of other representatives in relation to the specified offence.

They acted with the intent, at least in part, to benefit SLCI. [6.36] Through BEBAWI’s actions and BEN AISSA’s actions and companies, Duvel and Dinova, SLCI, through SLII paid monies to Duvel and Dinova that were ultimately transferred in part to the benefit of Saadi GADHAFI. In exchange for these funds and at the request of BEN AISSA, Saadi GADHAFI used the influence that he benefitted from, as the son of the Libyan dictator Muammar

GHADAFI, to assist SLCI in securing contracts in Libya. [6.37] The representative fees paid to Duvel and Dinova, and ultimately transferred in part to the benefit of Saadi GADHAFI, were essentially paid out of payments received by SLCI from the GMMRA, ODAC and the Libyan Civil Aviation Authority in relation to the contracts secured by SLCI and listed at paragraph 6.27. [6.38] As the son of the Libyan dictator, GHADAFI was capable of influencing the awarding of public contracts in Libya and he did influence the awarding of contracts in favor of SLCI in exchange for payments made to his ultimate benefit.

SLCI recognizes that it benefitted from Saadi GHADAFI’s influence. [6.39] By securing and obtaining the contracts listed above at paragraph 6.27, through the fraudulent means of the influence exercised by Saadi GADHAFI in exchange for payments made to his ultimate benefit, SLCI altered the competitive bidding environment and imposed on the GMMRA, ODAC and the Libyan Civil Aviation Authority a loss or a risk of loss within the meaning of paragraph 380(1) (

a) of the Criminal Code . [6.40] Funds transferred by Duvel Securities Inc. and Dinova International Inc. to BEN AÏSSA and/or BEBAWI and derived from payments made by the GMMRA, ODAC and the Libyan Civil Aviation Authority in relation to the contracts listed at paragraph 6.27, were diverted for personal private purposes that had nothing to do with the projects. ” REGISTRATION OF A GUILTY PLEA [ 7 ] As it appears from the above, SLCI, through the actions of BEN AISSA, BEBAWI and others that they directed, committed a fraud against various Libyan authorities, contrary to paragraph 380(1) (

a) of the Criminal Code . [ 8 ] Consequently, SLCI has acknowledged the following: A.

It has admitted all the essential elements of the following offence : Between on or about August 16, 2001 and on or about September 20, 2011, did, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of the Criminal Code , defraud the “Great Socialist People’s Libyan Arab Jamahiriya”, the “Management and Implementation Authority of the Great Man Made River Project” of Libya, the “General People’s Committee for Transport Civil Aviation Authority” of Libya, Lican Drilling Co Ltd, and the “Organization for Development of Administrative Centers” of Benghazi in Libya of property, money or valuable security or service of a value that exceeds five thousand dollars, thereby committing an indictable offence contrary to paragraph 380(1) (

a) of the Criminal Code . B. It understands the nature of the charge as well as the nature of the guilty plea hereby entered and its consequences; C. It enters a guilty plea in a free and voluntary manner, without promises or threats, by being duly assisted and represented by its attorneys; D. It was not pressured by the prosecutor or the police authorities nor anyone else; E. It knows that the Court is not bound by any suggestions made by the parties nor any agreement between its attorneys and representatives of the Crown as to the sentence that the Court will impose; F.

It consulted with its attorneys and acquainted itself with the Joint Statement of Facts before pleading guilty. PROSECUTION’S REPRESENTATIONS ON SANCTION [ 9 ] The Prosecution has made written submissions which state the following: [9.1] “ T he proposed fine and payment

schedule of $280 million, payable in equal regular instalments over a 5-year period is in the public interest. This position reflects due consideration of all aggravating and mitigating circumstances of this case, including the requirement for a substantial penalty reflecting the seriousness of the offense while taking into account its potentially crippling effect, and the necessity of a Probation Order. Significant credit is given for entering a plea before trial . I.

SERIOUS NATURE OF OFFENCE [9.2] The Corruption of Foreign Public Officials Act (CFPOA) is the vehicle through which Canada fulfils its obligations under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the Inter-American Convention against Corruption and the United Nations Convention against Corruption [9.3] As a result of these Conventions Canada has an obligation in international law to ensure that foreign bribery (or similar offences such as the fraud offence at hand) are punishable by effective, proportionate and dissuasive criminal penalties. [1] [9.4] The serious nature of these types of offences is also reflected in the recent case law dealing with the CFPOA.

For example, in R. v. Griffiths Energy, Justice Brooker stated at paragraph 8 that: The bribing of a foreign official by a Canadian company is a serious matter. As I said in R. v. Niko Resources Ltd., such bribes, besides being an embarrassment to all Canadians, prejudice Canada's efforts to foster and promote effective governmental and commercial relations with other countries; and where, as here, the bribe is to an official of a developing nation, it undermines the bureaucratic or governmental infrastructure for which the bribed official works. [2] [9.5] In R. v.

Karigar Justice Hackland stated at paragraph 19 that:

[ … ] it is clear that the bribery of foreign officials must be viewed as a serious crime and the primary objectives of sentencing must be denunciation and deterrence. The more recent cases, Griffiths Energy and Niko Resources clearly demonstrate that a substantial penalty is to be imposed by the courts even in circumstances where a guilty plea was entered and the accused has cooperated with authorities. [3] II.

Determining the Appropriate Fine Level [9.6] Determining the appropriate fine level for organizations is not achieved through a purely arithmetical process under Canadian law, especially in relation to offences such as fraud and corruption where there is limited precedent. This being said, given the international nature of the offence and Canada’s obligation under international law to impose effective and deterrent penalties, it may be compelling to benchmark fines against those that are likely to be imposed in other jurisdictions.

This is not to suggest that sentencing regimes in other countries are in any way binding in Canada. That point was made clear in Niko, [4] Griffiths [5] and Karigar.

However, the court in Niko and later in Griffiths did cite applicable fine ranges in the United States, and the court in Karigar did acknowledge the need to impose a penalty that is consistent with Canada’s treaty obligations. [9.7] Therefore, it is the Crown’s view that some guidance can be found in the formalized US and UK approaches to sentencing as both countries have public sentencing guidelines applicable to criminal offences including fraud of the nature of the offence at hand. [9.8] Despite differences in the approaches respectively taken, the US and the UK guidelines both essentially result in a multiplier derived from the seriousness of the offence and the manner in which the accused has conducted itself.

This multiplier is then applied to the gain derived, or expected to be derived, from the commission of the offence.

It should be noted that under US guidelines this means the net value of the benefit received or to be received without deduction of the value of a bribe. [6] Under the UK guidelines the appropriate figure will normally be the gross profit from the contract obtained, retained or sought as a result of the offending. [7] Under these guidelines, net profit from a venture is not considered to be the appropriate starting point to base these calculations . [9.9] Poor planning or mitigated success in obtaining the ill-gotten gain during implementation of the scheme cannot operate to discount the ultimate consequence of criminal activity.

In the present case, the company’s expected gain from the scheme was very likely impacted by instability in Libya and ultimately the fall of the Gadhafi regime, thereby lowering the bottom line that would have resulted absent the vagaries of this regime. To counter this skewing effect, both sentencing guidelines allow for alternative methods to base the gain, including the value of the contract or loss to victims when calculating the appropriate fine.

Neither regime bases the fine on the amount of the bribe. [8] [9.10] As stated above, under both regimes, multipliers serve to reduce the base fine where mitigating factors weigh accordingly or increase it where aggravating factors prevail. In the bribery or fraud context, mitigating factors include self-reporting and cooperation with authorities.

Aggravating factors include senior officer involvement in the offence and the use of complex means to conceal it. [9.11] Aggravating factors in this case include the important advantage realized by SLCI as a result of the bribe payments for the benefit of Saadi Gadhafi; the planning, complexity and duration of the offence; involvement in the offence at senior levels in SLCI’s hierarchy, the cost to the public authorities in the investigation and prosecution of the offence. [9.12] Under the US and the UK regimes the presence of such aggravating factors would result in a multiplier of up to four times the gain expected from the commission of the offence.

In the Crown’s view, a fine based on such a multiple of the gain, realized or expected, is appropriate in this case where the penalty must achieve the goals of denunciation and deterrence. [9.13] One of the most significant mitigating factor in the context of bribery, or fraud, is self-disclosure, [9] which in this case is not significant. A guilty plea, albeit entered late in the proceedings, avoids the cost of a trial.

Combining the measures the company has taken to reduce the likelihood of committing a subsequent offence, such as replacing the Board of Directors and any senior officer involved in the offence, with the implementation of an effective compliance program, results in a suite of mitigating factors worthy of a moderate to low level of credit. [9.14] The application of both aggravating and mitigating factors in this case would essentially result in an appropriate multiplier of 3 times the expected gain under the UK and US guidelines. [10] [9.15] The above factors in both the US and the UK guidelines share some commonality with the factors set out in

section 718.21 of the Criminal Code , which shall add to all factors to be considered when sentencing an organization.. [9.16] Applying the factors set out in 718.21 to the facts of this case can be summed up as follows: (

a) any advantage realized by the organization as a result of the offence; [9.17] The total revenue obtained from the commission of the fraud offence in Libya was $1,797,740,022 with a gross profit of $235,258,769. According to SLCI’s accounting records, a pre-tax net profit of $103,876,000 was realized. [11] A document seized during the search in the office of the former CFO states an anticipated profit of $260,270,000. [12] [9.18] In our view, the figure of the $103,876,000 pre-tax net profit is not an appropriate estimate of the advantage realized for purposes of paragraph 718.21 (

a) Cr.C . Indeed, this figure results from a deduction of the sums paid in bribes to Saadi GADHAFI: $47,689,868 paid by Duvel and Dinova; $2,384,560 paid for the travel expenses of Saadi Gadhafi in 2008 and 2009; [13] and $202,333 paid to Harvey Wise Design for the renovation of the condo of Saadi GADHAFI. [14] This aggregate bribe cannot be accounted for as a legitimate business expense. Under

section 2 of the Criminal Code , these amounts constitute offence-related property that, if still available, would be forfeited under

section 490.1 of the Criminal Code . [9.19] We submit that a court of law should not uphold such an approach in the context of sentencing an offender for the very conduct said to be a priori egregious. [9.20] In any event, such a deduction method would lead to the perverse effect of rewarding an offender with escalating leniency,

proportionate to the increasing amount of bribe paid. There is no question this would send the wrong message, running afoul of the cardinal principle of deterrence. [9.21] Therefore, calculating for purposes of paragraph 718.21 (

a) Cr.C . a more accurate advantage realized in this case, based on the addition of the above-mentioned offence-related properties to the pre-tax net profit, would yield the sum of $154 152 761. (

b) the degree of planning involved in carrying out the offence and the duration and complexity of the offence; [9.22] With respect to Libya, the offence occurred over a time span of 10 years. It involved a complex scheme of transferring funds to shell companies owned by one of its Presidents in Swiss bank accounts totalling $127,245,937. [9.23] Bribes were paid from these accounts to a foreign public official and commissions were paid to various entities and individuals, including to Mr. Riadh Ben Aïssa and to Mr.

Sami Bebawi. [9.24] In total, bribes of $50,276,761 were paid to the benefit of Saadi GADHAFI in the form of cash, a yacht, renovations to a condominium as well as extravagant travel and hospitality. [9.25] Much of these amounts, including $73,482,219 in illegal commissions to senior company officials, were attributed as costs to ongoing projects in Libya and therefore were funded unknowingly by the Libyan people. (

c) whether the organization has attempted to conceal its assets, or convert them, in order to show that it is not able to pay a fine or make restitution ; [9.26] There is no evidence that this has taken place. The SNC-Lavalin group of companies has sold some of its assets, and restructured its activities, but these appear to be business decisions. (

d) the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees; [9.27] Based on information provided by The SNC-Lavalin Group Inc. (the indirect parent company of SLCI) it appears that the proposed fine could have a significant economic impact on the organization. [9.28] There is limited and divergent treatment of this factor in Canadian case law. [15] The central question is whether courts should, as a matter of law, avoid a fine level that puts the offending organization on the path of vulnerability or bankruptcy, or whether other factors such as the seriousness of the offence and general deterrence should trump, even where these effects may ensue. [9.29] The Crown is of the view that in this case, the preferred

interpretation is the latter, [16] so long as the sanction is appropriate in the circumstances. It should not be perceived as a slap on the wrist if it is to achieve specific and general deterrence.

Therefore, given the circumstances of this case, the fine should indeed carry a stinging effect on SLCI. [9.30] In the end, there is no need to settle any divergence as there is no indication that the proposed fine level, coupled with an accommodating payment schedule, would yield such drastic consequences, as contemplated in the case law. [9.31] To mitigate undue hardship while meting out a substantial fine aimed at denunciation and deterrence, the Crown agrees that it is appropriate in this case, based on the suggested fine amount, to allow the defendant scheduled payments spread equally over 5 years. [9.32] There is no doubt, in our view, that this approach is in keeping with the fundamental principles of proportionality and individuality. [17] (

e) the cost to public authorities of the investigation and prosecution of the offence ; [9.33] The cost of the investigation and prosecution of the offences are significant, involving a multi-year complex investigation, and prosecution, requiring requests for mutual legal assistance, forensic accounting reports, witness interviews, expert witnesses and various warrants and court orders. In excess of 100 RCMP officers and multiple prosecutors have been engaged on these . (

f) any regulatory penalty imposed on the organization or one of its representatives in respect of the conduct that formed the basis of the offence ; [9.34] No penalty was imposed on the company for the present offence. (

g) whether the organization was — or any of its representatives who were involved in the commission of the offence were — convicted of a similar offence or sanctioned by a regulatory body for similar conduct ; [9.35] In 2013, the World Bank sanctioned the SNC-Lavalin group of companies in relation to misconduct connection with a World Bank financed project in Bangladesh. SNC-Lavalin’s misconduct involved a conspiracy to pay bribes and misrepresentations when bidding for Bank-financed contracts in violation of the World Bank’s procurement guidelines .

More than 200 group affiliates have been debarred for a period of 10 years with respect to operations financed by the World Bank. The sanctions were also in part based on evidence of misconduct by the company in relation to the World Bank-financed Rural Electrification and Transmission project in Cambodia. SNC Lavalin International and SNC Lavalin Energy Control Systems agreed to pay a bribe of $500,000 USD to senior Cambodian officials who had helped them win a contract for the construction of a national control center for the electrical grid of Électricité du Cambodge, which is a Cambodian government agency.

The World Bank’s legal foundation to investigate and sanction misconduct that affects the use of its funds rests on a well-developed debarment regime, importing some hallmarks of a regulatory body. [18]

(

h) any penalty imposed by the organization on a representative for their role in the commission of the offence; [9.36] There is no evidence of any penalty imposed by the organization on any of the former employees of the company that were involved in these offences. (

i) any restitution that the organization is ordered to make or any amount that the organization has paid to a victim of the offence [9.37] No restitution has been made to the Libyan government and the Attorney General will not be bringing a motion to have one imposed. (

j) any measures that the organization has taken to reduce the likelihood of it committing a subsequent offence. [9.38] In relation to the offences in Libya, none of the implicated individuals are still with the SNC-Lavalin group of companies .

Since the time of the offence, it has: ▪ Changed its corporate leadership; ▪ Reorganized its operational controls structures; ▪ Conducted internal investigations; ▪ Cooperated with World Bank measures; ▪ Cooperated with the RCMP by ▪ Facilitating interviews by the RCMP employees on company premises, ▪ Conducting a review of potentially privileged information seized by the RCMP with PPSC independent counsel, ▪ Providing a voluntary disclosure of information in relation to a collateral aspect of the events in Libya; ▪ Hired a new Chief compliance Officer with experience working in complex, multinational organisations that revised the company’s compliance program; and ▪ As part of the agreement with the World Bank, engaged an independent compliance monitor.

As part of the agreement with the World Bank, the company has caused an independent review of its books and records and given instructions to an independent investigator to conduct an investigation into possible sanctionable practices of its staff, representatives and agents in relation to 20 World Bank projects. [9.39] Since 2018, the company has been externally recognized for its compliance best practices and leadership. III.

CONCLUSION ON QUANTUM OF THE FINE AND PROBATION ORDER [9.40] With a gross profit of $235,258,769 and a realized advantage (including pre-tax net profit and offence-related properties) of $154 152 761, as well as an expected profit of approximately $260 million, applying a multiplier of 3, the upper level of the fine under the UK and US guidelines would be in the order of between $462 million and $705 million, applying aggravating and mitigating factors of this case under those schemes.

While this can act as a benchmark it is not, as previously stated, binding in any manner on Canadian courts when assessing the appropriate fine level. That being said, taking into account the aggravating factors in this case such as complexity, senior level involvement, duration, the amounts of the bribes for the benefit of Saadi Gadhafi and the expected profit, a fine in this order would be appropriate in the absence of mitigating factors such as a guilty plea. [9.41] Taking into account all sentencing factors, including under

section 718.21 as outlined above to mitigate the company’s liability, such as the complete turnover at the senior management level of SLCI, taking steps to implement a compliance regime to prevent future offences, cooperating with authorities and, in particular, pleading guilty, the applicable fine should be considerably reduced. Some consideration should also be given to the potential impact of the sentence on the company.

It is the Crown’s view that the a proposed penalty of $280 million payable in equal regular instalments over a 5-year period is in the public interest and constitutes an effective, proportionate and dissuasive penalty for the offence for which SLCI has plead guilty. [9.42] The Crown submits also that a proposed Probation Order for a period of three years is also in the public interest. [9.43] The proposed Probation Order provides that SLCI shall cause SNC-Lavalin Group to maintain, and as required, further strengthen its compliance program, record keeping, and internal control standards and procedures.

The Order aims to reduce the likelihood that the organization commit a subsequent offence pursuant to

section 732.1 (3.1) (

b) of the Criminal Code . [9.44] To achieve this goal, it orders SLCI to report periodically, at no less than 12-month intervals, to this court and to the Public Prosecution Service of Canada (PPSC) on the compliance program and internal controls, policies, and procedures of SNC-Lavalin Group. These reports shall be prepared by an independent monitor, any cost incurred for the monitoring and preparation of reports shall be at the expense of SNC-Lavalin Construction Inc. or SNC-Lavalin Group Inc. These reports shall be filed with this Court. [9.45] The Crown submits that, pursuant to

section 732.1 (3.2) of the Criminal Code , it is appropriate for this Court to supervise the development and implementation of the policies, standards and procedures mentioned above. SLCI would also be ordered to respect any orders given by this Court to ensure it’s, and the SNC-Lavalin Group Inc.’s, compliance program, record keeping, and internal control standards and procedures are to standard and continue to be enforced.

[9.46] Finally it orders, pursuant to

section 732.1 (5) of the Criminal Code, that the public must be provided by SLCI the followinginformation: the offence for which it was convicted; the sentence imposed by the Court, including the material terms of the ProbationOrder and the fact that a Monitor has been or will be appointed pursuant to the terms of the Probation Order and that the Monitor willprovide initial, as well as, annual reports during the probationary period, an executive

summary of which will also be posted on theCompany’s website once received by the parties and the Court and remain so until the end of the Probation. [9.47] For all of the reasons mentioned above the Crown asks this court to endorse these joint-submissions on a penalty to beimposed on SLCI.” ACCUSED’S REPRESENTATIONS ON SANCTION [10] The attorneys for SLCI submitted the following written submissions: I. “CANADIAN SENTENCING PRINCIPLES [10.1] The Criminal Code[19] sets out the sentencing objectives and factors that judges must consider in determining an appropriatesentence.

The principles of parity and individualization of sentences require “the exercise of a broad discretion by the courts inbalancing all the relevant factors in order to meet the objectives being pursued in sentencing”[20]. (

a) General Criminal Code Sentencing Objectives [10.2] The fundamental purposes and objectives of criminal sentencing in Canada are laid out at s. 718 of the Criminal Code[21].The Department of Justice has stated that the purpose of a sentence is to protect society and contribute to “respect for the law and themaintenance of a just, peaceful and safe society”.[22] This is achieved by imposing a sentence that considers one or more of thefollowing objectives:

a) to denounce unlawful conduct;

b) to deter the offender and other persons from committing offences;

c) to separate offenders from society, where necessary;

d) to assist in rehabilitating offenders;

e) to provide reparations for harm done to victims or to the community; and

f) to promote a sense of responsibility in offenders, and acknowledgment of the harm done to victims and to the community.[23] [10.3] Further, s. 718.1 of the Criminal Code requires that a “sentence must be proportionate to the gravity of the offence and thedegree of responsibility of the offender.” (

b) Criminal Code Factors Specific to Organizations [10.4]

Section 718.21 of the Criminal Code[24] lists 10 factors that are specific to organizations which judges must consider whendetermining an appropriate sentence. The

section applies to regulatory offences as well as indictable offences such as s. 380 of theCriminal Code (fraud offences). [10.5] Precedents related to regulatory offences committed by organizations or one of their representatives[25], which are often strictliability offences that carry specific legislated fines for infractions, should be considered carefully in the context of sentencing oforganizations. [10.6] The Criminal Code does not provide for the specific weight to be given to each of the factors.

Rather, it is left to the discretion of the sentencing judge to determine the weight to be given to each factor under s. 718.21 of the Criminal Code.[26] [10.7] The 10 factors to consider in sentencing organizations that are stipulated in s. 718.21 of the Criminal Code include bothmitigating and aggravating factors. The case law provides some guidance with respect to how these factors come into play. i. 718.21

a) any advantage realized by the organization as a result of the offence [10.8] In R. c. Technique Acoustique (LR) Inc., when referring to this factor the court stated that an advantage can include when a company becomes an unfair competitor as a result of fraudulent action.[27] [10.9] Prior to the enactment of s. 718.21, in R. v United Keno Hill Mines Ltd. (“United Keno Hill Mines”), the court stated thefollowing with respect to the starting point of the analysis of the fine amount: e.

Profits Realized by Offence 31 Courts attempt to ascertain the amount of profit or savings realized by the corporation as a consequence of the offence (see: R. v.Ocean Construction Supplies Ltd., (1975) (BC CA), 61 D.L.R. (3d) 323 (B.C.C.A.).). Thus the amount of illegallyrealized windfall should establish in almost every case, in the absence of other outstanding mitigating circumstances, the minimum fine.Other matters considered should increase the amount of the fine. In R. v. Canadian General Electric Company Ltd., supra, the Courtrecognized the difficulty of attempting to determine illegal gains.

In that case, the Court faced the particular difficulty of determiningprofits generated through an illegal conspiracy among a number of companies to illegally establish market prices of commodities on a

national basis. Nevertheless, the Court persevered and made estimates based on all the evidence available. 32 Establishing the quantum of illegal gains should reside with the defendant corporation as they are privy to the information and to theprocesses appropriate for determining the quantum of illegal gains. In the absence of conclusive evidence from the corporation theCourt may rely on any reasonable estimate the Crown submits. 33 The assessment of a fine based on illegally obtained gains is essential to ensure that non-complying corporations do not acquire aneconomic advantage over complying competitors.

It may be appropriate for the courts to hear evidence from complying competitors onthe extent of economic advantages the offending corporation derived from non-compliance [emphasis added].[28] [10.10] Thus, in light of the United Keno Hill Mines decision, the minimum fine should normally be set at an amount correspondingto the portion of the profits that the offender was able to realize by the perpetration of the offence. [10.11] In R. v.

McNamara et al. (No 2) (“McNamara”), the Ontario Court of Appeal stated that the “benefits contemplated oractually received were factors relevant to the imposition of a monetary penalty.” In that case, however, it was appropriate for thesentencing judge to give little weight to these factors, even though the profits were not as expected, because the evidence showed thatbids had been inflated to accommodate for payoffs. [10.12] Further, McNamara states that the purpose of a fine “is to prevent the corporation from retaining illegally acquired profits”.[29] [10.13] The McNamara decision may seem, at first glance, to contradict the United Keno Hill Mines decision.

However, it is possibleto reconcile the two approaches. In a book published prior to the enactment of s. 718.21, professor Hélène Dumont explained theinteraction between illegally realized profits and illegally anticipated profits: Les tribunaux doivent tenir compte du gain réalisé par l’entreprise qui s’est adonnée à la poursuite d’une activité criminelle. L’amendeinférieure aux profits réalisés paraît contraire à l’objectif de dissuasion puisque les compagnies ne tarderaient pas à comprendre lecaractère profitable de l’illégalité. Le gain réalisé devrait être le seuil minimal de l’amende. Dans l’arrêt R. c.

Shell Products Limited,la Cour d’appel augmente à 200 000 $ l’amende imposée en première instance qui ne représentait que 0,1% des profits de la compagniepour l’année en cours. En réalité, la preuve des profits illégaux peut être souvent difficile à faire. La corporation peut avoir tenu secrète la comptabilité liée àses activités criminelles.

Les tribunaux ont ainsi considéré comme élément d’appréciation dans l’établissement du montant de l’amende,les gains anticipés ou envisagés par la corporation, s’il leur était impossible d’établir les gains réels [emphasis added].[30] [10.14] Therefore, prior to the enactment of s. 718.21, according to professor Dumont, illegally anticipated profit were considered bycourts when it was impossible to establish illegally realized profits. [10.15] In 2003, Bill C-45 was enacted and s. 718.21 came into force. Paragraph 718.21(

a) provides that “any advantage realized bythe organization as a result of the offence” is a factor that shall be taken into consideration when imposing a sentence [10.16] It flows from the wording of paragraph 718.21(

a) that the advantages that need to be consider must be: (

i) realized and (ii) aresult of the offence. [10.17] As such, paragraph 718.21(

a) imported into the Criminal Code the approach followed in United Keno Hill Mines anddeparted from case law suggesting that “benefits contemplated” were a relevant factor. This was confirmed in R. v. Milligan, where theSupreme Court of Nova Scotia stated that s. 718.21 “appears to import into the Criminal Code the factors that had been considered byCourts in cases such as Cotton Felts and United Keno Hill Mines”[31]. [10.18] Likewise, authors Clewley, McDermott and Young, although they mention that it will still be open to the Crown to argueotherwise, state in their book entitled Sentencing – The Practitioner’s Guide that s. 718.21(

a) departs from the approach taken in caselaw such as McNamara with respect to the relevance of contemplated profits in the determination of a fine: In s. 718.21(a), by requiring the court to consider any advantage realized by the organization as a result of the offence, the Code departsfrom the approach taken in earlier case law such as R. v. McNamara (No. 2) (1981), (ON CA), 56 C.C.C. (2d) 516(Ont. C.A.) that it was not the gain actually made but the anticipated gain that was relevant to sentence.

In other words, if the criminalscheme did not turn out to be as lucrative as planned, this was not something that could benefit the offender on sentence. It would still beopen to the Crown to submit that the anticipated gain should be taken into account on sentence, however the court could decide that theorganization should be punished for the crime actually committed and not a larger-scale attempted crime. This may well be a live issuein future cases. [emphasis added].[32] [10.19] This

interpretation of 718.21

a) is also in line with the comments made during parliamentary debates on Bill C-45, during thecourse of which MP Larry Bagnell stated “first, the economic advantage gained by committing the crime. Clearly, the more money thecorporation made the higher the fine should be”,[33] and with the guide entitled A Plain Language Guide – Bill C-45 Amendments tothe Criminal Code Affecting the Criminal Liability of Organizations, which states “the economic advantage gained by committing thecrime - The more money the organization made, the higher the fine should be”.[34] [10.20] Indeed, it is unambiguous that “money made” can only refer to something that has been “realized”, contrary to something

that was “contemplated”. [10.21] More recently, in R. c. Pétroles Global inc. , the Quebec Superior Court considered the illegally realized profit as the starting point of the fine assessment.

The Court stated that “il est clair qu’il doit y avoir un lien entre le profit illicite et la peine, le surprofit [i.e. the profit realized as a result of the offence above the profit that would have been realized in any case ] étant rien de moins que le point de départ”. [35] In Pétroles Global, the “ surprofit” was established through expert evidence. [10.22] Proponents of the “anticipated profit” approach often argue that it avoids offenders being granted leniency for their incompetency as offenders. In addition to being contrary to

article 718.21

a) of the Criminal Code , this argument mischaracterized the reasoning behind the use of “realized profit”. [10.23] Indeed, it is not that the offender’s incompetency should be considered as a mitigating factor or is relevant to the determination of the fine amount, but rather that the severity of the conduct should be addressed by considering the “realized profits”. An offender that makes important profit from an illegal activity must face a more important sentence in order to avoid returning to the illegal activity than an offender that makes little profit.

Thus, by considering the “realized profit” it is not that “an offender should be granted leniency by reason of incompetency as an offender, but rather that the “realized profit” needs to be addressed when determining the severity of the offence and the element of disgorging ill-gotten advantage.” [36] [10.24] Based, on the aforementioned and on the specific facts of the present case, the considered “benefit” or “advantage”, when applying 718.21 a), is the net amount SNC-Lavalin Construction Inc. ( SLCI ) derived from all the Libyan projects it obtained between 2001 and 2011, taking into consideration the costs engaged to realized that profit and other amounts deemed relevant from an accounting perspective. [10.25] The “realized net pre-tax profit” that SLCI derived from all of the Libyan projects over the relevant period established by management as supported by detailed audit procedures applied by Deloitte is $103,876,000 . ii. 718 .21

b) the degree of planning involved in carrying out the offence and the duration and complexity of the offence [10.26] In Canada v. Maxzone Auto Parts (Canada) Corp. (“Maxzone”), the Court considered the organization in question to be a sophisticated cartel that undertook significant planning in order to effect a “complex series of coordinated price changes involving thousands of products.” [37] [10.27] The pre-meditation, sophistication and duration of the offence was considered to be an aggravating factor in BPR Triax Inc. , [38] R. v. Furukawa Electric Co.³(“Furukawa”), [39] and R. c.

Gosselin (“Gosselin”). [40] In BPR Triax Inc. , the accused was involved in a scheme to influence municipal officials of the City of Mascouche to vote in favour of or against the adoption of a measure, motion or resolution, and the scheme took place over two electoral periods.

In Furukawa, the accused was responsible for a complex bid-rigging scheme, and in Gosselin , the accused were key organizers of a gas cartel that fixed the price of gas in the gas markets of Magog, Sherbrooke, Victoriaville and Thetford-Mines for over a year. [10.28] Here, the planning to carry out the offence was done by two senior executives of SLCI, BEBAWI and BEN AISSA , over a period of approximately 10 years. [10.29] BEN AISSA set up off-shore companies with the help of a Swiss lawyer, Roland Kaufman.

He then, with BEBAWI’s knowledge and consent, proposed that SLCI (through SNC-Lavalin International Inc.) use the services of the off-shore companies as representatives in Libya. These companies were engaged for the purpose of providing representative services in foreign countries.

At the time of engagement and until the execution of search warrants on April 13, 2012, the executive management of SNC-Lavalin Group Inc., the ultimate parent company of SLCI, were unaware that SLCI executives owned these offshore companies. [10.30] SLCI (through SNC-Lavalin International Inc.) entered into contracts with the off-shore companies for representative services, as recommended by BEN AISSA, and paid the representative agent fees that were due under the contracts. iii. 718.21

c) whether the organization has attempted to conceal its assets, or convert them, in order to show that it is not able to pay a fine or make restitution [10.31] If this factor is present, then it warrants “a significant upward adjustment to the sentence that would otherwise be imposed.” [41] [10.32] This factor is not to be considered in the present case, as SLCI has not attempted to hide its assets. [10.33] Further, SNC-Lavalin Group has been honest and open with the authorities throughout the negotiations.

Since the events were uncovered, the company has conducted its business in the normal course, taking steps to ensure continued economic viability and growth while trying to improve its market position. [10.34] The sale of AltaLink, the acquisition of Kentz Corp. and of Atkins in the U.K. are all examples of transactions which were aimed at the core growth of the SNC-Lavalin Group’s business. [10.35] As noted below and as publicly disclosed, regardless of these efforts, SNC-Lavalin Group factually remains under significant financial strain and pressure with respect to its business. iv. 718.21

d) the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees [10.36] This mitigating factor considers the impact that a fine may have on individuals who are dependent on the corporation and

who are not at fault. Such individuals include employees, as well as shareholders [42] and other stakeholders such as pensioners, suppliers and clients. [10.37] In R. v. Metron Construction Corporation (“Metron”), [43] the Ontario Court of Appeal stated that: Consideration of the impact on economic viability may encompass such matters as the importance of a corporation to a community or its value as a source of supply or as an industry participant . The second element of subsection (

d) makes continued employment a factor to be considered . In the case of a corporation that is a significant employer, and whose viability is seriously threatened by the imposition of a fine , the quantum of the fine may be reasonably affected. In contrast, in the case of a corporation that carries on no or limited business and has no or few employees, the impact of a fine on the corporation’s economic viability may be of little consequence [emphasis added]. [44] [10.38] The decision of the Quebec Superior Court in R. c.

Constructions GTRL states that fines should not jeopardize the economic viability of a company, nor should they impact the employment of honest employees that had nothing to do with the crimes: Les amendes, bien que dissuasives, ne doivent pas cependant mettre en péril la viabilité économique de ces entreprises, non plus qu'atteindre le maintien à l'emploi d'honnêtes salariés qui n'ont rien à voir avec ces crimes [emphasis added]. [45] [10.39] In another decision of the Quebec Superior Court, the court underscored the fact that the accused company spent the equivalent of its annual profits ($750,000) on improving its safety measures following the death of one of its employees.

The court also stated that the fine should not jeopardize the viability of the company or the employment of its employees. [46] [10.40] Similar to the two aforementioned cases, the decision of the Quebec Superior Court R. c.

Pétroles Global Inc. noted that the economic viability and solvency of the accused company should be considered, and indicated that there would be no socio-economic or political advantage to provoking the bankruptcy of the company. [47] In making this statement, the court cited the following passage from McNamara: “Accordingly, to achieve effective general deterrence, the fines imposed for these offences must be substantial and exemplary, but not crippling or vindictive. [48] ” [10.41] Since 2012, SNC-Lavalin has paid heavily for the misconduct of its two former executives.

It has suffered, and continues to suffer, significant reputational damage with clients, partners and other stakeholders.

It can be easily estimated that many billions of dollars in potential revenues have been lost owing to the reputational damage caused by the allegations of criminal wrongdoing that surfaced in the public in 2012, and the legal uncertainty surrounding the company by having charges pending against it since 2015. [10.42] Between 2012 (when underlying facts relating to this matter began to be publicly disseminated) and 2018, the Canadian workforce of SNC-Lavalin Group as a whole decreased from 17,915 to 8,433. [10.43] While this was caused by a variety of factors, including operational issues, the public allegations and the existence of the charges clearly had a very significant negative impact on the company’s business over this period.

As such, the quantum of the proposed fine should take into account any further impact on the viability of SLCI and SNC-Lavalin Group, and, in turn, on its large number of innocent employees, pensioners and other stakeholders. [10.44] SNC-Lavalin Group is also a publicly-traded company.

As such any fine and the operational consequences of a conviction will have a serious economic impact on the company that will in turn impact all shareholders, including Canadian pension plans and other shareholders, whether in terms of the market value of the shares or the potential future ability of the company to declare and pay dividends. [10.45] As demonstrated by the October 2018 announcement indicating that SNC-Lavalin Group would not be invited to negotiate a Remediation Agreement, shareholders (which include many employees and retirees of the company) can be severely impacted by any and all announcements relating to this matter. [10.46] In the case of the October 2018 announcement, approximately $1 billion of market capitalization was lost on a single day.

This is a tangible example of market impact. [10.47] Further, the economic impact of a guilty plea on the organization will be greater than the amount of the fine itself. While the quantum of the fine will have a financial impact on the company (the company is under severe liquidity constraints) and a conviction is likely to also give rise to (

i) certain rights of termination under certain current agreements, (ii) future restrictions with respect the company’s ability to bid on both public and private projects, and (iii) the ability of company competitors to further use the conviction to their competitive advantage. [10.48] A conviction may also give rise to issues with respect to the company’s indebtedness, credit rating or other financial instrument related issues that could, for example, increase the company’s cost of borrowing or restrict its ability to do so in the future. [10.49] From an operating business perspective, as tangibly demonstrated by the company’s July 22nd announcement with respect to a corporate reorganization, a withdrawal of earnings guidance for 2019, significantly lower than expected results, an impairment charge of $1.9 billion and the most recent disappointing financial results, the company is in a very challenging period from a financial perspective.

As such, liquidity and cash flows will be under significant pressure for the foreseeable future.

[10.50] In the context of the above, the impact of a fine on the economic viability of the company is a significant issue of concern at the present time and for the foreseeable future and as such should be given significant weight as a mitigating factor. Although such impact and risk can be partially managed by providing for a fine payable in instalments, it will nonetheless put significant additional financial pressure on the company and calls for a substantial discount to be applied. v. 718.21

e) the cost to public authorities of the investigation and prosecution of the offence; [10.51] A guilty plea is a mitigating factor in determining a fine because the Crown is not required to invest resources to secure a conviction.

Given the substantial savings realized by the guilty plea, this factor should be given significant weight. [10.52] In Maxzone, the Court gave “significant weight” to the fact that the company’s guilty plea reduced the Competition Bureau’s investigation costs and the Crown’s prosecution costs. [49] [10.53] In Metron, the court also noted that by entering a guilty plea the company reduced the cost to the public of a prosecution. [50] [10.54] The fact that the accused pleaded guilty or assisted with the prosecution process, saving the public additional costs of prosecution, was also a mitigating factor in BPR Triax Inc. [51] and Furukawa [52] . [10.55] However, as the investigation code name suggests, the RCMP investigation was also a direct result of a request for legal assistance from the Swiss authorities regarding their investigation of BEN AISSA.

As a result, the RCMP substantially benefitted in time and resources from the Swiss investigation. [10.56] In addition to the significant savings associated to registering a guilty plea, SLCI cooperated throughout the investigation, provided numerous voluntary disclosures to the RCMP, facilitated in arranging employees for witness interviews, and assisted the review of privileged documents with an independent Crown lawyer . vi. 718.21

f) any regulatory penalty imposed on the organization or one of its representatives in respect of the conduct that formed the basis of the offence [10.57] There is no judicial decision that specifically looks at this factor. However, Justice Archibald notes that this factor is “a recognition of the overlapping nature of regulatory and criminal prosecution of corporations”. [53] [10.58] This factor appears to be irrelevant in the present case. vii. 718.21

g) whether the organization was — or any of its representatives who were involved in the commission of the offence were — convicted of a similar offence or sanctioned by a regulatory body for similar conduct [10.59] On October 1, 2014, following a plea agreement, the Swiss Tribunal Pénal Fédéral found BEN AISSA guilty of corruption of foreign public officials, disloyal management of funds, and money laundering.

BEN AISSA was sentenced to 3 years imprisonment, and approximately $ 43 million (29 million Euros) of his ill-gotten assets were confiscated. [10.60] On July 10, 2018 BEN AISSA pled guilty to one charge of using a forged document and was sentenced to 51 months in prison by the Quebec Court. [10.61] BEN AISSA was the primary person involved in the offensive conduct at issue.

The Swiss plea agreement was based on the same set of facts that form the basis of the offence in the present case. [10.62] BEN AISSA faced criminal charges for corruption of foreign public officials, fraud and money laundering for the same set of facts that form the basis of the offence in the present case. [10.63] Neither SLCI, nor any other SNC-Lavalin Group entities, have been convicted of a similar offence on different facts. In other words, no SNC-Lavalin entity, including SLCI, is a repeat offender. viii. 718.21

h) any penalty imposed by the organization on a representative for their role in the commission of the offence [10.64] This is a self-remediation factor that evaluates the steps an organization took upon uncovering the offence and is considered a mitigating factor.

In BPR Triax Inc. , the court considered that this factor was met given that the accused company fired the two principal perpetrators of the crime. [54] [10.65] When the facts that form the basis of the offence were uncovered in 2012, BEBAWI was no longer employed by SLCI and BEN AISSA’s employment had already been terminated. [10.66] Since the events surfaced, SNC-Lavalin Group and SLCI have refreshed their leadership teams.

Since 2012, all SLCI officers, other than employees in a management position who were not involved in the facts that form the basis of the offence, have left the company, the senior corporate executive team at SNC-Lavalin Group has been replaced in its entirety, and the Board of Directors at SNC-Lavalin Group has turned over completely. ix. 718.21

i) any restitution that the organization is ordered to make or any amount that the organization has paid to a victim of the offence [10.67] Commentators noted that this factor should encompass not only sums paid by a corporation, but also any apologies made by the corporation to the victims of the offense. [55]

[10.68] Since the facts that form the basis of the offence surfaced in 2012, SNC-Lavalin Group has entered into agreements with governmental and other public authorities to address issues arising from past conduct including: A. An agreement with the World Bank in 2013 resolving issues arising from past conduct and providing for the appointment of an independent monitor of the business conduct of Group companies and annual reporting on the conduct, which reporting has been consistently positive. B. An agreement with the African Development Bank in 2015 resolving issues arising from past conduct. C.

An agreement with the Commissioner of Canadian Elections in 2017 resolving issues arising from past conduct. D. An agreement with Quebec public authorities under Quebec’s Voluntary Reimbursement Program to resolve issues arising from past conduct. [10.69] Finally, it cannot be ignored and it is relevant to consider that SLCI is also a victim of the criminal behavior of its former executives. The company was recognized as an injured party in the Swiss proceedings and received partial restitution from BEN AISSA for his fraud against the company.

The company has also filed a civil claim for embezzlement of $144 million against BEN AISSA, BEBAWI and others in connection with the subject matter of this case. x. 718.21

j) any measures that the organization has taken to reduce the likelihood of it committing a subsequent offence . [10.70] In a recent decision of the Ontario Superior Court [56] , in relation to multiple charges under the Health of Animals Act, the court recognised that measures taken by the organization to eliminate or reduce the likelihood of committing a subsequent offence was an important mitigating factor. [10.71] The fact that the accused had instituted a corporate compliance program to reduce the likelihood of recidivism was considered to be a mitigating factor in Furukawa [57] Similarly, the court in R. v.

Stave Lake Quarries Inc. considered the fact that the accused took remedial steps to improve the safety protocols at its rock quarry to be a significant mitigating factor. [58] [10.72] Since becoming aware of the facts that form the basis of the offense in 2012, the ultimate parent of SLCI , SNC -Lavalin Group Inc., has implemented a fundamental transformation of its leadership, corporate culture, and ethics and compliance programs with the aim to detect and reduce the risk of misconduct by any corporation affiliated with SNC-Lavalin Group or by any of their respective directors , officers , employees or agents.

A

summary of the measures taken to reduce the likelihood of a subsequent offence being committed can be found in Annex A of this decision, but to summarize more particularly, since the time of the offences, the company has: • Changed its corporate leadership; • Reorganized its operational and financial controls structure; • Conducted internal investigations; • Cooperated with World Bank measures; • Cooperated with the RCMP by facilitating interviews by the RCMP employees on company premises; • Conducted a review of potentially privileged information seized by the RCMP with PPSC independent counsel; • Provided a voluntary disclosure of information in relation to a collateral aspect of the offence in Libya • Hired a new Chief compliance Officer with experience working in complex, multinational organisations that revised the company’s compliance program; • As part of the agreement with the World Bank, engaged an independent compliance monitor. [10.73] The company is now recognized as true benchmark model for compliance and integrity : A.

In 2018, the Globe and Mail, Canada’s national newspaper, ranked SNC-Lavalin as 7 th overall for Board Governance in its annual classification of 242 boards. B. Former President and CEO Neil Bruce was elected as co-Chairman of the World Economic Forum Partnering Against Corruption Initiative (PACI). C.

SNC-Lavalin earned the prestigious Compliance Leader Verification from the Ethisphere Institute, a world-renowned centre for research, best practices and thought leadership. [10.74] Since 2012, SNC-Lavalin Group has invested approximately $100M to transform the company from the top down and to implement a best in class ethics and compliance program. [10.75] Significant weight must be given to this factor and to the tremendous efforts made and expenses incurred by the company to transform itself and to reduce the likelihood committing any subsequent offence. [10.76] The company undertook internal investigations and reviews surrounding the allegations and on March 26, 2012 disclosed its findings to the RCMP and offered its entire cooperation to the authorities.

[10.77] Certain information provided to the RCMP on the March 26, 2012 meeting was referred to in the April 11, 2012 affidavit in support of the search warrants, in which the affiant acknowledged having been provided information by SNC-Lavalin’s lawyers. [10.78] These positive actions must be considered as mitigating factors and should result in a significant reduction of the fine to be imposed. (

c) Other Factors Judicially Considered i. General Deterrence [10.79] In McNamara , the court stated that “general deterrence was the paramount factor to which effect must be given in the imposition of sentences.” General deterrence in the corporate sense must mean that the penalty encourages leaders of the business community to act honestly. [59] [10.80] Recent cases also illustrate the balancing that courts must undertake when determining the amount of a fine.

Courts should impose an amount that will have a sufficient financial impact on the accused such that the fine is not seen as simply the “cost of doing business,” but rather has a dissuasive effect while ensuring that the fine does not hinder the company’s economic viability. [60] ii. Remorse [10.81] Offenders who show remorse are often treated more leniently, because a remorseful offender is less likely to re-offend so specific deterrence is not required.

Signs of remorse in the corporate context can include “a guilty plea, statements and actions of remorse by the officials of the corporation, changes to policies and procedures to prevent similar offences in the future, immediate reporting and cooperation with authorities and immediate measures to mitigate and clean up any damages.” [61] [10.82] As discussed above, SNC-Lavalin has taken numerous steps to remedy the corporate culture that fostered the offensive act. These steps denounce the behaviour of employees such as BEN AISSA, and act as a sign of remorse on behalf of the company. II.

APPLYING THE UNITED STATED SENTENCING COMMISSION GUIDELINES MANUAL [10.83] As that there is no defined methodology to assist in determining what an appropriate fine would be under Canadian law, including the criteria provided by

Section 718.21

a) to

j) of the Criminal Code or the case law, and given the international nature of the offence and Canada’s obligation under international law to impose effective and dissuasive penalties, SLCI submit it is appropriate to benchmark the proposed fine against those that may be imposed in other jurisdictions [10.84] This is not to suggest that sentencing regimes in other countries are in any way binding in Canada. That point was made clear in R. v. Niko Resources Ltd. [62] (“Niko”), as well as in R. v. Griffiths Energy [63] (“Griffiths”), and R. v.

Karigar [64] , but in Griffiths the court referred to fine ranges applicable in the United States and in Karigar the court did acknowledge the need to impose a penalty that is consistent with Canada’s treaty obligations. [10.85] Therefore, considering the particular nature of the present case, SLCI suggest it may be useful to look to the United States Sentencing Commission, Guidelines Manual (the “USSCGM”) [65] to assist with the fine calculation. Reference to the USSCGM formulas is helpful considering that the relevant fa

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