“Moral hazard is when they take your money and then are not responsible for what they do with it.”~ Gordon Gekko
I loved the movie Wall Street. Loved it. It is a great look at human behavior and character. Money, greed, power… choose your evil – I’m talking about the original 1987 movie of course, never did see the more recent release since nothing could have beat the first.
One of my favourite scenes from the movie is when Gordon Gekko( Michael Douglas) begins his education of young broker Bud Fox( pre-crazy Charlie Sheen) and tells him this:
“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you’re not naive enough to think we’re living in a democracy, are you buddy? It’s the free market. And you’re a part of it. You’ve got that killer instinct. Stick around pal, I’ve still got a lot to teach you. “
Ahhhh, brilliant, isn’t it? So true. And I’ve seen enough not to be naive to think we are living in a democracy anymore as well. On that note,let me introduce to you, SNC-Lavalin…
Long time readers will be very familiar with the name because of the close relationship they have fostered with the governing BC liberals for years, via a number of projects around the province. In picking apart these deals, it’s been clear that SNC is a preferred bidder of the provincial government even before the tendering process starts.
With the news that SNC is now the target of a proposed class action lawsuit on behalf of investors, the company and it’s directors are again in the spotlight.
This is not the first time the business practices of SNC Lavalin have been called into question – in fact there have been a number of allegations that have dogged the engineering empire for some time. Last year, in what I considered an odd reaction, the head of SNC, Pierre Duhaime, reacted publicly to a report on corruption and organized crime in Quebec’s construction industry, even stating that while the allegations were troubling, they did not warrant a public inquiry…
“Duhaime didn’t want to question the author’s credibility, but said most of the information came from anonymous sources.He said the measures taken by the Quebec government were sufficient to counter corruption.
He insisted the system of collusion described in the report does not affect SNC-Lavalin (TSX:SNC) which has “zero tolerance” for ethical misdeeds. Duhaime acknowledged, however, that SNC-Lavalin is currently investigating allegations of corruption concerning a project in Bangladesh. The RCMP recently conducted a search of SNC offices in Ontario in connection with this matter.”
The matter to which the RCMP raided the offices of SNC, is one of great concern to many in Bangladesh, where the World Bank initiated an investigation into allegations of corruption in the bidding process for the construction of a bridge. This Wall Street Journal article details that concern:
“A World Bank spokesman said RCMP executed search warrants in “several locations” following a referral by the Bank’s anti-graft unit, which is investigating allegations of corruption in the bidding processes for the Padma Bridge Project in Bangladesh.
The World Bank signed a deal in April to lend $1.2 billion to Bangladesh to build the four-mile bridge over the river Padma. The bridge will link Bangladesh’s underdeveloped south with the capital, Dhaka, and the country’s main port, Chittagong. Once completed, it would be the largest bridge in the country.
“We have been informed that the Royal Canadian Mounted Police is investigating employees of SNC-Lavalin for violations of Canadian law,” the World Bank spokesman said. “We commend the Royal Canadian Mounted Police for its robust response to the World Bank referral and look forward to the outcome of its investigation.”
I could go on. There is the scandalous saga in Kerala India with SNC Lavalin, documented with BC Mary like dedication at this site, and reported in detail here at the Indian Times .
However, the best compilation of everything we love to hate about SNC Lavalin is undoubtedly at this absolutely-must-read-immediately link http://retasite.files.wordpress.com/2011/09/reta-bourque-newswatch-art-sept-6-2011.pdf
This is not a question merely of ethics, in many instances the allegations are of criminal activity. And considering that during the Campbell era, 90% of SNC’s international transportation divisions activities were projects in BC, perhaps it is time to take a very close look at every aspect of those projects.
Here is where I thank Phil for rounding them all up together so I don’t have to go back and forth between this post and older ones… ( hats off to you!!)
“SNC Lavalin’s subsidiary Profac profits greatly from government service contracts and has been in the news for questionable invoices:
Canada Line stations General Contractor was SNC Lavalin Profac.
And of course SNC’s InTransit BC and its partners Caisse de Depot, BC Investment Management Corp were awarded a 35 year contract by CLCO and Translink to design, build, finance and operate the Canada Line.
SNC’s InTransit BC then contracted out the operations and maintenance of the Canada Line to another SNC Lavalin…Protrans.
Protrans subsidiary Protrans WRB Bridge operates and maintains the William R. Bennet Bridge in Kelowna. Protrans WRB Bridge is owned by SNC Lavalin.
BC Investment Management Corporation, which manages pension funds from BC’s government employees unions, has more than $100 million invested in SNC Lavalin.
Other SNC Lavalin BC projects involvement: Sea to Sky Highway, Airport Connector, Coast Meridian Overpass
SNC Lavalin Chair, Board of Directors, is none other than Gwyn Morgan, one of Premier Christy Clark’s advisors
Yes indeed, despite having a direct benefit from being a director and chairman of the board of SNC Lavalin, Christy Clark chose Gywn Morgan as her strategic advisor when becoming our unelected premier. Or perhaps, did Gwyn choose Christy ? To me, this is not even a perception of conflict of interest, but a very real one.
Either way, over at Rail for the Valley, they are asking some very serious questions today about why a proposed project for Victoria is so high here, considering the cost to build the same kind of LRT in France was far less. It was revealed that none other than SNC Lavalin conducted the initial cost study, which might explain a lot. And they have posed some very serious questions that certainly demand some answer from our premier:
Three important questions must be asked:
- “Is Premier Christie top adviser Clark’s Gwyn Morgan (who also donated $10,000.00 to Ms. Clark’s Leadership campaign), also a director on the SNC/Lavalin Board?“
- If the answer is yes; “Is the Premier’s close relationship with Mr. Morgan, is giving the green light for SNC Lavalin to grossly over-engineer Victoria’s proposed LRT?“
- If the answer is yes; “Is the BC Government allowing SNC Lavalin to reap huge profits from the BC Taxpayer by deliberately over engineering transit projects in BC, such as Victoria’s proposed LRT and or SkyTrain light-metro in Vancouver?“
I have some serious questions as well, because of the similarity between how SNC has approached projects in BC -many of which are P3’s – and how Macquarie has set up deals, using the now infamous ‘ Macquarie Model’.
The Macquarie model is all about making deals, most often with governments, that produces fee’s, fee’s and more fee’s. And Campbell’s government loved it.
From the Power Index:
“…specialty was infrastructure deals, in which Macquarie would finance and/or purchase roads, railways, ports and power stations and sell them on to Mac-run satellite funds. Using this model, Macquarie collected multimillion-dollar fees for buying the assets, multimillion dollar fees for selling them to the satellites (at a profit), and multimillion-dollar fees for managing them over the next 25 years (on contracts that couldn’t be broken). There were also performance fees if values went up, plus fees for advice. ( sound familiar? L.Y.)
In banking, they call this “clipping the ticket”. But Macquarie’s genius was to build the train to take punters for the ride”
And take us for a ride they did, us being the taxpayers in the end, of course. I will be bringing you a very telling presentation of that ride tomorrow as a follow-up.
And while SNC is still pocketing profits from deals made years ago, and undertakes to do more business in BC, the question of Gwyn Morgan,chairman of the board of SNC Lavalin, having a close working relationship with our premier must be called into question – and examination – immediately.
But then again, maybe I am naïve enough to believe we still live in a democracy after all.