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COURT OF QUEBEC

(Criminal and Penal Division)

CANADA
PROVINCE OF QUEBEC
DISTRICT OF MONTREAL

NO : 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.
JL3603
[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.

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[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

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(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

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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.

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[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.

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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.

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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.

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[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.”

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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] “The 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

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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 Griffiths5 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

1
OECD Convention Article 3
2
R. v. Griffiths Energy International, [2013] A.J. No. 412 (Alta. Q.B.),
3
R. v. Karigar, 2014 ONSC 3093
4
.R. v. Niko Resources Ltd, 2011 CarswellAlta 2521, [2012] A.W.L.D. 4536 (Alta. Q.B.) (paragraph 9)
5
Supra note 2, (paragraph 23)

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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.

6
USSG §2C1.1, comment. (n.3) and (backg,d)
7
https://www.sentencingcouncil.org.uk/offences/crown-court/item/corporate-offenders-fraud-bribery-and-money-laundering/
8
USSG §2C1.1 (b) 2 and https://www.sentencingcouncil.org.uk/offences/crown-court/item/corporate-offenders-fraud-bribery-and-
money-laundering/ : the UK guideline state that where the actual or intended gain cannot be established, the appropriate measure will
be the amount that the court considers was likely to be achieved in all the circumstances. It adds that in the absence of sufficient
evidence of the amount that was likely to be obtained 10–20 per cent of the relevant revenue, in the present case this amount would
be between $180M and $359M.
9
See for example USDOJ reduction of 50% from bottom range when corporates voluntary self-disclose offer full cooperation and
remediate in a timely fashion: US FCPA Corporate Enforcement Policy: https://www.justice.gov/criminal-fraud/file/838416/download

11
[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.

10
See the calculations under US and UK guidelines in appendix A
11
See Libyan projects –Summary P&L analysis 2002-2014-CAD$ provided to PPSC on October 3, 2019
12
See doc 441 page 3
13
See EP 30 (A)
14
See doc 1162 pages 30-34, 50, 63 and 65

12
[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.

15
Despite some dissonance between Quebec and Ontario, albeit on different footings, appeal courts seem to agree that a fine level
should never rise to inordinate levels. Most recently in 9147-0732 Québec inc c DPCP [2019] JQ no 1443 (appeal pending in the SCC)
the majority of the QCA sent the provincial offence matter back to the sentencing judge after ruling that s. 12 of the Charter applies to
legal persons. Turning its mind to the possible impact of the $30,000 minimum fine for failing to operate under the proper construction
licence, the court referred to the undesired effect of disproportionate fines leading to bankruptcy, departing from the opposite
reasoning of the ONCA in R v Metron Construction Corporation 2013 ONCA 541 at paragraph 130 (see below). However, it is
important to underscore the different sentencing objectives between criminal and regulatory schemes, as did the court in Metron at
paragraph 89: “In my view, while the sentencing judge was entitled to consider the range of sentences under the OHSA, reliance on
the OHSA regulatory jurisprudence and the resulting imposition of a $200,000 fine (which itself was at the lower end of the OHSA
range for fatality cases) reflect a failure to appreciate the higher degree of moral blameworthiness and gravity associated with the
respondent’s criminal conviction for criminal negligence causing death and the principle of proportionality found in s. 718.1 of the
Code. This was in error”. This point was recently reiterated by the ONCA in Ontario (Labour) v. New Mex Canada Inc., 2019 ONCA
30, at paragraphs 71 and 72. The court in Metron continued at paragraph 130: “If appropriate, the prospect of bankruptcy should not
be precluded”. Previously at paragraph 80, the court also dismissed the corporation’s attempt to distance itself from the act of its
senior officers, come sentencing (followed in R c Pétroles Global 2015 QCCS 1618, at paragraphs 76 and 77).

16
Metron, supra note 15, paragraph 108

13
[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

17 718.1 Criminal Code

See the SCC’s description of the WB’s investigative and sanctioning role at paragraph 51 of World Bank Group v Wallace [2016] 1
18

SCR 207

14
(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.

15
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 following information: the offence for which it was
convicted; the sentence imposed by the Court, including the material terms of the
Probation Order and the fact that a Monitor has been or will be appointed pursuant

16
to the terms of the Probation Order and that the Monitor will provide initial, as well
as, annual reports during the probationary period, an executive summary of which
will also be posted on the Company’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 be imposed 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 Code19 sets out the sentencing objectives and factors that judges
must consider in determining an appropriate sentence. The principles of parity and
individualization of sentences require “the exercise of a broad discretion by the
courts in balancing 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 Code21. The Department of Justice has stated
that the purpose of a sentence is to protect society and contribute to “respect for
the law and the maintenance of a just, peaceful and safe society”. 22 This is
achieved by imposing a sentence that considers one or more of the following
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 the degree of responsibility of the
offender.”

(b) Criminal Code Factors Specific to Organizations

[10.4] Section 718.21 of the Criminal Code24 lists 10 factors that are specific to
organizations which judges must consider when determining an appropriate

19 Criminal Code, RSC 1985, c. C-46.


20
R. v. Lacasse, [2015] 3 SCR 1089, para 1.
21
Criminal Code, RSC 1985, c. C-46, s. 718.21.
22
Canada, Research and Statistics Division Department of Justice Canada, A Values and Evidence Approach to Sentencing
Purposes and Principles, by Anthony N Doob (Ottawa: Department of Justice Canada, 2016) at 11-13.
23
Criminal Code, RSC 1985, c. C-46, s. 718.

17
sentence. The section applies to regulatory offences as well as indictable offences
such as s. 380 of the Criminal Code (fraud offences).

[10.5] Precedents related to regulatory offences committed by organizations or one of


their representatives25, which are often strict liability offences that carry specific
legislated fines for infractions, should be considered carefully in the context of
sentencing of organizations.

[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 both mitigating 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 the following 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) 61 D.L.R. (3d) 323 (B.C.C.A.).). Thus
the amount of illegally realized 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
Court recognized the difficulty of attempting to determine illegal gains. In
that case, the Court faced the particular difficulty of determining profits
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 the
processes appropriate for determining the quantum of illegal gains. In the
absence of conclusive evidence from the corporation the Court 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 an economic

24
Criminal Code, RSC 1985, c. C-46, s. 718.21.
25 Criminal Code, RSC 1985, c. C-46, s. 718.21 (f) to (h).
26 Canada v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, paras 46 and 48.
27
R. c. Technique Acoustique (LR) Inc., 2012 QCCQ 2250, page 7.

18
advantage over complying competitors. It may be appropriate for the
courts to hear evidence from complying competitors on the 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 corresponding to 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 or actually received were factors relevant to the
imposition of a monetary penalty.” In that case, however, it was appropriate for the
sentencing judge to give little weight to these factors, even though the profits were
not as expected, because the evidence showed that bids 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 possible to reconcile the two approaches. In a
book published prior to the enactment of s. 718.21, professor Hélène Dumont
explained the interaction 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’amende inférieure
aux profits réalisés paraît contraire à l’objectif de dissuasion puisque les
compagnies ne tarderaient pas à comprendre le caractère 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 compagnie pour 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 à ses 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 by courts 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 by the organization as a result of
the offence” is a factor that shall be taken into consideration when imposing a
sentence
28
R. v. United Keno Hill Mines Ltd., (1980-1981) 5 W.C13. 467, (1980) 10 C.E.L.R. 43,51 (Y.T. Terr. Ct.)
29
R. v. McNamara et al. (No 2), [1981] OJ No 3260 (ONCA), para 25.
30
Hélène Dumont, Pénologie : le droit canadien relatif aux peines et aux sentences, Montréal, Thémis, 1993, p. 370.

19
[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) a result of the offence.

[10.17] As such, paragraph 718.21(a) imported into the Criminal Code the approach
followed in United Keno Hill Mines and departed from case law suggesting that
“benefits contemplated” were a relevant factor. This was confirmed in R. v.
Milligan, where the Supreme Court of Nova Scotia stated that s. 718.21 “appears
to import into the Criminal Code the factors that had been considered by Courts 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 argue otherwise, state in their book entitled
Sentencing – The Practitioner’s Guide that s. 718.21(a) departs from the approach
taken in case law 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 departs from the
approach taken in earlier case law such as R. v. McNamara (No. 2)
(1981), 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 criminal scheme did not turn out to be as lucrative as
planned, this was not something that could benefit the offender on
sentence. It would still be open to the Crown to submit that the anticipated
gain should be taken into account on sentence, however the court could
decide that the organization should be punished for the crime actually
committed and not a larger-scale attempted crime. This may well be a live
issue in 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 the course of which MP Larry Bagnell
stated “first, the economic advantage gained by committing the crime. Clearly, the
more money the corporation made the higher the fine should be”,33 and with the
guide entitled A Plain Language Guide – Bill C-45 Amendments to the Criminal
Code Affecting the Criminal Liability of Organizations, which states “the economic
advantage gained by committing the crime - 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

31 R. v. Milligan, 2005 NSSC 22.


32
Gary R. Clewley, Paul G. McDermott and Rachel E. Young, Sentencing – The Practitioner’s Guide, Thomson Reuters Canada,
Toronto, 2017, p. 1.587
33
Canada, Parliament, House of Commons Debates, 37th Parl, 2nd Sess, Vol 138, No 119 (September 15, 2003), p. 7362.
34
Government of Canada, Department of Justice, A Plain Language Guide – Bill C-45 Amendments to the Criminal Code Affecting the
Criminal Liability of Organizations (https://www.justice.gc.ca/eng/rp-pr/other-autre/c45/c45.pdf)

20
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

35
R. c. Pétroles Global Inc., 2015 QCCS 1618, para 55.
36 Gilles Renaud, The Sentencing Code of Canada, Markham, LexisNexis, 2009, p. 576 - 577.
37
Canada v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, paras 95-96.
38
R. c. BPR Triax Inc. , 2017 QCCQ 4191, paras 37-38.
39
R. v. Furukawa Electric Co., 2013 Carswell Ont 18744, paras 10 and 13.
40
R. c. Gosselin, 2013 QCCS 4040, para 77.

21
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 shareholders42 and other stakeholders such as
pensioners, suppliers and clients.

41 Canada v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, para 97.
42
T. Archibald, K. Jull and K. Roach, The Changed Face of Corporate Criminal Liability, 48 Crim LQ 367 2003-2004, at 390.

22
[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

43
R. v. Metron Construction Corporation, 2013 ONCA 541.
44
R. v. Metron Construction Corporation, 2013 ONCA 541, para 103.
45
(1990) Inc., 2012 QCCS 4755, para 66.
46
R. c. Transpavé Inc., 2008 QCCQ 1598.
47
R. c. Pétroles Global Inc., 2015 QCCS 1618, para 29.
48 R. v. McNamara et al. (No 2), [1981] OJ No 3260 (ONCA), para 25.

23
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

24
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 Furukawa52.

[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

49 Canada v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, para 98.
50
R. v. Metron Construction Corporation, 2013 ONCA 541, para 48.
51
R. c. BPR Triax Inc., 2017 QCCQ 4191, para 69.
52
R. v. Furukawa Electric Co., 2013 CarswellOnt 18744, para 16.
53
T. Archibald, K. Jull and K. Roach, The Changed Face of Corporate Criminal Liability, 48 Crim LQ 367 2003-2004, at 390.

25
[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:

54
R. c. BPR Triax Inc., 2017 QCCQ 4191, para 51e
55
T. Archibald, K. Jull and K. Roach, The Changed Face of Corporate Criminal Liability, 48 Crim LQ 367 2003-2004, at 391.

26
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 Court56, 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
Furukawa57 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;


56
R. v. Maple Lodge Farms, 2014 ONCJ 212, para 23.
57
R. v. Furukawa Electric Co., 2013 CarswellOnt 18744, para 21.
58
R. v. Stave Lake Quarries Inc., 2016 BCPC 377, para 63.

27
 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 7th 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.

28
(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 Energy63 (“Griffiths”), and R. v. Karigar64, 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.

59
R. v. McNamara et al. (No 2), [1981] OJ No 3260 (ONCA), para 3.
60
R. c. BPR Triax Inc., 2017 QCCQ 4191, paras 71 and 73; R. c. Pétroles Global Inc., 2015 QCCS 1618, para 72(d).
61
See, R. v. Northwest Territories Power Corp., [2011] NWTH No 7, 2011 NWTTC 3, paras 47, and 98-101
62
R. v. Niko Resources Ltd., 2011 CarswellAlta 2521, [2012] A.W.L.D. 4536 (Alta. Q.B.).
63
R. v. Griffiths Energy International, [2013] A.J. No. 412 (Alta. Q.B.).
64
R. v. Karigar, 2014 ONSC 3093.

29
[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 factors on sentencing
applicable under Canadian criminal law are similar in nature to the factors
considered in the USSCGM formulas for determining the offence level and the
culpability scores66.

[10.86] The USSCGM applies a five-step process to assist a federal judge in determining
what penalty range should be imposed on a person found guilty of a variety of
serious offences, including fraud.

[10.87] The first step is an assessment of the facts against an enumerated list of factors to
determine the base offence level number. This number is used to determine the
severity of the offence.

[10.88] Second, the judge determines the base level fine. Under USSCGM the base fine
is the greater of (i) the amount in the Offense Level Fine Table; (ii) the pecuniary
gain to the organization from the offence; or (iii) the pecuniary loss from the
offences caused by the organization, where the loss was caused intentionally,
knowingly, or recklessly.

[10.89] Third, a culpability score is determined by applying the base level number among
certain circumstantial factors.

[10.90] Fourth, in turn the culpability score is used to determine the appropriate range of
multipliers. This set of minimum and maximum multipliers is then applied to the
base level fine to arrive at an appropriate range of fines.

[10.91] Finally, while looking at the range of base level fines determined by the culpability
score, a judge weighs the mitigating and aggravating factors and decides on a fine
within the determined range.

(a) Step 1: Determine the Base Offence Level

[10.92] The USSCGM at §2C1.1 sets out a calculation to determine the base offence level
for bribery offences.

[10.93] The base offence level is calculated using a variety of factors. The following table
applies the facts of this case to the USSCGM §2C1.1 factors:

Total Section / Rationale


Change

12 (a)(2) This is the base offence level.


base level

14 (b)(1) If the offence involved more than one bribe the


increase is 2. Note that related payments that
65
United States Sentencing Commission, Guidelines Manual, 2018 edition, available online at: https://www.ussc.gov/guidelines/2018-
guidelines-manual-annotated.
66
United States Sentencing Commission, Guidelines Manual, 2018 edition, chapter §2B1.1., available online at:
https://www.ussc.gov/guidelines/2018-guidelines-manual/annotated-2018-chapter-2-c#NaN

30
Total Section / Rationale
Change
increase 2 constitute a single incident of bribery are treated as
a single bribe.

38 (b)(2) Because the payment exceeded $6,500, use loss


increase 24 table at §2B1.1 to calculate offence level increase.

See base fine discussion in section B.

Because the amount of benefit received in return


for the payment, $103,876,000, is between
$65,000,000 and $150,000,000, there is a 24 level
increase.

38 (b)(3) The offence involved a public official in a high-level


no change decision making or sensitive position.
Further to the preliminary inquiry and as per the
expert evidence presented by the Crown this
criteria is not met as Saadi Gadhafi was considered
a “de facto” public official (which is also what the
Swiss Court concluded in the context of the guilty
plea registered by BEN AISSA).

38 (b)(4) The defendant is not a public official.


no change

[10.94] The total US base offence level is 38 based on the above analysis. The major
difference between the USSCGM and the Criminal Code is the importance of the
benefit received, referred to as the pecuniary gain or the pecuniary loss. Under the
USSCGM the quantum of the benefit received singularly and significantly
influences the overall base offense level and in turn the amount of the fine, while
this is only one factor out of many under the Criminal Code.

(b) Step 2: Determine the Base Fine

[10.95] The USSCGM at §8C2.4 states that the base fine is the greater of: (i) the amount
in the Offense Level Fine Table; (ii) the pecuniary gain to the organization from the
offence; or (iii) the pecuniary loss from the offences caused by the organization,
where the loss was caused intentionally, knowingly, or recklessly.67

[10.96] Where the offence level is 38 or higher, the base fine in the Offense Level Fine
Table is $72,500,000.68

67
United States Sentencing Commission, Guidelines Manual, 2018 edition, chapter §8C2.4., available online at:
https://www.ussc.gov/sites/default/files/pdf/guidelines-manual/2018/CHAPTER_8.pdf.

31
[10.97] The USSCGM defines “pecuniary gains” as the additional before-tax profit
resulting from the conduct, and can be calculated using the additional revenue or
cost savings realized by the offensive conduct. This calculation attempts to isolate
the improperly attained benefit received from the overall profit.

[10.98] Further, the amount of gain should normally be reduced by money and property
returned, as well as the fair market value of services rendered to the victim before
the offense was detected.69 This approach is supported by Canadian case law, as
the fine should represent the amount of the illegally obtained profits.

[10.99] As the strict pecuniary gain representing the additional before-tax profit resulting
from the offence is not readily available, it is appropriate to use the “realized net
pre-tax profit” that SLCI derived from all of the Libyan projects between 2002 and
2011. As demonstrated above, the amount of the net profit after deduction of all
applicable overhead and expenses is $103,876,000.

[10.100] As the pecuniary gain amount is a higher amount than the Offense Level Fine
Table amount, the pecuniary gain must be used as the base fine in the analysis.

(c) Step 3: Determine the Culpability Score

[10.101] The USSCGM at §8C2.5 sets out criteria to determine the culpability score,70 which is
then used to determine the minimum and maximum multipliers to apply to the base
fine. The factors used to determine the culpability score are set out in the table below
as applied to the facts:

Total Section Rationale Canadian


Equivalent
Score

5 (a) This is the base culpability score. N/A


base level

10 (b)(1) The company had 5,000 or more Considered


increase 5 employees and an individual within under general
high-level personnel of the deterrence.
organization participated in or was
willfully ignorant of the offence.
This increase is based on the
number of employees the company
had at the time of the offence. For
the purposes of this criteria the
number of Group employees is used.
That said, the Criminal Code does
not consider the size of the
corporation as a factor and arguably

69
The Office of General Counsel U.S. Sentencing Commission has published a guide to assist in applying the sentencing guidelines,
“Loss Primer (§2B1.1(b)(1))”, February 2019, available online at:
https://www.ussc.gov/sites/default/files/pdf/training/primers/2019_Primer_Loss.pdf.
70
United States Sentencing Commission, Guidelines Manual, 2018 edition, chapter §8C2.5., available online at:
https://www.ussc.gov/sites/default/files/pdf/guidelines-manual/2018/CHAPTER_8.pdf.

32
Total Section Rationale Canadian
Equivalent
Score
there should be no increase

10 (c) There is no prior history, and no 718.21(g),


criminal or civil adjudication of a whether
similar misconduct. “convicted of
a similar
offence or
sanctioned by
a regulatory
body for
similar
conduct”

10 (d) There was no violation of a judicial N/A


order or a condition of probation.

10 (e) The company did not willfully engage N/A


in obstruction of justice.

10 (f) Although the company had a N/A


compliance and ethics program, a
reduction does not apply because an
individual within high-level personnel
of the organization participated in or
was willfully ignorant of the offence.

8 (g)(2) The company did not report the No direct


decrease 2 offence as the Board of Directors equivalent,
was unaware of the offence. although the
company
As of March 26, 2012 and after, the
cooperated in
company did report what was known
the
to its Board of Directors. Certain
investigation
information provided to the RCMP at
and entered a
said meeting of March 26, 2012 was
guilty plea
referred to in an affidavit in support
reducing the
of the search warrant executed by
cost to public
Brenda Makad at the company on
authorities
April 13, 2012, in which the affiant
investigating
acknowledged having been provided
the offence at
information by SNC-Lavalin’s
718.21(e)
lawyers.
After said meeting, the company
cooperated with the RCMP by i)
facilitating interviews by the RCMP
employees on company premise, ii)
conducted a review of potentially
privileged information seized by the
RCMP with PPSC independent

33
Total Section Rationale Canadian
Equivalent
Score
counsel iii) provided a voluntary
disclosure of information in relation
to a collateral aspect of project the
offence in Libya
Further the company is entering a
guility plea. (see below paragraph
10.106) All these elements justify a
decrease of 2.

[10.102] Based on the above factors the total culpability score is 8.

[10.103] Section 718.21 of the Criminal Code does not specifically address the size of the
corporation as a factor. However, as discussed above, the courts have looked to
the size of the organization as a factor to consider as part of the general
deterrence rationale for criminal punishment.

[10.104] To serve as a general deterrence, when sentencing corporations, the


proportionality of any fine imposed to the relative size of the organization serves to
encourage leaders of the business community to act honestly. The courts have
held that a large multinational corporation should, generally, be punished more
severely than a small company.71

[10.105] The USSCGM takes into account a small culpability score decrease for
cooperating with the investigation and in demonstrating recognition of
responsibility. However, unlike s. 718.21(e) of the Criminal Code the USSCGM
does not fully consider the cost to public authorities for the prosecution of the
offence, because the USSCGM assumes that the prosecution has occurred.

(d) Step 4: Determine the Minimum and Maximum Multipliers

[10.106] Pursuant to §8C2.6 of the USSCGM, a possible fine range is determined by


applying a minimum and maximum multiplier to the base fine.72 The culpability
score is used to determine the minimum and maximum multipliers:

Culpability Minimum Multiplier Maximum Multiplier


Score

10 or more 2.0 4.0

9 1.8 3.6

8 1.6 3.2

7171
R. v. Terroco Industries Limited, 2005 ABCA 141, paras 61-63; R. v. Northwest Territories Power Corp., [2011] NWTH No 7, 2011
NWTTC 3, paras 47, and 98-101; and R. v. First Pro Shopping Centres Inc., [2006] BCJ No 1235, 2006 BCPC 231, paras 112-116.
7272
United States Sentencing Commission, Guidelines Manual, 2018 edition, chapter §8C2.6., available online at:
https://www.ussc.gov/sites/default/files/pdf/guidelines-manual/2018/CHAPTER_8.pdf.

34
Culpability Minimum Multiplier Maximum Multiplier
Score

7 1.4 2.8

6 1.2 2.4

5 1.0 2.0

4 0.8 1.6

3 0.6 1.2

2 0.4 0.8

1 0.2 0.4

0 or less 0.05 0.2

[10.107] Given on a culpability score of 8, the minimum multiplier is 1.6 and the maximum
multiplier is 3.2.

[10.108] Based on the estimated base fine being equal to the pecuniary gain of
$103,876,000, the fine range would be between $166,201,600 and $332,403,200.

(e) Step 5: Determine the Fine Within the Range (Policy Statement)

[10.109] The USSCGM at §8C2.8 includes policy factors that US courts use to determine
whether a lower and higher multiplier should be used. While the factors are
enumerated, the USSCGM does not give them a weighting.73

[10.110] The only USSCGM factor that aggravates the multiplier is that the sentence must
reflect its seriousness, promote respect for the law, and afford deterrence for other
companies from engaging in similar actions. A Canadian judge would consider this
as part of the general deterrence factor of criminal punishment.

73
United States Sentencing Commission, Guidelines Manual, 2018 edition, chapter §8C2.8., available online at:
https://www.ussc.gov/sites/default/files/pdf/guidelines-manual/2018/CHAPTER_8.pdf.

35
[10.111] The following lists the s. 718.21 Criminal Code factors that are similar in nature to
the USSCGM factors, and which are not considered elsewhere in the offence level
or culpability score calculations:

Criminal Code s. 718.21 Impact


Factor

(c) whether the Aggravating – No relevance.


organization has attempted
The company has not tried to conceal its
to conceal its assets, or
assets.
convert them, in order to
show that it is not able to
pay a fine or make
restitution

(d) the impact that the Mitigating – High relevance


sentence would have on
This factor should be given significant weight.
the economic viability of
the organization and the Fines should not generally jeopardize the
continued employment of economic viability of a company, nor should
its employees they impact the employment of honest
employees that had nothing to do with the
offences.
With regards to the magnitude of a fine, the
court has stated that “…the fine imposed [for
these offences] must be substantial and
exemplary, but not crippling or vindictive.”74
The quantum of the proposed fine will have a
significant impact on the company, both in
terms of its impact on the viability of the
company and in turn on a large number of
innocent employees who rely on the viability of
the company.

(f) any regulatory penalty Aggravating – No relevance


imposed on the
The World Bank is not a regulatory body but
organization or one of its
rather an international financial institution that
representatives in respect
provides loans to governments of developping
of the conduct that formed
countries. While the Bretton Woods and
the basis of the offence
Related Agreements Act binds Canada to the
founding agreements and it does not make the
WB a regulatory body in Canada or subject to
Canadian laws.

(h) any penalty imposed by Aggravating – Minimal relevance.


the organization on a
There is no case law that has analyzed this
representative for their role
factor.
in the commission of the
offence The company has taken actions against certain

74
R. v. McNamara et al. (No 2), [1981] OJ No 3260 (ONCA), para 25.

36
Criminal Code s. 718.21 Impact
Factor
employees who were involved in the actions.

(i) any restitution that the Aggravating – Moderate relevance.


organization is ordered to
Moderate because altought SLCI did not
make or any amount that
formally compensate Libya, it should be noted
the organization has paid
that when the company exited the country in
to a victim of the offence
2011 during the civil war, its deposits were
frozen by Libyan banks. These funds have not
been recovered and are now likely in the
possession of the Libyan auhtorities. In
addition, the company was forced to leave
behind material and equipment which are also
likely in the possession, directly or indirectly, of
the Libyan authorities.

(j) any measures that the Mitigating – High relevance


organization has taken to
This factor should be given significant weight.
reduce the likelihood of it
committing a subsequent The company has invested substantial effort
offence and expense, and has made it a priority to
implement a fundamental transformation of its
leadership, corporate culture, ethics and
compliance programs.
This is a mitigating factor that must be used to
reduce the amount of a fine, because the
company has taken significant steps to reduce
the likelihood of it committing a subsequent
offence. In addition, since 2018, the company
has been externally recognized for its
compliance best practices and thought
leadership.

[10.112] Certain of the aggravating factors, including the advantage realized and the
involvement of a senior official in the commission of the offense, have necessarily
been considered in the pecuniary gains realized and for an essential component
of the offence itself when committed by an organization (mens rea). Therefore, the
remaining relevant aggravating factors are the planning, complexity and duration
of the offence.

[10.113] The mitigating factors include entering a guilty plea and the cost savings to the
public, the impact of the sanction on the economic viability of the company and the
continued employment of its employees, severing the relationships with the
executives and directors at the time of the offence, implementing a comprehensive
ethics and compliance program and cooperating with the authorities once the facts
were uncovered. Given all these mitigating factors, the use of the highest
multipliers is not appropriate

[10.114] However, given the international nature of the offence, the magnitude of the
amount paid to Saadi Gadhafi and considering Canada’s obligations under

37
international law to impose effective and dissuasive penalties to encourage other
Canadian organizations and their leaders to act honestly and achieve the desired
deterrent effect, the multiplier to be used cannot be the lowest nor in the lower
range.

[10.115] In light of all the circumstances, using a range of 1.6 to 3.2, SLCI suggests that it
is reasonable to rely on a multiplier that is above the middle range but not at the
highest level. As such a multiplier of 2.9 seems appropriate. Applied to the base
amount of $103,876,000, this would result in a base fine of $301,240,000.

(f) Step 6: Consideration of the amounts paid to the benefit of Saadi GADHAFI

[10.116] The “realized net pre-tax profit” that SLCI derived from all of the Libyan projects
between 2001 and 2011 in the amount of $103,876,000 is arrived at after
deducting the amounts paid to Duvel and Dinova as commercial agents as
projects costs. These amounts included the monies that benefitted Saadi Gadhafi
totalling $50,276,761 (i.e. $47,689,868 paid by Duvel and Dinova, $2,384,560
paid for the travel expenses in 200875 and 2009 and $202, 333 paid to Harvey
Wise design for the renovation of the condo in Toronto76).

[10.117] SLCI agrees that the amounts paid for the benefit of Saadi GADHAFI should be
treated differently than traditional project costs when considering what should be
characterized as profit in the circumstances., They rather arguably constitute
offence related property under section 2 of the Criminal Code, which could be
confiscated pursuant to section 490.1 of the Criminal Code if they were still
available.

[10.118] Moreover, under section 462.37 of the Criminal Code, which applies to “proceeds
of crime”, when a property cannot be confiscated “the court may, instead of
ordering the property or any part of or interest in the property to be forfeited, order
the offender to pay a fine in an amount equal to the value of the property” and
the courts have no discretionary power with respect to the amount of the fine to be
imposed instead of a forfeiture order. The amount of the fine must “equal to the
value of the property”.77

[10.119] Applying the principles of section 2 and section 462.37 of the Criminal Code, SLCI
agrees that the amount of $50,276,761 that benefited Saadi Gadhafi should not
be taken into account and cannot benefit SLCI as business costs in the calculation
of the fine, but given that they were amounts actually initially disbursed as
commercial agent costs and are not either a profit, they should not be subject to
the application of a multiplier.

[10.120] As such, once the base amount of $103,876,000 is established and a multiplier of
2.9x is applied to result in an amount of $301,240,400, the Gadhafi benefit amount
should then be added to the initial amount resulting in a total base fine of
$351,517,161 prior to the application of any discount. This approach has also the
merit of removing any advantage the company would derive from the amounts to
the benefit of Gadhafi.

75
See EP-30 (a); Defendants counsel stated that further to the 2008 annual audit the consts were reallocated to SLCI overhead
expenses.
76
See Doc 1162 pages 30-34, 50, 63 and 65.
77
R. v. Lavigne, [2006] 1 S.C.R. 392; Québec (Procureur général) c. Robitaille, 2006 QCCA 1619.

38
III. THE USSCGM CANNOT BE DIRECTLY APPLIED IN CANADA

[10.121] While similar in nature the factors relevant to in the USSCGM are not identical to
the relevant factors that must be considered in the Canadian Criminal Code.

[10.122] Certain factors may be more heavily weighted in the Canadian sentencing
framework than in US sentencing framework and there are different policy
purposes that distinguish Canadian and US sentencing decisions. Further, as a
general rule, criminal sentencing in Canada tends to be more balanced than in the
US.

[10.123] Another point of distinction is that the USSCGM starts from the point of view that a
judge is making a sentencing determination based on a finding of guilt. The
USSCGM does not contain provisions that relate to guilty pleas which reduce the
administrative and legal burden on the justice system. Canadian law
acknowledges that guilty pleas result in substantial resource and cost savings and
as such should be given consideration in determining the ultimate sentence to be
imposed.

[10.124] Therefore, while the USSCGM can serve as a useful tool to help in establishing an
appropriate fine, it cannot be directly imported for use in Canada nor fully applied
to sentences imposed under the Canadian Criminal Code.

[10.125] The USSCGM was developed as a standard policy to reduce discrepancies


between sentences imposed by federal judges. Parliament has not introduced a
similar matrix in Canada.

[10.126] In Canada, judges look at precedents to determine what an appropriate sentence


or fine would be in the corporate context. Since the coming into force of section
718.21 of the Criminal Code, only two corporations have been found guilty under
section 380 of the Criminal Code.

[10.127] It is clear that the fines imposed on corporations under the existing precedent
cases, being for fraud or CFPOA related offences are not relevant to the specific
facts of the present case.

[10.128] As the present case is outside of the scope of the existing case law, SLCI
proposes to use a balancing of Canadian sentencing principles and guidance from
the USSCGM to determine the appropriate level of fine.

[10.129] Both Canadian and US courts will consider the mitigating and aggravating factors
to determine the fine. After balancing the aggravating and mitigating factors
discussed above, including the entering of a guilty plea which avoids the cost of a
full-blown trial, SLCI submit that 25% is a reasonable deduction to account for the
factors.

[10.130] As noted above, the Gadhafi benefit amounts totalling $50,276,761 constitute -
offence related property - and as such no discount should be applied to this
amount.

[10.131] Thus, applying a 25% deduction to the base amount (excluding the Gadhafi benefit
amount totalling $50,276,761) renders a fine of $276,207,061 which SLCI accept to
round of at 280 Million for the purpose of a joint recommendation on the sentence.

39
[10.132] Canadian courts have held that any fine must be substantial and exemplary. A fine
nearly double the amount of before-tax profit, would speak to both principles. Further,
the amount would have a substantial impact on the company without crippling it.

[10.133] Given the foregoing analysis and discussion, SLCI is hereby offering to pay a fine in
the amount of $280,000,000 to be paid in equal instalments over a period of five (5)
years, with each payment to be made in the first quarter of the relevant calendar
years.”

DECISION

[11] The parties have put forth a joint recommendation that consists of a fine of 280 Million
Canadian dollars to be accompanied by a three-year probation order that sets out very precise
and detailed conditions that are to be followed by SLCI under supervision of this Court.

[12] After reviewing the arguments made by both parties and the references by the parties to the
applicable principles drawn from the Criminal Code, the Canadian caselaw and the references
to the US and UK experiences in similar matters, the Court notes that by different approaches
and for different reasons the parties have nevertheless come to a similar result, thus the joint
submission.

[13] The suggestion is reasonable and is not contrary to the public interest. As the Supreme Court
has stated in R. v. Anthony‑Cook, 2016 SCC 43:

[40] In addition to the many benefits that joint submissions offer to participants in
the criminal justice system, they play a vital role in contributing to the administration
of justice at large. The prospect of a joint submission that carries with it a high
degree of certainty encourages accused persons to enter a plea of guilty. And
guilty pleas save the justice system precious time, resources, and expenses, which
can be channeled into other matters. This is no small benefit. To the extent that
they avoid trials, joint submissions on sentence permit our justice system to
function more efficiently. Indeed, I would argue that they permit it to function.
Without them, our justice system would be brought to its knees, and eventually
collapse under its own weight.

[14] Therefore, as a result of the foregoing:

CONSIDERING the guilty plea to the offence set out in the indictment;

CONSIDERING the facts set out in the joint statement of facts;

CONSIDERING the distinct submissions made by both parties to support and justify their
respective positions;

CONSIDERING that despite their divergent views about the application of the criteria
provided by the Criminal Code, the parties nevertheless arrive at a similar conclusion as
regards a fit sentence in the circumstances;

CONSIDERING that for sentencing purposes, the Court is not required to choose or
adhere to one view or the other as both parties agree with the outcome;

CONSIDERING that the parties have entered into a negotiated agreement in the context of
the Facilitation Conference under the guidance of the Court;

40
CONSIDERING that the sentence put forth by the parties is appropriate and in keeping
with the principles set out in the caselaw;

THE COURT ORDERS THE FOLLOWING:

ORDERS SLCI to pay a fine in the amount of 280 000 000$ to be paid in equal installments over a
period of five (5) years with each payment to be made in the first quarter of the relevant calendar year,
the first payment to be made in the year 2020.

IMPOSES on SLCI a probation order for a period of three (3) years with the following conditions:

1. Keep the peace and be of good behaviour.

2. Appear before the Court when required to do so by the Court.

3. SNC-Lavalin Construction Inc. shall comply with the following conditions, namely, the said
offender shall keep the peace and be of good behaviour, appear before the court when
required to do so by the court and notify the court in advance of any change of name or
address and, in addition,

a. SNC-Lavalin Construction Inc. shall cause SNC-Lavalin Group to maintain, and as


required, further strengthen its compliance program, record keeping, and internal
control standards and procedures in accordance with the directions set out in appendix
A to this order. It shall report periodically, at no less than 12-month intervals, to this
honourable court and to the Public Prosecution Service of Canada (PPSC) on the
compliance program and internal controls, policies, and procedures of SNC-Lavalin
Group and other conditions as described in Appendix A to this Order. Such reports
regarding SNC-Lavalin Construction Inc. and SNC-Lavalin Group’s compliance with
this section of the order shall be prepared by an independent monitor (the Monitor),
notwithstanding whether this person is or was also retained for similar ongoing
exercises for SNC-Lavalin Construction Inc. and-or SNC-Lavalin Group pursuant to
obligations arising from other sources, the whole at SNC-Lavalin Construction Inc.’s
and-or SNC-Lavalin Group’s expense, and shall be conducted in accordance with the
schedule described in paragraph 3 below.

b. The Court will supervise the development and implementation of the policies,
standards and procedures referred to in paragraph 1 and Appendix A of this order in a
public hearing.

c. For the duration of this order SNC-Lavalin Construction Inc. shall cause SNC-Lavalin
Group:

i. to identify the Monitor and give a mandate to the Monitor within thirty days of
the issuance of this order;

ii. to direct the Monitor to conduct an initial review and prepare an initial written
report to be filed with this honourable Court by no later than 120 days following
the coming into effect of this probation order This initial report shall set forth a
complete description of its remediation efforts to date, its proposals reasonably
designed to maintain or, if required, to further improve the policies and
procedures of SNC-Lavalin Group for ensuring compliance with the anti-
corruption laws and the parameters of subsequent reviews. This report shall be
transmitted to the PPSC and the SNC-Lavalin Group 15 days prior to its being

41
filed with the Court. The PPSC and SNC-Lavalin Construction Inc shall appear
before this Honorable Court the day the report is filed. SNC-Lavalin
Construction Inc may extend the time for the filing of the report with prior
written consent of the PPSC or an authorization from the Court; and

iii. to direct the Monitor to conduct three follow-up reviews and reports as
described below:

1. SNC-Lavalin Construction Inc. and the SNC-Lavalin Group shall


undertake three follow-up reviews, incorporating any comments
provided by this Honourable Court on its initial review and report, to
further monitor and assess whether the policies and procedures of
SNC- Lavalin Group continue to be reasonably designed to detect and
prevent violations of the anti-corruption laws,

2. the first follow-up review and report shall be completed by no more


than one year after the coming into force of this order. Follow-up
reviews and reports shall be completed annually. The last follow up
review and report shall be completed by no later than one day prior to
the expiration of this order. Follow up reviews and reports shall be
transmitted to the PPSC and the SNC-Lavalin Group 15 days prior to
their being filed with the Court. The PPSC and SNC-Lavalin
Construction Inc. shall appear before this Honorable Court on the same
day the follow up reports are filed. SNC-Lavalin Construction Inc may
extend the time for the filing of a follow up report with prior written
consent of the PPSC or an authorization from the Court.

3. the reports mentioned in this paragraph shall be reports prepared by


the Monitor in order to ensure compliance with SNC-Lavalin Group's
own internal rules, policies and procedures.

4. 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.

iv. to respect any orders given by this Court in order to ensure their compliance
program, record keeping, and internal control standards and procedures are to
standard and continue to be enforced.

d. The Court orders that SNC-Lavalin Construction Inc. shall forthwith cause SNC-Lavalin
Group Inc., through a press release disseminated on a major wire service in Canada
(such as CNW or a similar wire service) in English and in French and by filing same on
www.sedar.com, to provide the public with the following information:

i. the offence for which SNC-Lavalin Construction Inc. was convicted;

ii. the sentence imposed by the Court, including the material terms of this
Probation Order;

iii. the fact that a Monitor has been or will be appointed pursuant to the terms of
the probation order and that the Monitor will provide initial, as well as, annual
reports during the probationary period, an executive summary of which will also

42
be posted on the Company’s website once received by the parties and the
Court and remain so until the end of the probation.

e. The Court orders that an executive summary of the reports issued by the Monitor be
posted on SNC-Lavalin Group’s official website through a clear and distinguishable link
under the “Investors” tab of the website throughout the probationary period.

f. SNC-Lavalin Construction Inc. shall not take any steps, by any means whatsoever, to
recover any sums or assets related to the commission of the offences stipulated in
Appendices B and C of this Order, as well as any property restrained by or at the
request of Her Majesty The Queen in Right of Canada. In the event that any of these
sums, assets or property are returned to SNC-Lavalin Construction Inc. or SNC-
Lavalin Group, SNC-Lavalin Construction shall, forthwith, forfeit them or cause them to
be forfeited to Her Majesty The Queen in Right of Canada.

g. The Court orders that SNC-Lavalin Construction Inc. shall cause, forthwith, an
agreement to be entered and executed for the duration of this Order with SNC-Lavalin
Group, whereby SNC-Lavalin Group acknowledges the contents of this Probation
Order and undertakes to comply with same, the failure of which shall constitute a
breach of this Probation Order by SNC-Lavalin Construction Inc.

___________________________________________
THE HONOURABLE CLAUDE LEBLOND, J.C.Q.

Me Richard Roy
Me Anne-Marie Manoukian
Public Prosecution Service of Canada

Me François Fontaine, Ad. E.


Me Charles-Antoine Péladeau
Norton Rose Fulbright Canada, s.E.N.C.R.L, S.R.L
-and-
Me Giuseppe Battista, Ad. E.
Battista Turcot Israel Corbo, S.E.N.C.

43
Appendix A

1. In order to maintain and, as required, further enhance SNC-Lavalin Group’s internal controls,
policies and procedures regarding compliance with the Corruption of Foreign Public Officials
Act (“CFPOA”) and the Criminal Code of Canada, SNC-Lavalin Construction Inc. shall cause
SNC-Lavalin Group and its affiliates to conduct, in a manner consistent with all of its
obligations under this order, appropriate reviews of its existing internal controls, policies and
procedures.

2. If deemed necessary and appropriate by the Monitor or this Court SNC-Lavalin Construction
Inc. shall cause SNC-Lavalin Group to adopt new or further enhance existing internal controls,
policies and procedures in order to ensure that it maintains:

a. a system of internal accounting controls designed to ensure that SNC-Lavalin Group


makes and keeps fair and accurate books, records and accounts.

b. a rigorous anti-corruption compliance code, standards and procedures designed to


detect and deter violations of the CFPOA and other applicable anti-corruption laws. At
a minimum to the extent that they are not already part of SNC-Lavalin Group’s existing
internal controls, policies and procedures this should include, but not be limited to
agents and intermediaries, consultants and other representatives (hereinafter “agents
and business partners”) used by SNC-Lavalin Group in connection with sales,
business development, marketing or other customer interfaces, or government
relations. SNC-Lavalin Construction Inc. agrees to cause SNC- Lavalin Group to notify
all employees that compliance with the standards and procedures is the duty of
individuals at all levels of SNC-Lavalin Group. Such standards and procedures shall
include policies governing gifts, hospitality, entertainment and expenses, customer
travel, political contributions, charitable donations and sponsorships, facilitation
payments and solicitation and extortion.

c. compliance standards and procedures, including internal controls, ethics and


compliance programs on the basis of a risk assessment addressing the individual
circumstances of SNC-Lavalin Group. In particular foreign bribery risks facing SNC-
Lavalin Group, including but not limited to, its geographical organization, interactions
with various types and levels of government officials; industrial sectors of operation,
involvement in joint venture agreements, importance of licenses and permits in SNC-
Lavalin Group’s operations, degree of governmental oversight and inspection, and
volume and importance of goods and personnel clearing through customs and
immigration.

d. anti-corruption compliance standards and procedures including internal controls, ethics


and compliance programs, no less than annually, and update them as appropriate,
taking into account relevant developments in the field and evolving international and
industry standards and update and adapt them as necessary to ensure their continued
effectiveness.

e. a system of financial and accounting procedures including a system of internal


controls, reasonably designed to ensure the maintenances of fair and accurate books,
records and accounts to ensure that they cannot be used for the purpose of bribery or
concealing such bribery.

44
f. mechanisms designed to ensure that its anti-corruption policies, standards and
procedures are effectively communicated to all directors, officers, employees and,
where appropriate, agents and business partners. These mechanisms shall continue to
include but not be limited to:

i. periodic training for all directors, officers and employees and where
appropriate, agents and business partners; and

ii. annual certifications by all such directors, officers and employees and where
appropriate, agents and business partners certifying compliance with the
training requirements.

g. an effective system for:

i. providing guidance and advice to directors, officers, employees, and where


appropriate agents and business partners, on complying with the anti-
corruption compliance policies, standards and procedures, including when they
need advice on an urgent basis or in any foreign jurisdiction in which SNC-
Lavalin Group operates;

ii. confidential reporting by employees, directors, officers, agents and business


partners and protection against retaliation for reporting,

And oversight of all agents and business partners, including:

iii. properly documenting risk-based due diligence pertaining to the retention and
appropriate and regular oversight of agents and business partners;

iv. informing agents and business partners of SNC-Lavalin Group’s commitment


to abiding by anti-corruption laws and of SNC-Lavalin Group’s ethics and
compliance policies and standards; and

v. seeking a reciprocal compliance commitment from agents and business


partners.

3. Where appropriate, SNC-Lavalin Construction Inc. shall cause SNC-Lavalin Group to continue
to include standard provisions in agreements, contracts and renewals thereof with all agents
and business partners that are reasonably calculated to prevent violations of the anti-
corruption laws, which may, depending on the circumstances, continue to include:

a. anti-corruption representations and undertakings relating to compliance with anti-


corruption laws;

b. rights to conduct audits of the books and records of the agent or business partner to
ensure compliance with the foregoing; and

c. rights to terminate an agent or business partner as a result of any breach of anti-


corruption laws or SNC-Lavalin Group’s policies in that regard.

45
4. SNC-Lavalin Construction Inc. shall cause SNC-Lavalin Group to conduct periodic review and
testing of its anti-corruption compliance code, standards and procedures designed to evaluate
and improve their effectiveness in preventing and detecting violations of anti-corruption laws
and the company’s anti-corruption code, standards and procedures, taking into account
relevant developments.

46

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