Duhaime was arrested Wednesday morning at his home. The provincial police unit says he faces charges of fraud, conspiracy to commit fraud and use of false documents stemming from allegations surrounding the McGill University Health Centre, according to the warrant issued by Quebec police.
The former head of SNC-Lavalin’s construction arm, Riadh Ben Aissa, faces similar charges, the warrant said.
Duhaime stepped down from SNC-Lavalin in March after an investigation revealed he signed off on $56 million in "improper payments," to undisclosed agents, breaching the company's code of ethics.
SNC-Lavalin spokeswoman Leslie Quinton issued a statement Wednesday, saying the company "has and will continue to co-operate fully with all authorities who request our assistance" and that it has "voluntarily turned over information" to authorities.
Ben Aissa is currently in jail in Switzerland, after he was arrested in April on charges of money laundering and corruption.
Authorities in Canada and Switzerland have been conducting a widening probe of the company’s dealings, including in Libya, focusing on $195 million in payments by SNC-Lavalin.
On Sunday, a joint investigation by CBC/Radio-Canada and Swiss public Broadcaster revealed the Swiss probe is examining $139 million in payments to a Swiss bank account tied to mega-construction contracts in Libya. That’s in addition to $56 million in "improper payments" identified by the company last spring, when Duhaime was forced to resign.
Swiss investigators are trying to determine who approved a string of multimillion-dollar payments by SNC-Lavalin International now at the centre of the case. Sources have told CBC/Radio-Canada that Swiss investigators have questioned six high-level SNC-Lavalin executives, and hope to question three more, as they hold Ben Aissa in jail.
Geneva-based lawyer Roland Kaufmann is facing similar charges of money laundering and corruption in connection with the case.
Ben Aissa oversaw global construction projects and forged close ties to the Gadhafi regime in Libya, winning the company billions in contracts to build an airport, a prison, and a major water distribution project.
Last week, Sami Babawi, Ben Aissa's predecessor as head of international construction projects, flew to Switzerland to talk to prosecutors.
The Swiss probe is focusing on SNC-Lavalin's $139 million in payments to the Swiss bank accounts of Duvel Securities Inc. and Dinova international Inc., companies registered in the British Virgin Islands.
According to RTS sources, those two companies were set up by the lawyer Kaufman at the direction of Ben Aissa. CBC News has learned that some of the money paid to those companies was then transferred into Ben Aissa’s own personal accounts.
SNC-Lavalin says it has handed its records documenting payments to the two companies to Swiss authorities, but that it is unaware of any “misuse of the funds.”
Ian Lee, a professor of international business at the Sprott School of Business, says large corporations face risks when they do business in corrupt countries.
"It'a real dilemma," he told CBC News. "If you don't pay bribes, the chances are you won't get the contract. And if you do, there's a very good chance you'll go to jail in Canada." He said with some countries, "you have to walk away."
Shares of SNC-Lavalin Group fell 92 cents to close at $39.99 in TSX trading Wednesday.