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Trinidad and Tobago Taught Canada an Anti-Corruption Lesson

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After weeks of maneuvering by the Canadian government to secure a lucrative contract in Trinidad and Tobago for graft-tainted engineering giant SNC-Lavalin, the government of that Caribbean nation has announced that it isn't interested in dealing with a company that has "difficulty in passing the test of confidence."

According to Trinidad and Tobago's Guardian newspaper, the government announced yesterday that it was pulling out of a planned arrangement with the Canadian Commercial Corporation (CCC) to have SNC-Lavalin build a $163-million hospital. This followed a meeting with Canadian High Commissioner Gérard Latulippe and a delegation from the CCC, a Canadian Crown corporation which had been arranging the contract. CCC flew in its vice president of strategy and organizational development Mariette Fyfe-Fortin and regional director Luc Allary for the meeting.

The T&T government, as well as opposition lawmakers, had asked why they should hire SNC-Lavalin given the growing list of charges against the Montreal-based company for corruption both in Canada and abroad. Opposition member Colm Imbert had recently filed a motion in parliament to fire SNC-Lavalin.

According to the Guardian, the Canadian delegation believes that SNC-Lavalin has mended its ways. They presented a due diligence review to prove it and encouraged the T&T government to enter into a contract with SNC-Lavalin to build the hospital.

"They told us that [SNC-Lavalin] had developed enhanced management standards, ethics in governance as well as improved compliance, governance, quality, health and safety standards," said Jearlean John, the chairman of the Urban Development Corporation (UDeCOTT) - the developer that would be responsible for the hospital project.

Apparently those assurances were not enough for Housing Minister Dr. Roodal Moonilal, who was also present at the meeting. Signing a contract with SNC-Lavalin could harm T&T's international reputation, he argued.

"I feel that there is public concern and lack of confidence in the contractor [SNC-Lavalin] and the position of T&T's reputation. All projects, especially government-to-government arrangements, must bring confidence in public interest."

For that reason, he said, "after a discussion, we invited the CCC to nominate another contractor."

Opposition MP Imbert -- who has been an outspoken critic of the deal -- said it has been obvious for months that SNC-Lavalin was "unsuitable" to build the hospital, as the company has been accused of "bribing politicians and public officials in developing countries."

"It would have been a terrible thing for T&T if we were exposed to this kind of behaviour," he said.

Imbert is also upset by the suggestion that Trinidad and Tobago should ask CCC to nominate another contractor. "Do we not have a say in the procurement process?" he asked.

The Canadian government should take note: both Dr. Moonilal and Mr. Imbert make good points.

The Trinidadians have good reason for not wanting to deal with SNC-Lavalin. The company is being investigated for bribery and corruption scandals in half a dozen countries. Recent media reports and a civil suit filed against the company by a former employee, also charged with corruption, indicate that the company routinely used code letters to conceal alleged bribery payments. The civil suit -- filed in Toronto -- alleges that upper management was made aware of the bribes being paid, but failed to take action to stop the practice.

SNC-Lavalin's corrupt ways recently led the World Bank to slap a 10-year ban on the company and more than 100 of its affiliates - an unprecedented move. Because of that decision, Canada is now home to more debarred companies than any other country.

The SNC-Lavalin Penal Hospital deal could not pass the smell test. It was untendered, secret, and guaranteed by Canadian taxpayers. And therein lies the root of the problem: secret, sole-sourced, subsidized deals arranged by the Canadian government for any company can't help but create an environment in which bribery, corruption, and conspiracy to defraud taxpayers and ratepayers thrives.

Trinidad and Tobago lawmakers had the good sense to see that. Why can't the Canadian government?

Patricia Adams is an economist and the executive director of Probe International. Brady Yauch is an economist and the executive director of the Consumer Policy Institute.