Canadian Dam Builder Rocked by Corruption

Zachary Hurwitz
SNC-Lavalin, Inc. staff laundered money from the Matala Dam in Angola.  The company has been engaged in corrupt contracts across the world.
SNC-Lavalin, Inc. staff laundered money from the Matala Dam in Angola. The company has been engaged in corrupt contracts across the world.
Photo by EngSolvers

SNC-Lavalin, Inc., a Canadian engineering firm that had been in discussions to participate in the construction of the Grand Inga Dam Complex in the Democratic Republic of the Congo (DRC), has been rocked by a corruption scandal that involved widespread bribery payments to local officials.

As reported by the Canadian Broadcasting Company (CBC) on May 15th, the firm had disguised bribe payouts to local officials as so-called "project consultancy costs" using the terms "PCC" or "CC," on at least 13 contracts for the design and supervision of infrastructure megaprojects between the years 2008-2011.

As a result, the World Bank has added the company and its 100 controlled affiliates to the Bank's List of Debarred Firms.  According to the CBC, the engineering firm agreed to a ten-year ban from project contracts supported by the World Bank. Similarly, the Canadian International Development Agency has also banned the firm from bidding for contracts.

SNC-Lavalin's corruption scandal highlights how significant poor governance could be for the planned Grand Inga Dam Complex in the DRC. The company had been in discussions with the Kinshasa government to participate in the Inga 3 Dam and mid-sized hydropower projects on the Congo River, for which the Bank has committed to providing technical assistance. Due to the recent scandals, however, the DRC and the World Bank have had to drop SNC-Lavalin, and questions remain as to how much more corruption, bribes, and money-laundering will be created by the Grand Inga Dam rather than real benefits for the poor.

The Inga 3 Dam and the mid-sized hydropower projects would create a stepping stone for construction of the Grand Inga Dam, which would be the world's largest. The South African government has signed a power purchasing agreement to import a percentage of the electricity generated by the Inga 3 Dam, but large mining companies also seek to consume the electricity to transform the immense mineral deposits in the DRC's eastern region, which has been characterized by violent conflict for near two decades.

In May, President Jim Kim stated that the World Bank would give multi-billion dollar support to infrastructure investments in the country and Sub-saharan Africa as a whole.

SNC-Lavalin, Inc. has previously participated in contracts for India's Kerala Dam, Afghanistan's Dahla Dam, and Angola's Matala Dam.  In Angola, the company is facing a separate scandal in which its hydropower division allegedly hid commission fees laundered by staff.

The company has also participated in contracts for rural electrification and grid expansion in Cambodia, and contracts for road and highway expansion across multiple countries.

More information: 
  • Read more about SNC-Lavalin's controversies, from here, here, and here.
Tuesday, June 4, 2013