Structural damage: 7 scandals that shook the industry
Bribery, soaring costs and criminal investigations — these incidents grabbed headlines across the country.
The McGill University Health Centre project resulted in a criminal conviction for former SNC-Lavalin CEO Pierre Duhaime. – Arcadis IBI Group
Ontario’s Greenbelt scandal is unfolding at a rapid pace. But it’s not the only major drama that has emerged from the construction sector and it certainly isn’t the largest. Although, take that with a grain of salt as the criminal investigation has only just begun. In the meantime, check out some the other recent scandals that grabbed headlines across the country.
Winnipeg Police Headquarters
The city of Winnipeg won a civil case against its former chief administrative officer after accusing him of conspiring with builders to manipulate procurement, drive up costs and get rid of undesirable contractors for the city’s downtown police headquarters project. The court found that Phil Sheegl worked to extend deadlines, lower bonding requirements, leak confidential information and sever a design contract to benefit Caspian Construction. The civil case came following a five-year RCMP investigation into Caspian Construction that resulted in no criminal charges. Despite the long investigation, officials felt there was not enough evidence. Sheegl lost his appeal of the civil case was ordered to pay $1.1 million. Other defendants related to the scandal agreed to settle lawsuits for no less than $21.5 million.
The SNC-Lavalin corruption case
The scandal involved allegations of corruption, fraud, and bribery related to SNC-Lavalin’s business dealings in Libya. The massive Quebec-based construction and engineering firm was rebranded as AtkinsRéalis this year. It was revealed that the company had allegedly paid bribes to secure contracts in Libya, violating Canadian law. In 2015, the RCMP charged SNC-Lavalin with corruption and fraud in connection with over $48 million in payments to Libyan officials between 2001 and 2011. The Trudeau government faced criticism for attempting to pass legislation that would allow SNC-Lavalin to avoid a criminal trial and instead enter into a deferred prosecution agreement (DPA). The scandal resulted in multiple high-level goverment resignations. The company was found guilty of fraud and corruption after a criminal trial in 2019.
The Charbonneau Commission
The Charbonneau Commission was a Quebec public inquiry established in 2011 to investigate the province’s construction industry after growing concerns of corruption, bid rigging and collusion. The commission found that organized crime groups had infiltrated the construction sector, exerting influence and seeking to profit from corrupt practices. It also highlighted connections between corrupt practices and political financing, suggesting that construction companies made contributions to political parties in exchange for favorable treatment in the awarding of contracts. The commission called for enhanced transparency in public contract awarding, improved regulation and oversight, and establishing measures to prevent corruption and collusion. It’s hard to overstate the impact of the commission. The resulting crackdown was massive, resulting in many arrests and convictions of construction leaders as well as government officials.
Investors Group Field
Back in 2011, The NDP approved $160 million in loans to build a new stadium for the Winnipeg Blue Bombers. The resulting project has led to lawsuits, allegations of poor construction and millions of dollars in repairs that have taken years. The various parties have argued in court over who is responsible for water damage caused by insufficient drainage in the building, as well as inadequate insulation, widespread cracking in the concrete and dozens of other issues. Following the completion of the project one year later than expected, the province approved $35 million in loans for fixes.
The McGill University Health Centre
The McGill University Health Centre (MUHC) bribery scandal revolved around the construction of the MUHC, a large healthcare facility in Quebec. The project was estimated to cost over $1 billion and aimed to centralize several hospital facilities into a single state-of-the-art medical complex. SNC-Lavalin (now known as AtkinsRéalis) faced allegations of offering bribes to secure the contract. Arthur Porter, a Montreal doctor and the hospital’s CEO, received more than $22 million in consulting fees from the firm before awarding them the contract. He died of Cancer in a Panama prison while awaiting extradition back to Canada. In total, nine were charged.
Tony Accurso case
A Quebec judge called it one of the worst examples of municipal corruption to ever come before a Canadian court. The case centered on allegations of corruption and collusion in the awarding of public contracts. Construction mogul Tony Accurso was accused of being part of a network of businesspeople who engaged in fraudulent practices, including bid-rigging and bribery, to secure public contracts in the construction sector. The kickback and fraud scheme lasted between 1996 and 2010 and involved former Laval, Que. Mayor Gilles Vaillancourt, who eventually pleaded guilty to fraud-related charges and received a six-year sentence. In 2018, Tony Accurso was found guilty on several charges related to corruption and fraud. He was sentenced to four years in prison. Just this year, his appeal in the case was denied. This is just one of several major cases that stemmed from the Charbonneau Commission crackdown.
Ontario’s Greenbelt is a special zone that was created to protect farmland, communities, forests, wetlands and watersheds. It also preserves cultural heritage and supports recreation and tourism in Ontario’s Greater Golden Horseshoe. In an effort to address the province’s growing housing issues, officials decided to open up part of the Greenbelt to development. However, when the dust settled, the auditor general found that the deals were rushed, did not follow proper protocols, heavily favoured a small group of developers and did not consider environmental impacts. The scandal resulted in the resignation of several cabinet members, the deals being reversed and the launch of an investigation by the RCMP. Get a timeline of scandal here.