News reports announced that “Pierre Duhaime, former president of SNC-Lavalin, was arrested at his Montreal-area home Wednesday on charges of fraud, conspiracy to commit fraud and using forged documents.”
While one may be inclined to simply shake their head at this most recent example of the avarice and moral decline of yet another corporate executive, there is a much more interesting aspect to the story that many may overlook.
As reported on the iPolitics website, “Under the government’s integrity policy, companies can be blocked from bidding on government contracts if the company or one of its directors has been found guilty of offences such as fraud, bid-rigging, money-laundering, tax evasion, bribing a foreign official, drug dealing or being involved with organized crime.”
However the article continued, “Companies can escape the provisions of the federal government’s tough new integrity policy for procurement if an official under a cloud leaves the company before conviction.”
This raises a number of interesting questions.
To start, and thinking about the old saying about one bad apple spoiling the barrel, is it fair to punish (or in this case exclude) an entire organization from bidding on government contracts as a result of the acts of a select few or one?
The fact is that corruption in any form undermines the public sector procurement process, and of course cannot be tolerated. However, and in our efforts to root out malfeasance, are we pushing the pendulum too far in the opposite direction? Specifically, are we saying that anything SNC-Lavalin does as a company as whole is the fruit of the poisonous tree – the tree in this case being the actions of Duhaime?
My initial reaction is to suggest that the “out” associated with the prior to conviction departure of a wrongdoing executive represents a fair option. The question then becomes one of whether or not the company should benefit from a contract that was awarded under fraudulent conditions?
My answer would be no. While the company should not be excluded from bidding on new or different contracts, it should not be allowed to benefit from the award of a contract that was tied to illegal activities.
What are your thoughts?
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Procurement Insights 
John Brooks
April 15, 2013
Most international policies on this topic require conviction vs relying on charges…if convicted then company should be penalised…for both the crime and to provide warnings to others that may be so inclined
colincram
April 15, 2013
I agree with your view, Jon. Fraud will be taking place in a high proportion of organisations. Often it is small. However, there will be occasions when a senior person succombs to temptation. If a senior executive at say Microsoft or Apple or a supplier on whom the Canadian government depended was corrupt, I am sure some way would be found to avoid having to suspend the companies from bidding for future business. Requirements like this penalise less-essential suppliers, which often means the medium and small sized ones. In effect, they can be inadvertently discriminatory.