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Jul 9, 2019

Bombardier to appeal Brazil ruling over alleged bidding infractions

Bombardier

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MONTREAL -- Bombardier Inc. (BBDb.TO) says it intends to appeal a Brazilian administrative tribunal ruling that concluded the railway car manufacturer and 10 other companies manipulated contract bids.

Brazil's economic defence administrative council imposed fines of around $175 million against a "cartel" it found had manipulated at least 26 tenders between 1999 and 2013 in four Brazilian states.

"Bombardier strongly disagrees with this judgment, which is based on a partial reading of 1/8the council's 3/8 evidence in an administrative proceeding characterized by flagrant violations of constitutional principles, including the reasonable application of the law," the company said in a statement.

France's Alstom received the largest penalty of $43.8 million and lost the right to bid on rail contracts in the South American country for five years.

Bombardier Transportation in Brazil was fined $7.9 million. It could also be prevented from receiving public subsidies for five years, but won't be barred from obtaining public contracts.

The case involving Bombardier concerned a Sao Paulo metro line and train car maintenance.

Despite being sanctioned abroad, the Quebec railway car manufacturer shouldn't lose the right to bid on public contracts in Quebec and in the rest of Canada since it is not a criminal conviction, said Benjamin Lehaire, a professor of business law at TELUQ University in Quebec City.

"It will have no effect in Canada and Quebec," he said Tuesday, referring to the administrative and not criminal nature of the decision. "Of course, this can alert the authorities, who may, after learning about these practices, investigate the actions in Canada of these companies."

Under the Government of Canada's Integrity Regime, a supplier may automatically lose the right to bid on public contracts following a criminal conviction.

However, there are certain provisions that allow the federal government to determine whether or not a business or individual should be blacklisted if offences committed abroad are considered sufficiently serious.

"I have trouble imagining that this could apply to Bombardier," Mark Warner, a Canada-US trade lawyer with Maaw Law in Toronto, said in a phone interview.

Siemens was also targeted, but the German giant was not charged as it signed a confidential agreement with Brazilian authorities.

Public Services and Procurement Canada and the Quebec Public Procurement Authority didn't respond to questions about the potential repercussions from the case in Brazil.

In Brazil, Bombardier remains under the scrutiny of the World Bank as part of an investigation into a contract of about $340 million awarded to a consortium led by Bombardier in 2013.