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Mar 5, 2019

SNC sues former CEO Duhaime for millions over hospital bribery scandal

Corporate governance issues at SNC in focus as scandal grows

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MONTREAL -- SNC-Lavalin Group Inc. (SNC.TO) is suing its former CEO in connection with a bribery scandal around the construction of a $1.3-billion Montreal hospital.

The beleaguered engineering and construction giant said in court documents that Pierre Duhaime hurt the company when he helped a public servant commit a breach of trust tied to $22.5-million in bribes that helped rig the McGill University Health Centre (MUHC) project in favour of SNC-Lavalin.

Duhaime, who led the Montreal-based company between 2009 and 2012, is serving 20 months of house arrest after pleading guilty to aiding the hospital's former senior manager, Yanai Elbaz, in the breach of trust.

The documents, filed in Quebec Superior Court on Friday, also say Duhaime acted "in bad faith" when he signed a retirement agreement in March 2012 without disclosing his "criminal wrongdoing."

The agreement saw the company cover Duhaime's $1.17 million in legal costs during his trial and dole out more than $1 million so far as part of a larger retirement package, all money that SNC-Lavalin wants back.

"Had SNC-Lavalin known of such criminal wrongdoing, it would have terminated the defendant Duhaime for cause and would never have entered into the March 25 agreement," the plaintiffs state.

The company is demanding Duhaime and other defendants -- whose lawsuit he's been tacked on to -- repay the $22.5 million in bribes and $17.5 million in punitive damages and compensation for reputational harm.

"The embezzlement and the faults committed by defendants ... resulted in plaintiffs being linked in the public eye with individuals who have been accused or convicted of criminal offences, thereby tarnishing the excellent reputation enjoyed by the plaintiffs in Quebec and throughout the world and causing plaintiffs to incur significant costs and expenses in order to restore their good names," SNC-Lavalin and three subsidiaries say in the lawsuit.

The lawsuit is unrelated to the corruption charges linked to SNC-Lavalin's dealings in Libya that have thrown the company into the eye of a political firestorm in Ottawa.

Elbaz pleaded guilty in December to accepting a bribe and was sentenced to 39 months in prison.

Former SNC-Lavalin executive Riadh Ben Aissa pleaded guilty to a charge of using forged documents last July and was sentenced to 51 months in prison.