By John Stang and Wayne Barber
While it faces a potential 10-year ban on contracts with the Canadian government, SNC-Lavalin’s legal woes north of the border do not appear to automatically translate to similar troubles in the United States.
The Montreal-based engineering and construction multinational is the parent company to Department of Energy contractor Atkins and would be a key partner in a New Jersey company’s plans to buy and decommission at least three U.S. nuclear power plants.
While its situation has been much-discussed in the nuclear industry, and could be a complicating factor in securing new business, no one is ready to say SNC-Lavalin will face legal restrictions on its ability to work in the United States.
In 2015, SNC-Lavalin was charged with fraud and violating Canada’s Corruption of Foreign Public Officials Act, for allegedly spending tens of millions of dollars to bribe top Libyan officials from 2001 to 2011 while seeking to secure business in the country. Canadian authorities also alleged the company defrauded Libyan entities to the tune of $140 million (CAD), according to Global News.
A conviction could lead to a penalty of a decade-long ban on entering contracts with the Canadian government. There have also been claims of political interference by the Justin Trudeau government to help SNC-Lavalin in its criminal case, leading to the reassignment and eventual resignation of Canada’s justice minister.
Legal experts say a blanket ban on Canadian government contracts would not lead to a corresponding prohibition by the U.S. government – with the caveat that individual federal agencies could take SNC-Lavalin’s problems into account when issuing their own contracts.
“Unlike in Canada, so-called debarment or suspension for U.S. government contracts is discretionary and discretionary as to the specific U.S. government agency doing the contracting,” Mike Koehler, an associate law professor at Southern Illinois University who focuses on foreign corruption issues, said by email this week. “In other words, the U.S. government (as a whole) does not make a debarment decision, but rather debarment decisions are left to the SPECIFIC agency doing the contracting.”
Even companies found to have breached the U.S. Foreign Corrupt Practices Act rarely are prohibited from doing work with U.S. federal agencies, Koehler wrote. “Thus, I would not expect SNC-Lavalin’s legal situation in Canada, to have any meaningful impact on its ability to do business in the U.S.”
A Washington, D.C., attorney who also specializes in foreign and nuclear issues echoed Koehler’s comments, saying SNC-Lavalin’s status is unlikely to become an issue in American commercial nuclear business matters. That attorney spoke under the condition that his name not be used.
SNC-Lavalin employs about 9,000 people in Canada. In 2017, its work in that nation produced toughly one-third of its $9.3 billion in revenue, according to press accounts. It employs another 10,000 in the United Kingdom and roughly 33,000 elsewhere.
The company completed its purchase of British engineering and project management provider WS Atkins in July 2017. Atkins has a role in cleanup of several Cold War nuclear sites overseen by the Department of Energy’s Office of Environmental Management.
“It does not stop the trains or anything like that,” but it causes some stigma for Atkins in the short term, according to a source who has worked for the Energy Department. If DOE is weighing two otherwise equal contract proposals and one of them involves a “company that’s under investigation,” then bet on the other team, the source said Thursday.
At the same time, federal rules on foreign ownership typically require some degree of separation between an American subsidiary doing government work and an international parent, the source said. Also, Atkins is not usually a prime contractor for DOE cleanup projects and operates “below the radar to some extent,” he added. “This too shall pass.”
A source with a company involved in nuclear remediation expects SNC-Lavalin will indeed be prosecuted in Canada, although he would not venture a guess Wednesday on whether the company would get temporarily blocked from government contracts in its home nation. Here in the United States, “DOE is watching these things,” he said. There is a significant amount of interaction between the U.S. Energy Department and the Canadian government on nuclear matters.
The Canadian investigation also weighs on the minds of DOE contractors considering teaming with Atkins on a bid proposal. “When you are going after work together it’s a concern,” the industry source said. Large companies often have some type of ethics policy that could affect who they work with. The Energy Department typically does require companies to disclose any recent government contracts and their status, which might include Canada, the source said.
Atkins is a minority partner in AECOM-led Washington River Protection Solutions, which manages radioactive tank waste at the Hanford Site in Washington state. The contracting team began work on the $6.8 billion agreement in October 2008. The WRPS team is currently operating under a one-year extension that runs through September of this year.
Atkins also leads Mid-America Conversion Services, which has a $319 million uranium hexafluoride conversion contract at the Portsmouth Site in Ohio and the Paducah Site in Kentucky. The contract began in February 2017 and runs through January 2022.
The SNC-Lavalin subsidiary is also listed as a “critical subcontractor” to AECOM-led Savannah River Remediation, which has managed liquid waste at the Savannah River Site in South Carolina since July 2009. It has been operating under a series of extensions to the original eight-year, $5 billion contract that expired in June 2017.
Meanwhile, SNC-Lavalin itself has formed a joint venture with New Jersey-based Holtec International. Their partnership, Comprehensive Decommissioning International, would carry out actual decommissioning of three retired or soon-to-close nuclear power plants Holtec plans to buy: Oyster Creek in New Jersey, Pilgrim in Massachusetts, and Palisades in Michigan.
The potential value of this work is tightly held. Upon taking ownership of a power plant, Holtec would also own the trust fund that pays for decommissioning. The fund for Pilgrim exceeds $1 billion. Some portion of that would trickle down to SNC-Lavalin.
The Massachusetts Attorney General’s Office cited SNC-Lavalin’s legal troubles in its petition last month to intervene in the Nuclear Regulatory Commission review of the license transfer for Pilgrim, which would allow owner Entergy to sell the plant to Holtec. An official at the Attorney General’s Office acknowledged that SNC-Lavalin’s situation “is on our radar,” but declined to elaborate.
The U.S. Department of Justice and New Jersey Attorney General’s Office declined to comment. The NRC said SNC-Lavalin’s participation would not be an immediate deal breaker for regulatory approval for Holtec’s plans.
“My understanding is that as long as the Holtec-SNC Lavalin partnership meets our technical and financial requirements, any pending legal issues in Canada would not affect our review,” agency spokesman David McIntyre said this week.
SNC-Lavalin, Comprehensive Decommissioning International, and Holtec did not respond by deadline Friday to requests for comment.
