Ottawa softens anti-corruption rules for companies seeking government work

MONTREAL — Ottawa has softened its anti-corruption rules, reducing the penalties for companies that are seeking government work after being convicted of bribery, money laundering and other offences.

Under the new procurement rules announced Friday, companies can still be barred from government contracts for 10 years if they have been convicted of such offences in the past three years.

But that ban can be cut in half if the company co-operates with authorities and takes remedial action.

Also, suppliers will no longer be automatically ineligible for government work because of the conduct of affiliates unless it can be demonstrated that the supplier had control over the convicted affiliate.

Canada's business lobby has been urging Ottawa to make changes to procurement rules it labelled as "draconian."

Public Works Canada says the new rules are fair, ensure due process and better align with international best practices.

SNC-Lavalin chief executive Robert Card has warned of the negative consequences for his company if the federal protocols used in awarding contracts weren't changed in light of the company's legal troubles. The company has been beefing up its compliance rules since improprieties surfaced three years ago.

The RCMP charged SNC-Lavalin (TSX:SNC) and two of its subsidiaries with one count of fraud and one of corruption last February over its dealings in Libya.

The Montreal-based company has said it will plead not guilty to the charges but is willing to pay a fine for the alleged transgressions of former employees. The case will be back in court in October.

While the legal case remains outstanding, SNC-Lavalin has been part of various consortia that have won or been selected as preferred bidders for several federal contracts.

Analyst Maxim Sytchev of Dundee Capital Markets says SNC-Lavalin isn't "entirely out of the legal woods," but the shorter debarment times and reinstatement opportunities is positive for the company.