P3 infrastructure criminal charges in Canada against a politically exposed person

By Christine Duhaime | June 29th, 2016

The RCMP has charged a former head of a Crown corporation, Michel Fournier, and his wife, Judith Fournier, both resident in Victoria, with money laundering in connection with alleged corruption from kickbacks they allegedly received tied to a $127 million contract to renovate the Jacques Cartier Bridge. Fournier had a secret bank account in Switzerland with millions of dollars in it and is a politically exposed person (“PEP“).

At the time he was banking in Switzerland, Fournier was a foreign PEP to Swiss banks and was subject to higher due diligence scrutiny and vetting of funds under international anti-money laundering laws.

Corruption occurs frequently enough in large infrastructure projects, including in Canada. The largest corruption and money laundering case in Canada involved infrastructure with the McGill University Hospital Centre, a public-private partnership arrangement (P3) in which another PEP, Arthur Porter, was paid a bribe for a contract. In February 2014, the late Minister of Finance said that infrastructure in Canada has”fallen prey to corruption.”

According to the OECD and FATF, P3 project are more susceptible to corruption is they have the following characteristics:

  • Lack of due diligence by financiers on, inter alia, financial crime including involvement of politically exposed persons, domestic and foreign.
  • Large projects with greater complexities or novel features.
  • Lack of transparency in the process.
  • Too much discretionary decision-making authority exercisable by several officials.
  • Unclear rules and regulations in respect of financial control and audits.
  • Lack of awareness of financial crimes.

The FATF has determined, with respect to PEPs, that there is a greater risk with persons involved in the following:

  • Energy, construction, gaming, mining and defense sectors;
  • Large infrastructure projects; and
  • Financing of government projects.

The Competition Bureau of Canada recently expressed concern in Canada over the potential financial crime risks with infrastructure projects because financial crime negatively impacts competition and creates an unfair playing field.

Fournier was politically exposed because he ran the Federal Bridge Corporation, a federal agency.

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