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The secrecy that accompanies privatization schemes also makes it a lot harder to figure out when there are serious problems.
Ottawa (28 Nov 2018) — There has been another guilty plea in the bribery case arising from the McGill University Health Centre (MUHC) P3 privatization scheme. The charges related to allegations that SNC-Lavalin bribed senior staff at the MUHC so the consortium they led could get the contract to build a P3 hospital.
Earlier this week, the former assistant director general of planning and real estate management for the MUHC pleaded guilty to receiving a bribe, breach of trust, conspiring to launder money and transporting or transferring the proceeds of crime. This is the third guilty plea in the case.
Investigation found $22.5 million in bribes paid for P3 privatization scheme contract
The police investigation concluded that SNC-Lavalin executives paid $22.5 million in bribes to ensure that the consortium led by SNC-Lavalin got the contract for the MUHC P3 privatization scheme. The money was split between Yanaï Elbaz, who pleaded guilty this week, and Arthur Porter, the former hospital CEO. Arthur Porter died be—fore he could be brought to trial, but his wife pleaded guilty to money laundering.
Riadh Ben Aissa, a former SNC-Lavalin vice-president of construction, has already pleaded guilty to using a forged document. In January 2019, Pierre Duhaime, the former CEO of SNC-Lavalin, goes to trial.
Secrecy surrounding privatization makes it hard to detect serious problems
For the privatization industry, secrecy is essential. Without the secrecy surrounding privatization schemes, it would be easy for the public to see the impact of privatization on costs and service levels.
When public services are privatized, information about costs and how services are provided gets hidden from the public. Even when the public is able to obtain contracts through freedom of information requests, pages with key details are blank or blacked out.
The secrecy that accompanies privatization schemes also makes it a lot harder to figure out when there are serious problems. That’s why we’re seeing problems like the bribery scandal in the MUHC P3 privatization scheme and governments being unprepared when companies operating privatized services go bust.
Secrecy surrounds who controls companies registered in Canada used to launder money
Based on media coverage, the people receiving bribes were able to take advantage of Canada’s weak laws on registering companies to hide the money. According to the Montreal Gazette, the bribe was hidden through a series of transfers to shell companies.
This is not a surprise. Because corporate registries in Canada allow the identity of the real owners to be kept secret, it’s very easy for people to use companies registered in Canada for money laundering, financing terrorism or tax avoidance. Using companies registered in Canada to hide money is now well enough known that it has a name — snow washing.
A public registry showing who really controls companies is an effective way to deal with this problem. But, as we we noted earlier this month, the NDP is the only major party willing to support a public registry. Until we have a public registry, we are making it much harder than it needs to be to catch individuals involved in money laundering, tax dodging or financing terrorism.