SNC-LAVALIN

A JOURNEY TO BEST-IN CLASS

ETHICS AND COMPLIANCE

STEFAN HOFFMANN-KUHNT

HEAD OF COMPLIANCE PROGRAM,

SNC-LAVALIN GROUP INC., MONTREAL, CANADA

Engineering & Construction Risk InstituteMontreal, June 4th, 2014

THE POWER OF MEDIASNC-LAVALIN UNDER PUBLIC SCRUTINY

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MYTHS AND FACTS ABOUT

CORRUPTION

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That„s what you hear:

"Everybody does it and in

some countries it is simply

part of the culture."

"I did it in the interest of

the company, I did not put

any money in my pocket."

"The honest companies are

being the stupid ones.

Compliance is a

competitive disadvantage."

That‟s what you see:

There does not exist any

country where corruption

would be permitted.

The truth is: I want to be

promoted by my company

and to get my bonus.

Many examples prove:

Corruption is not a

foundation for conducting

sustainable and successful

business.

CONSEQUENCES OF CORRUPTION

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Source: PricewaterhouseCoopers, Wirtschaftskriminalität und Unternehmenskultur 2013 (White-collar crime and business culture 2013)

EXECUTIVES' ESTIMATIONS OF CORRUPTION COSTS

Increased enforcement by authorities

Demotivation of employees

Loss of market capitalization

Increase of PR expenditures

Damage to governmental relations

Reputational damage

Increase of litigation expenditures

Management attention

Damage to customer relations

REPUTATIONAL DAMAGE

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"It takes 20 years to build

a reputation and five

minutes to ruin it!”

Warren Buffett, CEO

Berkshire Hathaway Inc.

over 100

OUR COMMITMENT TO ETHICS

EXCELLENCE

Our ambition is to become the global benchmark against which

other companies measure themselves. We strive to set a higher

standard for:

(1) How ethics is woven into the fabric of the way we do

business, and

(2) Transparency in the way we report to our stakeholders.

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SNC-Lavalin is committed

to doing business

with highest integrity

ETHICS & COMPLIANCE PROGRAM:

4 BUILDING BLOCKS

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PROGRAM IMPLEMENTATION AND VALIDATION

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PREVENT

• Tone from the Top

• Policies and Procedures

• Compliance Risk

Management

• Training & Communication

• Support and Advice

• Business Partner Due

Diligence

• Personnel Processes

• Collective Action

DETECT

• Effective Controls

• Resources & Skills for

Global Investigations

• Regular E&C Audits

• Compliance Reviews

RESPOND

• Disciplinary Sanctions

• Unbiased Consequences

• Remediation of

Systematic Deficiencies

• Prevention of Recurrence

MANAGEMENT RESPONSIBILITY

COMPLIANCE ORGANIZATION

INDEPENDENT COMPLIANCE MONITOR / EXTERNAL VALIDATION

PREVENTION

Tone from the Top

Policies and Procedures

Education and Training tailored to

Compliance risks

Clear Communications

Compliance Organization as

Trusted Advisors

Business Partner Due Diligence

Integration in Personnel Processes

Collective Action against Corruption

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General focus on prevention of wrongdoing through:

TONE FROM THE TOP

• Clear and consistent messages from top leadership team

• Engage middle management in compliance communication

• Include Compliance messages in regular management meetings

and events

• Management leads by word and deed

• Encourage open communications

• Reiterate that everyone is responsible for Ethics & Compliance

• Recognize exemplary Ethics & Compliance behavior

• Integrate Ethics & Compliance related performance criteria in

compensation system

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All managers have to deliver the Tone from the Top:

POLICIES AND PROCEDURES

Business Partners

Gift & Hospitality

Facilitation Payments

Political Contribution

Sponsorships & Donations

Reporting of Misconduct

Investigation Protocol

Amnesty Program

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Maintain a Framework of Good Governance

EDUCATION AND TRAINING

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CREATE APPROPRIATE AWARENESS WITH STAFF AT ALL LEVELS

TARGET# STATUS

In-Person Training

• General Awareness

• Anti-Corruption

• Business Partner

General Management

Procurement, Bus.Dev.

Project Management,

Government Relations

3081

employees

globally

• 2256 / 3081 trained

• 152 / 191 sessions

• 45 various office &

project sites

ExCom / OpCom

Board of Directors

18

11

Q2

April 14, 2014

Code of Ethics

Certification

All staff / consultants 30500 99.96% certified

Tone at the top

TRAINING TARGET GROUP

COMPLIANCE IN-PERSON TRAINING

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• In person Anti-Corruption and Business Partner Policy Training provided to approx. 3,000+ employees in

„sensitive roles‟: All Executive, Senior and General Management Functions as well as all staff in

Business Development, Procurement, Project and General Management and Government Relations

• 70+ Cities / 4 languages

• Provided by SNC-Lavalin and local Anti-Corruption specialists and to be completed by Q2/2014

2022

154

29

40

33

15

67

26

174

36

25

54

106

103

175

358

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8

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COMPLIANCE COMMUNICATION

Internal Communication

• Frequent and consistent placement

of Compliance Messages

• Use of all possible communication

channels

External Stakeholder Management

• Clients

• Business Partners and Suppliers

• Governmental Agencies

• Industry Associations

• Media

Clear and Consistent Messages to All Stakeholders:

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NEW ETHICS & COMPLIANCE

INFOZONE PAGE Useful Information on

Compliance

Frequently asked Questions

Compliance Process

Descriptions

Contact Information for

Compliance

Available in French and

English

Will be frequently updated

ANTI-CORRUPTION MANUAL

A new resource intended to complement the Code of Ethics, setting

out mandatory principles in 7 key corruption risk areas:

1. Gifts and Hospitality

2. Prohibition of Facilitation Payments

3. Corporate Charitable Donations

4. Sponsorships

5. Business Partners

6. Recordkeeping

7. Mergers and Acquisitions, Joint Ventures,

and Minority Stakes

The Manual provides information on consultation and approval

protocols for a range of common business activities: Compliance

Officers are prominently featured as a key point of contact.

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17

Board of DirectorsPresident and Chief

Executive Officer

Chief Compliance

Officer

Compliance Organization

Infrastructure Concessions &

Investments Compliance

Officer

Robert G. Card

David G. Wilkins

Compliance

Program

Monitoring &

Reporting

Compliance

Training and

Consultation

Compliance

Coordination

Compliance

Investigations

Project Office

Corporate

Functions

Compliance

Officer

General

Construction

Compliance

Officer

Transportation

Construction

Compliance

Officer

Infrastructure

Group

Compliance

Officer

Operations &

Maintenance

Compliance

Officer

Infrastructure

Engineering

Compliance

Officer

Power Group

Compliance

Officer

Res., Env. &

Water Group

Compliance

Officer

Mining &

Metallurgy

Compliance

Officer

Oil & Gas

Compliance

Officer

Africa, Asia &

Middle-East

Compliance

Officer

Latin America

Compliance

Officer

Europe

Compliance

Officer

Environment &

Water

Compliance

Officer

As of June 1, 2014

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• Full transparency and accountability for 3rd Party Risk

• Risk level of the proposed relationship between SNCL and the

Business Partner will determine the depth of necessary

Compliance Due Diligence (CDD) and the required level of

authority for management approval

• Responsibility for CDD rests with the Business Unit that wants

to engage the Business Partner

• Overall process is supported by a user-friendly IT-solution

Business Partner Due Diligence

BasicRed Flag

Evaluation

Integrity Check

Lower Risk

Medium Risk

Higher Risk

Risk Assessment Due Diligence

Higher Risk

Medium Risk

Lower Risk

Approval

BU LoA

BU

EVP

BU

CO

Chief

CO

BU

EVP BU CO

© SNC-Lavalin

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2014 GOAL STRUCTUREFinancial Objectives

(Overall Weight: 2/3)

Non-Financial Objectives(Overall Weight: 1/3)

Objective 1

Ethics and Compliance (25%)*

15% - Company Program Implementation: continue to implement an

effective and sustainable ethics and compliance program

10% - Program execution: effectively execute and operationalize the

Ethics and Compliance Program within area of responsibility

HSSE (10%)

• Goal 1

• Goal 2

• …

Objective 2

Strategy, Organization and People (65%)

• Goal 1

• Goal 2

• …

COLLECTIVE ACTION AGAINST

CORRUPTION

Partnering Against Corruption Initiative (PACI)

United Nations Global Compact

Transparency International

International Anti-Corruption Academy (IACA)

Construction Sector Transparency Initiative (CoST)

Ordre des Ingénieurs du Québec

Endow Faculty Chair on Global Business Ethics at Canadian

University

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Several initiatives being explored to promote fair and

equal market conditions:

DETECT AND MONITOR

• Effective controls

• Resources / skills for global deployment

of compliance investigations

• Regular Ethics & Compliance audits

• Regular compliance reviews

• Periodic and “spot” risk assessments

• External review and assessment of

program

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Identify misconduct and compliance gaps through:

COMPLIANCE CONTROL FRAMEWORK

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'Tone from the Top'

Compliance

Organization

Case

Monitoring Effectiveness10

1

3

2

Tracking

Training &

Program

Commun-

ication

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Implementation of Policies and Procedures

3rd parties / Business Partners

Tender & Contracts

Gifts & Hospitality

Finance & Accounting

Integration with Personnel Processes9

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7

6

5

Independent and continuous testing of the effectiveness

of all modules of the SNC-Lavalin Compliance Program

CHANNELS FOR WHISTLEBLOWING

AND CONSULTATION

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TELL US ASK US

Compliance

Consultation Centre

(CCC)

Requesting advice

and support on

compliance in

business activities

By email

Channel

Purpose

How to

contact

?!

Duty to Report

Ethics and

Compliance

Hotline

(EthicsPoint)

Amnesty

Program

Reporting of Allegations and

Complaints

Reporting of own

involvement in

wrong doing

Any Channel

By Phone

+

Online

Any Channel

COMPLIANCE INVESTIGATION

“Duty-to-report”, EthicsPoint hotline and amnesty program are

important enablers in order to enforce compliant behavior and to

sanction misconduct

Highly experienced Investigation Team set up to investigate

Compliance violations, separate from Internal Audit function

Clear Mandate for Compliance Investigations

Investigation Reports are issued to Ethics & Compliance

Committee, who will approve disciplinary sanctions and further

preventive measures

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Expeditious investigation of potential misconduct

RESPOND

• Swift and fair disciplinary

sanctions

• Unbiased consequences

regardless of position /

performance in the organization

• Remediation of systematic

deficiencies and harm to

immediately stem any further

consequences

• Prevention of recurrence

• No Retaliation

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Measures to respond to improper conduct:

CONTINUOUSLY IMPROVE

• Encourage open discussion and

feedback

• Debrief on all incidents

• Also identify “near misses”

• Continuously look for

improvement opportunities

• Re-align policies and processes

• Communicate lessons learned

• Walk the talk and recognize role

model behavior

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INDEPENDENT COMPLIANCE MONITOR

• Engaged by SNC-Lavalin, the Monitor reports to the World Bank.

• Reviews the implementation and effectiveness of the SNC-Lavalin

Ethics & Compliance Program, measuring against the Integrity

Compliance Guidelines of the WBG

• Provides recommendations for further improvements of the Ethics

& Compliance Program

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Providing External Validation of Compliance Program:

INDIVIDUAL RESPONSIBILITY IS

KEY!

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Questions to

guide you

towards

compliant

and

responsible

behavior

Is it the right thing for SNC-

Lavalin?

Is it consistent with my core

values and SNC-Lavalin’s?

Is it legal? Is it ethical?

Is it something I am willing to

be held accountable for?

If the answer

to those

questions is

“Yes”,

Don‟t worry,

be confident!

…IT’S ALL ABOUT PEOPLE –

EVERYWHERE!

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"In looking for people to hire, you

look for three qualities: integrity,

intelligence, and energy. And if you

don't have the first, the other two

will kill you."

Warren Buffet

CEO of Berkshire Hathaway Inc.

WE CARE embodies SNC-Lavalin’s key corporate values and

beliefs. It is the cornerstone of everything we do as a company.

Health and safety, employees, the environment, communities

and quality: these values all influence the decisions we make

every day. And importantly, they guide us in how we serve our

clients and therefore affect how we are perceived by our external

partners. WE CARE is integral to the way we perform on a daily

basis. It is both a responsibility and a source of satisfaction and

pride by providing such important standards to all we do.

WE CARE about the health and safety of our employees, of those who work under our care, and

of the people our projects serve.

WE CARE about our employees, their personal growth, career development and general well-

being.

WE CARE about the communities where we live and work and their sustainable development, and we commit to

fulfilling our responsibilities as a global citizen.

WE CARE about the environment and about conducting our business in an environmentally responsible manner.

WE CARE about the quality of our work.

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