Canadian firms operating abroad should obey the law, Trudeau says

Prime Minister Justin Trudeau said Canadian companies

MONTREAL — Prime Minister Justin Trudeau said Canadian companies operating abroad are expected to obey the law after a Bombardier employee in the Swedish offices of the plane and train maker was detained Friday in pretrial custody on suspicion of aggravated bribery.

Evgeny Pavlov, a Russian national living in Stockholm, was one of several Bombardier employees “suspected to have been colluding” with Azerbaijan railway authorities “in order to adapt a contract” to fit Bombardier, Swedish prosecutor Thomas Forsberg said.

Forsberg said Pavlov worked with Bombardier Transportation Sweden AB. On LinkedIn, Pavlov described himself as “Head of sales, Marketing and Country co-ordinator for the north region.”

Pavlov was ordered held in pretrial custody for two weeks to prevent him from fleeing or tampering with evidence. Two others were briefly detained during the week but were released, Forsberg told The Associated Press. Both remain suspects while the investigation continues. Formal charges have not yet been made.

Trudeau was asked about the legal controversy facing Bombardier, a company that the federal government has heavily invested in.

“The Canadian government expects Canadian companies and Canadians working abroad to uphold the highest standards of ethical and legal behaviour,” said Trudeau, who was attending a global oil conference in Houston.

He said he didn’t believe the case has any bearing on his government’s decision to offer the company’s aeronautics division a $372.5-million loan last month to support its CSeries and Global 7000 jet programs.

“At this point I can’t predict that it will have any impact,” he said. “I think that it’s very clear that this was an entirely separate issue.”

Pavlov’s lawyer, Cristina Berger, said her client denies any wrongdoing and it will be up to the Stockholm District Court to decide March 24 whether to remand him in custody.

Bombardier Transportation confirmed that employees working in its office in Sweden have been questioned by police and it said it is co-operating with Swedish prosecutors. But it’s “premature” to comment on the outcome of the investigation or court proceedings, the company added.

“As always, we are committed to operating in full compliance with all legal rules and requirements and our own high ethical standards,” Claas Belling, a spokesperson for Bombardier Transportation, said in an email.

Forsberg said emails seized in October 2016 during a search of Bombardier offices in Sweden were considered evidence in the case. He said the suspicion was that Azerbaijani officials co-operated with Montreal-based Bombardier (TSX:BBD.B) to “receive rewards for having favoured the Bombardier contract.”

“Despite the fact that Bombardier was in fifth place in terms of price, it won the contract in 2013 and competitors with better prices were disqualified by the railway authority in Azerbaijan,” Forsberg said.

In 2013, Bombardier was part of a consortium awarded a $288-million contract to supply signalling equipment for a 503-kilometre track along a corridor connecting Asia and Europe to Azerbaijan Railways. Bombardier then said it was its “first major signalling contract in Azerbaijan.”

Forsberg said Azerbaijani companies made $56 million in earnings from the contract.

Karl Moore, professor at Desautels Faculty of Management at McGill University, said he doesn’t think Pavlov’s arrest will affect Bombardier’s ability to win government contracts in Canada. The Quebec and federal governments have placed restrictions on companies whose directors have been convicted of violating the Canadian Criminal Code.

“That’s a very small possibility at this point so I don’t think it’s a big worry,” said Moore on the company’s future ability to win government contracts. “But we’ll see how things unfold.”

Michel Nadeau, executive director of the Institute for Governance of Private and Public Organizations, said he too doesn’t think the arrest will affect the company’s relationship with governments in Canada.

“I would say it’s part of the daily life of big companies that do business with governments, to be, eventually now and then, accused of corruption,” he said.

Nadeau used to be president of the investment arm of Quebec’s pension fund, which in 2015 bought a 30 per cent stake in the holding company of Bombardier Transportation — the company’s rail division, headquartered in Berlin.

— With files from Julien Arsenault in Montreal and The Associated Press

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