Iconic Australian engineering company, SMEC, has had five of its subsidiaries banned by the World Bank after the discovery of “inappropriate payments” linked to projects in Sri Lanka and Bangladesh.
The World Bank action is a bitter blow for the company which started out as the Snowy Mountains Engineering Corporation.
The scandal adds SMEC to the list of well-known Australian companies to have been mired in foreign bribery allegations including BHP Billiton, Tabcorp, Tenix and CIMIC, formerly known as Leighton Holdings.
A long-running investigation by the World Bank implicated SMEC International Pty Ltd and four other subsidiaries based in India, Bangladesh and Sri Lanka in a scandal involving improper payments connected to World Bank-funded projects.
The investigation also found SMEC subsidiaries had made mis-representations to the World Bank when bidding for contracts for projects in Sri Lanka and Bangladesh.
Under a negotiated settlement, the SMEC units will be barred from participating in World Bank projects for between six and 30 months. The SMEC units will also be denied work with the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the African Development Bank.
SMEC has been Australia’s biggest beneficiary of World Bank contracts, winning more than $250 million worth of work over the past 10 years.
Fairfax Media last year revealed explosive details of SMEC’s overseas staff’s alleged bribery of officials in Sri Lanka to secure a $2.3 million aid-funded sewerage project in 2003 and a $2.2 million power plant project in Bangladesh in 2007. The Bangladesh project was in partnership with a Canadian company.
Company emails reveal Sri Lankan President Maithripala Sirisena and his adviser allegedly sought a political “donation” to be paid by SMEC when Mr Sirisena was a cabinet minister.
The emails show a plan to siphon off money from a World Bank-funded dam project in 2009 which was to involve Mr Sirisena awarding the $1.82 million contract to SMEC.
A damaging series of correspondence involved a SMEC Sri Lanka manager writing to his Australian colleagues to tell them that he wanted to “inform the minister/co-ordinating secretary” of the size of an alleged kickback to be paid. The manager also wrote that he needed to “prioritise” certain payments to unnamed parties “since the signing of the contract would depend” on it.
In a statement to Fairfax Media last year, Mr Sirisena said he had “no knowledge of the incident” and requested further information to “ascertain the involvement of any of his office staff”.
The President said he would co-operate with any investigation in Australia and ask his local authorities to do their own inquiry.
Foreign bribery has been a criminal offence in Australia since 1999. But the Australian Federal Police has found many cases difficult to investigate, with overseas officials and governments often unwilling to co-operate.
The AFP continues to investigate SMEC over its Sri Lankan and Bangladesh contracts.
This week, Sydney’s Elomar brothers and an associate were the first Australian businessmen to be jailed for foreign bribery offences.
NSW Supreme Court Justice Christine Adamson jailed Mamdouh Elomar, 63, his brother Ibrahim Elomar, 62 and John Jousif, 48, for four years with a non-parole period of two years.
Intercepted phone calls and emails captured the men in a plot to bribe an Iraqi minister with more than $1 million in return for their construction firm winning major contracts.
Mamdouh Elomar’s late son, ISIS fighter Mohamed Elomar, received global notoriety in 2014 after photographs emerged of him holding the severed heads of Syrian soldiers.