MONTREAL – Embattled engineering giant SNC-Lavalin faced the second RCMP search of its premises in seven months Friday as police executed search warrants related to millions of dollars of mysterious payments.
The global construction and engineering company said the police action at its Montreal headquarters relates to an investigation of some former employees.
“This is subsequent to our previous investigations and we were completely prepared and are co-operating fully with the authorities,” said spokeswoman Leslie Quinton.
She said the warrants are targeted at certain individuals whom she wouldn’t identify.
The latest raid follows an investigation into bidding on projects in Bangladesh that prompted RCMP searches of SNC’s Toronto-area offices last September.
Two uniformed officers patrolled the lobby of SNC’s downtown high-rise. Sgt. Marc Menard declined to provide any details about what police were searching for.
SNC-Lavalin said last month that it planned to inform police and other authorities about the results of an internal investigation into US$56 million of payments that resulted in the departure of its CEO and two other senior executives.
Chief executive Pierre Duhaime stepped aside after a probe revealed he signed off on payments to undisclosed agents on two large projects, breaching the company’s code of ethics.
SNC-Lavalin (TSX:SNC) has refused to indicate the whereabouts of the projects involved, or rule out if they included construction projects in Canada.
However, the company has said that it didn’t believe the payments in question were related to its operations in Libya. SNC was one of the major Canadian companies doing business in the North African country prior to the fall of Moammar Gadhafi last year.
Duhaime, 57, is slated to receive nearly $5 million as a golden handshake severance package after he was relieved of his duties.
He will remain an SNC employee until June 27 but will not have any responsibilities or perform any policy-making decisions, the Montreal-based company said in a regulatory filing ahead of its May annual meeting.
SNC-Lavalin has said Duhaime co-operated with its internal investigation, but he couldn’t provide details of the payments. Investigators believe those details are known by two former senior employees, including one who has since left the country.
Executive vice-president of construction, Riadh Ben Aissa and vice-president of finance Stephane Roy, parted ways with the company after the board said their conduct had recently been questioned. Their departure coincided with the February launch of a board investigation into $35 million in questionable payments.
The company said Aissa — who did not co-operate with the investigation — authorized the signing of agreements for the projects, which were improperly documented.
It said Aissa “is believed to have significant knowledge about most of the investigated transactions, but has not been met despite a request to his counsel.” He is believed to have left Canada, possibly for Tunisia.
SNC added that Roy may also have knowledge, but he has not been interviewed since prior to his dismissal in February.
The company’s shares closed down more than four per cent at $38.40 Friday on the Toronto Stock Exchange.
Maxim Sytchev of Alta Corp. Capital said investors were reading more into the RCMP involvement than is warranted.
“It’s a non-event because there was an anticipation that there will be a followup procedure, whether it’s going to be from the RCMP or another government agency,” he said in an interview.
“It’s not as if there was a discovery of another $50 million that was paid God knows where.”
While there is no certainty that all the problems have been identified, Sytchev said the company’s fundamentals are sound, presenting investors with a good buying opportunity.
“This is a lot of headline risk because the company’s name is being dragged through the mud right now, that’s just kind of the reality, but we’re standing on our call.”
Earlier this month, a class-action lawsuit was filed on behalf of shareholders who acquired its securities between March 2009 and February 2012.
The suit is seeking $250 million in damages from the company in relation to the millions in undocumented payments.
The World Bank has also temporarily suspended its Bangladesh subsidiary from bidding on new projects while it completes an investigation that prompted the RCMP raids in Toronto.
The RCMP has said it conducted searches at several locations near the city to gather evidence for an ongoing investigation involving employees at the company.
The World Bank signed a deal last April to lend $1.2 billion to Bangladesh to build the bridge over the Padma river, but it said the money won’t be doled out until the investigation has been completed.
SNC-Lavalin has offices across Canada and in more than 40 other countries around the world, and is currently working in some 100 countries.