MONTREAL – The president and CEO of engineering giant SNC-Lavalin has welcomed Ottawa’s decision to review the protocol used to award public contracts in light of the company’s current legal troubles.
The RCMP charged SNC (TSX:SNC) and two of its subsidiaries with one count of fraud and one of corruption last February over its dealings in Libya.
Billions worth of public and private contracts are at risk if the engineering firm is found guilty, CEO Robert Card said Thursday after the company’s annual meeting.
One is the contract recently awarded to a consortium, which includes SNC, to construct a new bridge over the St. Lawrence River linking Montreal and its populous south shore.
“We applaud the government’s review of the public integrity framework but we would note that only deals with project work for the government of Canada,” Card said.
Currently, firms convicted of certain criminal offences are prohibited from receiving federal contracts for 10 years.
Card said SNC will plead not guilty to the charges, although it is willing to pay a fine to account for the alleged transgressions of former employees.
“We do not endorse the actions that these people took,” he said. “We want to achieve a solution which recognizes appropriate accountabilities but leaves us and our employees in a position to be protected and carry on.”
The Crown alleges that between 2001 and 2011, the company gave more than $47 million in bribes to one or more members of the Libyan government and also allegedly committed fraud of more than $129 million in the country.
Card said the Crown hasn’t finished presenting its evidence and that company lawyers believe the court process could last up to five years.
“We don’t intend for that to go on that long,” he noted. “We hope to get this done in advance.”
It is still unclear when Canada will announce changes to its procurement rules or what they will be.
A spokesman for Public Works Minister Diane Finley said the review began in March.
“Two independent third party experts in the field of procurement ethics have been retained to participate in the consultations,” Marcel Poulin said in an email. “Consultations are ongoing and all feedback will be taken into consideration before making a decision on a path forward.”
Card spoke after SNC announced it had $104.3 million of net income in the first quarter, a 10 per cent increase over the same period last year as it benefited from focusing on core business areas and a recent acquisition.
The profit amounted to 68 cents per common share, compared with $94.6 million or 62 cents per share in the first quarter of 2014.
SNC’s revenue increased to $2.26 billion, from $1.72 billion, despite a decline in revenue from its investments in infrastructure.
The company has been selling some of its non-core assets such as the AltaLink power grid in Alberta in order to focus on its main business of engineering and construction services.
However, that was more than offset by higher revenue from its oil and gas segment, including from the acquisition of Kentz last August, as well as its power segment.
Despite the positive earnings as well as the announcement the company has overhauled its ethics and compliance structures, chairman Lawrence Stevenson said “recovery has taken longer than expected” given the criminal charges.
Stevenson believes the company’s image is rehabilitated with the people “who really count” such as clients and employees.
“Clearly there is still some (more work to do) on the broader perception (of the company) I would suspect,” he said.