MONTREAL – SNC-Lavalin is looking to turn yet another page on its troubled past by replacing its chief executive with someone the company’s board of directors believes can deliver stronger results from its core engineering and construction business.
The company announced Monday that Robert Card, 62, is stepping down after three years on the job.
He will be replaced effective Oct. 5 by Neil Bruce, 55, who joined the firm a few months after Card and became chief operating officer earlier this year.
Board chairman Lawrence Stevenson said Card transformed the company by enhancing its ethics and compliance system, but both sides “mutually agreed” over the past nine months that it was time for a change at the top.
“We feel that Neil is the right person to focus on that operational execution and deliver the kind of projects that our clients want — on time, on budget with the right financial performance,” Stevenson said in an interview.
Stevenson said the company’s strategy, developed by both executives, won’t change. SNC has repositioned its operations through the sale of AltaLink electric transmission company in Alberta and the acquisition of U.K.-based Kentz, which has expertise in oil and gas.
The company expects to start the process to sell its stake in Highway 407 toll road in Toronto this year, but won’t complete a transaction until the performance of its core business is more stable, Stevenson added.
Card will remain an adviser to the board and his successor through 2016. Details about his compensation and departure package will be disclosed next year ahead of the company’s annual meeting. Card received $4.96 million in total compensation last year.
Bruce had initially led SNC’s mining, metallurgy and oil and gas business. He has more than 30 years experience in the engineering and construction industry and was in London before moving to the SNC’s headquarters in Montreal.
Analysts said the change in leadership won’t alter SNC-Lavalin’s (TSX:SNC) direction.
“Turning a large ship such as SNC is no easy task,” said Maxim Sytchev of Dundee Securities. He said instituting culture change enabled the company to win massive government contracts, including the new Champlain Bridge in Montreal and large transit projects in Toronto and Paris.
“We view the company’s current turnaround stage is that of stabilization. The next leg of progress pertains to financial performance, which has still been uneven,” he wrote in a report.
Yuri Lynk of Canaccord Genuity said Bruce’s involvement in some contract challenges could “mute investor enthusiasm” over his appointment as CEO.
The leadership change comes as the company and two of its subsidiaries face one count of fraud and one of corruption over its dealings in Libya, to which it plans to plead not guilty.
SNC-Lavalin has filed several civil lawsuits seeking $167 million from former SNC executive Riadh Ben Aissa and other individuals, alleging they embezzled millions of dollars in funds belonging to the company that were improperly diverted for personal use and harmed the firm’s reputation.
It claims the actions were a “flagrant violation” of the company’s internal code of conduct along with Canadian and foreign laws.
Ben Aissa has formally responded to the civil suits by asserting that higher-ranked executives in the company knew that payments made to secure contracts in the North African country were in reality bribes.
“SNC is only trying to use Ben Aissa as a scapegoat by presenting him as solely responsible for acts that SNC was fully aware of, accepted and encouraged,” according to a statement of defence filed for Ben Aissa.
Stevenson said SNC-Lavalin disagrees with Ben Aissa’s claims, which have not been tested in court.
“I can tell you having been on the board of directors at that time in 2012, the board of directors was not aware of any of the things that Mr. Ben Aissa is alleged to have done,” he said.
Ben Aissa was extradited to Canada a year ago after being convicted in Switzerland of bribery and embezzlement in connection with illicit payments for Libyan contracts. In Canada, authorities laid several charges against him and other former officials related to $22.5 million of alleged fraud involving a $1.3 billion hospital contract in Montreal.
His statement of defence claims SNC bought former Libyan dictator Moammar Gadhafi’s son Saadi a yacht, put his wife on the company payroll in the midst of the Libyan conflict, and paid about $2 million in expenses including for the services of prostitutes during a 2008 trip to Canada by the former leader’s son.
Ben Aissa denied that he was “materially involved” in attempts to organize Saadi Gadhafi’s escape from Libya.
Follow @RossMarowits on Twitter