SNC-Lavalin says Swiss investigating agents hired for Libya projects

MONTREAL – SNC-Lavalin has confirmed that it made payments for more than a decade to commercial agents for projects in Libya, payments it says part of an investigation by Swiss authorities.

The Montreal-based engineering and construction giant said Monday that it retained Duvel Securities Inc. and Dinova International Inc. in connection with projects in the North African country between 2001 and 2011.

The payments were unrelated to the $56 million in payments for two projects that were disclosed following an independent investigation by the company, said spokeswoman Leslie Quinton.

“However, subsequent to the independent review, we learned that all or certain payments made to these companies were likely being reviewed by Swiss authorities in their investigation,” she said in an email issued after markets closed.

The statement came after a Swiss TV report said SNC-Lavalin’s former head of construction has been formally charged in relation to at least $139 million in payments in North Africa.

The company has long said those original $56 million in payments were not related to Libya. Published reports have suggested that at least one of the unnamed projects was Montreal’s superhospital.

SNC-Lavalin said it learned of the investigation into Riadh Ben Aissa by Swiss authorities in mid-April, after it disclosed the results of its independent review, but that it has limited information.

“Because this investigation is ongoing and we continue to co-operate with authorities, there is very little we are able to add at this time.”

SNC-Lavalin said it provided information and documentation to the appropriate authorities, including what it had on Duvel and Dinova.

“While we are not aware of any evidence that funds paid to these companies were misused, to the extent any fiduciaries of the company are found to have misused company funds, we reserve our right to makes claims to recover these amounts,” she added.

“We also reiterate that we strongly believe that anyone found to have committed any wrongdoing in connection to this or any other investigation should be brought to justice.”

SNC-Lavalin said it will continue to co-operate with investigations and has taken steps to reinforce its procedures to strengthen internal controls and processes.

Swiss public broadcaster RTS, citing unnamed sources, reported that Ben Aissa faces charges, including money laundering that tie him to at least $139 million in payments. The report said authorities have tracked money moving from SNC to Swiss bank accounts registered to companies in the British Virgin Islands.

According to RTS, a Geneva lawyer who also faces charges alongside Ben Aissa created Duvel Securities Inc. and Dinova International Inc. in the British Virgin Islands for Ben Aissa, whose bank accounts were mostly at EFG Bank in Geneva.

It said tens of millions of francs passed through the Geneva accounts of these offshore companies since 2001.

Efforts to reach representatives of the two companies were not immediately successful.

Swiss authorities wouldn’t confirm the report, saying details of its criminal investigation are not made public before the trial phase.

“The investigations are still ongoing and we are not able provide more information right now, nor comment on information relayed by the media or to confirm their content,” spokesman Jeannette Balmer said in an email.

A Montreal law firm that represented Ben Aissa in the past said it now longer has a relationship with him. The Tunisian lawyer for his brother said he passed on requests for comment to Rafik Benaissa.

Ben Aissa has been held on suspicion of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.

SNC-Lavalin (TSX:SNC) shares tumbled in Monday trading after the report surfaced. The shares fell by 4.5 per cent in early trading, but closed down 2.19 per cent, or 91 cents to $40.63 in Monday trading on the Toronto Stock Exchange.

Analyst Maxim Sytchev of AltaCorp Capital said Monday that investors were concerned at the discrepancy between the $56 million originally cited by the company and the latest tally of more than $139 million.

But he said there are few known facts or any indication that SNC-Lavalin will be forced to take a charge to reflect the higher amount.

In a report, he said the $139 million figure doesn’t imply that additional money is missing, but the reported charges against Ben Aissa means that SNC-Lavalin is closer to finding out where the money ended up.

“As a result, we do not believe that investors should be shaving off $190 million of market capitalization from SNC-Lavalin this morning. Once again, the market does not like the company’s name being dragged through the mud, even though there is no indication that today’s reports implies anything else from an accounting perspective for SNC-Lavalin.”

Ultimately, he said investors should focus on SNC-Lavalin’s “pristine” balance sheet, strong backlog, valuable concessions and ability to win new contracts.

Ben Aissa was in charge of business dealings in his native Tunisia as well as Libya, where the company won lucrative contracts with the former regime of Moammar Gadhafi.

The RCMP executed search warrants at SNC-Lavalin’s Montreal headquarters in April. The company said it was co-operating with the RCMP investigation.

The raid followed an investigation into bidding on projects in Bangladesh that prompted RCMP searches of SNC’s Toronto-area offices last September.

Earlier this month, Ben Aissa’s brother filed a $5-million lawsuit in Quebec Superior Court alleging the company caused him harm by using Ben Aissa as a “scapegoat” while protecting its interests in Libya in the face of political change.

Rafik Benaissa, an American-based orthopedic surgeon, said the Canadian company’s attack on his brother followed 27 years of supporting and funding his work with the regime of former leader Moammar Gadhafi.

The allegations have not been tested in court.

In September, an Ontario judge certified a $1 billion class-action lawsuit against SNC-Lavalin on behalf of investors who saw the value of their investment in the company plummet following revelations of the mysterious payments in North Africa.

The claim arises from alleged payments made by SNC-Lavalin to members, associates and agents of the Gadhafi regime to secure contracts for infrastructure projects in Libya.

The allegations made in the class action have not been tested in court, and SNC has said it intends to “defend our interests vigorously.”