SNC Lavalin CEO resigns in suspect payments saga
By Helen Wright27 March 2012
Pierre Duhaime, CEO of Canadian contractor SNC Lavalin, has resigned after an internal investigation found he signed-off on US$ 35.5 million in suspect payments, even though they were refused by the normal signatories. An internal investigation has failed to find what the payments were for, but said they are not believed to relate to Libya.
The company has appointed director Ian Bourne as vice chairman and interim CEO while the search begins for a permanent CEO.
The news of the irregular payments came after SNC Lavalin vice president Riadh Ben Aïssa, who oversaw its operations in Libya, and vice president controller Stéphane Roy left the company in February. SNC Lavalin said it believed Mr Aïssa had "significant knowledge" about the suspect transactions, but that it had been unable to speak to him about them, despite requests made via his legal representatives.
It added that it could still face sanctions in connection with possible violations of law or contracts.
SNC Lavalin reported full-year net income for 2011 of CA$ 379 million (US$ 382 million), down from CA$ 477 million (US$ 481 million) in 2010. The result was affected by a net loss of CA$ 35 million (US$ 35.5 million) related to payments made in the last three months of the year, which the company said were "presumed to be agency agreements".
The company also revealed that its 2010 net income was reduced by CA$ 18 million (US$ 18 million) to reflect the impact of payments of CA$ 20 million (US$ 20 million) made during the year, which it also said it presumed was an agency agreement.
Meanwhile, Canadian law firm Siskinds Desmeules filed a motion in the Québec Superior Court at the start of March to bring a class action law suit seeking CA$ 250 million (US$ 252 million) in damages from SNC Lavalin over the company's conduct.
And it is not the first time that SNC's business practices have come under the spotlight in the last 12 months. Its offices were raided by Canadian authorities last September over allegations of corruption in the bidding process for a US$ 2.9 billion World-Bank funded bridge project in Bangladesh.
Bangladesh's finance minister, however hit back at the World Bank, claiming there has not been any corruption in the bidding process for the bridge.