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Winnipeg Free Press - PRINT EDITION
Scandal not affecting contracts: SNC
TORONTO -- Global engineering giant SNC-Lavalin said client confidence remains strong despite intense turmoil resulting from disclosure of $56 million of mysterious payments that have tarnished its name, top executives said Thursday.
In an effort to calm jittery investors, they told the company's annual shareholders meeting that an updated code of ethics, along with stronger corporate governance and reporting lines, have been implemented in the wake of the scandals.
"I'm not saying there's no damage done, obviously," chairman Gwyn Morgan said after the meeting.
"The fact is that we had very senior employees who were acting outside of the code of ethics, outside of the plan, outside of the communication with other senior management or the board." Still, the company said it has lost no project renewals or seen bids pulled.
Despite an internal forensic audit, Morgan said the company still did not know who actually received the $56 million to unknown agents or what it was used for.
The scandals have hit SNC's shares hard, with its stock price plunging 34 per cent since January, wiping out $3.3-billion from the company's market value. Shares fell nearly two per cent to close at $37.31 Thursday on the Toronto Stock Exchange.
Three senior executives, including SNC's former CEO Pierre Duhaime, have resigned under a cloud or been fired since the debacle first came to light in February. The company said no other employees have been implicated.
Duhaime approved payments suggested by former executive vice-president Riadh Ben Aissa, SNC's former head of construction, who is in a Swiss jail on suspicion of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.
Morgan defended a $5-million severance payout to Duhaime, saying the company's only choice was to litigate his contract or pay.
Despite the problems, the company's 11 directors were easily re-elected at Thursday's meeting, and only one shareholder, John Hanson, openly expressed frustration.
Hanson blamed poor communication at the highest executive levels for the problems.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition May 4, 2012 B9
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