By The Canadian Press on August 14, 2019.
MONTREAL – A new report from Canada’s ethics watchdog on the government’s handling of the SNC-Lavalin affair is reviving questions about the beleaguered engineering firm’s health, as well as potential broader economic consequences if it continues its path of decline.
SNC-Lavalin Group Inc.’s bidding prospects, reputation and stock price have been causes for concern in a year that has seen the Montreal company’s own financial woes conflated with its role in a political scandal that continues to dog Prime Minister Justin Trudeau.
Canada’s ethics commissioner says it has found that the prime minister improperly pressured the attorney general to overrule federal prosecutors to grant the construction giant a sweetheart deal on corruption charges, bringing SNC’s pending criminal trial back into the headlines.
But it remains unclear exactly whether a conviction for the company, which employs some 8,700 Canadians, would result in the dire economic fallout the government has feared.
The engineering giant is facing criminal prosecution over alleged bribes to Libyan government officials while pursuing business in that country. Under the current rules, a conviction includes a 10-year ban on federal contracts.
About 29 per cent of SNC-Lavalin’s $10.06 billion in revenues in 2018 came from Canada, down from roughly 60 per cent of revenue in 2014. Analysts estimate that up to one-half of home-turf revenues stem from federal contracts.
Neil Bruce, who stepped down as CEO in June following the controversial handling of the high-profile court case, repeatedly said the company lost out on between $5 billion and $6 billion in contracts over the past five to seven years as competitors sought to persuade customers the company is too hot to handle – an impression only heightened in the glare of the Ottawa firestorm.
SNC-Lavalin, which has seen its market value fall by more than 60 per cent since January, began to claw its way back from a 15-year-low in its stock price last week before shares slumped again Wednesday.
Trudeau and his aides had argued that a criminal trial could trigger the company’s exit from Canada and the loss of thousands of jobs – a claim that was later underscored in an internal SNC-Lavalin document obtained by The Canadian Press. It outlined a “Plan B” that the company presented to federal prosecutors last fall in which, absent a remediation agreement, it would split the company in two, move its offices south of the border and chop its Canadian workforce to 3,500 from 8,700 before eventually shuttering its domestic operations.
Companies in this story: (TSX:SNC)
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