SNC Lavalin Settles on Ethics As It Inks Major Deal for Chinese Nuclear Reactors
With a federal agreement last month that resolves seven years of illegal campaign contributions in Canada by former executives, Montreal-based design-construction giant SNC-Lavalin Group Inc. moves closer to final resolution of its past regime’s ethics issues that have dogged the firm for nearly five years. The firm still faces resolution of federal charges that could affect its status as a preferred government contractor. But many observers see a deal ahead and also note aggressive moves to boost global market share.
In the September deal, Canadian elections officials acknowledged SNC-Lavalin assistance in tracking down some $91,000 in illegal payments between 2004 and 2011. Canada’s two political parties have repaid the funds to the government treasury, with SNC-Lavalin waiving its right to the money. “Our cooperation … reflects the efforts and progress we have made in terms of ethics and compliance since 2012,” said Neil Bruce, the firm’s president and CEO.
SNC-Lavalin last year won a temporary waiver allowing it to continue to work for the federal government, even as the investigation continues into activities of the former executives, including deposed CEO Pierre Duhaime. He and other execs still face trial, while the company is embroiled in civil actions. “While there is some headline risk, we believe the majority of this overhang is behind,” CIBC World Markets analyst Jacob Bout told Canada’s Financial Post on Sept. 15.
One week later, the firm announced a push to become a major player in China’s nuclear-energy sector with a pact to develop there—and possibly elsewhere—the next generation of Candu reactors, the technology SNC-Lavalin acquired in 2011 from the Canadian government. Under the pact, the engineer and two Chinese state-owned firms would form a joint venture to design, market and build the reactors. “This is a game-changer in the nuclear industry and a great endorsement … from the largest nuclear market in the world,” said Sandy Taylor, SNC-Lavalin power unit president.
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