Quebec Bans SNC-Lavalin Units From Public Works for Five Years, After Plea
Six units of design-build giant SNC-Lavalin Group Inc., Montreal, have been banned from public works bids for five years in its home province of Quebec, in the latest fallout from a now nearly-decade-old Libyan bribery scandal involving long-departed executives.
The firm's construction subsidiary pleaded guilty in December to one federal fraud charge related to the allegations.
While the guilty plea – and the company’s agreement to pay a $210 million fine – was enough to spare it from a federal bidding ban, it triggered an automatic ban on Feb. 5 by a Quebec oversight organization, Autorite des marches publics, under the province's anti-corruption law.
SNC-Lavalin leads a consortium that is handling design and construction of the $4.7-billion REM light-rail system in Montreal, but the company downplayed the Quebec ban, noting, in a press statement, that SNC is in the midst of shift out of the direct construction market in a bid to become more of an engineering consulting firm.
"The company does not anticipate that the guilty plea by a construction subsidiary (which has not bid on any new contracts since it was charged in 2015) will affect the eligibility of SNC-Lavalin Group companies to bid on future projects that are aligned with [its] newly announced strategic direction," said spokesman Nicolas Ryan.
“While it is possible that the guilty plea by the subsidiary may present risks in the near-term, the company believes these risks will be manageable and does not anticipate that the plea will have any long-term material adverse impact on the company’s overall business.”
SNC’s Quebec, Ontario and Atlantic construction divisions are among those named in the ban, which expires in January 2025,
The move comes as SNC Lavalin looks to rebound in its financials after a particularly difficult stretch that saw its stock price fall to a low of $16 a share on Sept. 2, before clawing its way back over the past few months to more than $32 a share.
“Only legacy construction entities are banned,” noted Maxim Sytchev, construction industry analyst at National Bank Financial, adding “it’s irrelevant now given the new strategic direction.”
Separately, SNC Lavalin announced Feb. 10 that it had appointed energy industry executive Jeff Bell as its new chief financial officer, effective April 14.