Billions on the line for SNC-Lavalin

OTTAWA • A looming criminal trial could sideline SNC-Lavalin Group Inc. on billions worth of federal contracts, removing a key player in Prime Minister Justin Trudeau’s infrastructure ambitions and possibly risking a number of Quebec-based jobs, analysts say.

SNC has a long history of building major infrastructure projects in Canada, including the $6.3-billion REM rail line in Montreal currently under construction. That rail project remains the sole investment made thus far by the Canada Infrastructure Bank, a body introduced by the Trudeau government in 2016 that aims to funnel $35 billion into various infrastructure projects over a 10-year period. SNC is also on the short list to build the $3.6-billion expansion of Ottawa’s light rail system.

But financial analysts and legal experts say a bribery and fraud conviction against the company would bar it from bidding on any federal contracts for 10 years, and would even allow federal authorities to cancel the company’s current infrastructure contracts, if deemed necessary.

The Montreal-based company faces charges under the Corruption of Foreign Public Officials Act (CFPOA) that it funnelled $48 million in payments to Libyan government officials, including former dictator Moammar Gadhafi’s son, Saadi, to secure government contracts. The case has been in preliminary hearings since October, and no trial date is scheduled.

The depth of SNC’s footprint in Canada points to the shared goals between the company and Ottawa, as the government gradually rolls out its $186.7-billion infrastructure program aimed at improving Canada’s roads, bridges, clean power facilities and telecoms lines.

Frederic Bastien, an analyst at Raymond James, said SNC has roughly $8.6 billion worth of planned infrastructure projects — a large chunk of which is based in Canada. That makes up over half of the company’s total global backlog of $15 billion.

“If they’re found guilty, they’re barred from bidding on federal contract jobs. It’s very critical to the business that that doesn’t happen,” Bastien said.

“The bulk of the work that they do in Canada is for the government.”

SNC also employs thousands of workers in Montreal, home of Trudeau’s Papineau riding. Quebec is expected to be highly sought-after turf in the coming federal election.

SNC has been looking to avoid criminal trial on bribery and fraud charges ever since the RCMP levelled allegations against the firm in 2015.

The company’s request to negotiate a deferred prosecution agreement, or DPA, has come into focus following a report by the Globe and Mail on Thursday that suggested the Prime Minister’s Office had urged former attorney general Jody Wilson-Raybould to issue such a deferral to the company. In October 2018, the federal director of public prosecution effectively denied the company a deferred prosecution. Wilson-Raybould was shuffled into the Veterans Affairs file in January.

DPAs effectively allow corporations to pay a fine in lieu of criminal charges, in turn allowing them to continue business operations as usual under the condition they put corporate compliance measures in place.

SNC, led by CEO Neil Bruce, has said Ottawa should allow the company to make its case for a DPA. The firm has replaced its top management and board of directors, and has put in place reporting standards aimed at eliminating corruption, Bruce has said.

The political upheaval in Ottawa on Thursday comes amid a corporate shakeup by Bruce, who has pivoted the company toward infrastructure projects, and away from oil and gas.

The company has teamed up with Aecon Group Inc. on refurbishment contracts for two nuclear facilities in Ontario, worth a combined $3.2 billion. It also has a longterm maintenance contract for a sizable part of Vancouver’s SkyTrain system.

The prosecution of the company for alleged bribery in Libya dating back to at least 2012 has cast a shadow over the company’s ability to secure public contracts.

In announcing the charges in February 2015, the company sought to distance itself, calling it “reprehensible deeds by former employees who left the company long ago.”