SNC-Lavalin reimbursing Quebec for illicitly-obtained funds

SNC-Lavalin Group Inc. is taking another step to distance itself from a past blemished by corruption scandals, announcing on Tuesday it would give back illegally-obtained funds to the Quebec government through the province’s Voluntary Reimbursement Program.

“We are committed to working with the Government of Quebec and the province’s public agencies to reach a settlement that is comprehensive, final and fair,” said SNC-Lavalin CEO Neil Bruce during a speech to the Board of Trade of Metropolitan Montreal on Tuesday.

The Quebec government launched the program Nov. 2 and gave companies two years to come forward and reimburse funds for contracts that may have somehow been illicitly awarded or overpaid in the last 20 years. Paying now is a way for the company to avoid a lawsuit with the provincial government in the future, though it will not affect its federal charges.

SNC says it will submit proposals in the coming days for fraudulent contracts relating to work in Montreal, Laval, Quebec City, Lévis and Saint-Cyprien, a municipality in the Lower St. Lawrence.

SNC-Lavalin executives testified during Quebec’s Charbonneau corruption inquiry, saying that the company was involved in bid-rigging scams across the province and obtained public work contracts in exchange for political donations.

However, Bruce says participating in this reimbursement program is not an admission of guilt.

“We’re just complying with the legislation that’s been put in place, and we want to move on and put it behind us,” said Bruce at a news conference following the speech.

“There are a whole variety of things that are not very clear. This is a process that allows us to go in, enter into dialogue and wrap it up globally.”

SNC-Lavalin says the amounts the company is willing to pay is confidential, as are the details surrounding the original transactions.

The final amount recovered by all participants in the disclosure program will be reported in early 2018.

National Bank Financial analyst Maxim Sytchev says SNC’s move is just another stride the company has made in ethics and compliance, and he expects its trading multiple will lift when the legal overhang clears.

SNC’s stock closed up 3.26 per cent at $51.59 in Toronto on Tuesday, higher than it has been since September 2014. Last week the company reported its third consecutive quarter showing a positive EBIT margin for all of its divisions, along with a 17-per-cent jump in profits.

“We don’t have enough information to comment on potential costs to SNC at the moment, but more importantly we cannot emphasize enough that as the company progresses on the legal front, investors who have stayed away from the name will have to reconsider their stance,” wrote Sytchev in a note to investors on Tuesday.