SNC-Lavalin to replace CEO
BUSINESS: Robert Card was brought in to head scandal damage control in 2012
MONTREAL — The CEO of SNC-Lavalin Group Inc., Robert Card, is stepping down as the head of Canada’s largest engineering firm and will be replaced by chief operating officer Neil Bruce, who the company says will help improve financial performance on projects.
Card has been at the helm of the Montreal-based firm since 2012, brought in to help the company recover from allegations of bribery and corruption against former executives by putting in place a best practice ethics and compliance program.
“The objective has been accomplished of putting in a best practice system here at SNC-Lavalin and now really the focus is on operational excellence and delivering on the projects and Neil Bruce is, frankly, the perfect candidate for that,” said Lawrence Stevenson, chairman of the board.
“We need to have better financial performance on the projects that we have. The financial performance on the engineering construction side has not been equal to what we are capable of and so that will be the real focus.”
SNC announced Monday that Card will officially leave the company’s top job Oct. 5, though he will stay on with an advisory role to both the board and the CEO.
Stevenson says both Card and the SNC board of directors agreed it was the right time to make this leadership change.
Bruce started working with SNC in January 2013 and has led the company’s mining and metallurgy and oil and gas businesses, including the acquisition of Kentz Corp Ltd.
He was named COO of the 40,000-employee company in April 2015.
In February, the RCMP laid corruption and bribery charges against SNC over the dealings of former employees and its subsidiaries with the regime of Libya’s Moammar Gadhafi and if the company is found guilty, it would face a 10-year ban on bidding on federal government contracts.
Since Card became CEO, SNC has been awarded several large Canadian government contracts including one leading a consortium that will build the new, multibillion-dollar Champlain bridge connecting Montreal to communities on the south shore of the St. Lawrence River.
Dundee Capital Markets analyst Maxim Sytchev says he does not see the new leadership as changing the investment thesis for the company and maintains a buy rating with a target price of $54.
“While we don’t have a final (legal) settlement which we are certain will take place at some point, SNC’s track record of instituting culture change enabled the company to continue winning massive government contracts not just in Canada but also abroad,” wrote Sytchev in a note Monday.
“We view the company’s current turnaround stage is that of stabilization. The next leg of progress pertains to financial performance which has still been uneven and in particular, largely afflicting the company’s Infrastructure practice.”
Monday, the CBC reported that court pleadings by Riadh Ben Aïssa — a former SNC-Lavalin vice-president — said in his defence against several lawsuits against him that the engineering firm knew all about bribes and gifts to win contracts with the Gadhafi regime in Libya.
“I was on the board of directors at the time and what I can tell you is that the board of directors was not aware, and the minute we did become aware we took the actions you saw us take back in March 2012 against the senior leadership, including Mr. Ben Aïssa,” Stevenson said.
The position of COO will not be refilled and the presidents of the company’s four business sectors will continue to report to Bruce.
“It was a position, frankly, put in place to help us with operational execution. It was also one put in place so that the board of directors could have more direct visibility to Neil Bruce as a lead candidate to become the CEO.”
Neither Bruce nor Card were available for comment Monday.