SNC-Lavalin shares fall on legal setback
SNC-Lavalin Group Inc. shares plunged to their lowest close since early 2016 on Wednesday after the company revealed that federal prosecutors won’t negotiate a deal that could reduce the time SNC spends in court fighting fraud and corruption charges laid against it in 2015 following an investigation of activities by some of its former employees.
Shares of the Montreal-based engineering and construction company fell nearly 14 per cent after the prosecutors’ decision was announced, closing at $44.86 on the Toronto Stock Exchange. That’s the lowest close since March 2, 2016.
The drop came after federal prosecutors declined to “invite” the company to negotiate an remediation agreement, also known as a deferred prosecution agreement or reparation agreement, using a new provision of the criminal code.
“The criminal code defines the criteria for reparations agreements; the (prosecutor’s office) determined that the criteria were not met,” the Public Prosecution Service of Canada said in a brief email without elaborating.
Chief executive Neil Bruce said the decision will probably result in three or four more years of court battles as the firm defends itself.
“We truly believe we’re not guilty,” Bruce said in an interview.
In the meantime, Bruce acknowledged that the uncertainty surrounding the case weighs heavily on its investors and its 50,000 employees, whom he described as innocent people who have been trying to rebuild the company.
“Financial markets, you know, don’t like uncertainty. You can see the damage that this has caused to the company and to the market capitalization and share price today.”
SNC and two of its subsidiaries were charged in February 2015 following a years-long RCMP investigation into activities by several individuals working for the company.
The RCMP has also charged the company, its construction division and a subsidiary with one charge each of fraud and corruption for allegedly defrauding various Libyan organizations of roughly $130 million.
A few months after the charges were laid, SNC signed an administrative agreement that enables it to continue doing business with the federal government while the court process winds on