Thursday, April 19, 2012

Canadian Engineering Giant Served With Massive Search Warrant

Friday the 13th seemed like a good day for Canadian Mounties to serve a search warrant on the Toronto headquarters offices of engineering firm SNC – Lavalin, apparently looking for evidence in the case of $56 million in improper payments which led to the resignation last month of three of the firm’s top executives, including CEO Pierre Duhaime.  The company’s internal investigation disclosed Duhaime had signed off on improper payments to two undisclosed agents on large construction projects, and the firm reported the ethical breach to the government. However, SNC – Lavalin refuses to identify the projects involved by name or by location.

The other two departing executives were Vice President of Finance Stepahne Roy, and Vice President of Construction Riadh Ben Aissa. Apparently Ben Aissa has fled Canada for Tunisia. The company reports he “is believed to have significant knowledge about most of the investigated transactions, but has not been [interviewed] despite a request to his counsel.”

The search warrant and the presence of uniformed Mounties in the headquarters building lobby drove the price of SNC – Lavalin stock down more than four percent Friday. Earlier this month, certain shareholders filed a class action lawsuit seeking $250 million in damages relating to the undocumented payments.

Meanwhile the World Bank has suspended bidding on new projects in Bangladesh while the bank completes an investigation into the engineering firm’s potential improprieties there. The bidding suspension is holding up World Bank funding for a $1.2 billion bridge construction project over the Padma River in Bangladesh. While the Mounties haven’t jailed anyone yet, with SNC – Lavalin operating in over 100 different countries, it may be that still more international construction projects will be arrested.

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