Shareholders of SNC-Lavalin Group Inc., Canada’s biggest engineering firm, are expected to use Thursday’s annual meeting in Toronto to grill executives about the Libyan corruption scandals that have knocked 28 per cent off the company’s market valuation this year.
The scandals are centred on alleged secret funnelling of millions of dollars to the family of the late Libyan dictator Moammar Gadhafi by former executive vice-president Riadh Ben Aissa.
The crisis came out in the open when the board of Montreal-based SNC-Lavalin abruptly fired Ben Aissa in February following the discovery that $56 million had been paid improperly to undisclosed agents for the benefit of Gadhafi and his two sons. The Libyan civil was at its height.
Later, company CEO Pierre Duhaime was fired for allegedly sanctioning the payments. He took over from longtime CEO Jacques Lamarre in May, 2009, after building up the company’s mining construction business into a world force. The company has maintained it does not know where the $56 million is.
The Swiss authorities have recently detained Ben Aissa, charging him with fraud, corrupting a public officials and money laundering via dealings in North Africa.
SNC Lavalin’s vice-president and controller Stephane Roy was forced to resign in February at the same time as Ben Aissa.
Ben Aissa reportedly was the SNC-Lavalin executive who hired Toronto consultant Cyndy Vanier, who is in jail in Mexico facing charges that she plotted to smuggle Saadi Gadhafi, one of the dictator’s sons, out of Libya to Mexico. Saadi is alleged to have directed billions of dollars of construction projects to Ben Aissa.
Vanier maintains Ben Aissa hired her to charter private aircraft for SNC-Lavalin.
Before the civil war, which started in February 2011 and ended in October, Libya produced almost two million barrels of oil daily. SNC-Lavalin had active contracts worth more than $1 billion for a new airport at Benghazi, a massive freshwater transportation system and a prison when the war began. It employed 4,000, mostly Libyans, and closed down operations because of the fighting.
Two international oil companies have recently moved back to restart the flow of export oil, but SNC-Lavalin has not resumed work on its old contracts.
The drastic fall in SNC-Lavalin’s share-price from a high of $59.97 last June to around $38.50 has prompted a group of shareholders to launch a class action suit claiming poor company governance.
Money manager Jarislowsky Fraser Ltd., which owns 14 per cent of SNC-Lavalin, says the directors failed to provide adequate oversight in the period leading up to an internal investigation of the missing $56 million early this year — “the discipline was pretty loose.”
Quebec’s public pension fund manager, the Caisse de depot et placement du Quebec, has also expressed concern about the company’s governance.
The RCMP conducted a second search of the company’s HQ in downtown Montreal last month at the request of Swiss investigators.
SNC-Lavalin has won well over $2 billion of new contracts since the scandals became fully public in February.