* Police investigating $56 mln in improper payments
* Employees urged to share information on any violations
* SNC holds annual meeting in Toronto on Thursday
* Chairman says misconduct the work of "relative few"
* Q1 EPS C$0.44 vs C$0.50 year earlier, below market view
By Susan Taylor and Nicole Mordant
TORONTO, May 3 SNC Lavalin Group Inc, a
Canadian construction company caught up in allegations of
bribery and improper payments, vowed on Thursday to get to the
bottom of any wrong-doing but said the transactions were still a
The company also reported weaker-than-expected financial
results on Thursday, sending its shares lower.
But it had no further details to share about revelations
that it made $56 million in payments to unknown "agents" on
construction contracts that did not exist.
SNC, which held its annual meeting in Toronto on Thursday,
said it was encouraging employees to come forward with any
information that might help with police investigations into the
"We are committed to getting to the bottom of any violations
of laws or misappropriations of funds that may have occurred,"
Chairman Gwyn Morgan told the company's annual meeting.
"We are hopeful that our actions will help in establishing
accountability and bringing to justice anyone found to have been
involved in criminal activity," Morgan told the room of about
100 people attending the meeting.
Shares of Montreal-based SNC dropped receded 2.7 percent on
Thursday, extending a slide of more than 20 percent of its value
since it revealed its internal probe into payments mystery in
It also warned that the impact of the civil war in Libya,
where it had several big contracts, would push 2011 profit below
"The biggest question is whether this episode is going to
affect their future ability to earn contracts," said Morningstar
Inc analyst Min Tang-Varner.
WORK OF "A RELATIVE FEW"
In March, Pierre Duhaime resigned as chief executive of the
101-year-old company after revelations he had authorized the
payments, but details surrounding the matter remain shrouded in
Morgan said the company still does not know who received the
payments and what the money was used for, but he stressed that
the misconduct was the work of "a relative few." He admitted the
company was not sure if police would uncover other rogue
SNC has handed over information from its internal
investigation to police, which have the "capability and means to
go much further and much deeper," than a civilian review, Morgan
said in a press conference after the meeting.
Canada's Royal Canadian Mounted Police searched the
company's Montreal headquarters in mid April, after launching an
investigation into the payments.
SNC has said its former head of construction, Riadh Ben
Aissa, who left the company in February, may have direct
knowledge of the mysterious transactions.
Swiss authorities confirmed over the weekend that Ben Aissa
had been arrested on charges of corruption, fraud and money
Canadian newspapers have linked Ben Aissa in an unflattering
light to the family of deposed Libyan dictator Muammar Gaddafi.
Police were also probing bribery allegations against SNC
involving a $1.2 billion bridge project in Bangladesh financed
by the World Bank.
POLITE BUT PASSIONATE
Shareholders attending SNC's meeting were polite but
passionate about the need for management to move quickly to
repair the company's battered image.
Ian Bourne, appointed interim CEO in March, said support
from SNC's clients and suppliers remains strong. A couple of new
contracts are close to completion, he said.
Even so, Morgan conceded, "2012 will be the most challenging
year we've ever faced."
SNC said it approved a new code of ethics on Thursday and,
under a series of measures to help prevent future wrong-doing,
was tightening reporting processes in its finance department.
All 11 SNC directors who had stood for re-election to the
board were elected at the meeting.
The company aims to conclude its CEO search, which began in
late March, in three to six months.
SNC's shares were down C$1.02 at C$37.03 on the Toronto Stock
Exchange early afternoon on Thursday after the company reported
a 14.5 percent decline in first-quarter earnings to C$67 million
($67.91 million), or 44 Canadian cents a share.
That was below the 49 Canadian cents that analysts had been
expecting, according to Thomson Reuters I/B/E/S.
Revenue rose to C$1.78 billion from C$1.64 billion, also
below market expectations of C$1.84 billion.
"In this environment, where people are freaking out about
what is going to happen with the company over the medium to
longer term, I think that's as good as it gets. Overall it looks
all right," said Maxim Sytchev, managing director of industrials
research at Toronto-based AltaCorp Capital.
While SNC repeated its target of 2012 earnings in line with
2011 profit, the company has an internal target to top that.