Canada's SNC-Lavalin unit pleads guilty to fraud charge in Libya case

MONTREAL (Reuters) - A division of SNC-Lavalin Group Inc pleaded guilty to one fraud charge and will pay a C$280 million fine related to projects in Libya, the company said on Wednesday, in a case that engulfed Canadian Prime Minister Justin Trudeau’s government in crisis.

The SNC-Lavalin Group Inc., headquarters seen in Montreal, Quebec, Canada, February 12, 2019. REUTERS/Christinne Muschi

The Montreal-based construction and engineering company said it reached a settlement after being accused of bribing Libyan officials to get contracts between 2001 and 2011. Shares in SNC, which were halted on the Toronto Stock Exchange early on Wednesday, soared as much as 35.3% to C$32.59 following the announcement.

On Sunday, a Quebec jury found a former top SNC-Lavalin executive guilty of fraud and corruption charges related to the Libya case. Government prosecutors had suggested Sami Bebawi, the former head of SNC’s international construction arm, was a key figure in the bribery scheme.

In a statement, SNC said its SNC-Lavalin Construction unit will plead guilty to a fraud charge.

As part of the settlement, all charges against SNC-Lavalin Group Inc and its international marketing arm, SNC-Lavalin International Inc, have been withdrawn, the company said.

SNC-Lavalin Construction will pay a C$280 million ($211 million) fine in equal instalments over five years, and will be subject to three years probation, SNC said. The company said it will engage an independent monitor as part of the probation.

“This is a game-changer for the company and finally allows us to put this issue behind us,” SNC Lavalin CEO Ian Edwards said in the statement. “I apologize for this past misconduct and welcome the opportunity to move forward.”

A court conviction would have barred SNC-Lavalin from bidding on government contracts for 10 years, threatening job losses in Canada. The company employs around 9,000 people in Canada and tens of thousands abroad.

The construction unit has not bid on any new contracts since 2015, and SNC said it does not expect the division’s guilty plea to affect the company’s ability to compete for future projects.

Earlier this year, Trudeau’s government faced allegations that top officials pressured former Justice Minister Jody Wilson-Raybould to direct prosecutors to strike a deal rather than go ahead with a trial.

Trudeau was re-elected with a minority government in October.

SNC had asked for a deferred prosecution agreement on the grounds it had removed the executives who were in charge at the time and overhauled its ethics and compliance systems.

Rachel Rappaport, a spokeswoman for Justice Minister David Lametti, was not immediately available to comment.

Reporting by Allison Lampert in Montreal; Additional reporting by Kelsey Johnson in Ottawa; Editing by Amran Abocar and Lisa Shumaker