Responsible Electricity Transmission for Albertans
SNC-Lavalin Sued Again by Investors
SNC-Lavalin which is building many high voltage power lines in Alberta together with its AltaLink subsidiary, including the controversial Heartland Transmission Project and Western Alberta Transmission Line, is being sued again by investors.
This time, a class-action suit has been launched on behalf of investors outside Quebec who have seen their SNC-Lavalin share values plummet due to the extensive corruption probe into the company. The claim is seeking $1.5 billion, “alleging the Montreal-based company violated securities law by misrepresenting that it had adequate controls and procedures to ensure accurate disclosure and financial reporting,” (Montreal Gazette). “When a company repeatedly highlights its strong governance practices to the investing public, revelations of serious misconduct cause damage to the company’s reputation and, in turn, substantial harm to its investors, “ said the claimants’ lawyer. The Gazette goes on to write, “The claim arises from alleged payments made by SNC-Lavalin to members, associates, and agents of the Gadhafi regime to secure contracts for infrastructure projects in Libya.”
Although an earlier internal investigation by SNC suggested the unlawful payments made to commercial agents were not related to its business in Libya, the plaintiff’s lawyer said, “In order for shareholders to get to the bottom of this, there has to be a meaningful investigation that is not conducted by those that are potentially responsible,” (Financial Post).
Fred Lazar, Associate Professor of Economics at the Schulich School of Business, said, “How can directors not ask the obvious questions and still claim that the Board is following good corporate governance practices? Unfortunately, some directors choose not to ask so that they have ‘credible deniability’. Don’t ask and the company doesn’t tell, and then, when a scandal breaks, you have your defence: you didn’t know,” (PR Newswire).
This latest suit closely follows a $250-million suit filed in March on behalf of investors in Quebec against SNC and some of its former executive. In summary, that action alleges SNC-Lavalin made statements in relation to its code of conduct, legal compliance and internal controls that were “materially false and misleading”, and that some senior executives “were engaged in unlawful activities in Libya” contrary to the company’s statements.
Another lawsuit was recently filed in Tunisia by a subcontractor who alleges he refused to pay SNC-Lavalin a bribe demanded by the company in exchange for work on a power station.
Meanwhile, the World Bank may soon cancel its funding for the Padma Bridge Project in Bangladesh because the Bangladeshi government has not adequately responded to the World Bank’s report on corruption allegations involving the project. The Daily Star writes, “The report contained findings of the Canadian government’s probe into the corruption allegations over selection of Canadian company SNC-Lavalin as the consulting firm to supervise the main bridge’s work.”
These and many other questionable business dealings by SNC-Lavalin around the world have caused its share values to drop significantly – about 40% (rabble.ca). “Nearly $3.5 billion has been wiped from the company’s value since SNC’s shares peaked at $59.97. They lost 28 cents to $36.77 in afternnoon trading Wednesday (May 9) on the Toronto Stock Exchange,” (Montreal Gazette).
And, according to SNC-Lavalin’s interim CEO Ian Bourne, “The reality of these police investigations mean that they’re going to find some other stuff,” (Financial Post). In other words, we can expect more questionable activities by SNC-Lavalin to be uncovered.
In addition to all of its work with its AltaLink subsidiary on high voltage power lines in Alberta, SNC-Lavalin has many other contracts in Alberta including: $300 million NAIT LRT project in Edmonton, $5 billion North West Upgrading project in the Industrial Heartland, Syncrude’s upgrader expansion, CNRL’s froth treatment plant, MacKay Operating Corp’s SAGD plant west of Fort McMurray, and Grizzly Oil Sands Algar SAGD plant (Edmonton Journal).