Financial Crime World

Title: SNC-Lavalin Charged with Fraud and Corruption in Libya: Alleged Scandal Involves Approximately $178 Million

Montreal-based Construction Giant Faces Criminal Charges for Alleged Fraud and Corruption in Libya

The Royal Canadian Mounted Police (RCMP) brought criminal charges against Montreal-based engineering and construction giant, SNC-Lavalin, on Thursday for alleged fraud and corruption concerning its business dealings in Libya. The company is accused of defrauding the Libyan government and other entities of approximately $130 million and bribing Libyan public officials to the tune of $48 million between 2001 and 2011.

Details of the Allegations Against SNC-Lavalin

  1. Charges Against SNC-Lavalin and Its Subsidiaries The Montreal-based company, which employs about 45,000 people worldwide, including 16,650 in Canada, is adamant that these charges are unfounded. The RCMP’s investigation, named Project Assistance, led to the filing of charges against SNC-Lavalin and two of its subsidiaries.

  2. Previously Charged Individuals Three individuals, two former SNC executives and one lawyer, have previously been charged in relation to this investigation, which began in 2011.

  3. Potential Consequences for SNC-Lavalin If convicted, SNC-Lavalin could face a ban from bidding on government contracts for a decade, with the ban extending to subsidiaries and sister companies, under Ottawa’s integrity framework.

Background of Previous Corruption Scandals and Fines

  1. Previous Allegations and Fines for Foreign Corruption Calgary-based companies, Griffiths Energy International and Niko Resources, were fined $10.35 million and $9.5 million respectively, for bribing foreign public officials.

  2. Previous Concerns Expressed by SNC-Lavalin’s CEO In October, Robert Card, the company’s president and CEO, expressed concerns that the company could close or sell its operations due to criminal charges, but later clarified that they would consider all options in deciding what is best for shareholders.

SNC-Lavalin’s Significant Presence in Libya and the Impact of the Scandal

  1. SNC-Lavalin’s Activities in Libya SNC-Lavalin had a significant presence in Libya for decades and reported annual revenues exceeding $400 million. The company undertook substantial projects, like water infrastructure, airport, and prison developments in Libya during that time.

  2. The Withdrawal of Projects due to Unrest Since the 2011 civil war, all new contracts in Libya have been terminated and over $900 million worth of projects have been withdrawn due to the unrest.

  3. World Bank’s Ban on SNC-Lavalin In 2013, the World Bank suspended SNC-Lavalin from bidding on projects it finances for a decade due to allegations of bribery involving a bridge contract in Bangladesh and a project in Cambodia. This is the longest ban on record for the World Bank.

Market Response to the Criminal Charges

The announcement of criminal charges against SNC-Lavalin led to a significant drop in its shares on the Toronto Stock Exchange. SNC-Lavalin’s shares lost $2.93 or 6.7% in afternoon trading, closing at $40.78.