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Dec 17, 2018

Rivals 'mercilessly' beating SNC on contracts amid charges: CEO

Rivals ‘mercilessly’ beating SNC on contracts amid government charges: CEO says

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The chief executive officer of SNC-Lavalin Group Inc. said the Quebec firm’s competitors are taking advantage of its ongoing impasse with the federal government and shutting the company out of potential contracts.

“Our competition – more internationally than within Canada, as such – basically used this mercilessly against us and have been doing so for the past six years,” SNC President and CEO Neil Bruce told BNN Bloomberg in an interview on Monday.

“We know that we’ve lost out on a number of contracts probably in excess of $5 billion because clients, in the end, will not take the chance on picking SNC-Lavalin even though we provide a great service and a great bid.”

The engineering company said on Oct. 10 that federal prosecutors refused to set aside criminal charges against SNC by approving a remediation agreement. The company later announced it had filed for a judicial review of the decision on Oct. 30.

The RCMP charged the company in 2015 with fraud and corruption for alleged payments to Libyan officials between 2001 and 2011. SNC has pleaded not guilty but could be excluded from bidding on Canadian government contracts for up to 10 years if convicted.

Bruce said his competitors are already treating the ongoing investigation as a done deal.

“The competition – specifically from the U.S., a little bit from Europe – [is] constantly, constantly using this against us, even though, as a company, we have not been found guilty of anything. These are still charges that are pending,” Bruce said.

Bruce added that he believes the company has taken enough actions of its own accord to remove those behind any wrong-doing.

Grading SNC's PR campaign as it confronts fraud charges

A preliminary inquiry into fraud and corruption allegations against SNC-Lavalin tied to its dealings with Libya between 2001 and 2011 kicked off Monday. And SNC has been trying to save its reputation over the past couple of weeks leading up to this, taking out ads in newspapers in the form of an open letter from the CEO. Bob Pickard, principal at Signal Leadership Communication, joins BNN Bloomberg to react to this PR strategy.

“The events that we’re talking about date back to almost 20 years ago in some respects and, from the period of post-2012, we’re six years past that,” Bruce said. “The company has self-remediated in so many different ways: We’ve changed the board, we’ve changed the management, all of the alleged bad actors have all left the business.”

“We’ve settled up on the class-action, on Elections Canada, with Bill 26 in Quebec,” he added. “We’ve cleared up all these items and this is really the last one that we really want to reach an agreement and put it behind us.”

However, Bruce countered a recent statement by Quebec Premier Francois Legault that the company could be vulnerable to a foreign takeover.

“I think it’s pretty difficult, because ultimately, we’re a big company,” Bruce said. “So, even though we’ve been affected fairly dramatically with this – and I think everybody saw the stock price going down 15 per cent when we had to disclose that we were not being invited in – we’re still a big company.”

SNC’s TSX-listed shares were down 0.93 per cent to $47 as of 1 p.m. ET Monday. The company’s shares hit a more-than-six-year-low on Oct. 11, closing at $44.36.

Legault’s comments came on the same day SNC announced it was eliminating 100 positions in Canada.

Bruce said any firm looking to take over SNC would ultimately have to face the same challenges the company is currently navigating.

“Anybody who looked at this would have to have a plan, I guess, to solve the issues that we’re having difficulty solving,” he said.

“I think it’s unlikely, but I think the main piece in all of this is [that] the firm is being consistently damaged as this continues to go on.”