Judge certifies $1 billion class action lawsuit against SNC-Lavalin
Posted: Sep 20, 2012 6:33 PM ET
Last Updated: Sep 20, 2012 7:48 PM ET
An Ontario judge has certified a $1 billion class-action lawsuit against SNC-Lavalin on behalf of investors who saw the value of their investment in the company plummet following revelations of mysterious payments in North Africa.
The Montreal-based engineering and construction firm didn't oppose the certification in exchange for the plaintiffs withdrawing their original plans to seek punitive damages.
Dimitri Lascaris, one of the lawyers involved in the case, said certifications normally take years to achieve because of opposition from defendants, but the case reached this stage at perhaps record speed.
"I have done scores of class actions and I don't recall a case where certification was ever achieved this quickly," he said in an interview Thursday.
SNC-Lavalin also agreed to pay nearly $250,000 to advertise the notice of claim and to cover fees incurred for two plaintiff experts.
The company said it intends to "defend our interests vigorously" and noted the case is limited only to statutory claims under securities legislation, which caps damages.
The suit alleges that SNC-Lavalin violated securities law by misrepresenting that it had adequate controls and procedures to ensure accurate disclosure and financial reporting.
The suit claims, among other things, that a 2009 prospectus offering $350 million of debentures failed to contain "full, true and plain disclosure of all material facts."
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.
The allegations have not been proven in court.
The certification ruling by Justice Paul Perell of the Ontario Superior Court of Justice doesn't apply to a separate $250-million claim filed in Quebec. It contains similar allegations filed in March on behalf of most investors in Quebec. A ruling to certify that claim, which also isn't opposed by SNC, is expected in a few weeks.
Two separate Ontario lawsuits filed by Lascaris and Rochon Genova LLP were merged earlier this year.
Lascaris said the plaintiff could have refused to give up its claim for punitive damages, but felt it kept the strongest part of its case.
A trial could begin next year or early in 2014 unless the case is settled.
An expert hired by the plaintiffs, Prof. Douglas Cumming of the Schulich School of Business at York University, estimated damages at between $700 million and $1.1 billion.
The lawsuit was brought on behalf of all SNC-Lavalin investors who purchased SNC-Lavalin securities between Feb. 1, 2007 and Feb. 28, 2012 or who bought debentures through the company's June 2009 prospectus offering.
The lead plaintiff is Brent Gray, a resident of Surrey, B.C., who purchased 600 shares in January at $52.20 per share.
SNC-Lavalin's stock dropped more than 20 per cent on Feb. 28, wiping out more than $1.5 billion of market value after the company disclosed the launching of an investigation into $35 million of undocumented payments.
More than $3.3 billion has been wiped from the company's value since SNC's shares peaked at $59.97. They lost 64 cents to $38.16 in Thursday trading on the Toronto Stock Exchange.
In addition to current and former members of SNC's board of directors, those named in the Ontario lawsuit include SNC-Lavalin International chairman Michael Novak.
The claim said these officials, former CEO Pierre Duhaime and former controller Stephane Roy assisted executive vice-president Riadh Ben Aissa in arranging "improper or unlawful payments" to secure contracts in Libya.
Duhaime, Roy and Ben Aissa have lost their jobs with SNC-Lavalin.
Ben Aissa, SNC's former head of construction, was last reported to be in a Swiss jail on suspicion of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.
The engineering and construction giant's initial review led to it finding $56 million of payments to unidentified foreign agents.
The company has insisted that none of the funds were directed to Libya.
SNC-Lavalin removed $900 million worth of Libyan projects from its backlog in 2010 amid the civil war in the North African country.
The RCMP executed search warrants at SNC-Lavalin's headquarters at the request of Swiss police.
Latest Montreal News Headlines
- Supreme Court refuses to hear Lise Thibault's appeal
- The Supreme Court of Canada has refused to hear the appeal of Quebec's former Lt.-Gov. Lise Thibault, who is charged with fraud and breach o ftrust. more »
- RCMP moving to freeze assets in widening SNC-Lavalin probe
- The RCMP is moving to freeze millions of dollars in bank accounts and real estate holdings in Montreal and Florida as part of its expanding probe into Canadian engineering firm SNC-Lavalin. more »
- Via terror plot suspects due in court today
- Two suspects charged in an alleged plot to bomb a Via Rail train are scheduled to appear in a Toronto court Thursday morning. more »
- Eugenie Bouchard advances to Strasbourg International semifinals
- Quebec teenager Eugenie Bouchard continued her impressive week in Strasbourg, France with a straight sets quarter-final win Thursday against her Georgian opponent. more »
Top News Headlines
- 2nd suspect in Tim Bosma murder case to plead not guilty
- The lawyer for Mark Smich says the Oakville, Ont., resident will plead not guilty to first-degree murder in the death of Tim Bosma, the Hamilton man who disappeared earlier this month after taking two men on a test drive of his truck. Smich was charged today, after Dellen Millard of Toronto was also charged with first-degree murder. more »
- U.K. attack suspects were focus of past security probes
- WARNING: This story contains graphic content. Two men accused of butchering a British soldier had featured in previous investigations by security services, a British official said, as investigators tried to determine whether the men were part of a wider radical Islamic plot. more »
- Neil Macdonald: Harper no Obama when it comes to dealing with scandals
- Beset by three so-called scandals at the moment, Barack Obama has been meeting his accusers and the press head on, Neil Macdonald writes. The same cannot be said for how Stephen Harper operates. more »
- Rob Ford: Councillors, media want answers on crack issue
- Newspaper editorials and commentators are expressing frustration over Toronto Mayor Rob Ford's silence on allegations he was captured on video smoking what appears to be crack cocaine. more »
- 1.3 million Montrealers face boil water advisory
- Woman injured after falling on Montreal metro tracks
- 23-year-old woman dies while surfing near LaSalle
- Taking a look at graffiti tagging hotspots in Montreal
- Court freezes assets in widening SNC-Lavalin probe
- Anti-corruption raids at borough offices in CDN-NDG
- How Quebec Cree avoided the fate of Attawapiskat
- Quebec private daycare owners hold 1-day walkout
- CBC board member linked to allegations before corruption inquiry