Canadian engineering giant SNC-Lavalin Group Inc. has announced it is in the midst of a major internal investigation into $35 million in undocumented payments tied to its construction projects in Libya.

News of the probe comes on the heels of resignations earlier this month of the executive vice-president of SNC-Lavalin’s construction arm, Riadh Ben Aïssa, and financial controller, Stephane Roy.

CBC News investigation has learned the probe, which was announced this week, began in December after an anonymous "poison pen" letter sent to senior executives and board members outlined a string of unproven criminal allegations involving kickbacks, misuse of supply companies and suggestions that the company has for years been used to funnel money from SNC-Lavalin through "shell companies" back to members of Libya’s Gadhafi family.

'All issues that are determined to be serious enough to require our attention, get our attention.'—SNC-Lavalin spokeswoman Leslie Quinton,

According to a number of insiders, the letter was taken seriously and served as a ‘tipping point’ to launch internal audits, especially of the company’s dealings in North Africa.

Ben Aïssa and Roy resigned without explanation Feb. 9. In a statement, SNC-Lavalin, which has its headquarters in Montreal, said it was related to the company’s code of conduct. Ben Aïssa is now contesting that and is threatening to sue.

The resignations came the same day CBC News published reports about internal turmoil at the company over Ben Aïssa’s close ties to Saadi Gadhafi, and revelations that Roy was in Mexico to meet individuals, including the now-imprisoned Canadian Cyndy Vanier, who is accused of plotting to smuggle Gadhafi family members into Mexico.

'Poison pen' alleges money funnelled to Gadhafis

The author of the anonymous letter pleads to company leadership to examine SNC-Lavalin’s business dealings in Libya and to unearth the truth behind the evolving scandal in Mexico, in which Roy was found inside a Chevrolet Suburban meeting with a number of  Vanier's co-accused, now arrested and in prison accused of trying to smuggle Moammar Gadhafi’s son, Saadi, and his family into Mexico.

SNC-Lavalin operated for decades in Libya procuring billions of dollars worth of airport, road, water and prison contracts under the Gadhafi regime.

The company, like many other Canadian firms operating there, faced having to change its mode of operation after the Gadhafis were targeted by United Nations asset freezes and travel bans in March 2011.

A NATO bombing campaign ensued, and rebel forces overthrew the government last fall.

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However, the letter received by SNC-Lavalin levels major, unproven allegations of millions of dollars going through shell companies back to the Gadhafis, of illegal commissions being paid and of employees having close ties to supply companies.

SNC-Lavalin has refused repeated requests by CBC News for interviews.

SNC-Lavalin takes letter seriously

What is clear, according to numerous sources, is that — despite the unproven nature of the allegations — SNC-Lavalin took the letter seriously. CBC News has confirmed it was written by a company insider with intimate knowledge of the firm’s history and business dealings.

riadh-ben-aissa

Riadh Ben Aissa is the former executive vice-president of SNC-Lavalin's construction arm. (SNC-Lavalin)

CBC News has also repeatedly asked for interviews with SNC-Lavalin, but instead has only been provided email responses.

"These are anonymous accusations made externally, and except through specific mechanisms to allow confidential internal reporting, we do not address anonymous statements. However, we can state that all issues that are determined to be serious enough to require our attention, get our attention," stated SNC-Lavalin global corporate spokeswoman Leslie Quinton in an email last Friday.

However, on Tuesday, the company issued a market-wide news release revealing the discovery of $35 million in undocumented payments under its construction arm, and issued a profit warning stating it expects to lose $23 million this quarter from its Libyan operations.

"The company is working with its external auditors and legal advisers to resolve all issues relating to the investigation to permit the auditors to deliver their audit report on a timely basis," the release said. "The company is working towards announcing and filing its 2011 fourth-quarter and year-end financial results as soon as reasonably possible and in any event prior to March 30, 2012."

Shares of SNC-Lavalin tumbled Tuesday after the company issued the profit warning. The stock fell $9.94, or 20.55 per cent, to close at $38.43 on the Toronto Stock Exchange.

Letter claims Mexico 'business meetings' a cover

The poison-pen letter obtained by CBC News also alleges that Roy, who was under the direction of Ben Aïssa, had no legitimate purpose for being in Mexico in November to meet Canadian consultant Vanier and her associates. The author alleges the trip by Roy to Mexico for "business meetings" made no sense for a financial controller.

CBC News has spoken to the agencies with which Vanier and her co-accused claim to have been arranging meetings for SNC-Lavalin. Mexico’s water regulator has responded, indicating that indeed there was a meeting planned with Roy and the group; however, it never happened. At the same time, one of Vanier’s co-accused, Pierre Flensborg, has told authorities he was in Mexico on behalf of a number of foreign companies. CBC News contacted them and they deny any such association with Flensborg.

SNC-Lavalin won’t discuss the results of their audits and investigations underway in Montreal and its offices in Tunis, stating their probes are not yet finished.

The author of the anonymous letter claims that the perpetrators used SNC-Lavalin’s office in Tunis "by design" as it had virtually no oversight from the company’s headquarters in Montreal, let alone from the RCMP, FBI or Interpol.

SNC-Lavalin says it has not completed its examination and to date has not requested assistance from any law enforcement agency.