A brief history of SNC-Lavalin

The Montreal engineering company SNC-Lavalin has grown into an international powerhouse that finds itself in a scandal surrounding its dealings in Libya.

One of the world's largest construction and engineering firms under scrutiny

SNC-Lavalin CEO Pierre Duhaime stepped down in March due to a breach of the company's code of ethics. (Graham Hughes/Canadian Press)

One of the world's largest construction firms, Montreal-based SNC-Lavalin, was formed in 1991 as a result of the merger of Surveyer, Nenniger & Chenevert Consulting Engineers and Quebec City-based Lavalin.

The company instantly became one of the five largest engineering firms in the world.

It has grown to become an international powerhouse with 28,000 employees worldwide and operations in more than 100 countries.

Among the iconic projects the company has spearheaded in recent years are the Hibernia offshore oil platform, the 407 toll highway north of Toronto, extensions to Montreal's subway system, light-rail transit systems in Calgary and Vancouver, and the new fixed roof on Montreal's Olympic stadium.

Its two original firms were also instrumental in the construction of Quebec's massive James Bay hydro project, beginning in the 1970s.

A subsidiary, SNC-Lavalin ProFac,  is "a well recognized leader in the provision of real property management," according to the the federal government and manages many of its buildings. The company also manages the main offices of the CBC across Canada.

In 2011, the company bought the reactor division of the federally owned Atomic Energy of Canada Ltd. for $15 million. The federal government is also providing SNC up to $75 million to complete development of a new reactor, Enhanced Candu 6.

SNC-Lavalin has been in the news recently regarding corruption allegations in Bangladesh and Libya after results of an internal investigation showing $56 million in mysterious payments became public in March 2012.

The allegations are that SNC made a series of unauthorized payments to undisclosed agents connected to the company's operations in Libya.

Those operations include what the company calls, "the largest civil engineering project ever-conceived," a 4,000-kilometre pipeline to bring water from underground aquifers in the southern desert to Libyan cities in the north.

Corruption probe in Bangladesh

In September, RCMP raided SNC-Lavalin's offices near Toronto in connection with a corruption probe into the Padma bridge project in Bangladesh. The World Bank's anti-graft unit had provided information to the RCMP.

The next month, the World Bank suspended a $1.2 billion loan it had offered to Bangladesh for the project.

Then in April, the World Bank temporarily banned an SNC-Lavalin subsidiary from bidding on new bank contracts. SNC-Lavalin was to supervise the contractor for the bridge on behalf of the Bangladesh government.

Chief executive resigned in March

The company's name had also surfaced in connection with Canadian consultant Cyndy Vanier, who is accused of masterminding a plot to smuggle members of Libya's Gadhafi family into Mexico.

Vanier has been in jail in Mexico since October 2011. No executives or SNC-Lavalin employees have been charged, but Stéphane Roy, then a vice-president of finance for SNC-Lavalin, was detained and released by Mexican police in November.

In March, SNC-Lavalin chief executive Pierre Duhaime resigned under the weight of the allegations. Duhaime has not been charged with any crime, but the company said his signing off on payments to undisclosed agents was a breach of the company's code of ethics.

Arrest in Switzerland

In mid-April, Riadh Ben Aïssa, the former SNC-Lavalin vice-president of global construction, was arrested in Switzerland and taken into custody on fraud and money-laundering allegations. In a statement on its website, SNC-Lavalin reiterated that Aïssa left the company on Feb. 9.

"SNC-Lavalin is doing its utmost and has offered its complete co-operation to the authorities in order to obtain the answers required about situations concerning ex-employees as expeditiously as possible," SNC-Lavalin said in a statement on the company's website. 

"We reconfirm that we voluntarily and proactively turned the results of our internal investigation over to the authorities."

The RCMP had searched SNC-Lavalin's headquarters on April 13 in connection with the Swiss investigation.

SNC-Lavalin SV 3-month TSX trading chart

Ben Aïssa, known for his intimate ties to two of Gadhafi's sons, oversaw a project that hired Edis Zagorac, the husband of Canada's ambassador to Libya, Sandra McCardell. The project, a military-civilian engineering unit SNC-Lavalin created with the Gadhafi government, also hired Canada's former ambassador to Tunisia, Bruno Picard. It's initial project was to build a $271 million prison in the north African country.

In January, Foreign Affairs Minister John Baird requested a review into a potential conflict of interest concerning Zagorac's hiring. McCardell was reassigned in March.

On April 20, Standard and Poor's revised its outlook for SNC-Lavalin to negative because of the news about the company.

On April 30, the company's share price closed at $37.14. Although up for the day, the shares are down 38 per cent from their 52-week high on July 5, 2011.