SNC-Lavalin CEO says company plans to vigorously defend itself as political scandal unfolds
'Our employees are being used as the puck in a political hockey game,' Neil Bruce says
The CEO of SNC-Lavalin says the company plans to "vigorously defend" itself in the court case as the centre of the unfolding political scandal in Ottawa, and says the company's hard-working employees are being used "as pucks in a political hockey game."
Neil Bruce made the comments on a conference call with analysts on Friday, after the company posted its quarterly results.
While SNC wants to focus on the company's financial performance, the narrative around the company has been hijacked in recent weeks over allegations that the Prime Minister's Office had unduly tried to influence then attorney general Jody Wilson-Raybould into allowing the company to settle allegations it bribed foreign officials to secure work in 2012.
The RCMP alleges that between 2001 and 2012, the company paid almost $48 million in bribes and defrauded various other entities of almost $130 million.
Last fall, the Public Prosecutor Service of Canada declined to offer the company what's known as a deferred prosecution agreement in the matter, a solution that the company had lobbied for which would have allowed it to settle the allegations out of court by paying a financial penalty.
The name of the engineering giant has been bandied about on Parliament Hill for two weeks in an unfolding political scandal, and Bruce says the company is "fed up" with the implications that it has acted improperly.
"It is not easy for me or the management team or for any of our dedicated hard-working parties to see SNC in the media over the last two weeks," Bruce said.
"We've done nothing wrong as a company and none of our current employees have done anything wrong," he said.
"We've never asked that the charges be dropped, we've never asked for anything to be circumvented outside this judicial system," he added.
Bruce said the company would still prefer to see the case settled outside of court because "we believe that ultimately the public interest will be served in the remediation agreement," but if the case is destined to proceed he says the company plans to vigorously defend itself.
"Our employees are being used as the puck in a political hockey game"
"They don't deserve it and frankly we've had enough."
The company's quarterly earnings showed it posting a loss of $1.6 billion for the quarter. Revenue fell to $2.56 billion, down from $2.92 billion, and the company slashed its quarterly dividend by two-thirds to 10 cents a share — down from 28 previously.
The company has issued two profit warnings earlier this year related to problems at a South American mining project and its Saudi Arabian oil and gas business, and is still trying to sell its 16 per cent stake in Highway 407, a toll highway in Ontario, to raise cash.
This week, ratings agency S&P downgraded the company's credit rating, which will exacerbate the company's problems by increasing its cost of borrowing.
Despite the dark clouds, most analysts who cover the company call it a "buy" according to Bloomberg data.
Analyst Derek Spronck of RBC Dominion Securities advised investors to "keep calm and carry on," and has a target price of $44 on the shares — which means he thinks their price will rise from $35 today to $44 within the next year.
"There remain lots of challenges ahead for SNC, but none of which we would view as insurmountable and more than reflected in the current share price," he said in a research note Friday.