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SNC Lavalin Reaches Out to Employees in Scandal Probe

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Seeking to root out the corruption of a previous regime that still affects its bottom line, and to boost its ethics stance, SNC-Lavalin Group Inc., Montreal, is offering all global employees "amnesty" to share details they may know of anti-competitive practices.

The firm, which has thousands of employees in more than 40 countries, said May 27 that its amnesty program encourages employees "to report potential corruption and anti-competition matters in which they may have direct or indirect knowledge."

The program, which SNC-Lavalin says is the first for any Canadian company, comes as the firm and its new management moves to eliminate client bribery and similar alleged practices in procuring work.

The practices have already resulted in charges against some former top executives, including former CEO Pierre Duhaime, and a 10-year ban in doing work on World Bank-financed projects.

The firm also is awaiting a governmental decision on the status of its ability to bid work in Quebec, which has been investigating the role of the company and other industry firms in an overall construction corruption probe.

SNC-Lavalin has been run by President and CEO Robert G. Card, formerly of U.S.-based CH2M Hill, since last October.

In March, SNC-Lavalin announced it had hired Andreas Pohlmann as its first-ever Chief Compliance Officer. From 2007 to 2010, he held the same role at Germany's Siemens AG, which settled bribery charges brought by U.S. and German officials. Pohlmann designed and managed that firm's compliance system.

SNC-Lavalin says the offer to provide information without fear of legal action or termination, does not extend to executives reporting to the president or management committe or to "anyone who directly profited from an ethical violation."

Employees who want amnesty have until Aug. 31 to file a request to Pohlmann.

"Amnesty programs are known to be highly effective means of getting to the bottom of ethics and compliance issues in large organizations," said Pohlmann. "While the vast majority of SNC-Lavalin's employees will have nothing to report, this offer of amnesty will allow us to uncover and quickly deal with any remaining issues ... so we can focus all of our attention on creating value for our stakeholders."

On May 22, Standard & Poor's cut SNC-Lavalin's long-term corporate credit rating to BBB from BBB-plus, while retaining its investment grade status.

S&P cited "weakened profitability as high administrative costs resulting from the company's recent ethics issues will continue to affect margins."

“Retaining strong financial stability is important for the firm, and we are committed to operating in a fiscally conservative fashion as we complete our near-term actions leading to ethics and operational excellence,” said Card.

The latest top exec to depart is Ric Sorbo, who has been the firm's Calgary, Alberta-based acting executive vice president and general manager of its hydrocarvons and chemicals group, who left last month "to pursue other opportunities," says SN-Lavalin.


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