For new SNC-Lavalin Group Inc. chief executive officer Robert Card, the company’s “division of labour” is simple: He’ll focus on building the business; the board will deal with a damaging payments scandal.
Mr. Card started his new job Monday at the helm of Montreal engineering giant as the company seeks to reclaim its leadership and to regain the trust of its shareholders and its 32,000 employees. Earlier this year, the company disclosed $56-million in improper payments through its international operations. The scandal led to the departure of former CEO Pierre Duhaime in March.
SNC is trying to shield its new CEO from the controversy, executives made clear Monday.
“There are issues that are significantly distracting in the short run,” said the 59-year-old Mr. Card, referring to the payments issue. “Why burden the new CEO, when there is plenty to do to move the company forward.”
His “priority is running the business, not dealing with the past,” said Gwyn Morgan, chairman of SNC’s board of directors.
Shareholders are also eager for SNC to get on with business.
“It is important for him not to waste his time on old problems,” said Stephen Jarislowsky, CEO of investment manager Jarislowsky Fraser Ltd., SNC’s largest shareholder with a 14 per cent stake. “He should get on with the real job of chief executive.”
But the “division of labour,” as Mr. Card calls it, might be hard to maintain as the company deals with new developments. On Monday, La Presse newspaper, citing unnamed sources, reported that $22-million of the $56-million in improper payments could have been funnelled back to Montreal as kickbacks in the $1.3-billion contract to construct McGill University’s superhospital, which was awarded to SNC and to U.K. infrastructure group Innisfree.
A spokesperson for the McGill University Health Center, Marc-Antoine Pouliot, declined to comment on the allegations, which followed a search executed on the hospital’s offices on Sept. 18 by the provincial police’s anti-corruption squad. The search warrant was in relation to the awarding of the contract.
For his part, Mr. Morgan refuses to comment on any of the criminal investigations now under way in Canada and in Switzerland.
To put SNC’s controversies behind it, Mr. Card intends to focus on results. “We need to deliver,” he said. Mr. Card has his own money at stake, as he bought close to $1-million in SNC shares.
This, in the end, will determine how the first American to lead the Montreal engineering firm will be viewed in Quebec. “At the end of the day, I will be judged by my results. Not by where I am from or what I speak,” Mr. Card said.
The former CH2M Hill leader was one of a dozen executives SNC board members interviewed for the top job, Mr. Morgan said. Despite Mr.Card’s 40-year career in engineering, Premier Pauline Marois criticized the choice of the anglophone during the last election campaign.
Mr. Card just bought a condo with in wife Nancy in Old Montreal – not in the traditionally English borough of Westmount, he was quick to add. He started taking French classes, as speaking Molière’s language has long been on his “bucket list.”
His French, which he started learning in school when he grew up in Yakima, Wash., is actually less coarse than that of Mr. Morgan’s.
Mr. Card is also familiar with Canada. Since his childhood, he has vacationed in British Columbia, boating around Vancouver Island and in Desolation Sound. He also spent three years in Alberta, from 1980 to 1983, working as a project manager on Suncor’s Fort Kent steam simulation project.
What SNC’s new president brings, however, is an in-depth knowledge of the U.S. market, where the Montreal engineering firm does less than 4 per cent of its business. “The U.S. is a big market, and Canadian firms have done well there, he said. So I see no reason why a Canadian firm can’t be spectacularly successful there.”
Mr. Card says it would be premature for him to unveil how he will put his own imprint on SNC’s business strategy, given the global slowdown. As he keeps all options open, even the Montreal headquarters should not be taken for granted, though Mr. Morgan later stated that the board is not currently considering such a move.
But Mr. Card did give some indications as to what he will be looking into.
“SNC could be stronger outside of its core markets, in infrastructure, in mining and in oil and gas. There are also key markets where the company has a limited physical presence,” he said.
This environmental engineer from a family of engineers (his father, his brother, his wife and his two children are all engineers) is also very cautious about spinning off business units to maximize short-term shareholder value.
“Because our businesses are people oriented, they are hard to enter and hard to exit, so I will not make snap decisions,” Mr. Card said, and said he was no “Wall Street wheeler-dealer.”