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Embattled SNC-Lavalin Group Inc. has appointed an outsider as the company’s new chief executive following the resignation of Pierre Duhaime, who stepped down amid controversy over millions in mysterious payments in North Africa.
Robert Card, a former senior executive at CH2M Hill Companies Ltd., will take the reins Oct. 1.
He was chosen after a global search for leaders outside the Montreal-based construction and engineering giant, which has recently been mired in scandal.
“We considered several strong candidates from Canada and around the world,” said Gwyn Morgan, chair of the SNC board.
During the search the company concluded that it found in Mr. Card “an exceptionally intelligent, energetic and ethical leader, well-equipped to deal with both the specific issues that face SNC-Lavalin and the broader strategic challenges of global political and economic changes,” Mr. Morgan said.
In addition to his role as president and CEO, Mr. Card will also sit on the company’s board of directors.
SNC-Lavalin has been feeling the fallout from investigations into $56-million worth of payments that were directed through its Tunisian office to unknown sales agents.
The rogue payouts prompted it to part ways with several senior executives, including former chief executive officer Pierre Duhaime.
Mr. Duhaime stepped aside in March after a probe revealed he signed off on payments to undisclosed agents, breaching the company’s code of ethics.
SNC-Lavalin has said Mr. Duhaime co-operated with its internal investigation, but he couldn’t provide details of the payments.
Despite the scandal, the new CEO, who has nearly 40 years of experience in managing infrastructure and energy projects, said he is excited about the “enormous opportunity that this company represents.”
“SNC-Lavalin has long been known as an international player with significant credibility in the (engineering and construction) sector globally and excellent people,” Mr. Card said in a statement.
Mr. Card added he and his wife are excited to move to Quebec and to learn French, a language he called “an integral part of this global firm’s heritage.”
At CH2M Hill, he held a variety of positions, including president and group chief executive of the international division. He also recently acted as COO for the consortium responsible for building the $15-billion London Olympics complex. Between 2001 and 2004, he was an under secretary with the U.S. Department of Energy. Mr. Card has a master's degree in environmental and civil engineering from Stanford University and also attended Harvard.
CH2M Hill Companies Ltd. group is a Fortune 500 engineering services firm with 30,000 staff, a presence in more than 80 countries and $6-billion in revenue.
The company said last week it’s committed to ethical behaviour and good corporate governance as it awaits the outcome of the investigations involving former employees.
Riadh Ben Aissa, SNC’s former head of construction, sits in a Swiss jail. He hasn’t been charged but is being held on suspicion of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.
Mr. Ben Aissa was in charge of business dealings in his native Tunisia as well as Libya, where the company won lucrative contracts with the former regime of Moammar Gadhafi.
The RCMP executed search warrants at SNC-Lavalin’s Montreal headquarters in April.
The raid followed an investigation into bidding on projects in Bangladesh that prompted RCMP searches of SNC’s Toronto-area offices last September.
Two former SNC executives will be in court next year to face a corruption charge connected to the Bangladesh investigation. Ramesh Shah, 61, of Oakville, Ont., and Mohammad Ismail, 48, of Mississauga are accused of trying to bribe officials in the country. A hearing to determine if there is enough evidence to warrant a trial is set for next April.
In its most recent quarterly results, SNC’s net income fell to $32.7-million, or 21 cents per share, in the three months ended June 30.
That’s down from $102-million or 67 cents per share a year earlier and far below a consensus estimate compiled by Thomson Reuters.
Despite the controversy, SNC continued to receive numerous mega-project contracts during the quarter including a part of a $1-billion extension of the 407 toll highway in southern Ontario.
The company also made headlines when about 800 employees at its subsidiary Candu Energy went on strike.
Shares of SNC-Lavalin dropped more than 20 per cent on Feb. 28, wiping out more than $1.5-billion of market value after the company disclosed the launching of an investigation into $35-million of undocumented payments.
Nearly $3.5-billion has been wiped from the company’s value since SNC’s shares peaked at $59.97.
Shares in the company, which made the announcement Friday after markets closed, moved 12 cents higher to close at $37.50 on the Toronto Stock Exchange.