SNC-Lavalin chief executive Neil Bruce and his team are working behind the scenes on contingency plans for the company after it failed to secure a settlement.Paul Chiasson/The Canadian Press
Legal analysts say a Quebec court is expected to rule on Wednesday to send SNC-Lavalin Group Inc. to trial on criminal corruption charges.
The low threshold required to proceed past the preliminary inquiry stage means Judge Claude Leblond of the Quebec Court is likely to decide there is enough evidence to move ahead with a trial, analysts say. The company said in a regulatory filing this month that it might seek a judicial review of the decision by a higher court.
“The general expectation right now is that this will continue to proceed to trial,” said Chris Murray, who tracks SNC-Lavalin for AltaCorp Capital Inc. in Toronto. Any other outcome would be “very surprising,” he said.
SNC-Lavalin had sought to negotiate a settlement called a deferred prosecution agreement with federal prosecutors. Since it announced in October that the effort failed, the company has lost some $2.2-billion in market value. The price of its stock has plunged 22 per cent over the past month alone.
A loss of about $356-million on a project for Chilean miner Codelco and the decision to sell a bigger stake than planned in Highway 407, a toll road in the Greater Toronto Area, have added to investors’ concerns. The sale of the 407 stake is now mired in legal wrangling among the buyers.
The RCMP laid bribery and fraud charges against SNC-Lavalin in February, 2015, alleging the company paid at least $47.7-million in bribes to public officials in Libya between 2001 and 2011 to secure contracts from the regime of the late Moammar Gadhafi while participating in a $130-million fraud. The charges came even though the company has overhauled its senior leadership and put in place ethics and compliance programs.
SNC-Lavalin could be banned from doing work for the federal government for five to 10 years if it is convicted. In that situation, the company says it would almost certainly be forced to lay off workers or even pull out of Canada. A conviction would also hurt it internationally.
SNC-Lavalin chief executive Neil Bruce and his team are working behind the scenes on contingency plans for the company after it failed to secure a settlement. The issue sparked a political crisis in Ottawa in which a top aide and a top bureaucrat resigned and two cabinet ministers left the governing Liberal Party.
The company is using all its legal options, launching a separate effort before the Federal Court of Appeal to quash the criminal case while defending itself in the preliminary inquiry. Mr. Bruce told The Globe and Mail on March 20 that "nobody appears to give a crap about whether we fail or not in Canada.”
The CEO is under tremendous pressure to reverse SNC’s slide. He told investors earlier this month that the company is weighing a breakup before its criminal case even gets to trial, a move that could include carving out British unit WS Atkins. The thinking is that separating the businesses would force investors to re-evaluate their worth.
Daniela Pizzuto, a spokeswoman for SNC-Lavalin, declined to comment on Monday. The company has said all options are on the table as it prepares so-called “Plan B” scenarios to fight off a further decline in its stock price.
Charges against SNC-Lavalin were tested for the first time last October as prosecutors began laying out their case during the preliminary inquiry. The evidence is under a publication ban. Justice Leblond has scheduled a hearing for Wednesday, during which he is expected to outline his decision on whether the case should proceed to trial.
The threshold is “very minimal” at this stage, and amounts to whether there is a reasonable prospect of conviction, said Jennifer Quaid, associate professor of law at the University of Ottawa. “It leaves completely to the side how strong that evidence is at the moment and how strong any defences might be that come against it,” she said.
Nicolas Van Praet