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Offering Canadian engineering giant SNC-Lavalin Group Inc. the chance to negotiate a deal to avoid a trial on criminal charges related to a bridge contract nearly two decades ago is the appropriate path to prevent collateral damage to the company’s stakeholders, Quebec prosecutors say.

“I think it fits” as a solution in this case, said Patrice Peltier-Rivest of Quebec’s office of criminal prosecutions, known as the Directeur des poursuites criminelles et pénales (DPCP). “This is an alternative to a more classic sentence – an alternative that allows for a lessening of the effects on employees, on retirees, on shareholders, on the clientele of SNC-Lavalin.”

The prosecutor’s office announced last week that it charged two of the company’s business entities – SNC-Lavalin Inc. and SNC-Lavalin International Inc. – and former SNC vice-presidents Normand Morin and Kamal Francis in connection with a long-standing RCMP investigation into bribes paid on a $128-million contract to refurbish Montreal’s Jacques Cartier bridge in 2002.

The development raises new legal headaches for the company as it tries to reshape itself into largely an engineering consulting business and wind down big construction projects. Ahead of an investor day Tuesday, the company said it would focus its efforts on the United Kingdom, Canada and the United States – where it has a leading presence in each region – while maintaining more targeted operations in other select markets.

The SNC units and the two former executives face charges of forgery, conspiracy to commit forgery, fraud, conspiracy to commit fraud, fraud against the government and conspiracy to commit fraud against the government, the RCMP say. The two men, both aged over 70, were arrested last Thursday and released.

During a brief hearing in Montreal on Monday before a Court of Quebec judge, lawyers for the two former SNC managers confirmed their clients would reserve their choice on how to be tried on the indictable offences – which is the equivalent of a not-guilty plea at this stage of the process. The men were not required to be present in person and did not attend the hearing.

Prosecutors, meanwhile, told the court they would file a formal invitation to the SNC units signed by the Attorney-General of Quebec to negotiate a deferred prosecution agreement. Such a deal, also known as a remediation agreement, would allow the company to avoid a trial in exchange for paying a fine and third-party monitoring of its activities.

SNC-Lavalin has said it welcomes the offer to strike a deferred prosecution deal.

A statement from SNC said last Thursday that it is the first time a Canadian company has received such an invitation. However, Mr. Peltier-Rivest said it is the second time Quebec prosecutors have offered an invitation to negotiate a deferred prosecution agreement.

The first instance involved a separate business known as Les Entreprises Dupont 1972 Inc., a spokeswoman for the DPCP confirmed Tuesday morning. A final agreement was reached in that case without a trial but the agreement was not a deferred prosecution deal, she said.

Mr. Peltier-Rivest said SNC co-operated with authorities during police searches and voluntarily provided relevant information afterward, which contributed to the decision to extend an offer to negotiate a deal. The two former managers cannot benefit from a deferred prosecution agreement because they do not apply to individuals.

Negotiations with the company have not yet begun. The Quebec Superior Court has to approve the agreement once the parties finalize it.

SNC-Lavalin was denied a DPA two years ago in a separate case in which it was charged with violating Canada’s Corruption of Foreign Public Officials Act, and fraud related to its business dealings in Libya when Moammar Gadhafi was in power. Kathleen Roussel, director of federal prosecutions, told The Globe and Mail last year a DPA in that case was inappropriate because of the “severity and breadth” of the offence.

SNC-Lavalin undertook an intense lobbying campaign with the federal government to get a DPA in the Libya case. Allegations that Prime Minister Justin Trudeau and other members of his government improperly pressed then-justice minister and attorney-general Jody Wilson-Raybould to order a settlement engulfed the government in crisis for weeks.

SNC-Lavalin struck a deal with prosecutors in December, 2019, in which the company’s construction division pleaded guilty to a single charge of fraud and the potentially more-damaging bribery charge was dropped. The company agreed to pay a $280-million fine and received a three-year probation order, which includes oversight by an independent monitor. The Quebec judge who approved the agreement called it “reasonable” and said that, without such plea deals, Canada’s justice system “would collapse under its own weight.”

The Jacques Cartier bridge investigation, dubbed Project Agrafe (staple), has long been a legal risk for SNC-Lavalin. The company has acknowledged the probe in corporate filings, noting that other investigations into its past business dealings may be ongoing, including in Algeria.

Michel Fournier, the former head of the Federal Bridge Corp., pleaded guilty in 2017 to fraud-related charges for accepting more than $2.3-million in kickbacks from SNC-Lavalin in the Jacques Cartier bridge case and laundering the funds. He was sentenced to 5½ years, and has since received full parole. The police probe then focused on who arranged the bribes.

The Libya and Jacques Cartier bridge cases are “two different cases completely,” said prosecutor Francis Pilotte of Quebec’s office of criminal prosecutions. “The DPCP is completely independent regarding any cases that might have happened in the past. So it is our sole discretion” to lay charges and offer deferred prosecution agreements, he told reporters.

SNC-Lavalin’s share price has seen only a modest decline over the past three trading sessions, suggesting that investors believe the bridge case will have a minimal impact on its business. National Bank of Canada analyst Maxim Sytchev estimates the company could pay a $15-million fine to the government as part of the negotiated agreement.

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