Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

SNC-Lavalin has been hit with a second class-action lawsuit on behalf of investors.


Embattled engineering giant SNC-Lavalin is facing a class-action lawsuit seeking more than $1.5-billion on behalf of investors who saw the value of their asset plummet on revelations about payments in North Africa.

Rochon Genova LLP announced the lawsuit Wednesday, alleging the Montreal-based company violated securities law by misrepresenting that it had adequate controls and procedures to ensure accurate disclosure and financial reporting.

"When a company repeatedly highlights its strong governance practices to the investing public, revelations of serious misconduct cause damage to the company's reputation and, in turn, substantial harm to its investors," lawyer John Archibald said in a news release.

Story continues below advertisement

The suit filed in the Ontario Superior Court seeks $1.5-billion for misrepresentations and $150-million in punitive damages.

It was brought on behalf of all SNC-Lavalin investors, excluding residents of Quebec, who purchased securities of SNC-Lavalin between Feb. 1, 2007 and Feb. 28, 2012 or who purchased debentures of the company through the company's June 2009 prospectus offering.

The lead plaintiff is Brent Gray, a resident of Surrey, B.C., who purchased 600 shares in January at $52.20 per share.

The suit claims, among other things, that a 2009 prospectus offering $350-million of debentures — a type of bond issued to raise capital — failed to contain "full, true and plain disclosure of all material facts."

"As a result of the misrepresentations alleged herein, the prices at which debentures were offered pursuant to the prospectus were inflated, and class members who purchased the debentures in the primary market suffered damages a result," said the 26-page statement of claim.

The claim arises from alleged payments made by SNC-Lavalin to members, associates, and agents of the Gadhafi regime to secure contracts for infrastructure projects in Libya.

The allegations have not been proven in court.

Story continues below advertisement

In addition to current and former members of SNC's board of directors, those named include SNC-Lavalin International chairman Michael Novak and subsidiary vice-presidents Charles Azar and Andre Beland, who are in charge of Libyan operations.

The claim said these officials, former CEO Pierre Duhaime and former controller Stéphane Roy assisted executive vice-president Riadh Ben Aissa in arranging "improper or unlawful payments" to secure contracts in Libya.

"SNC-Lavalin and the defendants knew, ought to have known, or were reckless in not knowing that the former Gadhafi regime awarded contracts for infrastructure projects in Libya in return for improper or unlawful payments," the suit states.

Mr. Duhaime, Mr. Roy and Ben Aissa have lost their jobs with SNC-Lavalin.

Mr. Aissa, SNC's former head of construction, is in a Swiss jail on suspicion of corrupting a public official, fraud and money laundering tied to his dealings in North Africa.

The suit follows a $250-million claim containing similar allegations that was filed in March on behalf of investors in Quebec.

Story continues below advertisement

SNC didn't immediately respond to this latest legal challenge. But it denied all liability in respect of the claims alleged in the earlier class-action and vowed to defend itself.

Shares of SNC-Lavalin (TSX:SNC) 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. They lost 42 cents to $36.63 in Wednesday trading on the Toronto Stock Exchange.

The engineering and construction giant's initial review led to it finding $56-million of payments to unidentified foreign agents.

The company has insisted that none of the funds were directed to Libya.

Analyst Maxim Sytchev of AltaCorp Capital said the lawsuits will have no short-term impact on perceptions about SNC or its share performance.

Story continues below advertisement

He noted the suits could drag on for a long time, if they ever get certified by the courts.

"For the time being this is not an issue," he said in an interview.

"Here it looks like they're being sued for an event that only recently became apparent even to the people on the inside," he said, adding there is no proof of payments to Libya.

SNC-Lavalin removed $900-million worth of Libyan projects from its backlog in 2010 amid the civil war in the North African country.

The RCMP executed search warrants at SNC-Lavalin's headquarters at the request of Swiss police.

However, Mr. Bourne said he wouldn't be surprised if police aren't able to use their powers to shed more light on events.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to
Comments are closed

We have closed comments on this story for legal reasons or for abuse. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies