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The head office of SNC Lavalin are seen Thursday, February 19, 2015 in Montreal. The RCMP has laid fraud and corruption charges against Montreal-based engineering firm SNC-Lavalin and two of its subsidiaries.Ryan Remiorz/The Canadian Press

The RCMP have laid rare corporate fraud and bribery charges against SNC-Lavalin Group Inc. after protracted negotiations with prosecutors failed to reach a settlement, threatening the future of an enormous Canadian firm that builds infrastructure around the world.

While former company executives already face criminal charges related to bribing Libyan officials – former vice-president Riadh Ben Aissa has pleaded guilty to Swiss charges – a series of scandals has shown a culture of breaking ethics rules in the company's executive suite prior to 2012. These are the first charges targeting the company as a whole.

SNC is accused of using at least $47.7-million to bribe Libyan officials. A second count is for fraud of about $130-million related to construction projects in Libya. SNC responded quickly, saying the alleged activities took place between 2001 and 2011 and the people involved have been fired. The company says it has co-operated with authorities for the past three years and intends to plead not guilty.

A source familiar with the investigation said settlement talks between SNC-Lavalin and prosecutors were close to a deal in October.

As part of any deal, the company was expected to face a multimillion-dollar fine. But the possibility that a guilty plea could automatically trigger a 10-year ban on winning Canadian government contracts "complicated everything" and must have been among the factors that scuppered the settlement, the source said.

Long considered soft on anti-corruption enforcement, Canada's international reputation may benefit from the charges, according to one of the country's staunchest critics.

"This is a step in advance. Canada is actually gaining ground on its past," said Mark Pieth, a criminal law professor at the University of Basel in Switzerland and the former chairman of the Organization for Economic Co-operation and Development's bribery working group.

"Finally. I had waited for action against the company for a long time."

Business analysts played down any immediate threat to the company, saying charges and an eventual fine of up to $300-million were expected. But chief executive Robert Card was unequivocal when he told The Globe and Mail last fall SNC could be broken up or "cease to exist" if the company were convicted and barred from Canadian government contracts for 10 years. He said even laying charges could be damaging enough to SNC's reputation to pose a threat.

The company has "always been willing and remains willing to reach a reasonable and fair solution that promotes accountability while permitting us to continue to do business and protect the livelihood of our over 40,000 employees," Mr. Card said in a statement issued Thursday. The company has 5,000 employees in its Montreal headquarters.

Corruption charges against companies are rare in Canada, and current law offers few options for a speedy recourse, setting up a legal battle that could take years. If convicted, the company could be barred from vital federal business for 10 years under the government's new "integrity framework."

The United States and other countries have quick rehabilitation processes that encourage guilty pleas, cash settlements and remedial measures for companies accused of corruption. Canada does not, a situation business leaders and Transparency International, an organization committed to fighting corruption, have described as excessively harsh. The government has agreed to review the regime but has refused to suspend it in the meantime.

The company's reach, when it comes to Canadian infrastructure, is so vast it's difficult to measure. SNC has built or refurbished hydro dams, bridges and major buildings across Canada and around the world. The company has had a hand in Vancouver transit's Canada Line, Toronto's 407 toll highway, the Olympic Stadium roof in Montreal and Newfoundland's Hibernia oil platform.

Riyaz Dattu, a Toronto lawyer with Osler, Hoskin & Harcourt LLP who advises companies on corruption issues, said the charges for SNC-Lavalin are a dire warning for other Canadian companies that they need to bring in stronger anti-corruption controls and new training for employees to ensure bribes are not being paid around the world.

"The message is coming through loud and clear to corporate Canada," Mr. Dattu said.

The Libyan allegations are not the only corruption troubles facing SNC. Ethics probes have involved SNC employees who worked on projects in Algeria, Bangladesh and Montreal. Mr. Ben Aissa is at the centre of many of the allegations, including fraud and corruption charges related to building a Montreal hospital.

The company has fired alleged perpetrators including former CEO Pierre Duhaime. Mr. Card was hired to replace him in 2012 with a mandate to overhaul ethical compliance in the company.