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SNC to reimburse Quebec municipalities, agencies over questionable contracts

SNC Lavalin President and CEO Neil Bruce speaks to reporters in Montreal, Tuesday, May 10, 2016, following a business luncheon. THE CANADIAN PRESS/Graham Hughes
May 10, 2016 - 1:50 PM

MONTREAL - Engineering giant SNC-Lavalin said Tuesday it wants to turn the page on its checkered past by making restitution to municipalities and other public bodies in Quebec for obtaining contracts through questionable means.

The provincial government launched a program last November aimed at recovering money paid in connection with public contracts obtained as a result of fraud or fraudulent tactics. It gives businesses and individuals two years to voluntarily make such payments for contracts dating as far back as 1996.

Following an internal investigation, Montreal-based SNC has decided to submit in the coming days what it said will be a fair proposal to make restitution for some contracts obtained in Montreal, Laval, Quebec City and Saint-Cyprien.

"We think it's important for us to put everything in the last 20 years in the past and move on and this is a great opportunity for us to do that," CEO Neil Bruce told reporters after speaking to the Montreal Board of Trade.

Other municipalities or public bodies that feel wronged can present evidence as to why they should obtain restitution. They have 60 days following the submission of a company's proposal to formally respond before negotiations begin through Francois Rolland, a retired judge who will act as mediator.

Quebec's justice minister has to approve all settlements, which must be reached by November 2017.

Although the company said in a news release that it is making the payments in response to the government program, Bruce said SNC-Lavalin isn't admitting culpability and only following the process set up by the province.

"We're basically taking the opportunity to enter the process, which is a global agreement that basically puts anything that may or may not have happened in the past," Bruce said.

By participating in the program, companies cannot be sued civilly over the contracts but are not immune from criminal charges.

Top SNC-Lavalin executives testified before the Charbonneau corruption inquiry that the company illegally donated money to provincial and municipal political parties to obtain work contracts.

SNC-Lavalin (TSX:SNC) said Tuesday it has found no evidence of its involvement in fraud relating to provincial contracts.

While several former company executives face fraud-related charges involving the McGill University Health Centre in Montreal, the actions didn't raise the price of the contract, said company spokesman Louis-Antoine Paquin.

Under the reimbursement program, companies repay at least 20 per cent of the value of the contracts plus a 10 per cent administrative charge.

The process allows details and penalties to remain confidential, although a final amount recovered by all participants will be disclosed in late 2017 or early 2018.

Although the process isn't fully transparent, it's a way to collect and disperse money without provoking an "interminable numbers war" among participating companies, said Michel Nadeau, head of Quebec's institute of good governance of private and public organizations.

"I hope the judge in charge will find a good settlement and, at the end of the process, the Quebec government will say we collected $180 million from the 10 to 12 engineering firms," he said in an interview.

Quebec's restitution program doesn't affect contracts in other provinces or those awarded by the federal government. It also doesn't affect criminal fraud and corruption charges SNC-Lavalin faces over allegations of illegal activity in Libya. The company has said it will plead not guilty to those charges.

Bruce said participating in the provincial program is the latest in a string of efforts to rebuild its reputation since it uncovered problems in 2012 that led to the removal of a former chief executive and other senior officials.

The Autorite des marches financiers, Quebec's securities regulator, certified SNC-Lavalin to do business with the province's public sector organizations after the company strengthened its ethics and compliance measures.

In December 2015, SNC-Lavalin signed an administrative agreement under a federal government program that allows companies facing charges to continue to secure contracts from Ottawa.

News from © The Canadian Press, 2016
The Canadian Press

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