SNC-Lavalin

SNC-Lavalin Group Inc.

Type	Public (TSX: SNC)
Industry	Engineering and construction services
Founded	1911
Headquarters	Montreal, Quebec, Canada
Key people	Lawrence Stevenson[1] (Chairman) Neil Bruce (CEO)[2]
Products	Engineering services, project management, construction, construction management, procurement and operations and maintenance
Revenue	C$ 9.587 billion (2015)[3]
Net income	C$1343.5 million (2014)[3]
Number of employees	37,000
Website	www.snclavalin.com

Founded in 1911, SNC-Lavalin Group Inc., a Montreal-based company, provides EPC and EPCM services in a variety of industry sectors, including mining and metallurgy, oil and gas, environment and water, infrastructure and clean power. In many cases, SNC-Lavalin combines these services with its financing and operations and maintenance capabilities to provide end-to-end project solutions. Being the largest engineering firm in Canada and with offices in over 50 countries, SNC-Lavalin is constantly ranked among the top engineering design firms in the world.

History

Surveyer, Nenniger & Chenevert Consulting Engineers (SNC) was established by Swiss-born Arthur Surveyer in 1911 in Montréal. He had a tough beginning, and he was struggling financially. He partnered with many companies, but they came and left. However, his reputation continued to grow. Surveyer’s private practice at first specialized in hydraulics (rivers, hydropower projects and flood control), but soon branched out into the industrial sector (particularly pulp and paper, mining and metallurgy).

Surveyer formed a first 10-year partnership with Emil Nenniger and Georges Chênevert in 1937. A second partnership agreement was signed in 1946, and the firm’s name was changed to Surveyer, Nenniger and Chênevert. The name would eventually be abbreviated to SNC. As stated by SNC, in the 1960s Surveyer, Nenniger & Chênevert completed the Manic-5 dam on the Manicouagan River, which is the highest multiple-arch dam in the world. The completion of this project made them gain notoriety. Their first international contract was awarded in 1963, to design and build the 780 MW Idukki power station in Kerala State, India.

Lavalin was formed in 1936 by engineers Jean-Paul Lalonde and Romeo Valois. Bernard Lamarre was named President and CEO in 1962, and led the company for the next 29 years. During that time Lavalin grew to become SNC’s main rival in Canada. Lavalin also branched out in other industries, such as cable television—Canada's The Weather Network and MétéoMédia were founded by Lavalin in 1988; Lavalin's shares would be sold to Pelmorex in 1993. In 1991, SNC merged with Lavalin to become SNC-Lavalin.

According to Ingram, to increase their reach, SNC-Lavalin partnered with Bombardier in the 1990s to build transportation projects in Malaysia and Turkey. To increase their profits, they bought a 27 percent share in Ontario's Highway 407 toll road for $175 million. In 2011, they sold part of their share of Highway 407 at a significant profit.

SNC-Lavalin's growth strategy involves building on its recognized expertise in the core sectors (agrifood, aluminum, biopharmaceuticals, chemicals and petroleum, the environment, facilities and operations management, infrastructure, mass transit, mining and metallurgy and power), developing its vast international network, and increasing its project financing capabilities to enhance its competitiveness in major projects and infrastructure concessions.

In June 2011, SNC-Lavalin agreed to purchase the commercial reactor division of Atomic Energy of Canada Limited (AECL) from the Government of Canada for C$15 million. SNC-Lavalin established a subsidiary company named Candu Energy Inc. to market the design and supply of CANDU reactors.^[4]

On 23 June 2014, SNC-Lavalin agreed to acquire Kentz for approximately C$2.1 billion ($1.95 billion). Kentz is an Irish engineering and construction business serving clients primarily in the oil and gas, petrochemical and mining and metals sectors. It is a constituent of the FTSE 250 Index.^[5]

Operations

SNC-Lavalin operates in oil and gas, mining and metallurgy, environment and water, nuclear power, hydro power, the transmission and distribution of energy, thermal power, and a variety of infrastructures, including mass transit and heavy rail systems, highways, bridges, airports and marine facilities, as well as industrial, commercial, cultural and healthcare buildings. The company states that it has the ability to provide services across all of these sectors, including financing and asset management, engineering, construction, procurement and operations and maintenance, or provide any one of these services individually.

Major projects

Corporate headquarters of SNC-Lavalin on René-Lévesque Blvd, in Montreal.

• The James Bay Project for the James Bay Energy Corporation (completed in 1979)^[6]
• The Brun-way project to twin Route 2, the New Brunswick portion of the Trans-Canada Highway. This project saw existing sections of highway twinned as well as extensive new alignments built (completed in 2007)^[7]
• The William R. Bennett Bridge in Kelowna, British Columbia (completed in 2008)^[8]
• The Canada Line, an extension of the SkyTrain rapid transit system in Vancouver (completed in 2009)^[9]
• The Goreway Power Station power plant in Ontario (completed in 2009)^[10] for Toyota Tsusho and Chubu Electric Power
• The Ambatovy nickel and cobalt mining and preparation plant in Madagascar (due to be completed in 2010)^[11]
• The Eglinton Crosstown (LRT) and Blue22 (airport rail link) projects in Toronto were originally awarded to SNC-Lavalin,^[12] who was one of only two bidders for the Crosstown line.^[13] Both lines have since been transferred to Metrolinx ownership. The Crosstown line is due to be completed in 2020, while Blue22 opened as Union Pearson Express in 2015.
• Lac Doré Vanadium Deposit^[14]

• Ermine Power Station for SaskPower in Saskatchewan (completed in 2009)^[15]
• Ontario Highway 407 was leased to a conglomerate of private companies in 1999 for $3.1 billion, who renamed the route 407 ETR. The company, known as 407 International Inc., is owned by a consortium of three companies including SNC-Lavalin.
• Confederation Line, a 12.5 kilometre rapid transit line in Ottawa with a 2.5 kilometer downtown subway tunnel as the center piece. SNC-Lavalin is one of three main partners of the Rideau Transit Group, along with Grupo ACS and EllisDon. The project should be completed by 2017.
• Halifax Central Library structural engineering

Controversies

In 2010, the first reports of murky affairs surfaced against the company.^[16] These reports prompted calls for Canada to tighten bribery laws^[17] and triggered a series of ethics and compliance initiatives within SNC-Lavalin.

SNC-Lavalin Kerala hydroelectric dam scandal

In 2008, SNC was accused of bribery and financial fraud related to the contracting of the renovation and modernization works of the hydro electric power stations in India. A government investigation, which resulted in the expulsion of several Indian government officials, alleged a net loss to the exchequer of 3745.0 million.^[18]

Other controversies

Under Muammar Gaddafi's controversial government, SNC-Lavalin formed close ties with the former ruler's family and regime.^[19] When SNC-Lavalin pulled out of Libya in 2011, it left behind $22.9 million in Libyan banks.^[19]

The relationship between SNC and Dr. Arthur Porter, the McGill University Health Centre's CEO between 2004-2011, attracted extensive media scrutiny due to perceived conflict of interest. This scrutiny intensified when it was revealed that Porter had received $22.5 million in consulting fees from the firm prior to awarding them a $1.3 billion contract related to the hospital's construction, even though they were outbid by $60 million.^[20] These dealings were found to be in violation of the Quebec Health Act, and further investigation of the case by the Charbonneau Commission resulted in allegations of SNC-Lavalin employees' involvement in fraud and forgery relating to the contract. Porter resigned from the post on 5 December 2011 in light of substantial public pressure, and a warrant has since been issued for his arrest.^[21][22]

Late in February 2012, SNC investors found out that audited financial statements have been delayed to accommodate an internal review relating to SNC's operations. The internal review will probe $35 million of unexplained payments in Libya. Prior to the launch of the investigation, there had been months-long media speculation about the company's work in Libya and its ties to the Muammar Gaddafi family.^[23][24][25] In 2012, the Royal Canadian Mounted Police investigated the company on these charges.,^[26] and then in 2015 they charged SNC-Lavalin with "fraud and corruption", which the company indicated they would contest in court.^[27]

In September 2013, SNC-Lavalin and its affiliates composed 115 of the 117 Canadian companies that were part of 250 total companies blacklisted from bidding on the World Bank's global projects. James David Fielder, the bank's manager, stated, “As it stands today, the World Bank debarment list includes a high number of Canadian companies, the majority of which are affiliates to SNC-Lavalin Inc.” The companies were debarred due to an investigation relating to the Padma Bridge project in Bangladesh, where World Bank investigators worked with RCMP officers to make a collective action against corruption.^[28]

In 2015, internal documents from SaskPower (the crown corporation that is the principal electric utility in Saskatchewan, Canada), revealed that there were "serious design issues" in the carbon capture and storage system at its Boundary Dam Power Station, resulting in regular breakdowns and maintenance problems that led the unit to only be operational 40% of the time. SNC-Lavalin had been contracted to engineer, procure, and build the facility, and the documents asserted that it "has neither the will or the ability to fix some of these fundamental flaws."^[29] The low productivity of the plant had in turn meant that SaskPower was only able to sell half of the 800,000 tonnes of captured carbon dioxide that it had contracted to sell to Cenovus Energy for use in enhanced oil recovery at a cost of $25 per tonne. In addition to the lost sales, this meant that SaskPower had been forced to pay Cenovus $12 million in penalties.^[30]

Top executive resignations

In March 2012, SNC-Lavalin's chief executive officer Pierre Duhaime resigned^[16][31] and was replaced by company director Ian Bourne, who is also the Chairman of Ballard Power Systems and a member of the CPP Investment Board.

On 28 November 2012, Duhaime was arrested by Quebec authorities on fraud charges.^[32]

Two other executives, former vice president Riadh Ben Aissa and vice president and financial controller Stephane Roy also left.^[31][33] In late 2013, Michael Novak, the former head of SNC International who "signed several of the contracts between SNC and commercial consultants for work in Africa – notably with the government of former Libyan dictator Muammar Gaddafi" also resigned.^[34] As of July 2014, Aissa was jailed in Switzerland for "suspicion of corruption, fraud and money-laundering in North Africa," while Roy was awaiting trial for fraud, bribery, and contravening a United Nations act. Roy may also face charges in Canada in relation to the McGill University Health Centre. Aissa's predecessor, Sami Abdallah Bebawi, has a warrant out for his arrest but his whereabouts as of July 2014 were unknown.^[35]

References

External links

• SNC-Lavalin
• ReferenceForBusiness company history