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SNC-Lavalin Chief Says Job Losses Possible Amid Canadian Scandal

Mar 20, 2019, by Josh Wingrove

The head of the Montreal-based construction giant at the center of a political firestorm warned the company remains undervalued, is vulnerable to a takeover and at risk of shedding jobs in Canada.

Neil Bruce, president and chief executive officer of SNC-Lavalin Group Inc., said Wednesday that Canadian prosecutors should be grilling ex-executives instead of the firm. The company is facing fraud and corruption charges related to decade-old activities in Libya, and efforts by Justin Trudeau’s government to intervene have exploded into a crisis for the prime minister.

“Justice is upside down on this,” Bruce said in a BNN Bloomberg television interview. “We’ve apologized for the behavior of the previous management, and ultimately, I firmly believe the prosecution service should hold those responsible to account and stop damaging the innocent people.”

SNC-Lavalin once had 20,000 workers in Canada and now has 9,000, he added. “If we can’t put some of this behind us, it’s highly likely that we’ll have less,” he said.

Bruce’s comments are the latest twist in a saga over whether his company will get a deferred prosecution agreement, a negotiated fine that would end prosecution and help it avoid a ban on bidding for federal contracts that would come with a potential conviction. Trudeau’s former attorney general alleges the prime minister and several staff pressured her to help SNC.

Political Scandal

The scandal is dominating political debate in Canada, coinciding with a drop to second place in opinion polls for the governing Liberal Party. Trudeau, whose finance chief delivered his final budget this week before an election this fall, has lost two cabinet minister, one of his top political aides and Canada’s top bureaucrat to the controversy.

Bruce said Wednesday he never spoke with Trudeau directly about job losses or a deferred prosecution agreement, but that his company lobbied through normal channels.

“We put forward in our submissions what the public interest case is,” he said. “We’ve never asked for charges to be dropped, we’ve never asked for this to be circumvented in any way. We’ll follow the rule of law, whether it’s the court process or a remediation agreement.”

He said he never threatened to move the company headquarters from Montreal: “This is where we want to be, in terms of our base.” But the chief executive also signaled the company could pivot its focus elsewhere.

“We are a proud Canadian global champion — one of the few, actually,” Bruce said. “We’re a global company, we’ve got over 50,000 people. We can dial up, dial down, where we work. And if we are not in a position to do federal contracts, then that’s really clear. We don’t do that, we do something else.”

He said the company is looking at all its options and that it remains undervalued. “It’s always a possibility, but no, we haven’t” been approached recently about a takeover, he said. Asked if he was considering spinning off parts of the business, he said “every option is open.”

Bruce added: “Ultimately, this uncertainty just makes it very, very difficult to surface the true value.” The prosecution could take another three or four years, he said.

Saudi Arabia and Scheer

The legal case wasn’t the only thing Bruce singled out as hurting SNC’s business. He also cited uncertainty in Saudi Arabia, saying “it’s not of our making, in terms of the intergovernmental relationships there.” Trudeau’s government clashed with Saudi Arabia last year over human-rights issues, prompting the kingdom to restrict Canadian investment.

Bruce criticized political leaders for the current scandal, likening it to an “unacceptable” hockey game between Trudeau’s team and that of his rival, Conservative Leader Andrew Scheer, with his employees caught in the middle.

“It’s politics, it’s not actually anything to do with us. We’ve gone through the right channels, we’ve been really transparent and we’ve been clear,” Bruce said, adding that he’s spoken to Scheer on social occasions. “He seemed pro-business and seemed supportive, so I’m sort of puzzled by the reaction,” he said.

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