World Bank bars SNC-Lavalin unit from projects
(Reuters) - The World Bank has temporarily barred a unit of SNC-Lavalin, a big Canadian engineering company that is already facing a payments scandal, from bidding on new bank projects following an investigation into a Bangladesh bridge project.
In a statement on Monday, SNC said the World Bank's move relates a probe of the Padma Bridge project in the South Asian country, on which the SNC unit had bid.
An international consortium, led by the World Bank, last year agreed to lend Bangladesh up to $2.9 billion for the 6-km (4-mile) bridge over the river Padma to link the country's underdeveloped south with its capital, Dhaka, and the country's main port.
The bank launched an investigation of the bidding process last September. A contract to build the bridge has not been awarded.
The World Bank's move against the SNC subsidiary is more bad news for SNC, whose chief executive quit last week after an internal investigation revealed he authorized $56 million in payments for projects that did not exist. Canadian police are now investigating the payments.
"While we do not expect this World Bank decision will materially impact SNC directly, we view the news as negative, particularly given SNC's recent findings with respect to its internal board investigation," RBC Capital Markets analyst Sara O'Brien said.
She said she expected SNC's stock, which is down 22 percent in the past three months, to come under more pressure.
The stock finished 2 percent higher at C$40.75 on the Toronto Stock Exchange on Monday. The news was released shortly before the market closed.
SNC, which is one of the world's biggest engineering companies, said it intends to provide a "comprehensive response" to the allegations contained in the confidential World Bank report. Continued...