(Reuters) - SNC-Lavalin Inc’s (SNC.TO) biggest shareholder said on Monday it has “great confidence” in the Canadian engineering company, a day after news of the arrest of a former senior executive on charges of corruption, fraud and money laundering.
SNC did what it could to investigate allegations of wrong-doing, and its reputation is unlikely to be greatly harmed in the long term, said Len Racioppo, president and director of Jarislowsky Fraser, a Canadian investment group that owns approximately 14.4 percent of SNC.
“Moving forward, is there reputational risk here? Perhaps, but I don’t think that’s going to hurt the company significantly longer term,” Racioppo said in an interview.
“We have great confidence in the company.”
Montreal-based SNC, which is one of the world’s biggest engineering groups with operations in about 100 countries, said last month that it had uncovered US$56 million in improper payments to unknown agents on projects that did not exist.
Canadian police are investigating this, as well as separately probing SNC over allegations about bribery in Bangladesh related to a bridge project there.
The latest twist in the saga came from Switzerland, where the State Prosecutor’s Office confirmed on Monday that Riadh Ben Aissa, a former company executive, had been arrested as part of a criminal investigation that was launched last May.
The arrest is in connection with business transactions in North Africa, Jeanette Balmer, a spokeswoman for the Swiss State Prosecutor’s Office said in an email.
Ben Aissa, who left SNC in February, was the group’s global head for construction operations. SNC alleges he is at the center of the improper payments mystery, which resulted in the company’s chief executive quitting last month.
Canadian media have written extensively about Ben Aissa’s alleged close ties to the family of former Libyan dictator Muammar Gaddafi.
Amid the allegations, SNC’s stock price is down about 28 percent in the past three months. But Racioppo was not overly concerned, saying the impact of the investigations will blow over.
“It could obviously have an effect on somebody in the short term, you never really know. But I don’t think longer term people will hang SNC because they had a couple of rogue employees who were able to manipulate whatever systems SNC had in place,” he said.
Separately, the Canadian government said on Monday it will cooperate fully with investigations into alleged wrongdoing at SNC and provide consular assistance to Ben Aissa.
“There are very serious allegations being made against this company, there are very serious investigations,” said Foreign Affairs Minister John Baird in Parliament.
“The government will do everything it can to support investigations and to be as helpful as we possibly can. Anyone who breaks the law should bear the full force of the law ... whether it be in Canada or abroad,” he said.
SNC, which last year earned revenue of C$7 billion ($7.09 billion), will release its first-quarter results on Thursday, when it also holds its annual meeting.
Its stock ended 17 Canadian cents higher at C$37.14 on the Toronto Stock Exchange on Monday.
Additional reporting by Louise Egan in Ottawa, Jennifer Kwan in Toronto and Catherine Bosley in Zurich; Editing by Janet Guttsman; and Peter Galloway