TORONTO (Reuters) - Canadian police laid corruption charges against SNC-Lavalin Group Inc (SNC.TO) on Thursday, the first time the engineering company has been directly charged with alleged bribery as it conducted business in Libya over a ten-year period until 2011.
Montreal-based SNC said it would plead not guilty and urged that individuals, and not the company itself, be charged.
Still, the company’s stock fell more than 8 percent on fears about how a conviction would affect its business, as strict new anti-corruption legislation in Canada potentially bars companies convicted of crimes from doing business with the government.
Scandals involving alleged corruption and bribery at SNC’s Libyan operations emerged three years ago and led to the ouster of SNC’s former chief executive, Pierre Duhaime, in 2012, after the discovery of millions in missing funds. Other former SNC executives, too, stand accused of fraud and criminal offenses by law enforcement authorities in different countries.
The Royal Canadian Mounted Police charged SNC and two units Thursday with offering C$47.7 million ($38.2 million) in bribes to Libyan officials between 2001 and 2011 and of defrauding Libya of C$129.8 million.
SNC Chief Executive Robert Card responded in a statement, saying the charges, which were publicly known, were without merit, and “the company has cooperated with authorities.”
Card had previously said any move by authorities to charge the company would threaten its future because it could lose out on crucial government contracts.
RBC Capital said in a note SNC could face challenges in future bidding in Canada and abroad if found guilty.
“To a certain extent the damage to the company’s reputation and operational prospects may have already been done. But fighting these charges could be a distraction to management,” said Colin Cieszynski, chief market strategist at CMC Markets.
Barry Schwartz, a portfolio manager at Baskin Financial Services who previously held SNC stock, said he may consider buying shares if the price drops to the mid-C$30 range.
“It’s going to tarnish their reputation to get new contracts, but that’s not new news,” he said. “Hopefully they’ll clean the slate and take their punishment, take the medicine, and then things will pick up again.”
SNC shares were down 8.1 percent to C$40.15 in mid-morning trading in Toronto.
Additional reporting by Susan Taylor and John Tilak in Toronto and David Ljunggren in Ottawa; Writing by Andrea Hopkins; Editing by Jeffrey Hodgson and Bernadette Baum