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Commumications

In: Business and Management

Submitted By joshblaq
Words 1297
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|Improbable Plot Casts Unflattering Light on SNC-Lavalin |
| | |
|In October of 2012, one of Canada’s largest engineering |merger of two Montreal-based engineering firms in 1991. SNC |
|companies, which was also one of the world’s five largest, hired |was established by Arthur Surveyer in 1911 while Lavalin’s |
|a new CEO in what looked like the next chapter of an ongoing |precursor company was crated by two engineers in 1936. Bernard|
|attempt to put a series of revelations about unethical and |Lamarre was named President and CEO in 1962, and still led |
|potentially illegal dealings around the world behind them. While|Lavalin when the merger happened. During the late 1980s it was|
|the company had fired some key people who were connected with the|Mr. Lamarre’s projects that a young Riadh Ben Aissa worked |
|scandals, there were those who publicly mused that the reported |on—and the two of them became know as the “firemen” for their |
|unethical and illegal dealings weren’t just the work of a rogue |abilities to handle complicated situations successfully. |
|international VP, Riadh Ben Aissa, but that Mr. Ben Aissa’s way | |
|of doing business was well-understood within SNC. |Stories of illegal dealings arise |
| | |
|While Mr. Ban Aissa was detained in jail in Switzerland on |It was a strange start to what became an even stranger story |
|suspicion of paying bribes in order to get contracts in North |and an embarrassing episode for the major Canadian company. In|
|Africa, including Libya, the new CEO, Robert Card, stated that |November 2011, Cynthia Vanier, a Canadian woman from mount |
|sorting out the payments scandal would be the job of the |Forest, Ontario, was included in a group of people arrested in |
|company’s Board of Directors and his job would be to reassure |Mexico and later jailed for 18months, for allegedly trying to |
|investors by growing the business. At that time, investor |smuggle Saadi Gaddafi, son of Muammar Gaddafi, the President of|
|concerns had caused the stock price to fall to $35 from $60 18 |Libya, and his family into Mexico on false passports. |
|months earlier. |Authorities claimed that part of the plot included the purchase|
| |of a condo and house for the Gaddafi family by Ms. Vanier, a |
|Over the past three years the company had reported strong |contractor for SNC-Lavalin. Ms. Vanier denied the charges |
|financial results. In 2010, SNC-Lavalin’s revenues had been $6.0|saying that the condo was for her and her husband. She said |
|billion and profit reached a record $477 million. In 2011, |she had been hired by the company to report on the security |
|revenues had grown to $7.2 billion but profit declined to $379 |situation in Libya where SNC-Lavalin had significant |
|million, partly as a result of the pullout from Libya, but still |investments. Saadi Gaddafi also had connections to SNC-Lavalin|
|the second highest in company history. In 2012, the revenues |and to Canada. He was hosted by the company when he traveled |
|were again trending up with an expected total of over $8 billion |to Canada for English classes, and he also bought a condo in |
|and profit of around $300 million. |Toronto. SNC-Lavalin initially denied they had hired Ms. |
| |Vanier, but later admitted they had asked her to assess whether|
|The creation of a Canadian champion |company employees, who had been evacuated during the civil war |
|SNC-Lavalin was a 101-year old Montreal-based company with |in Libya, could return to their jobs in the country. |
|offices in 36 countries and contracts with about 100 countries. |Matters only got worse for the company when it came to light |
|With 34,000 employees worldwide, the company was involved in |that $56 million dollars were missing and that mystery payments|
|designing, building and operating power facilities, irrigation |were made to an unnamed agent of the company. |
|systems, upgrading mines, providing building maintenance and | |
|constructing sulphuric acid plants. SNC-Lavalin had been formed |headquarters and also in other countries as a result of |
|by a |allegations that the company was paying bribes to win |
| |contracts. The company |
|At that time, the CEO, Pierre Duhaime, abruptly resigned and the |said it was cooperating with all the investigations. |
|Board of Directors called in the police to investigate. The | |
|Company Chairman, Gwyn Morgan, stated that the missing funds |The future |
|weren’t related to the earlier firing of senior executive, Riadh |SNC-Lavalin’s new CEO, Robert Card, was committed to getting |
|Ben Aissa, who had been the head of the company’s operations in |the company re-focused on its engineering businesses and |
|Libya. Mr. Ben Aissa had been very successful at winning large |proving to the world that it was a company that could be |
|contracts there apparently due to his relationship with Saadi |counted on. |
|Gaddafi. In 2010, the company earned $418 million for its | |
|projects in Libya, which was approximately seven percent of the | |
|overall revenue for the year. In 2011, the Libyan revenue |Discussion Questions: |
|dropped to $86.2 million when SNC-Lavalin pulled out of Libya due| |
|to the civil was that broke out in the country. |What is the communication problem(s) SNC-Lavalin is facing? |
| |What are the causes and symptoms of this problem? |
|Following its own investigation, the board explained that the | |
|missing funds were paid to commercial agents who were hired to |Who are the key stakeholder groups (identify three) and what |
|help the company get two major construction contracts, although |are they going to be concerned about? |
|they also admitted that the proper procedures weren’t followed in| |
|those cases. Many international companies hired local agents to |Discuss how SNC-Lavalin could communicate with each stakeholder|
|help them get contracts in foreign countries. In some instances,|group and what the message should be in order to address the |
|the agents paid bribes in order to help the company win a |concerns of each stakeholder? |
|contract. Canadian companies did business in places where bribes| |
|were demanded and where some competitors paid them. Canada had | |
|taken a stand against Canadian companies paying bribes overseas, | |
|but was criticized for not aggressively prosecuting cases. | |
|Although SNC-Lavalin claimed that it had policies in place to | |
|prevent paying bribes, it wasn’t clear whether the policies were | |
|taken seriously inside the company. Even given the problems the | |
|company was having finding the missing money, a spokesperson for | |
|one of SNC’s largest shareholders, Jarislowsky Fraser Ltd, with | |
|about 14 percent of the stock, publicly complimented the company | |
|for doing a thorough investigation of the missing funds. | |
| | |
|In addition to the company’s attempts to get to the bottom of the| |
|missing money, the RCMP began its own investigation searching for| |
|documents related to the $56 million in improper payments, at the| |
|company’s | |

Sources
Clark, C. “SNC-Lavalin’s murky affair shows need to tighten bribery law.” The Globe and Mail, March 29, 2012, pg. A17
Cousineau, S. “As scandal simmers at SNC, a new CEO looks to the future.” The Globe and Mail Report on Business, October 2, 2012, pg.1
Reguly, E. McArthur, G., Smith, G. Waldie, P. “The combustible fortunes of SNC-Lavalin’s man in the Middle East.” The Globe and Mail, April 21, 2012, pg. A4
Reguly, E. “New allegations arise in SNC-Lavalin probe.” The Globe and Mail, April 23, 2012, pg. A3.
SNC-Lavalin Annual Reports as retrieved from http://www.snclavalin.com on January 23, 2014
Waldie, P., Silcoff, S. “Mystery fund put CEO out, police in.” The Globe and Mail, March 27, 2012, pg. 1
Waldie, P. “SNC’s Libyan mystery deepens: It left $23-million behind.” The Globe and Mail, Report on Business, March 28, 2012, pg. 1
Waldie, P., Peritz, I. Smith, G. “RCMP makes second search of SNC-Lavalin.” The Globe and Mail, April 14, 2012, pg. A4

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