Reuters: Regulatory News: UPDATE 2-SNC-Lavalin CEO resigns; profit plummets

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UPDATE 2-SNC-Lavalin CEO resigns; profit plummets Mar 26th 2012, 12:39 Mon Mar 26, 2012 8:39am EDT * Probe finds CEO authorized mysterious payments * Payments breached code of ethics, company said * CEO steps down; Ian Bourne named interim CEO * Payments not believed related to Libya * Quarterly profit fell more than 50 percent TORONTO, March 26 (Reuters) - Canada's SNC-Lavalin said on Monday Chief Executive Pierre Duhaime had resigned after an internal probe found that tens of millions of dollars in mysterious payments authorized by him breached the engineering and construction company's code of ethics. SNC, which had delayed releasing its quarterly and full-year results, announced Duhaime's resignation as it reported a 52 percent drop in fourth-quarter profit. Montreal-based SNC disclosed the payments on Feb. 28, just weeks after it suspended two executives, who Canadian newspapers said had ties with the family of former Libyan dictator Muammar Gaddafi. At the time, SNC did not say whether the internal probe was in any way related to its extensive business dealings with the now-deposed Gaddafi regime. [ID: nL4E8DS5UW] On Monday, the company said based on the findings of the internal probe, it does not believe the payments were related to Libya. Even so, the company's audit committee, which probed the matter, said the dealings highlight weaknesses in its internal control over financial reporting. SNC said its code of ethics requires that no transaction or other financial information is concealed from management or from internal and external auditors. The review found that the payments authorized by the CEO and the former head of its construction were not properly disclosed. Ian Bourne, a director since 2009, will take over as the interim CEO. A search for a new CEO is set to begin immediately and will consider both internal and external candidates. Shares of the Canadian engineering and construction company have fallen nearly 20 percent since the probe was disclosed last month. At the time, the company also warned that the impact of Libya's civil war would push its 2011 profit well below earlier forecasts. PROFIT TUMBLES Net income attributable to shareholders fell to C$76.0 million ($76.13 million), or 50 Canadian cents per share, from C$158.7 million, or C$1.04 per share, a year earlier. The sharp decline in profits mainly reflected an operating loss at its infrastructure and environment arm, along with a loss from its hydrocarbons and chemicals units. The company, which raised its fourth-quarter cash dividend by 4.8 percent, expects 2012 profit to be little changed. SNC said it is eyeing growth from its power business, along with its mining and metallurgy unit, but its expects the challenging environment to continue for its infrastructure and environment segment and its hydrocarbons & chemicals unit throughout 2012. Link this Share this Digg this Email Reprints

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