Reuters: Regulatory News: UPDATE 3-SNC-Lavalin vows to get to bottom of any misconduct

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UPDATE 3-SNC-Lavalin vows to get to bottom of any misconduct May 3rd 2012, 16:41 Thu May 3, 2012 12:41pm EDT * SNC, police investigating $56 mln in improper payments * Employees urged to share information on any violations * SNC holds annual meeting in Toronto on Thursday * Chairman says misconduct the work of "relative few" * Q1 EPS C$0.44 vs C$0.50 year earlier, below market view TORONTO, May 3 (Reuters) - SNC Lavalin Group Inc, a Canadian construction company caught up in allegations of bribery and improper payments, vowed on Thursday to get to the bottom of any wrong-doing as it also reported weaker-than-expected financial results. SNC, which held its annual meeting in Toronto on Thursday, said it was encouraging employees to come forward with any information that might help with investigations into the alleged misconduct. "We are committed to getting to the bottom of any violations of laws or misappropriations of funds that may have occurred," Chairman Gwyn Morgan told the company's annual meeting. "We are hopeful that our actions will help in establishing accountability and bringing to justice anyone found to have been involved in criminal activity," Morgan told a room of about 100 shareholders. Montreal-based SNC, whose stock receded on Thursday, is grappling with fallout from an internal investigation that revealed that it paid $56 million to unknown "agents" on construction contracts that did not exist. In March, Pierre Duhaime resigned as chief executive of the 101-year-old company after revelations he had authorized the payments, but details surrounding the matter remain shrouded in mystery. Morgan said the company still does not know who received the payments and what the money was used for, but he stressed that the misconduct was the work of "a relative few". SNC has said its former head of construction, Riadh Ben Aissa, who left the company in February, may have direct knowledge of the mysterious transactions. Swiss authorities confirmed over the weekend that Ben Aissa had been arrested on charges of corruption, fraud and money laundering. "The biggest question is whether this episode is going to affect their future ability to earn contracts," said Morningstar Inc analyst Min Tang-Varner. Ian Bourne, who has been appointed interim CEO, said that support from SNC's clients and suppliers remains strong, evident in meetings held with them in the past six weeks. All 11 SNC directors who had stood for re-election to the board were elected at the meeting. The company's search for a new CEO is continuing. SNC's shares were 2.6 percent weaker at C$37.05 on the Toronto Stock Exchange at midday on Thursday after the company reported a 14.5 percent decline in first-quarter earnings to C$67 million ($67.91 million), or 44 Canadian cents a share. That was below the 49 Canadian cents that analysts had been expecting, according to Thomson Reuters I/B/E/S. Revenue rose to C$1.78 billion from C$1.64 billion, also below market expectations of C$1.84 billion. "In this environment, where people are freaking out about what is going to happen with the company over the medium to longer term, I think that's as good as it gets. Overall it looks all right," said Maxim Sytchev, managing director of industrials research at Toronto-based AltaCorp Capital. The stock has shed more than 20 percent of its value since Feb. 27, the day before the company revealed the payments probe and warned that the impact of the civil war in Libya, where it had several big contracts, would push 2011 profit below earlier forecasts. Canada's Royal Canadian Mounted Police searched the company's Montreal headquarters in mid April, after launching an investigation into the payments. Police were also probing bribery allegations against SNC involving a $1.2 billion bridge project in Bangladesh financed by the World Bank. Canadian newspapers have linked Ben Aissa in an unflattering light to the family of deposed Libyan dictator Muammar Gaddafi. Link this Share this Digg this Email Reprints

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