SNC-Lavalin, WSP get nod to bid in Quebec
The Canadian PressWednesday, February 05, 2014
MONTREAL - SNC-Lavalin and WSP Global, two of Quebec's largest engineering firms tainted by allegations of corruption and fraud, are now free to bid on public contracts across the province.
Quebec's securities regulator said Wednesday that it has given its authorization after months of investigation.
The firms have passed all checks from the province's anti-corruption squad and have ensured that all people associated with alleged improprieties have left the companies.
"These companies have put in place governance measures and very robust and strong internal controls to prevent fraud and corruption," said Sylvain Theberge, spokesman for L'Autorite des marches financiers.
WSP must provide quarterly updates on its efforts to prevent fraud and corruption, while SNC must submit periodic reports from the same independent expert updates its progress to the World Bank.
The development bank barred an SNC-Lavalin subsidiary and more than 100 affiliates from bidding on World Bank Group-financed projects for up to 10 years over alleged bribes for a bridge project in Bangladesh and an undisclosed project in Cambodia. The Canadian International Development Agency also said it was ineligible to bid on projects it funds because of the World Bank sanction.
Since December 2012, AMF approval has been required before companies can sign or renew big public contracts or subcontracts in Quebec.
The Montreal-based firms join about 270 companies that have been granted AMF approval to date, including most of the province's large construction and engineering entities. Authorization has only been denied for a handful of applicants.
The authorization, valid for three years, is required for public contracts over $10 million or contracts with the City of Montreal valued at more than $100,000.
WSP Global (TSX:WSP), formerly known as Genivar, and SNC-Lavalin have been highlighted at a provincial corruption inquiry.
SNC-Lavalin, which employs more than 6,400 employees in Quebec, welcomed the decision which follows efforts over the last two years to implement an ethics and compliance standard across the company.
"I believe that with this certification, SNC-Lavalin has taken an important step in its goal to become a standard of excellence in ethics and compliance in its industry. It's the start of a new era for SNC-Lavalin," said CEO Robert Card.
SNC-Lavalin (TSX:SNC) also said it remains committed to working with the Quebec government to reach a "comprehensive, final and fair" settlement to address past infractions.
Analyst Pierre Lacroix of Desjardins Capital Markets said AMF's authorization won't have a significant impact on either company's financial results because Quebec represents only a small portion of their annual revenues.
"However, we believe that today's announcement is a critical step in positioning SNC and WSP to bid on several big ticket transportation and power projects in the province in the next three to five years," he wrote in a report.
WSP said it will now bid on several large contracts, including the Turcot highway near Montreal, the new Champlain bridge and a suburban Montreal transit project.
Spokeswoman Isabelle Adjahi said WSP is one of the three short-listed groups for Turcot and is talking to potential partners for a Champlain bridge bid.
Maxim Sytchev of Dundee Capital Markets said the AMF's blessing help to remove the "corruption overhang" for the firms.
For SNC-Lavalin, "the clean bill of health from the regulator" will help the public perception about the company, he said, pointing also to momentum from the awarding of contracts and impending concessions asset sales.
On the Toronto Stock Exchange, SNC-Lavalin's shares gained 85 cents at $46.55, while WSP was up eight cents at $33.11.
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Note to readers: This is a corrected story. A earlier version incorrectly said authorization was required for construction projects over $40 million.