Via Financial Times

A division of SNC-Lavalin, the engineering company at the heart of a political scandal that shook Canadian Prime Minister Justin Trudeau’s government earlier this year, has agreed to plead guilty to fraud related to its work in Libya during the last decade and pay a C$280m penalty.

Under the deal, SNC-Lavalin Construction, a subsidiary of SNC-Lavalin, pled guilty to a single fraud charge. In exchange, all other fraud and corruption charges against the parent company and its international marketing arm were withdrawn.

The settlement, which has been accepted by the Court of Quebec, has the company paying the C$280m fine over five years. SNC will also be subject to a three-year probation during which an independent monitor will be hired to ensure the company is in compliance with ethics programmes and to provide annual reports on its findings.

The company admitted that its subsidiary paid C$48m to public officials in the Libyan regime of Moammar Gadhafi between 2001 and 2011, in return for construction contracts. On Sunday, in a separate case which covered related allegations, a jury found former SNC executive Sami Bebawi guilty of bribing foreign officials in Libya.

Since the political scandal around SNC’s corruption case emerged in January the company’s shares have plummeted, at one point to as much as 66 per cent below the level at the start of the year.

The stock jumped 30 per cent on Wednesday after the settlement was announced. The fine and three-year probation are “far removed from the worst-case scenarios that have floated around the company”, wrote National Bank Financial analyst Maxim Sytchev in a note to clients.

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Earlier this year, Canada’s former attorney-general and justice minister, Jody Wilson-Raybould, said she faced pressure from Mr Trudeau and his inner circle to enter a deferred prosecution agreement with SNC that would allow it to avoid a criminal trial.

Ms Wilson-Raybould and another high-profile minister resigned from Mr Trudeau’s cabinet over the matter, and he eventually kicked them out of the Liberal caucus.

Mr Trudeau initially denied pressuring Ms Wilson-Raybould, but in August Canada’s federal ethics commissioner said Mr Trudeau violated conflict of interest rules by trying to influence her. Mr Trudeau said he accepted responsibility in the matter, but said he was “not going to apologise for standing up for Canadian jobs.”

The scandal claimed the jobs of Canada’s top bureaucrat, Michael Wernick, as well as Mr Trudeau’s closest adviser, Gerald Butts.

Ms Wilson-Raybould said in a tweet on Wednesday: “2019 began with very public questions about the rule of law in our country. I am glad to see it end with that principle being upheld. The justice system did its work. It is time to move forward and for the company to look to its future.”

Under government ethics rules, companies found guilty on corruption charges could face ban of up to 10 years from bidding on federal construction contracts. At one point the company had threatened prosecutors that if it did not get a deal allowing it to avoid criminal prosecution it would move its head office from Montreal to the US and cut its workforce in Canada from 8,700 to 3,500 and eventually withdraw from Canada altogether.

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In its statement on Wednesday, the company said it “does not anticipate that the guilty plea . . . will affect the eligibility of SNC-Lavalin Group companies to bid on future projects”.

In a statement, SNC’s chief executive officer Ian Edwards apologised for the company’s “past misconduct” and called the settlement a “game-changer” because it will allow the company to put the fraud and corruption allegations behind it.

The federal government did not immediately comment on the settlement. Federal prosecutor Richard Roy said in a statement: “We are pleased that after entering into a facilitation conference supervised by the Court of Quebec, we were able to reach an agreement that is fair and furthers the administration of justice.”