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SNC Lavalin's investigation to weigh on company

Tags: SNC-Lavalin

SNC-Lavalin's (SNC-T) announcement earlier this week that it was investigating $35 million in improper payments sent its shares down more than 20 percent. Anthony Scilipoti, Executive Vice President Special Situations and Accounting Issues at Veritas Investment Research, tells BNN that the uncertainty surrounding the investigation is going to weigh on the company's performance.

"This is now getting to a point where it's going to disrupt day-to-day operations," he tells BNN.

On Tuesday, SNC-Lavalin said it expects the 2011 fiscal year income to be about $80 million less, due to a revision of its financial exposure to Libya and recalculation of costs in projects at two of its business units.

It also said it was recording a $35 million write-down regarding improper payments in the fourth quarter of 2011 "that were documented to construction projects to which they did not relate and, consequently, had to be recorded as expenses in the quarter."

SNC-Lavalin said it had initiated an independent investigation into the $35 million worth of payments and "certain other contracts."

Scilipoti, who has been "critical of [SNC Lavalin's] accounting and disclosure since 2008", says the size and complexity of the investigation is going to impact the company.

"You have a company that is operating in hundreds of countries, has thousands of contracts happening at the same time and you're trying to isolate these payments," he says.

"I think it's going to be very difficult for them to [file their financial statement with regulators by March 30]." CTV Two CTV News CTV News Channel BNN - Business News Network CP24