SNC says fraud allegations haven't hurt business

The interim of chief of SNC Lavalin Group (SNC-T), the engineering giant currently reeling from allegations of bribery and improper payments, tells BNN that the company's business has not suffered significantly from the controversy.

"We have not had any significant project cancellations and we have not had any bids that have been pulled," Ian Bourne, interim CEO at SNC Lavalin, tells BNN. "The level of support has been pretty strong and the backlog is bigger now than it was at the end of December and we're confident we'll be able to drive this forward."

Bourne says that he has talked to a number of its customers and suppliers and that support has been "fairly strong."

He also says that the company is confident it's taking the necessary steps to address the allegations of fraud and bribery.

"We're anxious to support the authorities, we've been cooperating with them from the very beginning and to the extent that there has either been illegal activity or fraud against the company we want to run it to ground," he says.

Montreal-based SNC, whose stock fell 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 after revelations he had authorized the payments, but details surrounding the matter remain shrouded in mystery. In April, authorities from the RCMP raided the company's office and launched an investigation into the company regarding certain payments.

"The biggest question is whether this episode is going to affect their future ability to earn contracts," said Morningstar Inc. analyst Min Tang-Varner.

This week, the company reported a worse-than-expected 14.5-percent decline in first quarter profit to $67 million, or 44 cents a share. Analysts were expecting the company to report 49 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose to $1.78 billion from $1.64 billion, also below market expectations of $1.84 billion. Its backlog rose to $10.5 billion at the end of March from $10.1 billion at the end of December.

The company's stock has plummeted since February, when the allegations first surfaced and it warned that the civil war in Libya, where it has major contracts, would push its profit below previous forecasts -- falling more than 20 percent.

With files from Reuters