MONTREAL, March 26, 2012 /CNW Telbec/ - SNC-Lavalin Group Inc.
announced today the results of the independent review of the facts
and circumstances surrounding certain payments and contracts (the
"Independent Review") voluntarily initiated by the Board of
Directors of the Company and announced on February 28, 2012. The
Independent Review was carried out by external independent counsel
under the direction and oversight of the Audit Committee. The
executive summary of the results of the Independent Review and the
related findings and recommendations of the Audit Committee is
reproduced below. The Board has adopted all of the recommendations
of the Audit Committee, and has directed management to develop a
detailed plan and timetable for their implementation. Such
recommendations are directed primarily at reinforcing standards of
conduct, strengthening and improving internal controls and
processes, and reviewing the compliance environment. The Company
intends to separately report these matters to the appropriate
authorities and to cooperate fully with such authorities with
respect to these or any other matters. Based on the findings of the
Independent Review, the Company does not believe that these
payments are related to Libya. The Company is separately announcing
today the departure of its chief executive officer and its 2011
fourth quarter and year-end financial results. EXECUTIVE SUMMARY OF
INDEPENDENT REVIEW, FINDINGS AND RECOMMENDATIONS DELIVERED ON MARCH
23, 2012 BACKGROUND OF THE INDEPENDENT REVIEW During December 2011
and January 2012, information was received as part of an accounting
review and numerous internal meetings, held amongst certain members
of senior management, with respect to two agency agreements
documented to construction projects to which they did not
appear to relate. The Chairman of the Board of Directors was
briefed on January 19, 2012, requested additional information, and
was further briefed on February 3, 2012, at which time Stikeman
Elliott LLP was mandated as independent counsel. The investigation
commenced of payments aggregating US$33.5 million made by the
Company in the fourth quarter of 2011 under presumed agency
agreements (the "A( )Agreements") documented in respect of Project
[Intentionally omitted](1) ("Project 1") and Project [Intentionally
omitted] ("Project 2"), but believed in fact to relate to Project
[Intentionally omitted] ("Project A"). Independent counsel retained
investigative advisors to provide business intelligence and related
services. In February 2012, documents were received by the
Company's Chief Financial Officer (the "CFO"),(2) and related
information was detected as part of year-end accounting processes,
with respect to two other contracts. On February 16, 2012, the
Chairman of the Board of Directors and the Chairman of the Audit
Committee were briefed and the scope of the investigation was
widened to include: (a) payments aggregating approximately US$22.5
million made by the Company in 2010 and 2011 under a presumed
agency agreement (the "B( )Agreement" and together with the A(
)Agreements, the "Agreements") documented in respect of Project
[Intentionally omitted] ("Project 3"), but believed in fact to
relate to Project [Intentionally omitted] ("Project B"); and (b) a
presumed collection agreement (the "Collection Agreement") and
related 2009 invoice (the "Invoice") purporting to relate to the
settlement of a dispute relating to Project [Intentionally omitted]
("Project 4"), as to which there was no information at the time. On
January 23, 2012 and on February 16, 2012, the Company informed its
external auditor, Deloitte & Touche LLP ("D&T"), of
the subject matters of the Independent Review, and has since
regularly kept them informed as it has progressed. Independent
counsel has reported periodically to the Audit Committee or the
outside members of the Board of Directors on the progress of the
Independent Review. Outside Board members were invited to attend
Audit Committee meetings. The Chairs of the Audit Committee and of
the Board of Directors were briefed regularly to update them on the
progress of the Independent Review, as well as to seek instructions
on matters arising therefrom. On February 27, 2012, based upon the
analysis to date regarding the A( )Agreements, the Audit Committee
was informed by management that they had concluded, with the
concurrence of D&T in the context of their audit of the 2011
financial statements, that the payments thereunder would need to be
recorded as period expenses (i.e. not generating any revenues). On
February 28, 2012, before the opening of markets, the Company
publicly announced that its 2011 net income is expected to be
approximately 18% (or approximately $80 million) below its
previously announced 2011 outlook, including because of period
expenses of approximately $35 million relating to certain
payments referred to above made in the fourth quarter of 2011 that
were documented to projects to which they did not relate and,
consequently, had to be recorded as expenses in the quarter. SCOPE
OF THE INDEPENDENT REVIEW The scope of the Independent Review and
the processes undertaken were approved by the outside members of
the Board of Directors or the Audit Committee, as the case may be.
From the outset, the cooperation and support of current senior
executive officers was sought and obtained in the Independent
Review, including assistance in helping to coordinate requests and
to obtain information. At the direction of independent counsel,
electronic and paper documents were collected from Company
corporate headquarters in Montreal, Company servers and members of
senior management and key employees. The electronic documents were
searched using relevant keywords, and documents flagged as a result
of the searches performed were reviewed. Independent counsel
interviewed members of senior management and other employees
identified as possibly having knowledge about the subject matter of
the Independent Review or who were otherwise relevant to it, in
some cases more than once. In addition, at the direction of
independent counsel, background intelligence and other information
was sought about various companies and individuals. Background
intelligence work was carried out in respect of the named
counterparties to the Agreements and Collection Agreement and other
entities where some form of connection was observed to such named
counterparties. This consisted primarily of searches of publicly
available information, such as company records in the relevant
jurisdictions. The Independent Review has been subject to certain
practical limitations, including that: (a) Mr. Riadh Ben Aïssa
(the "Former EVP Construction"), a former senior executive of the
Company, is believed to have direct and significant knowledge about
most of the investigated transactions, but has not been met despite
a request to his counsel; (b) Mr. Stéphane Roy (the "Former
Controller Construction"), a former executive of the Company who
may have knowledge about some of the investigated transactions, was
met prior to his dismissal on February 9, 2012, but has not
been met since; (c) the information reviewed is limited to that
within the Company's control and information that is publicly
available; (d) the relevant counterparties to the Agreements and
Collection Agreement are constituted in multiple jurisdictions and
public records in certain of these contain limited information
which may not be complete, current or accurate; (e) third parties
have been unresponsive or reluctant to provide information
regarding their operations or their clients' affairs; (f) some
former employees have conducted Company affairs using non-corporate
email addresses or had password protected devices to which the
Company does not have access; (g) the conclusions drawn are limited
to the information obtained to date; and (h) the interpretation of
improper documentation cannot be definitive, including because it
is known to be inaccurate, at least in some respects, and the true
arrangement and terms thereof will be inferred from contradicting
or supplementing oral or circumstantial evidence. RESULTS OF THE
INDEPENDENT REVIEW Preliminary matters The Agreements are based
upon the form of representative agreement contemplated in the
Company's Policy on Commercial Agents/Representatives (the "Agents
Policy"). The Agents Policy sets out the rules governing the hiring
and remuneration of commercial agents or representatives by the
Company in various markets around the world. One key feature of the
Agents Policy is that all of the hiring and remuneration of agents
is the responsibility of SNC-Lavalin International Inc. ("SLII"), a
subsidiary of the Company. There are different authorized
signatories depending on whether the contract with the agent
respects certain limits, but no provision in the Agents Policy
allows any person to override the Agents Policy.(3) Findings
derived from information obtained Based upon the information
obtained as part of the Independent Review, and although there is
no documentary evidence linking the Agreements to Project A or
Project B: (a) a presumed agent, representative or consultant(4)
appears to have been retained for each of Project A and Project B;
(b) the Agreements were respectively documented in respect of
Projects 1 and 2 (instead of Project A) and Project 3 (instead of
Project B); (c) all or part of the US$33.5 million paid in 2011
under the A Agreements is more likely than not to relate to
Project A; and (d) all or part of the approximately US$22.5 million
paid in 2010 and 2011 under the B( )Agreement is more likely than
not to relate to Project B. No agency agreement other than the
Agreements came to light in the context of the Independent Review
as being improperly documented in respect of a project to which it
did not effectively relate. The following table summarizes these
findings:
_____________________________________________________________________
| | AAgreements | BAgreement |
|______________________|______________________|_______________________|
|Presumed agents hired |In 2011, the Former |In 2009, the Former
EVP| | |EVP Construction said |Construction said that | | |that he
had hired an |he had hired an agent | | |agent to help secure |to
help secure work in | | |work in respect of |respect of Project B.
| | |Project A. | | | |The Independent Review|The Independent
Review | | |has found no direct |has found no direct and| | |and
conclusive |conclusive evidence | | |evidence establishing
|establishing the nature| | |the nature of the |of the services or
| | |services or actions |actions undertaken by, | | |undertaken
by, or the |or the true identity | | |true identity of, any |of,
any presumed agent.| | |presumed agent. The |The counterparty named
| | |counterparties named |in the B Agreement | | |in the |appears
to be without | | |A Agreementsappear to |substance, and any | |
|be without substance, |individual named on the| | |and any
individual |public registers in | | |named on the public |relation
to the | | |registers in relation |corporate | | |to the corporate
|counterparties does not| | |counterparties does |appear to be a
true | | |not appear to be a |principal. | | |true principal.5 | |
|______________________|______________________|_______________________|
|Decisions to attribute|At the same time, a |At the same time, a |
|to other projects |decision was made not |decision was made not |
| |to charge the presumed|to charge the presumed | | |agents' fees
to |agent's fees to | | |Project A, and not to |Project B, and not
to | | |otherwise associate |otherwise associate the| | |the
presumed agents |presumed agent with | | |with Project A. |Project
B. |
|______________________|______________________|_______________________|
|Execution of improper |The Former EVP |The Former EVP | |documents
|Construction co-signed|Construction instructed| | |and instructed
a |a senior officer of | | |senior officer of SLII|SLII to sign the
| | |to co-sign the |BAgreement on behalf of| | |AAgreements on
behalf |SLII. The BAgreement | | |of SLII. The |was improperly | |
|AAgreements were |documented in respect | | |improperly documented
|of Project 3. | | |in respect of Projects| | | |1 and 2. | |
|______________________|______________________|_______________________|
|Agents Policy |The Agents Policy was |The Agents Policy was | |
|not complied with in |not complied with in | | |various respects
in |various respects in | | |connection with the |connection with
the | | |A Agreements, |B Agreement, including | | |including the
|the authorized | | |authorized signatories|signatories and the | |
|and the aggregate |aggregate corporate | | |corporate limits on
|limits on fees | | |fees attributable to |attributable to the | |
|the attributed |attributed project. | | |projects. | |
|______________________|______________________|_______________________|
|Payments |The AAgreements |The BAgreement | | |contemplated fees
of |contemplated fees of | | |US$33.5 million in the|$30 million.
Payments | | |aggregate. In December|aggregating | | |2011,
payments of |approximately US$22.5 | | |US$33.5 million under
|million6 were made in | | |the AAgreements were |2010 and 2011
through | | |requested of SLII by |SLII (Tunisia), but | | |the
Former EVP |were improperly | | |Construction. The |approved on its
behalf | | |required signatories |by the Former EVP | | |(the
Chairman of SLII |Construction and | | |and the CFO) refused
|someone within his | | |to approve the |division. | | |payments.
The requests| | | |were brought to the | | | |Company's Chief | | |
|Executive Officer (the| | | |"CEO"), who authorized| | | |or
permitted the | | | |Former EVP | | | |Construction to make | | |
|the payments through | | | |his division. | |
|______________________|______________________|_______________________|
|Use of payments, etc. |The Independent Review|The Independent
Review | | |has found no direct |has found no direct and| | |and
conclusive |conclusive evidence | | |evidence establishing
|establishing the exact | | |the exact use, purpose|use, purpose or
| | |or beneficiaries of |beneficiaries of | | |payments made under
|payments made under the| | |the AAgreements. |BAgreement. However,
| | |However, as noted |as noted above, the | | |above, the
decision to|decision to hire a | | |hire presumed agents |presumed
agent was | | |was based on the |based on the | | |understanding at
the |understanding at the | | |time that it would |time it would
help | | |help secure work in |secure work in respect | | |respect
of Project A. |of Project B. |
|______________________|______________________|_______________________|
|Accounting |Payments were to be |Payments were accounted| |
|accounted for in |for in respect of | | |respect of Projects 1
|Project 3 in accordance| | |and 2 in accordance |with the improper
| | |with the improper |documentation. | | |documentation.
|Accounting entries were| | |Accounting entries |made in relation
to | | |were not made or were |Project 3 in 2010 and | | |made and
reversed in |2011. The entries were | | |short order in
|subsequently detected | | |relation to Projects 1|in February 2012
as an | | |and 2. |anomaly and reported to| | | |the Senior | | |
|Vice-President and | | | |Controller of the | | | |Company. |
|______________________|______________________|_______________________|
|Disclosure |The agencies on |The agency on Project B| | |Project A
were neither|was neither properly | | |properly disclosed
|disclosed within the | | |within the Company, |Company, nor to its
| | |nor were they |internal or external | | |disclosed to its
|auditors until shortly | | |internal or external |before the
Independent | | |auditors until shortly|Review began. | | |before
the Independent|In 2010, the CFO was | | |Review began.7 |told at a
meeting with | | |In late 2011, the CFO |the CEO and the Former | |
|was told at a meeting |EVP Construction that | | |with the CEO and
the |an agent had been hired| | |Former EVP |on Project B and that
| | |Construction that |its fees would be | | |agents had been
hired |charged to other | | |on Project A. The CFO |projects. The
CFO | | |objected to any |objected to this at the| | |involvement.
|meeting. | | | | | | | | |
|______________________|______________________|_______________________|
Collection Agreement The Collection Agreement and the Invoice were
received together. The Collection Agreement purports to relate to a
dispute over an amount owing to the Company under Project 4
and to give rise to a payable of US$8.25 million. The Invoice
appears to have been received by the Company in 2011 only, but
payment was refused on the basis that there were no records or
other information available about such an arrangement. On March 21,
2012, a demand letter was received from legal counsel to the
counterparty demanding payment of Euros (sic)
8.25 million. To date, other than these documents, there
is no oral, documentary or circumstantial evidence linking the
documents to Project 4 or any other project. In addition, there
does not appear to be any payment of any amount to the payee
thereof since January 2010. Accordingly, no conclusion can be drawn
other than that these documents are unlikely to relate to Project
4, including because there is already a collection arrangement in
respect of the presumed dispute and there is no obvious reason why
there would need to be a second collection agreement on the
project. The Independent Review has found no direct and conclusive
evidence establishing the nature of the services or actions
undertaken by, or the true identity of, the presumed agent. From
the business intelligence gathered, the named counterparty appears
to be without substance, and the true principal involved in the
transaction does not appear to be an individual named on the public
registers relating to the counterparty. Potential Sanctions In the
absence of direct and conclusive evidence, the use and purpose of
the payments or nature of the services rendered or actions taken
under the Agreements cannot be determined with certainty. However,
the absence of conclusive findings does not exclude the possibility
that, if additional facts that were adverse to the Company became
known, sanctions could be brought against it in connection with
possible violations of law or contracts. Code of Ethics and
Business Conduct and Related Matters Introduction Code. The
Company's Code of Ethics and Business Conduct (the "Code") was
considered in light of the findings of the Independent Review. The
general policy underlying the Code is expressed as follows: "Our
policy is to maintain ethical standards in the conduct of our
business and in our relations with whomever we associate - our
colleagues, directors, shareholders, customers, associates and
suppliers, as well as governments, the public and the media. Our
integrity and reputation for ethical practices are among our most
valued assets and are essential aspects of our sustained
profitability." The Code applies to "all members of the Boards of
Directors and to all officers and employees of SNC-Lavalin in
Canada and abroad." It imposes personal obligations on all
directors, officers and employees "[a]s a condition of membership
and of employment", and each must acknowledge having read the Code,
understanding its contents, and being bound by its provisions. Each
person who authorizes or participates in a breach of the Code
breaches the Code ("each one of us is accountable for his or her
actions"). However, while it is open to any individual who is aware
of a suspected breach of the Code by others to report it, there is
no duty to report such a suspected breach, such that a person who
has knowledge of a breach of the Code and who does not report it is
not himself or herself in breach. Whistleblower Policy. The
Procedures for Complaints and Concerns Regarding Accounting,
Internal Accounting Controls, Auditing and Other Matters (the
"Whistleblower Policy") sets out the procedures governing
complaints, including matters such as protecting the
confidentiality of any whistleblower and ensuring that there be no
retaliation against a whistleblower. The Whistleblower Policy does
not, however, impose an obligation to report an issue. Agents
Policy. The Code provides that "[a]ll transactions are conducted at
the level of authority required by SNC-Lavalin policies and
procedures", such that a breach of the Agents Policy is a breach of
the Code. Records Rule In the present circumstances, the relevant
provisions of the Code include compliance with sound accounting
practices and record maintenance (the "Records Rule"): Compliance
with Sound Accounting Practices and Record Maintenance "Accurately
reflecting our business transactions" We all have a responsibility
to ensure that SNC-Lavalin's books and records accurately and
punctually reflect the Company's transactions, assets and
liabilities. We adhere to a proper application of accepted
accounting standards and practices, rules, regulations and
controls. These commitments include the following: -- Business
records, expense reports, invoices, vouchers, payrolls, employee
records and other reports are prepared with care and honesty and in
a timely fashion. -- All transactions are conducted at the level of
authority required by SNC-Lavalin policies and procedures and in
compliance with applicable rules and regulations. -- No
transaction, asset, liability or other financial information is
concealed from management or from SNC-Lavalin's internal and
external auditors. … -- All documents signed are, to the best of
our knowledge, accurate and truthful. -- False or misleading
entries and unrecorded bank accounts, for any purpose, whether
regarding sales, purchases or other Company activity, are strictly
prohibited. ... The above list is by no means exhaustive. Suspected
breaches of our accounting practices and record maintenance and
internal controls that appear to be in violation will be
investigated." [Emphasis added.] The Records Rule does not refer to
or incorporate materiality thresholds explicitly or implicitly,
except where it refers to accounting practices. Accordingly, a
finding that the Records Rule has been breached does not require or
imply misconduct resulting in a material event on a consolidated
basis. Findings In the present circumstances, the Records Rule was
not complied with as a result of any one of the following findings:
(a) the improper documentation of agency arrangements in respect of
projects to which they did not relate, and concealment thereof; (b)
incorrect entries relating to payments in the books and records of
the Company, and concealment thereof; and (c) non-compliance with
the Agents Policy. Transactions not disclosed. The Code provides
that no transaction or other financial information is concealed
from management or from internal and external auditors. In December
2009 and in July 2011, presumed agents in respect of Projects A and
B respectively were hired by the Former EVP Construction, without
complying with the Agents Policy. The agencies on Projects A
and B were neither properly disclosed within the Company, nor were
they disclosed to its internal or external auditors until shortly
before the Independent Review began. The CEO and Former EVP
Construction authorized or permitted this course of action until
2012, which did not comply with the Code. Accuracy of documents and
records. The Code provides that the Company's books and records
accurately reflect the Company's transactions and that all
documents signed are, to the best of one's knowledge, accurate and
truthful. The Agreements signed by the Former EVP Construction are
neither accurate nor truthful, and thus in breach of the Code. The
books and records relating to Project 3 inaccurately reflect fees
unrelated to it. The CEO knew that agents were being hired by the
Former EVP Construction on Projects A and B in unusual
circumstances, and that the Former EVP Construction would cause
their fees not to be charged to Projects A and B but rather to
other projects.(8) The CEO did not see the Agreements or accounting
entries in the Company's books and records, but should have known
that contractual documents would refer to projects other than
Projects A and B and that incorrect entries would be made, which
did not comply with the Code. Proper levels of authority. The Code
provides that all transactions are conducted at the level of
authority required by Company policies, and the Agents Policy
provides that all payments of agent fees must be made by SLII. In
December 2011, the Former EVP Construction requested SLII to make
the payments under the Agreements. The Chairman of SLII and the CFO
refused to authorize the payments. The matter was brought to the
CEO, who authorized or permitted the Former EVP Construction to
make the payments through his division. While the CEO thought he
had the authority to do so, he should have confirmed his authority
but did not. The CEO's authorization of these payments did not
comply with the Agents Policy and therefore was in breach of the
Code. SUMMARY OF ACTIONS RECOMMENDED The Audit Committee has found
that the hiring of presumed agents in respect of Projects A and B
and the improper documentation results primarily from the
following: -- management override, flawed design or ineffective
enforcement of controls in connection with the presumed agencies,
including the controls contained in the Agents Policy; --
non-compliance with the Code and the Agents Policy; and --
ineffective enforcement or scope of, or controls over compliance
with, the Code and the Agents Policy. The Company is a
multi-national organization that has changed organizational
structure over the past several years. One legacy of this changing
structure is distributed leadership, which has generally served the
Company well. The Audit Committee notes that the model could
usefully be reviewed over time and within a broader context.
Governing Principles The Audit Committee considered what governing
principles, based on the results of the Independent Review, should
be considered to prevent recurrence of inappropriate conduct, and
to improve the compliance and control environments. These
principles were directed primarily at: -- reinforcing standards of
conduct -- strengthening and improving internal controls and
processes -- reviewing the compliance environment Recommendations
The Audit Committee recommendations are discussed below, for
consideration by the Board of Directors. If adopted,
management should be directed, where applicable, to develop a
detailed plan and timetable for their implementation, subject to
the Board of Directors monitoring the implementation thereof by
management. Code and Related Matters The Audit Committee recommends
the following measures be taken in light of its findings: --
Non-compliance with the Code. The Board of Directors should
consider what sanctions if any to apply in connection with
non-compliance with the Code.9 Generally, in exercising its powers
with a view to the best interests of the Company, the Board of
Directors may consider in assessing breaches of the Code the
following factors: o the individual's functions and
responsibilities within the Company; o the nature and seriousness
of the conduct, including the risk of harm to the Company, whether
it was repeated, and whether it constituted a breach of law; o
whether the individual devised or was a participant in the conduct,
the length of participation, and the motivation in participating; o
the timely and voluntary disclosure of the breach and the
willingness to cooperate in the investigation; o any loss or risks
to the Company resulting from the conduct, and whether there are
any illicit gains to an individual; o whether the breach
constitutes aberrant behavior in light of an individual's overall
history with the Company and character; and o the multiple purposes
of enforcing the Code, including sanctioning inappropriate conduct,
and specific and general deterrence. -- Code and Whistleblower
Policy. The Audit Committee also recommends that the ongoing review
and update of the Code, as well as of the Whistleblower Policy,
take its findings into account, including to provide for a duty to
report violations or possible violations of policies or procedures.
Internal Controls and Processes, and Compliance Internal controls
foster sound monitoring of business operations and corporate
assets, accurate financial reporting, and compliance with laws, and
correspondingly reduce the risks of misuse, inaccuracies and
non-compliance. Accordingly, the Audit Committee recommends the
implementation of the following measures (the implementation of
some of which has already been initiated): -- Management
departures. The Company should clarify the procedure to be followed
in cases of acceptable management departures from policies or
procedures. -- Compliance review. The Board of Directors should
hire an independent expert to provide advice on the structure of
the organization, guidelines and controls, and communication and
training. -- Agents Policy. The Agents Policy should continue to be
reviewed from time to time as legislative changes and commercial
practices evolve, including in accordance with the proposed changes
presented to the Audit Committee in February 2012. However, the
Agents Policy should be further reviewed in light of the findings
of the Independent Review. -- Approval levels. Procedures and
approvals should be reinforced regarding levels of authority, with
clear reporting obligations on any deviations or proposed
deviations therefrom. -- Divisional controllers. The reporting
lines for divisional controllers should be reviewed. -- Internal
audit function. The existing practice of having the head of the
internal audit group report directly to the Audit Committee should
now be formally documented. -- Technology. The Company should
continue to move forward with the integration of its technology
platforms to further facilitate the production of accurate
financial information results, as well as the monitoring thereof in
a timely and cost effective manner. Recommended Adoption After
thorough consideration, the Audit Committee has recommended the
adoption by the Board of Directors of each of the recommendations
set out above. CONCLUSION The Audit Committee understands that with
the delivery of this report, its Independent Review of the
Agreements and Collection Agreement is terminated. The Audit
Committee will continue to review the Agents Policy and compliance
matters, including to assess whether amounts may directly or
indirectly have improperly been paid to persons owing fiduciary
duties to the Company. The Audit Committee will continue to
consider, develop and implement additional remedial measures as
appropriate. The Audit Committee would expect its next steps may
include such other specific activities as it may deem advisable or
the Board may instruct. ABOUT THE COMPANY SNC-Lavalin Group is one
of the leading engineering and construction groups in the world and
a major player in the ownership of infrastructure, and in the
provision of operations and maintenance services. SNC-Lavalin has
offices across Canada and in over 40 other countries around the
world, and is currently working in some 100 countries. FORWARD
LOOKING STATEMENT Reference in this press release, and hereafter,
to the "Company" or to "SNC-Lavalin" means, as the context may
require, SNC-Lavalin Group Inc. and all or some of its subsidiaries
or joint ventures, or SNC-Lavalin Group Inc. or one or more of its
subsidiaries or joint ventures. Statements made in this press
release that describe the Company's or management's budgets,
estimates, expectations, forecasts, objectives, predictions or
projections of the future may be "forward-looking statements",
which can be identified by the use of the conditional or
forward-looking terminology such as "anticipates", "believes",
"estimates", "expects", "may", "plans", "projects", "should",
"will", or the negative thereof or other variations thereon. The
Company cautions that its actual actions and/or results could
differ materially from those expressed or implied in
forward-looking statements, or could affect the extent to which a
particular projection materializes, as a result of risks and
uncertainties relating to: (a) cost overruns from fixed-price
contracts; (b) failure to meet scheduled dates or performance
standards on a particular project; (c) attracting and retaining
qualified personnel and any strike, partial work stoppage or other
labour actions by the Company's or its subcontractors' unionized
employees; (d) failure of the Company's joint venture partners to
perform their obligations; (e) failure by the Company's
subcontractors to deliver their portion of a particular project
according to contractual terms; (f) the financial performance of
the Company's infrastructure concession investments during a
particular concession period; (g) the Company obtaining new
contract awards; (h) revenue backlog and whether such revenue
backlog will ultimately result in earnings and when revenues and
earnings from such backlog will be recognized; (i) foreign currency
exchange and interest rates; (j) credit risk and the delay in
collection from the Company's clients; (k) information management
including its integrity, reliability and security; (l) the inherent
limitations of the Company's control framework and the
effectiveness of the measures implemented by the Company to
strengthen its internal controls over financial reporting following
the identification by the Company of material weaknesses relating
to the design and operational effectiveness of its internal
controls over financial reporting as of December 31, 2011; (m)
uncertain economic and political conditions in the countries in
which the Company does business; (n) any lack of strong safety
practices by the Company or its subcontractors exposing the Company
to lost time on projects, penalties, lawsuits and impact on future
contract awards; (o) the Company's inability to comply with
environmental laws and regulations; (p) the Company's reputation as
a result of, among others, any quality or performance issues on its
projects, a poor health and safety record, non-compliance with laws
or regulations by the Company's employees, agents, subcontractors,
suppliers and/or partners, or creation of pollution and
contamination; (q) the inability to adequately integrate an
acquired business in a timely manner; (r) non-compliance with laws
and regulations by an employee, agent, supplier, subcontractor
and/or partner of the Company or any further regulatory
developments; (s) failure by the Company's employees, agents,
suppliers, subcontractors and/or partners to comply with
anti-bribery laws; (t) any litigation and/or legal matters to which
the Company is a party; (u) any negative publicity associated with
the Independent Review led by the Company's Audit Committee of the
facts and circumstances surrounding certain payments that were
documented to construction projects to which they did not relate,
and certain other contracts, as well as any sanctions that could be
brought against the Company in connection with possible violations
of law or contracts should additional facts adverse to the Company
become known in connection with such Independent Review including
as to matters beyond its scope; (v) the proposed class action
lawsuit filed on March 1, 2012 against the Company with the Quebec
Superior Court; and (w) the investigations of the Royal Canadian
Mounted Police and the World Bank relating to the Company's
involvement in a past submission as the Owner's Engineer for the
Bangladesh government. For more information on risks and
uncertainties, and assumptions that would cause the Company's
actual results to differ from current expectations, please refer to
the section "Risks and Uncertainties" and the section "How We
Analyze and Report our Results", respectively, in the Company's
2011 Financial Report under "Management's Discussion and Analysis".
The forward-looking statements herein reflect the Company's
expectations as at the date of this press release and are subject
to change after this date. The Company does not undertake any
obligation to update publicly or to revise any such forward-looking
statements, unless required by applicable legislation or
regulation. (1) Because of the private or commercially
sensitive nature of such information, neither the projects nor
outside parties involved are named in this executive summary.
(2) See note 8 below. (3) The Agents Policy also provides
among others for the existence of a written agreement with any
agent, the use of an approved master agreement, a progressive
payment schedule for commercial fees, percentage or ratio limits on
commercial fees, a procedure for approval and signature of
agreements and payments thereunder, standard distribution of the
agreements once signed, diligence and certification requirements,
and an approval process in case an agreement departs from the
specified limits. (4) Given it is not known precisely what services
were rendered, reference is made, for convenience purposes, to a
presumed agency or agent throughout this executive summary. (5) In
correlating this information to similar information obtained,
certain relationships have been established through
co-directorships or otherwise with other counterparties to other
agency agreements. (6) It is assumed that this corresponds to a
renegotiated fee arrangement resulting from a change in the project
cost, but there is no evidence of this amendment. (7) In 2011, a
senior officer was told that a presumed agent had been hired for
Project A. He did not, however, see the A Agreements. (8)
No finding is expressed regarding the Former Controller
Construction. However, some awareness on his part of the
Agreements can be inferred from the fact he handed copies and/or
originals thereof to the CFO upon his departure in February 2012.
(9) These could include disciplinary, compensation, training or
other measures. SNC-LAVALIN CONTACT: Media:Leslie
QuintonVice-President, Global Corporate CommunicationsSNC-Lavalin
Group Inc.514-390-8000, ext. 7354leslie.quinton@snclavalin.com
Investors:Denis JasminVice-President, Investor RelationsSNC-Lavalin
Group Inc. 514-390-8000, ext. 7553denis.jasmin@snclavalin.com
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