Friday, April 13, 2012

SNC-Lavalin in the news, an overlooked angle

SNC-Lavalin is in the news today in a big way: "RCMP raids SNC-Lavalin’s Montreal headquarters." Thought I would raise an angle on this that might be overlooked. Recall the Government of Canada's rationale for selling off Atomic Energy of Canada Limited's commercial reactor division to said SNC Lavalin:
The Government of Canada has reached an agreement with SNC-Lavalin Group Inc. under which the Canadian engineering firm will acquire the CANDU Reactor Division of Atomic Energy of Canada Limited (AECL).

Under the terms of the agreement, SNC-Lavalin, through its wholly owned subsidiary CANDU Energy, will take over the CANDU Reactor Division’s three business lines: services to the existing fleet, life-extension projects and reactor new builds.

“The CANDU commercial reactor business will benefit greatly from SNC-Lavalin’s entrepreneurial capacity and global scale,” said the Honourable Joe Oliver, Minister of Natural Resources. “The transaction will place CANDU technology in proven, competent hands to be serviced and deployed in Canada and abroad, meeting energy needs and stimulating a supply chain located largely in Canada.”

“As one of the world’s largest engineering/construction firms with offices in over 35 countries worldwide, we’re looking forward to developing new business opportunities using CANDU’s renowned technology on projects around the globe,” said Pierre Duhaime, President and CEO, SNC-Lavalin Group Inc. “We’re also very happy to welcome the new employees this acquisition will bring to our ranks, and to work together to realize our vision for this industry.”

The Government of Canada will retain ownership of all CANDU intellectual property, while providing an exclusive licence to CANDU Energy to grow its business. In addition to an upfront payment of $15 million from SNC-Lavalin, this will create an opportunity for Canadian taxpayers to benefit from royalties on future sales of reactors, future life-extension projects and certain products and services.
What has transpired since June of 2011 when the above deal was reached? Beyond today's events, here was David Olive a week ago with an overview of recent major problems at SNC-Lavalin:
You wouldn’t guess from the sanguine mood at SNC-Lavalin Group Inc., the Montreal-based global engineering giant, that it has just lost the services of its CEO amid an improper-payments scandal.

And that the $7.2-billion firm (sales) just suffered a black eye after one of its subsidiaries was banned by the World Bank from bidding on Bank-financed projects until allegations that SNC bribed officials in the bidding on a controversial Bangladeshi bridge project are resolved.

And that SNC is facing a $250-million class-action lawsuit from shareholders over the company’s alleged mishandling of its funds.
The Harper government's sale of AECL for a song was criticized at the time. It takes on a whole new light these days given what has transpired and calls into question again this government's supposed claim to be competent economic managers.