SNC-Lavalin says it remains Que. company despite new U.K.-based super unit

by Ross Marowits

MONTREAL – SNC-Lavalin is shaking up its senior management team and creating a new organizational structure for the global engineering company as it tries to turn the page on the controversy that has sullied its reputation.

The most significant change is the creation of a new resources and environment business unit to be headed by Neil Bruce, a former operations chief at AMEC.

London-based AMEC (LSE:AMEC) is a rival to SNC-Lavalin as one of the world’s leading engineering, project management and consultancy companies, with 29,000 employees and customers in the oil and gas, mining, clean energy, environment and infrastructure sectors.

Bruce will be based in London and oversee SNC-Lavalin’s largest and most diverse business unit focused on hydrocarbons and chemicals, mining and metallurgy, environment, and water — with about 38 per cent of total company revenues.

SNC-Lavalin International becomes Global Operations group, headed by Christian Jacqui, formerly executive vice-president, Europe. The London-based position will oversee the globalization of the company’s operations.

Patrick Lamarre, who has been executive vice-president of SNC’s global power division, has resigned but will remain available to the company until June 1. Lamarre will be replaced on an interim basis by Scott Thon, president of its AltaLink subsidiary.

The changes were announced by Robert Card, an American who was appointed CEO in October as the engineering giant struggles with a series of financial scandals.

“These changes represent part of our ongoing effort to further strengthen the company’s management structure and extend its scope,” Card said in a news release.

“These announcements are an opportunity to unroll some of the company’s preliminary strategic orientation, of which there will be more to follow in the months to come.”

Even though key segments of the business will shift to London, SNC-Lavalin (TSX:SNC) will remain headquartered in Montreal where it will have its corporate functions.

A company spokeswoman said SNC-Lavalin will remain a Quebec-based company with a strong francophone presence.

Four of the 13 members of the office of the president are francophone Quebecers, including chief financial officer Gilles Laramee who will head a new business unit overseeing infrastructure, concessions and investments.

“SNC-Lavalin is a global company with its roots in Quebec. We are enormously proud of this heritage and the part it plays in who we are today and will be in the future,” Leslie Quinton said in an email.

Other changes will see Michael Novak become executive vice-president for Global Government, Aboriginal and Economic Affairs, based in Montreal.

Dale Clarke, executive vice-president Mining and Metallurgy and acting executive vice-president hydrocarbons and chemicals will report to Bruce.

SNC-Lavalin said Bruce has more than 30 years in the oil and gas, mining, and energy industries worldwide, with extensive experience in “change management and organizational development” to create operational efficiencies and strategic growth.

“With his excellent customer relationships and knowledge of the resources and environment sectors, as well as key stakeholders worldwide, Mr. Bruce is well-positioned to assume leadership of this group and to focus on building a strong platform on which to increase long term global net income and growth.”

Maxim Sytchev of Alta Corp Capital said the appointment of Bruce suggests that Card envisions a future for SNC that mirrors AMEC.

“Bob Card is making hiring reorganization decisions to properly align SNC-Lavalin structure with the reality of a new world — engineering is a global business and the company’s divisions have to be aligned likewise,” he wrote in a report.

Sytchev said the pedigree of the company’s two top executives should make investors “increasingly more comfortable with the turnaround/strengthening potential of company’s engineering and construction business.”

The organizational changes announced Friday come more than a month after the SNC-Lavalin suspended payments to former CEO Pierre Duhaime and said there will be changes to its board of directors.

Duhaime received a $5-million payout after he stepped down as president and CEO last March amid an internal accounting investigation. Most of the payments were due to be paid over two years, including $1.9 million in salary continuance and benefits and $1.7 million in incentives.

He was arrested in connection with alleged fraud involving one of Montreal’s huge new superhospitals.

The arrest warrant alleged Duhaime and Riadh Ben Aissa, another former top executive, conspired to commit fraud and falsified documents in connection with a contract pertaining to the multibillion-dollar McGill University Health Centre.

On the Toronto Stock Exchange, SNC-Lavalin’s shares lost 20 cents at $43.83 in Friday morning trading.




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