SNC-Lavalin Group Inc. is eliminating an undisclosed number of back-office positions in Canada as the Quebec engineering company remains entangled in a political battle over its future in this country.
Montreal-based SNC confirmed its employees were advised on Wednesday of the layoffs, which affect workers in information technology, business analysis and other related functions. Some work will be transferred to SNC sites in other countries, including India, the company said.
The cuts are being made largely in Montreal and Toronto, plus “a few” others around the world, SNC spokeswoman Daniela Pizzuto said. She declined to confirm how many jobs were being cut, saying it is not company policy to provide that information.
SNC interim chief executive officer Ian Edwards is trying to get the engineering and construction firm back on track after legal and operational setbacks hit its finances and spooked investors.The company is ending work on lump-sum contracts, and announced Friday a final settlement on a contract that had soured with Chilean miner Codelco. The settlement has no material impact on previously reported results and eliminates the potential for any risk stemming from a dispute with the copper miner, SNC said in a statement.
The engineering firm is also exploring options for its oil and gas and mining business and stepping up efforts to slash costs.
The layoffs are part of a plan SNC announced in May to reduce overhead by $250-million a year, Ms. Pizzuto said.
They also underscore the company’s diminishing presence in Canada. Since SNC disclosed in February, 2012, that it had discovered financial irregularities it couldn’t explain, the company’s payroll in Canada has declined to about 8,500 people from 20,000. In 2015, the RCMP charged SNC with bribery under Canada’s Corruption of Foreign Public Officials Act and fraud under the Criminal Code. The company faces a trial that could undermine its ability to win new contracts at home and overseas.
Jobs at SNC, and what could happen to them in the event of a conviction and the related business turmoil, have been a political issue in Canada since The Globe and Mail revealed in February that officials in the office of Prime Minister Justin Trudeau put pressure on Jody Wilson-Raybould when she was attorney-general to reach a negotiated settlement, called deferred prosecution agreement (DPA) with SNC on the charges.
SNC insists it has turned the page on its efforts to win a settlement and is focused on defending itself in court. But the issue has dogged Mr. Trudeau in the campaign for the Oct. 21 election, bolstered by the Ethics Commissioner’s findings in August that the Prime Minister broke ethics rules by improperly attempting to further the private interests of SNC.
In Monday’s English-language leaders debate, Conservative Party Leader Andrew Scheer accused Mr. Trudeau of interfering in the SNC case and shutting down parliamentary probes that would have shed further light on the matter. Mr. Trudeau responded: “The role of a prime minister is to stand up for Canadians’ jobs, to stand up for the public interest, and that is what I’ve done and that is what I will continue to do.”
In Thursday evening’s French-language debate, the moderator asked the leaders if they support offering a DPA to SNC-Lavalin. NDP Leader Jagmeet Singh, Green Party Leader Elizabeth May and People’s Party Leader Maxime Bernier answered that no company is above the law. Mr. Scheer insisted on the independence of Canada’s attorney-general to make that decision.
Mr. Trudeau said such settlements can hold companies to account without punishing innocent employees. “This is a system that works across the world,” he said. “But the decision as to whether it’s given in Canada belongs only to the attorney-general and the minister of justice, and we will respect that decision when it is made.”
Bloc Québécois leader Yves-François Blanchet predicted SNC will break up, and said Mr. Trudeau botched a process that could have allowed the company to move past its legal trouble.
“The shares are falling. The pieces will be sold," Mr. Blanchet said. "The workers are looking for other jobs. It’s another corporate engineering jewel in Quebec that will fall because of the negligence or bad faith of federalist parties.”
Most of SNC’s information-technology operations are outsourced to back-office supplier CGI Group under a 12-year, $500-million agreement announced in 2016. Under the deal, 400 IT employees at SNC moved to CGI, while SNC kept responsibility for IT strategy, cybersecurity and the development of applications related to its core engineering business.