When SNC-Lavalin Group Inc. pulled out of Libya last year as the country became engulfed in a revolution, the company left behind $22.9-million in cash in Libyan banks. Just what happened to that money isn't clear.
It's another mysterious facet in the engineering giant's effort to find out what happened to tens of millions of dollars of missing funds, which led to the departure of chief executive officer Pierre Duhaime on Monday. SNC said some $56-million of payments it can't account for were not related to the company's extensive projects in Libya. But the stranded cash in Libya highlights how SNC is grappling with the fallout from its shattered business in the war-torn country.
The fate of the Libyan cash was included in SNC's annual financial results, which offered the first insight into how much the collapse of the Gadhafi regime has cost the Montreal-based firm. Those costs included a $39.3-million loss on Libyan projects, a drop of more than $400-million in annual revenue and the elimination of $484-million worth of backlogged projects in that country.
SNC said it believes "there is risk to its current ability to repatriate" the $22.9 million. But it hopes the money will be available if it ever resumes operations in Libya.
SNC was among the biggest corporate players in Libya thanks to its close ties to the family of former dictator Moammar Gadhafi. The company participated in two joint ventures with Col. Gadhafi's son, Saadi, called the Libyan Corps of Engineers and the Executing Agency. Those organizations funneled a variety of projects to SNC and made sure other competitors stayed clear. The projects included a massive water diversion, an airport in Benghazi, a prison in Tripoli, as well as numerous roads, bridges and housing developments.
In 2010, SNC generated $418-million in revenue from Libya, or roughly 7 per cent of the company's total revenue that year. The company was forced to pull out of Libya in February of 2011 as rebel forces, backed by NATO, began waging war on Col. Gadhafi. As a result, SNC's revenue from Libya fell to just $86.2-million last year. It has likely fallen to zero today since none of the company's projects are operating.
The final toll could be higher. SNC's chairman Gwyn Morgan said on Monday that the company has no clear idea about what went on in Libya. "We are actually learning more from what the media says than what we can find internally because we don't have the people with us anymore that were involved," Mr. Morgan told analysts and media on a conference call.
One of the key people who left SNC recently was Riadh Ben Aissa, a former vice-president who oversaw the company's construction division and its Libyan operations. Mr. Ben Aissa developed a remarkably close relationship with Saadi Gadhafi, funding his many visits to Canada and serving with him on the board of the Libyan joint ventures.
SNC has alleged Mr. Ben Aissa paid $56-million to various agents to help the company win contracts on a pair of major projects. The company alleged the payments were improper and that the money can't be traced. It added that some of the payments were approved by Mr. Duhaime. While SNC would not disclose any details about the projects, Mr. Morgan insisted that the company does not believe the agent payments involved projects in Libya.
Despite all the problems over Libya, Mr. Morgan said SNC is eager to get back into the country. "We're going to be looking at restarting [projects]at some point," he said during the conference call. The company's interim CEO, Ian Bourne, added: "We're driving forward with the business as we have known it and continue to drive for new opportunities, and we are not backing away from parts of the world in which we have been successful before."
When asked if the new government in Libya would be receptive to SNC given its past ties to Saadi, who fled to Niger and has talked about launching a counter revolution, Mr. Morgan replied: "Well, every other company that has operated in the country, including all other engineering companies, had links with the [Gadhafi]regime or they couldn't have done any business."