SNC-Lavalin Loses Bid for Review of Settlement Rejection

Mar 8, 2019 by Sandrine Rastello and Josh Wingrove

SNC-Lavalin Group Inc., the embattled Canadian builder at the heart of the political crisis that’s engulfed the Trudeau government, is one step closer to the trial it’s been trying to avoid.

A Canadian court has struck down a request by the Montreal-based company for judicial review of a decision not to offer the firm a deferred prosecution agreement. The new legal tool, which in effect settles a criminal case, would have prevented SNC from facing trial on fraud and corruption charges. Instead, the company would have paid a fine.

The Federal Court concluded that SNC’s application “had no reasonable prospect of success in the context of the law and the governing jurisprudence and when a realistic view is taken,” it said in an e-mailed release.

The decision is the latest development in a political crisis centered on what efforts Prime Minister Justin Trudeau and his staff made to intervene to end the case and shield SNC from a possible 10-year ban on government contracts if found guilty. Last month, the company had already indicated it was giving up on settling the charges and was focusing on preparing for trial.

The ruling clears the way for the criminal case to continue, but doesn’t mean it will run its entire course. The attorney general still has the power to direct the prosecutor to negotiate a deferred agreement. The current Attorney General, David Lametti, has acknowledged that power exists but hasn’t signaled whether he’ll exercise it or not.

SNC is also grappling with a business crisis that has intensified in recent weeks with two profit warnings, a writedown in the company’s energy business and a credit downgrade by S&P Global Ratings.

The shares were little changed in Toronto. They are down 27 percent since Jan. 25, the last trading day before the company disclosed a “serious problem” with a mining contract in Latin America and took a C$1.24 billion ($920 million) charge on its energy business because of a diplomatic spat between Canada and Saudi Arabia.

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