SNC-Lavalin Group Inc, Canada’s biggest engineering company, said it would suspend payments to its former chief executive, saying his arrest on fraud charges suggested it may not have been aware of all the facts when he resigned.
Pierre Duhaime stepped down in March after an internal investigation found that $56 million in company funds had gone missing, paid to unknown agents on projects that did not exist.
He was arrested on Nov. 28 by Quebec’s anti-corruption squad on charges of fraud, conspiracy to commit fraud and use of false documents.
Duhaime’s exit package, as laid out in a proxy circular in April, is worth about $5.0 million. It includes $1.9 million in salary, two years’ pension credit and about $55,000 for professional development.
Until the facts are clarified or resolved, payments under the arrangements will be held separately, SNC-Lavalin said on Thursday.
Duhaime could not be reached immediately for comment.
Duhaime is not the only former SNC executive who is under investigation. The Quebec anti-corruption squad said in November that SNC’s former head of construction, Riadh Ben Aissa, is facing the same charges as Duhaime.
Ben Aissa was also arrested in Switzerland in the spring. According to media reports, Swiss police are investigating $139 million in payments to a Swiss bank account tied to large construction contracts in Libya.
Separately, Canadian police are also investigating bribery allegations against SNC executives in connection with a $1.2 billion bridge project in Bangladesh. The World Bank has suspended its loan for the development and temporarily banned an SNC subsidiary from bidding on its contracts in the country.
SNC, one of the world’s biggest engineering and construction firms, also published a full-page letter to its stakeholders in the Globe and Mail newspaper. The letter outlined new compliance and ethics policies.
“SNC-Lavalin’s board and management are determined to put this unfortunate chapter in this great company’s 101-year history behind us, all the while without forgetting the lessons learned,” it said.
The company said it is cooperating with authorities and encouraged its employees to do the same. It also said some board members had decided not to stand for re-election.
SNC-Lavalin also said it had launched a search for a new chief financial officer. Once a replacement is in place, the incumbent, Gilles LaramDee, will become executive vice president for infrastructure, concessions and investment, a new role.
Shares of SNC were little changed on Thursday morning, rising 2 Canadian cents to $41.26 on the Toronto Stock Exchange.