04/02/2012 05:55 EDT | Updated 06/02/2012 05:12 EDT

World Bank Suspends SNC-Lavalin Unit's Bidding Rights


Montreal-based engineering giant SNC-Lavalin said Monday the World Bank has suspended the right of one of its subsidiaries to bid on the bank's projects.

The bank is the world’s largest development organization.

In a release, SNC-Lavalin said the suspension was imposed based on allegations in a confidential report by the bank on bidding by the subsidiary relating to the Padma Bridge project in Bangladesh.

"The scope of the project, which was not awarded, was to act as the owner's engineer for the Bangladesh government in supervising the contractor responsible for the overall bridge construction project," the firm said.

The release came a week after former SNC-Lavalin CEO Pierre Duhaime resigned following an internal investigation that revealed that he signed off on payments to undisclosed agents, breaching the company's code of ethics.

At the time, the company said it planned to inform police and other authorities about the results of the internal investigation that failed to determine the use of $56 million US in payments.

Today, SNC-Lavalin said that all ongoing projects and new bids by its other subsidiaries and divisions will continue as usual.

SNC-Lavalin to respond to World Bank

"We launched our own internal investigation when this matter was first brought to our attention and we will continue to co-operate fully with the World Bank on this matter," interim CEO Ian Bourne said.

SNC-Lavalin said it intends to provide a comprehensive response to the allegations.

In announcing Duhaime's resignation last week, the firm said he authorized the payments despite the objections of the company's chief financial officer.

Duhaime's departure came amid allegations he allowed payments to "agents" in Libya and Tunisia.

Based on the results of the investigation, SNC-Lavalin board chairman Gwyn Morgan said the board didn't believe the money was used for bribes or wound up in Libya.

However, he acknowledged the company wasn't "able to really determine the use of those payments."

Its shares closed up 82 cents, or two per cent, at $40.75 on the Toronto Stock Exchange Monday.