The Successful Investor Hotline – Friday, November 30, 2012

Article Excerpt

SNC-LAVALIN GROUP INC., $39.40, Toronto symbol SNC, fell 5% this week in response to the arrest of Pierre Duhaime, the company’s former chief executive officer. The charges relate to possible illegal payments that SNC may have paid to secure a contract to build the new McGill University Health Centre in Montreal. The company and its partners won this deal in April 2010 under a public-private partnership with the Quebec government. It’s unclear if these payments are related to the $56 million U.S. in unusual payments to agents that SNC discovered in March 2012. To put that in context, SNC earned $378.8 million (Canadian), or $2.49 a share, in 2011. This situation prompted Mr. Duhaime to step down as CEO and a director of the company. SNC also fired other executives. We recommend that you stay out of companies if you have doubts of any sort about the integrity of insiders. However, SNC’s quick response has helped prevent any permanent damage to its reputation…