A division of SNC-Lavalin Group Inc. pleaded guilty on Wednesday to fraud in connection with its past activity in Libya as part of an agreement with prosecutors, ending criminal proceedings for the Montreal company at the center of a political scandal in Canada this year.
The legal travails of the engineering-and-construction firm became a national obsession in Canada for most of 2019, after Prime Minister Justin Trudeau and his closest aides were alleged to have tried to press the country’s then-attorney general to intervene on the company’s behalf to help secure an out-of-court settlement.
SNC-Lavalin said in a press release that the company’s construction division, SNC-Lavalin Construction Inc., pleaded guilty to fraud and would pay a fine of C$280 million ($213 million) over a five-year period. The construction division will also face a three-year probation order, the company said.
Other charges against SNC-Lavalin, the construction division and its international subsidiary, which covered a 10-year period ending in 2011, have been withdrawn. The deal was accepted by the Court of Quebec, SNC-Lavalin and prosecutors said Wednesday.
Meanwhile, SNC-Lavalin said Wednesday it does not believe the guilty plea by its construction division will prevent it from bidding on any future contracts, including government contracts, removing a major source of uncertainty for investors.
Prosecutor Richard Roy said the agreement was fair and furthered the administration of justice. “In cases as complex as this, resolutions play an integral role in the criminal justice system,” he said in a statement.
In a statement on Wednesday, Attorney General David Lametti said the decision to enter into an agreement with SNC-Lavalin was taken independently by prosecutors. “Canadians can have confidence that our judicial and legal systems are working as they should,” Mr. Lametti said.
Trading in SNC-Lavalin’s shares were halted on the Toronto Stock Exchange shortly after 8 a.m. Wednesday morning, with no reason given. The shares had lost more than 50% of their value since October 2018, when the company first revealed that prosecutors had turned down its request for an out-of-court settlement. The company changed chief executive officers in June. Following the resumption of trading just after noon, SNC-Lavalin shares were up about 19%, trading in the C$29 range.
“This is a game-changer for the company and finally allows us to put this issue behind us,” SNC-Lavalin’s new CEO, Ian Edwards, said in a press release. Mr. Edwards apologized for the past misconduct and said he welcomed the chance to move forward.
Mr. Trudeau’s alleged involvement in SNC-Lavalin’s legal proceedings proved costly. Canada’s ethics watchdog ruled in August that Mr. Trudeau broke the country’s conflict-of-interest laws in his dealings with the former attorney general.
The SNC-Lavalin affair, as it became known in Canada, tarnished Mr. Trudeau’s reputation as a proponent of clean, accountable government. Political analysts believe the uproar likely contributed to his Liberal Party winning only a minority government in an election this fall.
Mr. Trudeau’s former attorney general, Jody Wilson-Raybould, who clashed with Mr. Trudeau over SNC-Lavalin’s prosecution, was named newsmaker of the year by the Canadian Press news agency on Wednesday.
The settlement came after the conviction on Sunday of a former SNC-Lavalin executive on fraud and corruption charges. Sami Bebawi was accused of participating in a kickback scheme that helped SNC-Lavalin obtain construction contracts in Libya during the 2000s.
Prosecutors said on Wednesday that SNC-Lavalin admitted in an agreed statement of facts that it directed nearly C$48 million to the son of former Libyan leader Col. Moammar Gadhafi between 2001 and 2011. In exchange for the payments, Saadi Gadhafi used his influence to secure construction contracts for the benefit of SNC-Lavalin Construction Inc.
Prosecutors said almost C$74 million was also paid through shell companies to two former SNC-Lavalin employees, including Mr. Bebawi, for their personal benefit.
—Paul Vieira contributed to this article.
Write to Kim Mackrael at kim.mackrael@wsj.com
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