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The head of engineering giant SNC-Lavalin has resigned after an internal probe showed he approved US$56 million in questionable payments that are now under investigation.

The Montreal-based company's Chief executive officer Pierre Duhaime signed off on the payments, which were related to hiring agents for two projects.

The company came under the microscope a month ago when it announced it was unable to issue a scheduled earnings report because of uncertainties around the company's projects in Libya.

"That's where problems erupted for Pierre Duhaime who today stepped down, he not only resigned, he retired and stepped away from the board of directors as well," said BNN's Michael Kane on Monday.

The company announced Duhaime's departure on Monday, and said it had discovered weaknesses in its internal controls "relating to management override, non-compliance with and ineffective controls over compliance with the company's policy on commercial agents and its code of ethics."

SNC-Lavalin said the company's CFO and chairman refused to approve the payments in question, but Duhaime stepped in and allowed them to go forward -- a move the company said contravened its code of ethics, according to an internal review.

Board chair Gwyn Morgan moved to allay concerns about whether Monday's developments were "the tip of the iceberg or the iceberg."

"We tried to make it clear because of our investigation and the very thorough work done by the auditors, both internal and external, plus the investigation, we were able to tell shareholders that this is pretty much the iceberg," Morgan said.

"And there are no more material issues that should substantially affect the results of the company going forward as a result of this episode."

Karl Moore, a business strategy professor at McGill University, said Duhaime's resignation sends "a strong message" to the rest of the company and throughout the corporate world.

"Hopefully they've drawn a line under it and said, ‘Look it, this is unacceptable behaviour,'" Moore told Â鶹ӰÊÓ Channel. "And everyone at SNC-Lavalin is going to be much more careful in the future, just because if they fired the CEO who's doing a good job, what are they going to do to me if I screw up?"

Last month, the company's board launched an investigation into $35.5 million in payments, which were previously thought to be linked to its Libyan operations.

That probe was later expanded to include another US$22.5 million worth of payments.

All the payments were attributed to construction projects, but a closer look showed the money never reached those projects.

"This Montreal engineering firm really has a stellar reputation around the world, has operations around the world and was in Libya when the Arab Spring began, and it quickly got its people out of harm's way. But it drew a microscope to those Libyan operations," Kane said.

The company did not specify Monday which projects the issues were related to, but did say it did not believe they were located in Libya.

SNC-Lavalin has been criticized in recent months for maintaining close ties to former Libyan dictator Moammar Gadhafi and his family.

Last month, the company fired two employees for having ties to al-Saadi Gadhafi, the son of the now dead dictator who is wanted on an international arrest warrant.

Former executive vice-president Riadh Ben Aissa and Stephane Roy, who was a controller, were "no longer in the employ of the company, effective immediately," according to a release published Feb. 10.

According to reports, Aissa had worked extensively in Libya on projects worth hundreds of millions of dollars.

He also helped al-Saadi Gadhafi set up the Libyan Corps of Engineers and there are reports he flew a Canadian security specialist to Libya to help Gadhafi when tensions were at their highest last year.

SNC-Lavalin said Aissa "is believed to have significant knowledge about most of the investigated transactions" but has apparently refused to co-operate.

It added that Roy may also have knowledge, but he has not been interviewed since prior to his dismissal in February.

Roy has been linked to an alleged plot to help smuggle Gadhafi into Mexico. Mexican authorities recently charged an Ontario woman, Cynthia Vanier, with masterminding the James Bond-style scheme which involved private planes, forged passports and a safehouse.

Vanier was arrested in November with a Dane and two Mexicans. She has been held in a Mexican prison ever since. SNC-Lavalin has only recently acknowledged that Roy was also with Vanier at the time of her arrest, though police did not take action against him.

The company said Roy was in Mexico to discuss water treatment projects with Vanier.

SNC-Lavalin has also acknowledged it hired Vanier's Mount Forest, Ont.-based mediation firm last summer to look at the security situation in Libya and determine whether the company could return to work there.

Al-Saadi Gadhafi eventually escaped Libya and was granted asylum in Niger. He is still subject to an Interpol warrant for his arrest.

Moore said the company's troubles highlight the potential pitfalls of doing business with emerging economies.

"It's problematic when you deal with the emerging world, where you're encouraged by your government," Moore said. "The prime minister's been over in Asia quite a bit trying to get more trade deals with them, trying to encourage Canadians to do business over there. This shows there's an occasional downside to that."

The company reported Monday that net income attributable to shareholders dropped 52 per cent to $76 million in the fourth quarter, or 50 cents a share, compared to net income of $158.7 million, or $1.04 cents per share, in the same period a year earlier.

The statement said Ian Bourne will take on the role of vice-chairman and interim CEO until a new chief executive is hired to replace Duhaime.

With files from The Canadian Press