Skip to main content

International Trade Minister Jim Carr has told Export Development Canada to improve its human-rights, transparency and anti-corruption practices, and said in an interview with The Globe and Mail that the federal agency had made “mistakes."

In a letter to EDC’s board conveying his expectations for 2020, Mr. Carr cited EDC’s “unfortunate involvement” in a 2015 loan of US$41-million to support Bombardier Inc.'s sale of a luxury jet to the Gupta brothers, who have been at the heart of a corruption scandal that toppled Jacob Zuma from South Africa’s presidency. He also referenced a World Bank audit, which accused Bombardier of colluding with officials at Azerbaijan Railways to win a rail-signalling contract.

Meanwhile, a review of Bombardier’s anti-corruption policies by law firm McCarthy Tétrault, which began in July, has triggered a halt in business between the company and EDC. The Crown corporation said it “cannot speculate” how long the review will take; Bombardier confirmed to The Globe that it won’t request any more loans until it’s complete.

Story continues below advertisement

Mr. Carr said recent public admissions by EDC marked a culture shift. “The early evidence, from our perspective, is that mistakes were made, lessons have been learned and they are now being applied,” Mr. Carr said in the interview. “Compared to where I believe we have been, we’re in a better place."

Explainer • What is EDC and what does it do?

See no evil: How Canada is bankrolling companies accused of bid-rigging, graft and human-rights violation

EDC supports Canadian exporters with a variety of financial services including loans, guarantees and receivables insurance. A Globe investigation this year highlighted its support for companies facing allegations of corruption, human-rights violations and environmental damage, and identified apparent lapses in EDC’s due-diligence procedures and favouritism for politically influential clients.

Bombardier is EDC’s top customer. According to a Globe analysis, EDC has issued 229 loans since 2002 that supported Bombardier, worth somewhere between $20-billion and $47-billion. (EDC only discloses broad ranges of possible value for its transactions.) That’s an average of about a dozen loans each year, most of which support aircraft sales. EDC announced only two loans to Bombardier this year, the latest on June 10.

Earlier this year, EDC revealed that it had suspended all support for SNC-Lavalin in 2014 after a series of corruption allegations involving that company. That suspension ended in 2017 after a review satisfied EDC that SNC had taken “significant corrective actions.” (The suspension wasn’t disclosed at the time; Unlike the World Bank, EDC does not publish a list of debarred companies.)

EDC declined to comment on whether it had placed any restrictions on Bombardier. "Right now, we’re focused on the third-party review,” wrote spokeswoman Shelley MacLean in a statement.

The agency reports to Parliament through the Trade Minister, but the government says its wholly owned agency operates “at arm’s length." Critics have accused the government of allowing EDC to operate without proper oversight, even when its activities clash with the federal government’s priorities and obligations.

Mr. Carr said that the government’s main responsibility regarding EDC is to select its leadership. EDC board chair Martine Irman was appointed in late 2017; former Bombardier executive Mairead Lavery became president and chief executive officer in February. She replaced Benoit Daignault, whose five-year tenure was marked by several controversial transactions, including the loan involving the Guptas.

Story continues below advertisement

“We’ve changed the leadership of EDC and we’re very pleased with the direction that new leadership is taking," Mr. Carr said.

There are indications of closer federal supervision since Mr. Carr assumed his post in the summer of 2018 − although some of the improvements seemingly underline previous oversight gaps.

The government appoints EDC’s board. Last year, a report by the Auditor-General deemed EDC’s corporate governance deficient because terms of eight of its 12 board members had expired, and one position was vacant. That has been rectified: EDC reports that there are no vacancies on its board, nor directors with expired terms.

EDC is in the midst of a one-a-decade legislative review, a process that in the late 1990s and 2000s had been largely outsourced to consultants. For the latest review, officials in Mr. Carr’s department assumed a direct role in authoring a report examining EDC’s performance in fulfilling its mandate.

Released in June, that report noted that because the government had no representatives on EDC’s board, federal departments couldn’t access board briefing materials. It recommended that information henceforth be supplied regularly. In his letter to Ms. Irman, Mr. Carr demanded EDC provide him with those materials.

EDC declined to comment on whether it would comply. “This is a new request,” it said in a statement. “We are committed to working with the minister and officials to make sure the government has the appropriate info to exercise good governance. Those conversations are under way.”

Story continues below advertisement

Both EDC and Mr. Carr’s office reported increased communication with each other during the past year. Mr. Carr’s letter noted that Ms. Lavery had “initiated regular calls with the Deputy Minister of International Trade and the Deputy Minister of Finance,” and encouraged her to continue doing so.

Patricia Adams, executive director of non-governmental organization Probe International, has been a vocal EDC critic for decades. “Nothing meaningful has changed in their behaviour," she said.

Karyn Keenan, director of Above Ground and another long-standing EDC critic, said she’d observed no significant modifications to EDC’s policies on transparency, corruption, human rights and the environment.

Above Ground objected to several of EDC’s transactions this year, including the two loans to Bombardier. It also protested against a loan of between $500-million and $1-billion announced in May that benefited Teck Resources Ltd., a company Above Ground has accused of “significant pollution problems” in B.C. and elsewhere.

“I wonder if Minister Carr is aware of the frequency with which EDC supports companies that are associated with very credible allegations of corruption, human-rights abuse and environmental damage,” Keenan said. “There’s only one logical conclusion, and it’s that EDC cannot be trusted with the level of discretion it has.” She called for greater federal oversight, including assigning the Auditor-General to review the performance of EDC’s internal controls concerning human rights and environmental matters.

EDC operates under less supervision and regulation than private-sector financial institutions. It is not subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, nor oversight from the Office of the Superintendent of Financial Institutions (OSFI). Asked whether Mr. Carr supported applying these to EDC, a spokesperson responded that “these are excellent questions for consideration through the legislative review.”

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter