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CANADA: EDC says it regrets $41-million loan to back Bombardier jet sale to Zuma allies

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Former South African President Jacob Zuma at the High Court in Pietermaritzburg in May.Themba Hadebe/AFP/Getty Images

‘We did see risks during our due diligence prior to providing the loan and we chose to proceed. And we acknowledge now that that decision was a mistake’


By The Canadian Press, Andy Blatchford, FINANCIAL POST, August 14, 2019

EDC has helped fuel the serial subsidization of Bombardier. The gravy train must end

OTTAWA — Canada’s export credit agency says it regrets its 2015 decision to lend US$41 million to a South African company owned by members of a family facing corruption allegations related to their ties to former president Jacob Zuma.

In the months and years that followed, the agency became increasingly concerned about the loan it provided to Westdawn Investments to backstop the sale of a Bombardier luxury jet, Export Development Canada executive vice-president Carl Burlock said Wednesday.

Over that time, he said, allegations related to corruption and political interference were mounting against members of the Gupta family, which owns the company.

“We do regret this transaction, which resulted in us having a business relationship with the Gupta family,” Burlock said in an interview following the agency’s release of a public statement admitting its error.

“It’s true we did see risks during our due diligence prior to providing the loan and we chose to proceed. And we acknowledge now that that decision was a mistake.”

The deal was first reported by the Globe and Mail newspaper in August 2017. The Globe reported that the money helped the wealthy Gupta family, which has been closely connected to Zuma, buy a $52-million Global 6000 jet from Montreal-based Bombardier.

Export Development Canada, a Crown corporation that backs loans and provides insurance, ended its business relationship with Westdawn in December 2017.

The agency’s decision to support the purchase, Burlock said, was in line with its international commitments under the Organization for Economic Co-operation and Development. It also relied on the fact there were no formal charges or active investigations related to the allegations.

The process flagged political influence concerns, but he added that it lacked an in-depth probe into the risks related to people who hold, or have held, powerful public positions.

Burlock insisted the Westdawn deal has taught the agency some “powerful lessons,” helped it fill gaps and make changes to how it makes its decisions.

He said the agency decided to make a public statement of regret after hearing from its stakeholders that they expected a higher level of transparency.

“We have learned and taken things away from this transaction,” he said. “It’s resulted in improved screening and today we would not proceed with a transaction that features the same kind of risk profile.”

Zuma resigned as South Africa’s president in 2018 after a near-decade-long tenure marked by persistent corruption allegations.

Westdawn has filed a lawsuit in the United Kingdom against the agency to contest the deal’s termination, he said. The litigation is still before the courts.

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EDC has helped fuel the serial subsidization of Bombardier. The gravy train must end

Since 1966, it’s estimated Bombardier has received nearly $4 billion in bailout money from both provincial and federal governments, according to the Montreal Economic Institute, and received another $11 billion in Export Development Canada (EDC) loans.Graham Hughes/The Canadian Press

Diane Francis: This is about bad governance, the exploitation of taxpayers, perpetuation of favouritism and the bruising of Canada’s good name


By Diane Francis
, FINANCIAL POST, June 3, 2019

Bombardier Inc. is where tax money goes to die.

Of all the Liberal boondoggles to benefit Quebec and party faithful, the serial subsidization of the fabulously wealthy Beaudoin-Bombardier family ranks highest. Since 1966, it’s estimated Bombardier has received nearly $4 billion in bailout money from both provincial and federal governments, according to the Montreal Economic Institute, and received another $11 billion in Export Development Canada (EDC) loans to help its customers buy their planes and rail cars.

A major factor behind Bombardier’s subsidization has been the EDC, which finances Canadian companies doing business abroad. It’s also self-financed. But, like most other federal agencies in Canada, the EDC president and board members are appointed by the Government of Canada, and report to Parliament through the Minister for International Trade. Some transactions are public, but others are not for competitive reasons.


This should never have been allowed.

And now taxpayers know why. A report in the Washington Post reveals that $41-million worth of EDC funding for a current Bombardier railway project found its way into the hands of a partner, a tainted family in South Africa, to buy a fancy Bombardier private jet for their personal use. The financing was intended to help the company win a rail contract.

Around the same time, an SNC-Lavalin whistleblower alleged that some of the $4-billion plus EDC funds earmarked for SNC-Lavalin were used for bribes.

These revelations have resulted in pledges by the EDC to investigate the allegations, but that’s unacceptable. The EDC cannot investigate itself and should be subjected to independent investigation by a judge or prosecutor who is thoroughly vetted for conflicts of interest.

The agency says the claim from the insider has prompted it to hire outside legal counsel to review at least one former deal with SNC-Lavalin.

The gravy train nexus between the EDC and favoured clients such as Bombardier, SNC and others must end. From now on, all transactions should be disclosed in real time, and all clients’ names and projects going back to 1966 should be published.

The public has a right to know how much EDC funding has gone to Quebec corporations or to Liberal favourites. What are, and have been, the political or other affiliations between clients, their officers and directors, project sponsors and EDC directors, officers and the ministers in charge?

The existence of a secretive EDC is not in the national interest.

Now one of the EDC’s biggest clients, Bombardier, is awash in controversy. The World Bank is threatening to ban Bombardier over Azerbaijan corruption allegations. And scandals have arisen around Bombardier in Brazil, as well as South Africa, involving sales of rail cars.

The company’s expensive CSeries planes, now the Airbus A220, have been troubled from the outset.

In October 2015, Quebec injected $1 billion directly into the CSeries program after Bombardier took a $3.2 billion write-down on the program. At the same time, Bombardier asked the Canadian government for “financial assistance.” That’s when Scotiabank analysts revealed the CSeries program would need another bailout in “12-18 months” and may never turn a profit.

In April 2016, talks for another bailout began and by February 2017 Bombardier received a repayable loan of $372 million from the Canadian government.

“This is not helping the middle class. This is lining the pockets of the 1 per cent with tax dollars,” said Rona Ambrose, interim Conservative leader at the time.

Today, the company is virtually on the ropes. In 2018, half of the CSeries was sold to Airbus for almost nothing.

The Bombardier saga is about bad governance, the exploitation of taxpayers, perpetuation of favouritism and the bruising of Canada’s good name.

No more.

—— AUTO – GENERATED; Published (Halifax Canada Time AST) on: September 06, 2019 at 09:14AM

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