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How a federal agency helps finance some of the world’s most corrupt regimes

By Richard Poplak

Published in The Walrus, Dec. 19, 2017

Export Development Canada has perfected the art of lending billions of taxpayer dollars to scandal-ridden foreign buyers. But its transparency could use some work.

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… “EDC is hardly ordinary. For one thing, the agency is massive—its transactions in 2016 amounted to more than $100 ­billion, almost twenty times as much as its American counterpart, the Export–Import Bank. Depending on the year, it ranks as the second or third largest such institution in the world, some distance behind China’s export credit agency but neck in neck with Japan’s.”

… “Before the ­Guptas began negotiating with EDC, they had been turned down for loans from two big multinational lenders. EDC was far more eager to help the Guptas, but it still planned on sending one or two investigators to South Africa prior to locking in the loan. Whether or not it dispatched a team remains unclear, but it seems impossible that any investigators would have missed signs of the ­Guptas’ political exposure, either on the ground in Johannesburg or on Google in Ottawa. ­According to its published list of regulations, EDC must assess profiles of companies or individuals who present risks for reasons including ‘being named on ­official lists, such as terrorism, corruption, or sanctions lists, being identified as politically exposed, being investigated, charged or convicted for illegal activities, being subject to allegations of wrongdoing or being subject to adverse media.’ In late 2014, the Guptas qualified on at least three counts.”

… “The agency’s client list is studded with some of the most ­scandal-ridden multinationals on the planet, including Kinross Gold—its West ­African mining operations were, as of 2016, under investigation by the United States Securities and Exchange Commission for bribery and corruption.”

… “EDC is effectively a black box, with the result that few in ­Canada—including the minister presiding over it—seem to know the full details about what the agency does, who it finances, and why. With EDC’s mandate up for review in 2018, it seems like a good time to examine the considerable reputational risks the agency often takes. Do Canadians want to be shareholders in a government agency that puts profit ahead of accountability?”

… “While EDC has been subject to the ­Access to Information Act since 2007, there is an exemption in the Export Development Act—the piece of legislation under which the agency is mandated—that basically treats any information pertaining to a client, and any documentation that may have been filed during or after the due diligence process, as confidential..”

… “At a time when Canadians are increasingly demanding ethical mutual funds and other responsible investment vehicles, how should they react to news that a government agency could be supporting the very companies and sectors they may have excommunicated from their portfolios?”

… “Above Ground also monitors EDC’s support for transnationals implicated in corruption on a scale the Guptas could only aspire to. Keenan directed my attention to the Brazilian state-owned oil-and-gas corporation Petrobras. In 2013, EDC gave Petrobras between $250 and $500 ­million to procure Canadian goods and services. The following year, Petrobras became mired in what has been described as the biggest corruption scandal in modern history.”

… “How EDC squares with ‘Canadian values’ is more than a conceptual question. The Export Development Act clearly identifies EDC as an agent of the government, which means that if EDC is somehow held accountable for any breach of international human rights law, Canada is on the hook.”

… “The Auditor General looks at EDC at least once every ten years, but the auditing process is largely comparative: Is EDC operating the same way as other export credit agencies around the world? ‘So it’s a relative assessment,’ says Keenan, ‘not an absolute assessment.’ EDC’s environmental and social impact and human rights policies are compared to other credit agencies also financing companies credibly associated with similar abuse and harm.”