(Above Ground, Ottawa, 22 February 2019) Following reports that engineering giant SNC-Lavalin lobbied federal officials intensively in the lead-up to its criminal prosecution on corruption charges, public attention has been brought to the hundreds of millions in government loans the company has received in recent years. The Globe and Mail reported last week that Export Development Canada (EDC) has provided at least $800-million and as much as $1.7-billion in loans to SNC-Lavalin since 2011, when news broke that the firm was under investigation by the RCMP. Some of those loans were approved after the World Bank announced in 2013 that SNC-Lavalin was barred from bidding on its projects until 2023 due to corruption, and after criminal charges were laid in Canada. As we noted in our recent submission to the government urging stricter oversight of Export Development Canada, SNC-Lavalin is just one of several EDC clients to face corruption investigations, charges or sanctions in recent years. (Others include Bombardier, Kinross Gold and Brookfield.)
Canada
Export Development Canada releases new Climate Change Policy
(Benzinga, Ottawa, 28 January 2019) Export Development Canada today revealed its new Climate Change Policy. The new policy commits EDC to measuring, monitoring and disclosing climate-related risks and opportunities, integrating climate change considerations into business decisions, and encouraging partners to do the same.
Ottawa offers $1.6B EDC backstop for energy sector as political tensions with Alberta fester
(CBC News, Ottawa, 18 December 2018) The federal government is promising more than $1.6 billion — most of it in loans — to support the ailing energy sector, but it’s unlikely to ease the heightened political tension between Ottawa and Alberta. Natural Resources Minister Amarjeet Sohi and International Trade Diversification Minister Jim Carr made the announcement in Edmonton this morning. The bulk of the money — $1 billion in commercial support — comes from Export Development Canada, the national export credit agency. It’s meant for oil and gas exporters who want to invest in new technologies and diversify their markets.
Industry group lobbies Ottawa for EDC insurance against First Nation rights consultations
(Globe and Mail, Toronto, 25 December 2018) Canada’s largest industry and trade association has asked the federal government to insure foreign investors against the risk their projects might be derailed by [mandatory] consultations with First Nations. The suggestion from Canadian Manufacturers & Exporters, which represents 1,200 companies, was among the farthest-reaching in hundreds made to a once-a-decade federal review of the Export Development Act, which governs the activities of Canada’s export credit agency. Successive court decisions have affirmed the federal government’s duty to consult Indigenous peoples when its actions may adversely affect their rights, and accommodate them if necessary. This still-evolving body of law has imposed significant responsibilities on governments across Canada relating to Crown-sponsored mining, energy, infrastructure and other projects, as well as private-sector projects that require government regulatory approvals. Disputes over the adequacy of consultations can lead to litigation and projects can grind to a halt. “To a foreign investor who does not understand these complex consultative processes, and has no real way of participating in them, it presents a high risk that dissuades their investment in projects,” Canadian Manufacturers & Exporters wrote in its submission. “EDC, who could be better positioned to understand such situations, could provide assurances to the foreign investor through some sort of guarantee.” Canada’s Assembly of First Nations said in a statement. “If Export Development Canada considers providing guarantees and other assurances to foreign investors to secure investment in projects, Canadian taxpayers may be left on the hook for paying compensation for projects that do not proceed due to faulty consultation processes.” [ECA-Watch commentary: It would appear that Canadian business wants EDC, an official public corporation, to guarantee private foreign investors’ profits from potential violations of First Nations’ rights.]
Report highlights EDC’s multibillion dollar support for oil and gas industries
(Windsor Star, Ottawa, 22 November 2018) A new report shows Canada’s export credit agency provides far greater backing to oil and gas companies than to makers of clean technology, a trend the authors contend undermines the country’s commitment to fight climate change under the Paris Agreement. Released Thursday and sponsored by a host of environmental groups, the report from the research and advocacy organization Oil Change International casts light on how Export Development Canada facilitated $62 billion in financial support for Canadian oil and gas companies from 2012 to 2017. That’s 12 times more support than the $5 billion the agency facilitated for clean technologies during that time, the report says, citing the agency’s own data.
Bringing Accountability and Transparency to Export Development Canada’s Practice
(Above Ground, Ottawa, 12 November 2018) Canada’s Export Development Act is under review. In our submission (pdf) to the government, Above Ground and other Canadian civil society groups call for legal reforms to bolster the accountability and transparency of Export Development Canada (EDC). EDC’s policies state that it screens and monitors the business it supports for associated social, environmental and business ethics risks. Yet over the years we have identified multiple companies that receive support from EDC despite credible or proven allegations involving environmental damage, corruption and human rights violations. In this submission we urge Parliament to adopt legislative reforms that include prohibiting EDC from supporting firms involved in wrongdoing, subjecting it to judicial oversight and expanding the Auditor General’s mandate regarding EDC. We have also made a second submission (pdf) calling for reforms to address the climate impacts of business supported by EDC. In addition, Both ENDS and other CSOs working from a number of countries made a joint submission as formal input to the EDC legislative review regarding EDC support for fossil fuels. The submission emphasized the Canadian governments’ ambition to show leadership on climate change and to prioritise climate change action and clean economic growth.
The South African ECA that can invest billions in public money on shadowy projects
(Daily Maverick, Johannesburg, 3 September 2018) The Export Credit Insurance Corporation of South Africa (ECIC) uses public funds for international projects it chooses to invest in. Right now, the agency is considering lending a part of $14-billion needed by US energy company Anadarko for a giant liquefied natural gas project in Mozambique. Four ECAs are showing interest in providing them with credit for $12-billion of that amount –Italy (SACE), Japan (JBIC), China (C-EXIM), the US (US EXIM) and South Africa. According to an EIA conducted for Anadarko by Environmental Resources Management/Impacto, there will be “major” negative environmental and social impacts during the construction and operational phases. According to ECIC CEO Mandisi Nkuhlu, they are not bound by the ECA transparency guidelines of the OECD. The ECAs involved have collectively contracted an Italian consulting firm, RINA, to conduct an environmental impact assessment of the project. For local communities and the environment the project will be disastrous. The project is leaving entire communities landless, with no livelihood, and insufficient resettlement and compensation, if any. Unique ecosystems such as mangroves, endangered species of sea life, ocean flora and pristine beaches will be put at great risk. ECAs have a history of funding projects that are sometimes corrupt, violate human and environmental rights, and are financially and ethically questionable. The Canadian ECA, Export Development Canada, financed $41-million of a $52-million jet sold by Canadian company Bombardier to the notorious Gupta family, who have been deeply embroiled in state capture and systemic corruption in South Africa. The Canadian agency lent the Guptas $41-million to purchase a Canadian product from a company that was struggling financially.
Ottawa orders Export Development Canada to examine lending practices
(Globe and Mail, Toronto, 26 September 2018) Ottawa has ordered the nation’s export credit agency to consider more carefully the human-rights implications of loans and insurance it offers in support of Canadian businesses. A Sept. 24 letter from International Trade Diversification Minister Jim Carr to Martine Irman, chair of Export Development Canada’s board of directors, urged the Crown corporation to ensure its internal procedures accord with Canada’s obligations under international humanitarian law. Human-rights and environmental-advocacy groups have criticized EDC for decades over what they say is a pattern of giving financial assistance to companies involved in harmful projects overseas. “The agency is essentially self-governing in the areas like environment, human rights and anti-corruption,” Karyn Keenan, director at ECA-Watch member Above Ground. Above Ground’s submission to EDC on strengthening environmental and human rights protection can be found here and their recommendations on bringing EDC’s climate change policy in line with Canada’s commitments can be found here.
ECAs flock to finance huge Peruvian mine project
(Global Trade Review, London, 22 August 2018) Peruvian miner Minsur has secured US$900mn in project financing for its Mina Justa copper mine. The lenders are: BBVA Continental, BBVA, Banco de Crédito del Perú, Crédit Agricole, Export Development Canada (EDC), Export Finance and Insurance Corporation (EFIC, the Australian ECA), ING, KfW Ipex-Bank, Natixis, SG Americas Securities, Société Générale and the Export Import Bank of Korea (Kexim). Mina Justa is set to produce 100,000 tonnes of copper a year when it comes online in 2020. Total project cost is expected to run to US$1.77bn, with Minsur providing the rest of the capital. The mine will be located in the district of Marcona, in Nazca province, in the Ica region of Peru.
ECAs to revive defunct Uganda Airline
(Daily Monitor, Kampala, 24 July 2018) Uganda hurriedly firmed up plans to revamp the country’s defunct airline in March 2019, after signing a purchase agreement for four Canadian Regional Jets 900 series, while at the Farnborough airshow in the United Kingdom. Uganda also signed a memorandum of understanding with Airbus for two A330 planes that are to be delivered in October 2020. Since Uganda doesn’t have the money to purchase the aircraft, it has committed to borrow from different lenders, on yet to be agreed terms. The biggest value of the loan will be provided by four Export Credit Agencies (ECAs). Export Development Canada will provide 80 per cent of the money to buy regional jets from Bombardier. United Kingdom Export Finance, Bpifrance, the French Public Investment Bank, and Euler Hermes a company that provides credit insurance, bonding and debt collection services will deliver the 80 per cent of the $215.4 million (Ush800.2 billion) needed for two the long haul planes from Airbus.
