CROWN AGENCY TAKES CUT OF FOREIGN SALES IT BROKERS.

Little incentive to scale back venture: critics

The Crown corporation that helped broker the controversial sales of Canadian military equipment to Saudi Arabia and to the “Madman of the Philippines” gets a cut of the proceeds, prompting critics to warn that it has little incentive to scale back its involvement in lucrative arms deals despite a government order to do so.

The Canadian Commercial Corporation also acknowledges it conducts no followup to ensure exported equipment isn’t being used to abuse human rights.

The Ottawa-based CCC, which helps Canadian exporters get contracts with foreign governments, came under fire in February after the media learned the corporation had brokered a $234-million deal to sell 16 Bell 412 helicopters to the Philippines military. The country has a poor human rights record under President Rodrigo Duterte, who has enacted a deadly antidrug crackdown.

As the federal government tried to quell criticism of the sale, International Trade Minister François-Philippe Champagne ordered a review of the deal — leading an enraged Duterte to say he was cancelling it — and told reporters the CCC had been ordered to become less reliant on the defence sector. The corporation was also involved in the $15-billion sale of Canadian armoured personnel carriers to Saudi Arabia.

In fact, Ottawa’s efforts to have the CCC move beyond arms deals began more than two years ago but have had little effect, defence industry officials told Postmedia.

The CCC will promote its services this week to hundreds of military equipment companies as one of the sponsors of the annual CANSEC trade show in Ottawa.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, the group that organizes CANSEC, confirmed the CCC’s diversification strategy has been underway for some time. “We have seen no evidence that this is diluting the organization’s defence activities,” she said.

The CCC saw the value of its military deals with the U.S. jump to $726 million in 2017 from $573 million in 2016. Defence contracts with other nations remained relatively steady, totalling $1.8 billion in 2015-16 and $1.6 billion in 2016-17.

Steve Staples, vice-president of the Ottawa-based Rideau Institute, doubts the CCC is putting much effort into moving away from military deals. “They collect a fee based on what they sell to countries like Saudi Arabia or the Philippines, so of course they are not going to want to back away from such a money-making venture,” said Staples, who campaigns against the arms trade.

Asked whether it had established a target and a timetable to diversify beyond defence, the corporation said in an email that its “diversification strategy has commenced in examining a core set of new industry sectors but will remain flexible and adaptive to Canada’s dynamic economy over time.”

It confirmed it collects fees from the transactions it brokers but would not reveal how much they are worth.

Critics have also raised concerns about a lack of accountability at the CCC, even though the organization is supposed to report to Parliament. “When the Canadian Commercial Corporation is involved in arms deals there often seems to be a lack of rigour when it comes to human rights concerns,” Alex Neve, secretary general for Amnesty International Canada, has said. For instance, the CCC raised no red flags about the Philippine helicopter deal, though Duterte once boasted he had thrown a man to his death from a helicopter and warned he would do the same to corrupt government workers.

Defence industry sources told Postmedia the corporation doesn’t conduct followup inquiries about how buyers use the Canadian equipment. The CCC confirmed this in its email, saying it “merely provides contracting assistance to Canadian exporters” and that it is those companies who are legally bound by the terms of the export permit.

The level of secrecy at the CCC also frustrates its critics. The corporation cites “commercial confidentiality” as the reason it won’t discuss the details of military equipment sales like the one to the Philippines.

That secrecy appears to permeate the organization. The individual who responded to Postmedia’s inquiries declined to provide his or her name or explain why it was secret. Not even the counter-terrorism unit, JTF2, nor the Communications Security Establishment spy agency go to such extremes in refusing to identify media relations officers.