Global Affairs sole-source deal with Streit Group under scrutiny

The Global Affairs Department has purchased at least two vehicles from a Canadian company that's been accused of violating sanctions in Sudan and Libya, CBC News has learned.

The revelation is contained in government tender records.

It adds a new dimension to a simmering controversy over the Streit Group, which has a plant near Innisfil, Ont., and was founded by Canadian businessman Guerman Goutorov.

The $201,626 contract was a sole-source deal, approved by the former Conservative government on Feb. 7, 2013, and came at the same time as the U.S. Commerce Department was investigating the company's American branch for selling retrofitted vehicles in multiple countries without proper licences.

Three separate United Nations panels that investigate sanctions enforcement have criticized Streit for selling hundreds of armoured vehicles into war-torn countries, including Sudan, South Sudan and Libya.

The sole source purchase was made as our supplier with the standing offer in place during this period was unable to meet the urgent demand.– John Babcock, Global Affairs Canada spokesman

In two of the instances, investigators have said the company violated arms embargoes by failing to ensure its vehicles, manufactured at its plant in the United Arab Emirates, did not end up in the wrong hands and armed with machine-guns.

Streit has denied the allegations, insisting it followed all U.A.E. export laws and that it did not see export permits in at least one case. Streit said that it's not responsible for modifications made after a sale.

Despite that, the Trudeau government handed two of the UN reports — on Libya and Sudan — to the RCMP for review.

Officials at Global Affairs initially claimed there was little they could do because the company's sales were made outside of Canada's arms export regime.

The fact the Canadian government was at one point a customer troubles both the opposition NDP and a human rights expert.

Vehicles met urgent demand

Global Affairs, in a statement to CBC News, confirms it bought two passenger vehicles — presumably armoured SUVs — for an unspecified overseas diplomatic mission.

"The sole-source purchase was made as our supplier with the standing offer in place during this period was unable to meet the urgent demand," said department spokesman John Babcock in an email statement. "Sole-source purchases of this nature are not a routine practice."

Babcock would not say where the vehicles were shipped or what security concerns might have been in play at the time.

"We do not comment on specifics of our security operations," he wrote.

Tories touted company

The case raises a number of troubling questions about the relationship the former Conservative government had with the company and to what extent the Canadian government has promoted the manufacturer abroad.

On May 1, 2015, Conservative trade minister Ed Fast and MP Ted Opitz met with Streit executives and representatives of another company in Vaughan, Ont., on May 1, 2015.

They lauded Streit in an online statement as one of the country's "world class" manufacturing companies that was benefiting from Canada's global markets action plan, a five-year, $50-million program that assists in market research and participation in trade missions.

That statement has since been pulled down from the Foreign Affairs, Trade and Development website and archived. A copy, however, was obtained by CBC News.

Fast also tweeted his support for the company at the time.

He said he only visited the company's Ontario plant once because it was supplying vehicles to Ukraine.

"I didn't know much else about Streit manufacturing," Fast said Wednesday during a break in the Conservative caucus meeting in Halifax. "My role as trade minister was to promote Canadian interests all around the world."

U.S. Commerce Department investigates

UN Security Council reports that criticize the company did not surface publicly until this year, but at the time of Fast's praise and the purchase of vehicles by foreign affairs officials, the company was under investigation by American officials.

That case involved the export of nine armoured vehicles — between March 2008 and November 2009 — to the U.A.E., Venezuela, Afghanistan, Iraq, Nigeria, the Philippines and Singapore without the required commerce department licences.

Frankly, I think we need a criminal investigation.- Paul Champ, human rights lawyer

Goutorov, the company's chairman, was personally charged with violating U.S. export laws.

The case ended on Sept. 1, 2015, and resulted in a $3.5-million fine against Streit, $1.5 million of which was eventually suspended.

Trade promotion?

Hélène Laverdière, the NDP foreign affairs critic, said it raises questions not only about the due diligence the department carries out on companies it chooses to tout, but also about the kind of support Streit received for its business activities.

"We have a sole-source contract to a company that has disregarded the [UN] rules," she said in an interview. "I have very serious concerns about what kind of trade support there has been. Is this the kind of company we want to promote?"

Laverdière renewed her call for a parliamentary subcommittee to examine Canada's arms trade business, including the multibillion-dollar sale of light armoured vehicles to Saudi Arabia by General Dynamic Land Systems Inc.

Canadian companies that operate overseas routinely have access to trade and consular support.

Global Affairs would not say precisely what kind of help, if any, was given to Streit by Canadian trade officials in the United Arab Emirates.

But federal sources with knowledge of the file, who could not speak publicly because of the sensitivity of the case, said no assistance has been rendered in the last year.

Neither Foreign Affairs Minister Stéphane Dion, Trade Minister Chrystia Freeland, nor Public Safety Minister Ralph Goodale would comment on Streit following a cabinet meeting this week.

A spokesman for Goodale did say, since the Mounties are involved, there's little the government can say.   

"Our minister can't comment on matters under investigation and in particular a minister should not speculate on penalties while investigations are ongoing," said Scott Bardsley.

The RCMP, however, are only reviewing the file and have not said whether they will launch a full investigation.

Human rights lawyer Paul Champ said there is more than enough information on the public record for the Mounties to launch a probe.

"It comes down to enforcing Canadian law," he said in a recent interview. "Frankly, I think we need a criminal investigation."