Canada-China Relations Committee on June 19th, 2023

[Paulo Martelli]

I'd like to mention that before we sign any transaction with any private sector entity, we post the transaction on our website 30 days before we sign, so that folks are aware of the kinds of counterparties we're entering into business with. When we sign an agreement with a counterparty, a client, we ask them to provide us with all sorts of reporting information, not just financial information, but also information about their operations and what they're doing from a development perspective. That's provided to us and analyzed by us on either a quarterly or an annual basis.

We incorporate—

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I'm sorry to interrupt. I realize you have the information on where those funds initially go, but as you know, as with many FinDev products, those funds are then distributed again and then distributed even further.

Do you have that same level of information coming back on end use, on what the achievements actually are from the end use of those funds?

[Paulo Martelli]

We do. For example, we're very prescriptive with respect to how the funds we provide to companies are used. They don't just go, let's say, into general revenues and then get disbursed to anywhere that we don't know about. Often we prescribe the use of funds, let's say, for climate finance or for small and medium-sized enterprises or whatever it may be, and we ask them to report back to us on the use of funds, where the funding went and what types of things the funds were utilized for.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I've been contacted by numerous individuals who have asked for more clarity and transparency because they can't actually get information on how those decisions are made and where those dollars are being spent and what those outcomes are.

Is there a website? It seems the sector is very unaware of where those end-use outcomes are being reported, so is there a place where they can look for that information?

[Paulo Martelli]

I would direct them to our website, on which we put information about the use of proceeds and about the type of analysis we've done, and then I would ask members of the public and those who are interested to give us more time in terms of trying to have our clients complete the projects we are asking them to do.

We ask them to provide reports and summaries of the development outcomes, and it takes time for those outcomes to come together. Then we need to gather that information and put that on our website.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Tell me a bit about the means of redress for beneficiary communities. If they are negatively impacted by projects funded by FinDev, what is the process there? Perhaps you could just tell us how many complaints there have been against FinDev projects.

[Paulo Martelli]

We recently launched an independent accountability mechanism, which is a forum that allows affected parties to submit a complaint about FinDev Canada or any of our clients not adhering to any of the policies that are there on the website.

To date, we have not received any complaints, and you can see this on our website.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Since December 31, 2021, there have been no complaints that involved human rights, labour rights, environmental or social impacts of FinDev projects or the end product of those.

[Paulo Martelli]

There have been none that I'm aware of. You can see on our website right now that as of today, or I believe as of this month, there have been no complaints.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Finally, can you just tell me what FinDev's policies, rules and guidelines are regarding its own and its beneficiaries' use of offshore financial centres, also known as tax havens?

[Paulo Martelli]

Thank you.

On our website we also have listed our tax principles and our tax policies, so those are summarized there. I won't go through them all, but among those principles is that we will pay tax. We ask our clients to pay the tax that's owed. We do due diligence on the end-user, on the end beneficiaries of the tax. We make sure that the flow of funds is respected, and we work with international standards with regard to the use of offshore financial centres. There is more detail on our website. and we can provide that to you in writing as well.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

When you ask—

[The Chair, Liberal, Ken Hardie]

I'm sorry, Ms. McPherson, but you are out of time.

We will now go to Mr. Kmiec for five minutes or less.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I want to ask something to FinDev Canada first. There was an announcement back in November 2022 that the federal government was going to put in another $750 million to expand FinDev Canada to increase its investments in the Indo-Pacific Region.

Can you give me an update on where that's at?

Which countries, specifically, are you looking at?

[Paulo Martelli]

With regard to the $750 million, those funds have still not been received by FinDev Canada. We're expecting the rest of the regulatory process to finish before we can receive those funds.

At this point in time we are conducting due diligence on the region itself to try to figure out what the best countries for investment are. We are working closely with partners. You may have noticed that we have signed a memorandum of understanding with the Asian Development Bank, a long-established bank of which Canada was a founding member, to work together to look for transactions. Work continues on that front, but we're waiting for additional funds before we can go ahead and sign—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you. I'm glad you mentioned the ADB. I was going to ask you if there was a reason you didn't pick the AIIB.

[Paulo Martelli]

Canada was a founding member of the Asian Development Bank in 1966, and we thought that with its long track record and its very clear focus on development, it would be the best partner for us to begin operations with in that region.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

They are also based in the Philippines. Did your organization at any point consider the Asian Infrastructure Investment Bank as a financial institution with which to deal?

[Paulo Martelli]

No, we did not.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Are the People's Republic of China or Taiwan on your list of areas to co-operate with or to fund projects in?

[Paulo Martelli]

They are not.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Neither is on it. Taiwan is not one of the countries you are considering.

[Paulo Martelli]

No. We focus our investments on ODA-eligible countries, official development assistance-eligible countries. We're going to focus primarily on the countries that were specifically indicated in the Indo-Pacific strategy, so our first countries of interest are Vietnam, the Philippines, Indonesia and the Pacific Islands. After that we're hoping to focus on other countries in Southeast Asia and then look to South Asia, where, obviously, India and Bangladesh and other countries in that region would be the next area of focus.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

The People's Republic of China features prominently in the Indo-Pacific strategy. I thought the whole Indo-Pacific strategy was based around countering the rise of Beijing. You can't ignore the biggest player in the region, especially if you include India.

Why is that? Why is that country being excluded?

[Paulo Martelli]

We are investing to promote development in emerging markets and developing countries. We're focusing on those countries that I mentioned earlier as a way for them to develop and to enable them to have independence from all sorts of regional players. They can grow in their own way.