International Trade Committee on April 24th, 2018

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Liberals now for five minutes.

Mr. Fonseca, you have the floor.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

Congratulations, Ms. Irman, on your new post; and to your team, welcome.

You bring a wealth of experience from the private sector and you work with the chamber, etc.

We've heard many witnesses come in and talk about how they've kind of moved into different markets. Some of them have brought up EDC, but very few. Most bring up the private sector. They talk about work with their private banks, etc. Scotiabank has a big presence in South America; TD in the United States. What's EDC's value proposition? Why, as a business, would I go to EDC and not TD or Scotiabank, where they have a presence in the market I'm looking at?

[Martine Irman]

I'll again address it relative to an EDC hat and not a TD hat, since I'm here representing EDC.

I think EDC has a unique value proposition. It's very focused. It's focused on bringing exporters out of Canada to the rest of the world, and vice versa, in terms of bringing people into Canada and looking at supply chain initiatives. In terms of how they assess the opportunities—and, correct me if I'm wrong, but they are in 19 jurisdictions outside of North America, and growing, with Sydney being the most recent one—it is in a very thorough fashion. I've known this from my private sector days in dealing with EDC. It's thorough, it's assessed, it's looked-at risk, it's forward-looking. Their risk profile, in terms of where they are in different geographies, is very much unique to EDC and, I think, very different from the other financial institutions you mentioned.

David, would you like to add something?

[David Bhamjee, Vice-President, Corporate Communications and Public Affairs, Export Development Canada]

Thank you for the question. Maybe I'll just add to what Ms. Irman said.

It's not necessarily binary, meaning that a Canadian company would look to work with a private sector financial institution or EDC, particularly when you're talking about the SME base, where we would actually work in partnership and look to how we can bring a more complementary offering to allow—

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

I'm just going to interject. What percentage would do that?

[David Bhamjee]

In the SME base, the vast majority of what EDC would do would either be guarantees to Canadian banks to allow them to lend more to Canadian companies, or credit insurance—when you have a Canadian company looking to either expand with an existing buyer or take on new risk with a new buyer, providing insurance support for that. In the case of the lending, it would be in the SME base almost exclusively in partnership with the private sector, and on the credit insurance side providing risk mitigation for them.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

My next question is around the organization, if it takes a passive or active approach to these trade agreements.

We've now signed with CETA, and we have the CPTPP. When you look at those, and to capitalize on those opportunities, we've strategized here and talked about how we can get more Canadian companies engaged, how they can get in there. Through your analysis, do you say, listen, here are some tremendous opportunities in Europe, in Asia, or in Mercosur's case, in South America? Then do you go out to the market actively and tap companies and say, listen, this is really good for you and maybe you'd like to come in and hear what our analysis is, or do wait for them to walk in the door and say, hey, we're looking for some help?

[Martine Irman]

Again, we're not there to set the trade policies, but we're certainly supporters of the government in its trade policies and extensions of such, as well as new trade policies. For us, we look at it relative to supporting the government, supporting the economy, and making sure they are being utilized by the end customers and create some awareness to them, but we're certainly not there to set them. I think we rely on Global Affairs to do that. It is certainly, I should say, a marketing tool that we use to say, hey, are you aware these are the various policies, these are the various trade negotiations that are going on, and these are potentially the outcomes from them—are you thinking about them, are you thinking about entering into this country and that country. Then we provide advice and product solutions to that effect.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

We had a company in here just before as a witness, Armstrong Fluid. I wanted the opportunity to ask them how they picked Brazil. Now, of course, it's a hot country. They provide HVAC services. Would you not say, okay, now we have this deal with Mercosur countries or with countries that are very hot, and here are some companies in Canada that have a lot of innovation they could provide, and there's a great market there? Would you not go to them and say, hey, listen, you should be looking at this, and we can help you?

[Martine Irman]

Benoit, would you like to...?

[Benoit Daignault]

Trade diversification is at the heart of what we do. It's a very important goal for us. Of course, you can go to the U.S., but to your point, there are a lot of trade agreements.

The way we're going to promote trade agreements is twofold. Number one, in Canada, through what we call our knowledge services—I don't know if you've heard about Peter Hall who is our chief economist—we have multiple engagements whether they're face to face or through websites and the like, where we promote the awareness of trade agreements. That is very important for us, because again we believe in diversification.

Number two is that we will beef up our presence in a country. For instance, we have presence in Europe, and we ask our people in Europe to make it part of their narrative to talk about free trade agreements and how they can increase the competitiveness of a Canadian company in that market.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the NDP.

Ms. Ramsey, you have the floor. Five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Good morning, and welcome, Ms. Irman. It's very nice to have you at the committee today. Congratulations on your new post.

[Martine Irman]

Thank you.

[Tracey Ramsey, NDP, Essex, ON]

I would like to talk a bit about something that's been in the news, the anti-corruption issues that have been surrounding EDC, the Gupta $41-million airplane loan. I think we all know the story.

I know that EDC has anti-corruption policy guidelines. I want to ask you what actions EDC has taken to ensure that employees are aware of the importance of the anti-corruption policy guidelines and practices, and also about the actions they should take if they have suspicions regarding corruption on a client who is coming to you.

[Martine Irman]

That is in a level of detail that I might defer. I know there are a lot of activities and processes in place at EDC.

I will defer to Benoit on that question, if I may.

[Benoit Daignault]

There are a few things here that I would like to bring to the attention of the members. First, we take CSR risk very seriously. We have a very strong track record. This being said, we're not perfect, and we are in what I call continuous improvement mode. We have been for many years.

The transaction you referred to happened about three years ago when we made a decision to fund the transaction. Since then—not necessarily related to what has happened lately regarding that transaction, but since then—if I look at our practices at the time and our practices now, we have appointed a chief compliance and ethics officer. We have a new process for CEO escalation. When the team is not certain about a situation, when they have concerns, they can elevate it directly to the CEO. We have updated our processes and searches. We have updated our code of conduct, and we've commenced training as well—more robust training.

Again, this is not necessarily related specifically to the transaction, but it's something we do on an ongoing basis. We improve our risk management practices and our CSR practices.

[Tracey Ramsey, NDP, Essex, ON]

I hope that we'll see that continue under your leadership there.

[Martine Irman]

Absolutely.

[Tracey Ramsey, NDP, Essex, ON]

There's another issue that has come up lately. At the House of Commons Standing Committee on Finance on March 21 of this year, a witness by the name of Mora Johnson, a barrister and solicitor, appeared as an individual. She said that EDC “is at a high risk for handling the proceeds of crime. For example, if it makes loans of tens or hundreds of millions of dollars to companies that obtained business through bribery, EDC is at risk of being repaid with proceeds of corruption....”

We know you have your anti-corruption policy guidelines, and you mentioned some of the other provisions. They state that you have this “legal, corporate and ethical responsibility to ensure it is not knowingly providing support in a transaction involving the offer or the giving of a bribe.”

Again, this is an area of concern to Canadians. If this were to be the case, if you have a suspicion of this, would you notify Canadian law enforcement authorities about that suspicion?

[Martine Irman]

Again, I'll let Benoit answer. That's a very good question, and I appreciate it.

[Benoit Daignault]

If you look at our CSR practices—and also it is a legal requirement—if we are aware of a situation that involves corruption or bribery, we have to raise it to the competent authorities. It's part of our processes.

[Tracey Ramsey, NDP, Essex, ON]

Would you apply the CSR, the environmental and social risk assessment, to all of your services?

[Benoit Daignault]

Yes.

[Tracey Ramsey, NDP, Essex, ON]

Very good.

We visited your Singapore office when we were travelling there recently, and we often visit EDC when we're travelling abroad. Can you give us some indication of who finances these administrative costs globally?