EDC formed alliance with London Guarantee

The Ottawa Citizen
May 12, 2000

Once again the Citizen has drawn erroneous conclusions about the Export Development Corporation’s actions, this time with respect to the alliance we have forged with London Guarantee (“Firm with ties to Chretien lands untendered EDC deal,” May 9). This continues the pattern of unbalanced and distorted reporting that has characterized the Citizen’s coverage of EDC over the preceding weeks.

The suggestion that we have “sold” an asset through an untendered process is a complete mis-characterization of the arrangement.

As we repeatedly told the author responsible for this incorrect story, EDC entered into a strategic alliance, not a sale of assets, with London Guarantee to help build Canadian private-sector capacity in the domestic credits-insurance market.

Under the arrangement, which may be terminated by either party, exporters will have “one stop shopping” access to both export and domestic receivables insurance through EDC’s offices. Exporters will seamlessly obtain export insurance from EDC and domestic-insurance from London Guarantee under one joint policy.

EDC will continue to be the single point of contact for all aspects of this coverage, but London Guarantee will assume the domestic risk. London Guarantee will also sell accounts receivable cover directly to Canada’s non-exporters. Companies are free to choose whatever private-sector supplier of domestic coverage they would prefer.

After extensive consultation with third-party experts, EDC management recommended the alliance with London Guarantee to EDC’s board of directors, which it then approved. This is a good business arrangement, eliminating EDC’s risk in the area of domestic-credits insurance and in furtherance of EDC’s mandate. It is also consistent with the recommendations made by the Insurance Bureau of Canada.

This initiative is also consistent with what we have done with other organizations to encourage private-sector involvement in trade finance. For example, EDC is a strategic partner with NORTHSTAR Trade Finance Inc., a provider of medium-term financing for smaller transactions.

In 1999, we joined with Accord Business Credit Inc. to launch ExportEase, an all-inclusive package of accounts-receivable insurance, credit reporting and management functions. And in March we announced an arrangement with i Trade Finance Inc. to develop another source of export financing for Canadian companies.

Readers should know that the London Guarantee story that the Citizen deemed worthy of front-page coverage on May 9 was announced by EDC via a detailed news release on March 29 (which the Citizen chose not to report on) and was referred to even earlier when EDC appeared before parliamentary committees last year.

The suggestion that the Citizen “exposed” this story, as claimed in the May 10 followup story is thus blatantly false.

Our corporate objective is to create and deliver capacity, capability and opportunities to support Canadian companies pursuing international business. We will continue to look for every opportunity so that Canadian companies can thrive internationally.

A. Ian Gillespie,
President and CEO
Export Development Corp.

Categories: EDC, Export Credit, News

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