EDC’s involvement in Gaddafi’s Libya silenced until fall

By Brady Yauch on March 10, 2014 • ( Leave a comment )

(March 10, 2014) Export Development Canada says it needs nearly a year to sort through a mountain of documents regarding its involvement in Libya.

By Brady Yauch for Probe International

Export Development Canada (EDC) needs nearly a year to sort through 40,000 pages of records concerning its political risk insurance policies for Canadian businesses that operated in Libya while Muammar Gaddafi was in power. In a response to an Access to Information (ATI) request filed by Probe International, EDC said that the “large number of records involved” meant that meeting the statutory 30-day deadline would “unreasonably interfere with the operations of the corporation.”

EDC requested an additional 330 days to fulfill the request, meaning the documents may not be released until September of 2014.

Probe International filed a complaint with the Information Commissioner of Canada on the grounds that the time requested by EDC was “unreasonably long and that the disclosure of this information is in the public interest and should be disclosed expeditiously.”

But the Information Commissioner’s office sided with EDC, stating that its investigation revealed that Probe International’s ATI request generated approximately 40,026 pages of records. The Information Commissioner noted that under the Access to Information Act, which governs all ATI requests, the head of a government institution can claim an extension of time, “if the request is for a large number of records or necessitates a search through a large number of records and meeting the original time limit would unreasonably interfere with the operations of the institution.”

Referring to the rule, the Information Commissioner’s office told Probe International that it was “satisfied” that the length of time needed to fulfill the request was reasonable.

At the heart of Probe’s ATI request are EDC’s political risk insurance activities, just one of the many subsidies the massive export credit agency, and a Crown Corporation, offers to Canadian businesses. In 2012, EDC subsidized more than $87.4 billion in exports and investments worldwide. Political risk insurance is similar to catastrophe risk insurance and offers protection to corporations if their investments in foreign countries go bust because of political instability. Those risks include: the illegal seizure of assets by governments, nationalization, expropriation, breach of contract by governments, war, civil strife, terrorism and restrictions on the conversion and transfer of currency.

When companies can’t get insurance from the private sector to do business in unstable countries with weak legal and political institutions, they turn to EDC.

EDC admits that although claims from political risk insurance policies are infrequent, when they do occur, they can be “very significant.” In 2012, EDC paid out $300 million in political risk insurance claims “as a result of the turmoil in North Africa and the Middle East.” A year earlier, in its 2011 annual report, EDC had warned that its policies in Syria posed a “potential liability.” Of EDC’s total outstanding political risk insurance, 47% in 2012 involves projects in the Middle East and Africa – up from 37% in 2011.

According to EDC’s latest annual report for 2012, the agency has $300 million of political risk insurance outstanding in Libya. Those insurance policies have been in place since at least 2008. In 2011, the eruption of civil war in Libya led to the overthrow of its government and the killing of Gaddafi by militants.

Probe International also complained to the Information Commissioner’s Office that EDC had failed to respond to its first two requests for information on the Crown corporation’s political risk insurance activities in Libya, despite the fact that it banked Probe’s $5.00 application fees. For that infraction, the Information Commissioner’s office did slap EDC’s wrists.

“We find that the institution acted inappropriately when it failed to commence the processing of the original requests for which it had, however, cashed your cheque for the application fees,” the Information Commissioner’s office scolded. But they were nonetheless “satisfied” that EDC had acknowledged its procedural error and “has undertaken to conduct awareness training and improve its process in order to mitigate the risk of future occurrences.”

As for what and who EDC insured in Libya, the public will have to wait until the fall of 2014 to find out.

Brady Yauch is an economist at Probe International.

The results were released September 8, 2014. These results are listed below: