Defence Minister concerned about allegations over sole-source contract to defence firm

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OTTAWA – Defence Minister Anita Anand says she is concerned by allegations that a Canadian defence firm broke anti-corruption laws to secure a sole-sourced, $92-million contract with the federal government.

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“It is of the utmost importance for us to continue to provide Ukraine with the military aid that it needs to fight and win this war. And at the same time, it is also crucial for suppliers with the Government of Canada to act with the utmost integrity,” Anand told the National Post Tuesday.

“I will say that this matter is of concern to me because we need to ensure that we are fiscally prudent with the money of the Canadian taxpayer,” she added.

Anand was reacting to a report by the National Post on Tuesday that Mississauga, Ont.-based armoured vehicle producer Roshel allegedly paid cash to a former Ukrainian official to “influence decisions made by the Ukrainian government and/or military” that culminated in Canada’s purchase of 200 of the company’s vehicles in January to be sent to Ukraine.

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The allegations are contained in a lawsuit filed in late February by ex-Roshel vice-president Anton Sestritsyn against his former employer. The claims have not yet been tested by a court.

The company and its president, Roman Shimonov, vehemently deny the allegations and are countersuing Sestritsyn for a total of $11 million in damages.

“This claim is frivolous, scandalous and vexatious, and has been brought with the intent and/or dominant purpose of causing harm” to Roshel and Shimonov, reads the company’s statement of defence.

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On Tuesday, Anand echoed previous government statements that it was conducting an audit of Roshel’s activities after it learned of the allegations in Sestritsyn’s lawsuit.

The Canadian Commercial Corporation (CCC), the federal crown corporation that oversaw the $92-million deal between the government and Roshel, said Monday that it had demanded the company halt production for one month in mid-March because it was “deeply concerned” by the allegations.

Anand said production was allowed to resume because Ukraine “desperately needs the armoured vehicles.” She also insisted that his claims have not been proven and that Ukraine’s Defence Minister specifically requested Canada’s help in purchasing Roshel vehicles.

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The minister said the government had already received a “significant number of documents” from the company as part of the audit.

Bloc Québécois MP Christine Normandin was among the first critics to raise questions about the sole-source deal in January.

On Tuesday, she said the lawsuit raised even more concerns about how the government handled the procurement process.

“It confirms the concerns we had from the start,” she said. “The fact that the rest of the industry wasn’t informed that there was a non-competitive process for a $92-million contract and that the only response we got was that the Ukrainian minister requested those vehicles raises questions.”

“And it’s only after we were told that the process was clean, clean, clean, that we find out that there may have been problems. Now we have to wonder, what else did the government miss?” she added. “Why wasn’t the government more diligent?”

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We hope the audit will provide further confidence that this government is doing its due diligence in helping Ukrainians.

NDP defence critic Lindsay Mathyssen

NDP defence critic Lindsay Mathyssen shared a similar thought Tuesday, arguing it was crucial to help Ukraine in its battle against Russia’s “illegal invasion” but that it shouldn’t come at the cost of proper due diligence.

“New Democrats expect the government to be swift in providing Ukraine with the tools they need, but it should not come at the cost of trust in public officials. We hope the audit will provide further confidence that this government is doing its due diligence in helping Ukrainians,” she said in a statement.

Sestritsyn’s lawsuit alleges that the price the government paid for Roshel’s Senator armoured personnel carriers (APC) also jumped significantly between an initial purchase of eight units in April 2022 ($370,000 per unit, according to Roshel) and the deal for 200 in January 2023 ($464,650 according to Sestritsyn).

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In court documents, the company admitted that the price did increase between both deals but did not specify by how much. It laid out a number of reasons to explain the jump, including increased material, labour and shipping costs.

It also said the government accepted the company’s explanation and revised price when signing the January deal.

But Normandin said the price increase is another reason why the government needs to review the contract. She also said the contract will come up during the House National Defence committee’s upcoming extensive review on military procurement.

“A competitive offer may have shed light on the real reasons behind the price increase,” she said. “The absence of competition does not allow to us to know completely why the price increased like that.”