Export Development Canada backs loan to Buhler Industries, a predominantly Russian company
Export Development Canada – a federal state credit corporation – signed a guarantee to back half of a $14 million loan to Buhler Industries in December 2020 to support the company’s ongoing operations.
The Winnipeg farm equipment maker, including Versatile tractors, sells more than $150 million worth of equipment outside of Canada, representing about 60% of its total sales.
The company has been under scrutiny since Konstantin Babkin, who resigned as Buhler’s director last Wednesday, made at least two public statements in support of the Russian invasion of Ukraine.
In a February 27 Interview in Russian on CGTN, a Chinese public broadcaster, Babkin blamed the Russian attack on US interference and said “it is necessary to stop the conflict, to build a unified economic space with Russia”.
Babkin also leads the Action Party, a Russian political party that backed Russian President Vladimir Putin. February 21, Babkin tweeted the party’s support for Putin’s decision “to recognize the people’s republics of Donetsk and Luhansk” – two separatist-controlled areas that are recognized by the international community as Ukrainian territory.
Since the start of the Russian invasion on February 24, more than 400 civilian deaths have been recorded by the UN human rights office, which said the true number would be much higher. The UN said two million people have now fled Ukraine.
The Russian military does not provide regular updates on its losses. Only once, on March 2, did he reveal a death toll of almost 500.
Buhler Industries has repeatedly denounced Russia’s attack on Ukraine.
Babkin’s resignation did not affect his stake in Buhler Industries, 97% owned by Combine Factory Rostselmash.
This company is a subsidiary of Novoe Sodrugestvo CJSCa Russian conglomerate co-owned by Babkin, current Buhler director Dmitry Udras and Buhler CEO Yury Ryazanov.
Pulling out of loan would have huge impact: Buhler
Buhler’s spokesman and vice president, Adam Reid, who took on the role of Babkin’s director, stressed that his company “is completely independent of Combine Factory Rostselmash, which in no way received any profit or dividends from Buhler Industries since acquiring a majority stake in the company in 2007.”
The last dividend payout at Buhler was in 2007, although the heavy machinery maker has enjoyed profitable years since then.
Udras and Ryazanov, who are Russian nationals, were on the Federal Council of the Action Party led by Babkin, according to the party’s website.
On Friday, Reid confirmed that Udras and Ryazanov had resigned from the party leadership but remained directors of Buhler Industries.
“The fact that these people quit this party…means they are feeling the effects of these sanctions that we are applying elsewhere,” said Marcus Kolga, senior fellow at the Macdonald-Laurier Institute, an Ottawa-based think tank. .
Kolga, whose area of expertise is Central and Eastern European politics, says Canada must be extremely vigilant when it comes to dealing with Russian-owned businesses.
“It’s not serious [what] kind of financial interactions…that the federal government might have with one of these companies. We have to be very sure who we are dealing with,” Kolga said.
Russia can now be considered a hostile nation, he said.
Export Development Canada — a federal export credit agency with a mandate to support international trade — says it applies extra scrutiny to deals when Russia is involved.
The agency has not pursued any activity related to Russian contracts or Russian borrowers since 2014, when Russia annexed the Crimean peninsula, a spokesperson said.
“Any transaction with a direct/indirect link to Russia will continue to undergo enhanced due diligence which may include seeking additional information on counterparties, contract award processes and review of statements. financial”, wrote Zoé de Bellefeuille.
The agency says it supported the loan from Buhler Industries to promote Canadian agricultural equipment exports and create domestic jobs.
Buhler Industries says withdrawing the loan could have a huge impact on workers, farm equipment dealers and farmers who rely on the company for spare parts.
“Consequences of loan termination/cancellation could include layoffs of Canadian jobs personnel, less investment in research and development, liquidation of inventory and assets, decreased sales and inventory, and reduced competitiveness due to lower volumes,” said Reid.
Reid says Buhler Industries employs about 700 workers in Canada and 50 in the United States, representing more than $50 million in jobs and taxes.