Exclusive: Saudis fall $1.8B behind in arms deal with Canada

Saudi Arabia has fallen behind in making payments on its $15-billion arms deal with Canada, a contract that Prime Minister Justin Trudeau has said he’s looking for ways to halt.

The Saudi government was short $1.8 billion in payments to the end of September for light-armoured vehicles assembled at General Dynamics Land Systems Canada (GDLS) in London, according to financial statements from the Canadian Commercial Corp., the federal Crown corporation overseeing the controversial contract.

“It is a problem. There is concern, absolutely,” a federal official with knowledge of the agreement told The London Free Press on Wednesday.

The arrears on the deal can be traced to a new regime in Saudi Arabia since the agreement was signed in 2014, and there have been delays in payments since the change, said the official, who declined to be identified.

“That changed the way everything worked, including payments,” he said of the desert kingdom’s new leadership.

However, since September the oil-rich country has been making payments and has reduced the amount owed, the official added.

The deal, which the Liberals are under pressure to scuttle amid Saudi human rights abuses, including the slaying of dissident journalist Jamal Khashoggi at the country’s consulate in Turkey, affects thousands of workers in the London area and in a supply chain that extends nationwide.

Trudeau, whose government inherited the deal from former prime minister Stephen Harper’s Conservatives, said publicly this week for the first time that the Liberals are trying to find a way to stop the sale involving hundreds of light-armoured military vehicles built by the Canadian division of American defence giant General Dynamics.

The report by the Crown corporation handling the sale says “trade receivables” are short $1.86 billion as of quarterly statements ending Sept. 30, and that payments have been sparse over the course of about one year.

“The significant increase in past due trade receivables, is mostly attributable to the ABP contract,” the report says, referring to the armoured brigades program.

“Trade receivables are considered past due when the payor has failed to make the payment by the contractual due date.”

We know that there are a lot of hard-working families in London who rely on these jobs, and we’re going to keep those jobs in mind.

Prime Minister Justin Trudeau, speaking to reportersWednesday at a year-end news conference

The payment issue hasn’t been helped by recent public musings by Trudeau, who on Sunday told CTV’s Question Period the government is looking for a way to halt the sale.

“We are engaged with the export permits to try and see if there is a way of no longer exporting these vehicles to Saudi Arabia,” he said, without being specific.

Such a move would devastate GDLS Canada’s 1,800-member workforce in London, as well as thousands of jobs with supplier companies, said David Perry, a senior analyst with the Canadian Global Affairs Institute think-tank.

The Saudis may now feel even less inclined to write a cheque, he added.

“It does not give the Saudis a reason to catch up on payments. The government of Canada is responsible for making sure GDLS gets paid for the work it has done,” said Perry.