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Setting the Record Straight

December 22, 2016 Montréal Bombardier Inc.,  Other News

Last weekend, the Globe and Mail published an article that maligned Bombardier’s integrity and business practices. The article missed important facts and critical context.

The story is premised on allegations that a “mysterious” company named Multiserv Overseas Ltd. was involved in selling billions of dollars of rail signaling equipment in Russia. This is incorrect.

Citing an online international trade database, the Globe erroneously claims that Multiserv was involved in almost $2.5 billion (U.S.) of Bombardier sales to Russian Railway. The source of the error was currency information from the database; some entries that were interpreted as being in U.S. dollars were actually in rubles. Had the figures been calculated correctly, the Globe would have realized the real amount was about $150 million, or 94 per cent less.

There is no doubt that as one of Canada’s largest exporters, Bombardier does business in markets outside of North America, where the laws are different and the political environment more challenging and complicated. What is not complicated, however, is how Bombardier conducts itself in those markets. At all times, and in every country, Bombardier acts in full compliance with all laws, and adheres to our strict internal code of ethics; a code that goes beyond legal requirement. To even suggest that this is not the case is an insult to the company and our tens of thousands of employees around the world.

Halfway through the lengthy article is the key takeaway, which should have led the story: “None of the material seen by the Globe and Mail suggests any criminal activity by Bombardier.” Readers would be right to apply heavy skepticism to a story that buries the main outcome of the investigation dozens of paragraphs after the headline. 

As a starting point, the article implies that Bombardier inappropriately pressured the Canadian government to exclude Vladimir Yakunin, the head of the Russian Railways, from a list of sanctioned individuals following Russia’s annexing of the Crimea Peninsula, even though Mr. Yakunin was placed on the U.S. sanctions list. These allegations are inaccurate.  

Here are the facts. Like many other companies, we informed the Canadian government of Bombardier’s investments and interests in Russia when Canada was considering imposing sanctions. Our main concern was ensuring that our rail business would not be placed at a competitive disadvantage against our global competitors.

What the article failed to mention is that our rail competitors are not from the U.S., but rather from Europe, Japan, China and Korea. The Globe and Mail also fails to note that Mr. Yakunin was not sanctioned by any of these countries, meaning our competitors were free to compete for business in Russia. Including Mr. Yakunin on Canada’s sanctions list could have unilaterally harmed a Canadian business, a fact also omitted from the original article.

More disturbing are the insinuations regarding Bombardier’s relationship with Multiserv Overseas Ltd., which the Globe labels “Bombardier’s mysterious middleman in Russia … a shell company [that] appears to have no staff and no operating headquarters.”

Some people believe that without a large street front office building like, say, a newspaper, that a business is somehow illegitimate. But this is erroneous. Multiserv manages the subcontractors responsible for the logistics related to shipping components from our Sweden facility. Multiserv also assumes the financial risk associated with the large swings in the foreign exchange that can arise when selling product in Swedish kronor to customers who pay in Russian rubles. These types of logistics management and hedging activities happen every day in international commerce. Mystery solved.  

The Globe also claims that its reporting “raises questions” — to cover the fact that no evidence of any violation or illegal activity by Bombardier has been identified.

For example, the Globe and Mail states that Multiserv’s corporate and ownership structure “raises questions” about whether Bombardier did its proper due diligence on its Russian Partners.” The answer to that question is yes — and we told the reporter that in writing on July 15, 2016.

This due diligence review was done by a prestigious international law firm before we entered into the relationship, with subsequent additional reviews conducted. All of which came to the same conclusion, that Multiserv remains in good standing as a corporation and there are no prohibitions – in any jurisdiction – for doing business with the company or its owners.

Why do we conduct due diligence on our business partners? Because we are not naïve. We know that not everyone shares our high ethical standards, something that the Globe does accurately point out. And when we become aware of illegal or unethical actions we have taken, and we will continue to take, action and work with the appropriate law enforcement entities.

Finally, the Globe article belabours the well-known business difficulties that the company has endured in recent years, implying that this caused us to compromise our values. It is disappointing that this path was chosen rather than presenting our past fairly, which would have included explaining that Bombardier, which does business in more than 100 countries, working with thousands of suppliers and partners, has an exemplary history of compliance with all rules and regulations, including anti-corruption laws around the world.

We understand and welcome the scrutiny that comes with being one of Canada’s leading multinational companies. When criticisms are warranted, we will own up to them. In parallel, the public deserves objectivity and full accuracy in how important issues about our company are reported. We believe the Globe and Mail fell far short in this instance. The far-flung travel and time that went into this “investigation” resulted in sensationalized rather than straightforward journalism.

Mike Nadolski
Vice President
Communications and Public Affairs
Bombardier

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