Bombardier Inc. went to great lengths to suppress the release of information about the government funding it receives, heading to court Ten times in nine years, often citing competitive concerns.
Court records and access-to-information documents obtained through the Financial Post show how difficult it’s to glean the outcome of previous government support for that Montreal-based aerospace giant, even as Ottawa considers its request for another US$1 billion (about $1.3 billion) in aid.
These records in many cases are redacted at Bombardier’s request, or appear incomplete, even just in cases where the company’s industry peers allowed exactly the same information to be released.
Last October, Quebec decided to invest US$1 billion in Bombardier’s CSeries commercial jet program, which has been struggling to generate sales amid delays and cost overruns. The company now says it requires additional federal funding to assist make it through before the CSeries starts generating positive income in 2020. That funding could be contained in the Liberal government’s budget, set to become delivered on March 22.
If you’ll get the money, surely the cost of admission is you need to be transparent about how and when you’re repaying it.
A contribution of $1.3 billion would equal all the repayable funding Bombardier has gotten in the last Half a century, according to Industry Canada’s calculations.
But how those funds was spent, and just how or even if it was repaid is difficult to discern from the documents released. While Bombardier says the information must be withheld for competitive reasons, the organization makes this argument far more frequently than its industry peers. With the government considering a historically large investment in the organization, some are arguing that transparency ought to be a condition associated with a new cash injection.
“If you’re going to get the money, surely the price of admission is that you need to be transparent about how exactly and when you’re repaying it,” said Aaron Wudrick, federal director of the Canadian Taxpayers Foundation.
The aerospace sector isn’t any stranger to government largesse. Beginning with the Defence Industry Productivity Program in 1959, Ottawa has frequently doled out grants and loans designed to support Canada’s aerospace champions, most of which are based in Quebec.
In a June 2014 analysis through the free-market-oriented Fraser Institute, a list of the very best 10 recipients of financial assistance from Industry Canada includes eight firms that generate at least some of the revenue from aerospace. (Their email list doesn’t range from the 2009 bailout of Vehicle Canada and Chrysler Canada, which was done through the Department of Finance.)
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Pratt & Whitney Canada Corp. is first out there with $3.3 billion in inflation-adjusted contributions between 1961 and 2013. Bombardier received $1.15 billion and De Havilland Inc., which was acquired by Bombardier in 1992, is third with $1.09 billion.
Industry Canada provides slightly different numbers, saying Bombardier has received $1.3 billion in repayable contributions since 1966, which it has repaid $584.6 million to date.
Most of the taxpayer funding is incorporated in the form of repayable or conditionally repayable loans, that are triggered when, for instance, the recipient’s gross revenues are higher than a base amount laid out in anything.
However, due to Bombardier’s efforts to block the release of information, it’s virtually impossible to find out if the individual contributions – and repayment of those contributions – met the objectives and forecasts from the government. It is also very difficult to discover whether government contributions have formulated the jobs which were promised when the funding was announced.
Bombardier is by no means the only real aerospace company that seeks to limit disclosure of its repayments to government, but it does seem to be probably the most aggressive. It went to the court Ten times to bar the discharge of knowledge, while Pratt & Whitney Canada went to court twice.
The company said it is just protecting its right to withhold info on competitive grounds.
“Bombardier and Industry Canada are in agreement that information associated with government contributions is proprietary and can validly remain confidential for competitive reasons,” company spokeswoman Isabelle Rondeau said within an email. “Through a legitimate process, i was in a position to make sure we ought to preserve Bombardier’s confidential information.”
The Access to Information Act permits the government to won’t disclose any record that “could reasonably be anticipated to prejudice the competitive position of a 3rd party.”
The onus is around the 3rd party to prove that disclosure would hurt its competitiveness. If a dispute within the discharge of information makes it so far as the government Court, the organization is asked to justify why disclosure would put it at risk.
“The courts have been quite good about insisting that a certain evidentiary threshold be met to justify the withholding from the information,” said Teresa Scassa, who holds the Canada Research Chair in Information Law in the University of Ottawa.
Bombardier and Industry Canada have been in agreement that information associated with government contributions is proprietary.
However, she pointed to 1 case where Bombardier argued that “the extreme competitive nature” of the aerospace industry meant that it shouldn’t have to disclose information – a justification that may arguably be used in any request for company data.
“I think that could become a justification for pretty broad withholding of information,” Scassa said.
Bombardier’s legal strategy seems to be working, as it has successfully challenged several requests for information within the courts.
The result of these challenges means we obtain a fragmented picture of government support, particularly when you are looking at the repayment of loans.
Here are only a few examples:
? In reaction to a request for all Industry Canada contributions of $5 million or more since April 1996, the released documents incorporate a list of a large number of recipients ranging from Research in motion sales Ltd. (now BlackBerry Ltd.) to Toyota Canada, but not just one reference to Bombardier.
However, other documents show the organization received a minimum of five contributions ranging from $35 million to $190 million between 1996 and 2009, plus another $350 million via a special program set up to support development of the CSeries.
In releasing the data, Industry Canada said two applications had been filed with the Federal Court to bar some good info from released, but didn’t say which company had filed them.
Court records indicate that Bombardier filed two access-to-information-related applications towards the Federal Court in the summer of 2014. Those cases are ongoing.
? Bombardier also successfully challenged a 2010 request for all conditionally repayable government contributions it had received since 1982. After reaching an out-of-court settlement using the information commissioner, Bombardier decided to release some information how much assistance it had received, but continued to withhold repayment details. (The request also included four other companies, all of which disclosed their repayment information.)
By the time that information was launched in June 2014, the numbers were 4 years outdated.
? It’s not just Bombardier asking to suppress information, of course. A request for info on jobs created or maintained through Industry Canada contributions since 1982 was almost entirely redacted although the government will often make claims about jobs if this announces funding.
For example, a 1996 press release announcing an $87-million contribution for Bombardier’s regional jet claimed the work “has the possibility to keep and make 1,000 high-quality, long-term jobs.” It’s not possible to verify this through the information released.
The lack of disclosure seems to be getting worse. A 2002 request for repayment data on all contributions made underneath the Technology Partnerships Canada program was disclosed entirely. But an identical request produced in 2011 saw approximately three-quarters of the repayment information withheld.
This may have something to do with the overlapping interests of Bombardier and the government, said Ken Rubin, an Ottawa-based investigative researcher who’s one among Canada’s foremost access-to-information activists.
Often, disputes over use of information are settled out of court through an agreement between your company in question and the government, which could produce a potential conflict of interest.
“Therein lies the actual problem, because specifically in cases like Bombardier and it is relationship with the government – the federal government is party towards the efforts to bar information about Bombardier,” said Rubin.
“It certainly has not been in the Government of Canada’s interests to produce similarly info.”
Scassa, the data law expert, said openness remains “a very challenging issue” despite oversight from both the Information Commissioner and also the courts.
“I do think that is a genuine transparency challenge, the government might be just like happy not releasing that information as the clients are,” he said.
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Industry Canada (since rebranded Innovation, Science and Economic Development Canada under the Liberals) said hello releases information that’s not susceptible to exemptions underneath the Access to Information Act.
“Depending on the relation to each contribution program, repayment information, specially when it concerns a particular recipient and/or project, cannot be provided publicly once the information might be commercially sensitive, could result in financial loss or gain to a third party, or could prejudice the competitive position of a third party,” department spokesman Hans Parmar said within an email.
“In determining what can launch underneath the ATI legislation, ISED considers the type of program and, depending on the type of information being requested, consults with third parties who may or may not agree to the release of their repayment information.”
In 2009, Industry Canada began releasing twice-yearly repayment status reports for that Technology Partnerships Canada (TPC) funding program, which ran from 1996 to 2006, and it is successor, the Strategic Aerospace and Defence Initiative (SADI).
According towards the newest updates, released Nov. 1, 2015, TPC has disbursed $3.16 billion to date and collected $1.13 billion in repayments. SADI has disbursed $935 million and picked up $35 million in repayments.
However, these reports are incomplete. The SADI report said $935 million continues to be disbursed, but if you add up the net expenditures listed for individual companies (you will find none listed for Bombardier), it only comes to $696 million. Based on the small print, “Amounts aren’t provided until completing the (project’s) R&D phase to protect commercial confidentiality.”
This may explain why there are no Bombardier contributions listed – the CSeries technically hasn’t finished its R&D phase.
Another hole in the government’s disclosures is when actual repayments stack up against estimates. The TPC report said repayments are “in line with forecasts” and also the SADI report says they’re “on track,” but those forecasts aren’t released. A recent access-to-information request for repayment forecasts withheld all estimates beyond the 2016-17 fiscal year.
It also appears that the government has a tendency to dramatically overestimate repayments, according to a 2005 report on the need for TPC which was ready for Industry Canada by consultants Hickling Arthurs Low. The report discovered that current repayment estimates for that TPC program were 45-per-cent lower than they were at that time the contracts were signed – a difference of nearly $2 billion.
Part of the problem is that the (Access to Information) Act allows them to get away with too much.
The insufficient transparency around previous government contributions to the aerospace industry in general, and Bombardier particularly, should concern taxpayers and encourage stronger legislation, said Rubin, the access-to-information activist.
“Part of the problem is the (Access to Information) Act allows them to get away with an excessive amount of,” he said. “You need stronger legislation if these terms are likely to come about.”
Scassa argues that a balance must be struck between the rights of corporations to protect sensitive information and the need for transparency.
“It’s really challenging because in principle you are able to certainly understand why companies shouldn’t be asked to sacrifice their competitiveness in the name of disclosure,” she said.
“Maybe there should be some type of oversight mechanism that may be sure that the public money is being spent appropriately which there’s appropriate accountability for them. That might be the answer.”
Illustration by National Post Graphics
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