Canada firm bankrupt after Turkish arms embargo imposed by Ottawa

A Canadian company was reported bankrupt because the Canadian government vetoed arms weapons and technology export to Turkey.

Telemus Systems Inc. of Kanata near the capital of Ottawa lost about CAN$1.5 million as a result of the arms embargo - the contracts called for support systems to a Turkish company for military drone manufacture, bankruptcy trustee KPGM reported in August. Telemus suspended production in July.

“Despite the company’s repeated attempts to reach a resolution with Global Affairs Canada, including explaining the material adverse impact on the company’s financial situation and solvency, the company’s Turkish export permits remained suspended,” the report said. “As a result of the government sanctions, the company was no longer able to generate any revenue."

Defense exports to Turkey were canceled after the Canadian government received a report that suggested Canadian technology, including that of Telemus, was being used to produce drones used by Turkey in a row between Azerbaijan and Armenia, thereby violating Canadian restrictions under the Controlled Goods Regulations. Also, the government said the sale would run counter to international human rights law (IHRL), which protects people not participating in armed conflict.

"...Due to government sanctions, the Company’s export permits for military products and technology were suspended, which prevented the Company from exporting its products to its primary customer in Turkey," the trustee report said.

The Canadian government canceled the Telemus sale to Turkey in April, 2021.

Yet two years before, a Global Affairs report released in April 2019 into whether Turkey was using arms in violation of IRHL in Syria, Libya and Nagorno-Karabakh cleared Turkey.

"...the department assesses that there is no substantial risk that Canadian exports of military goods and technology to Turkey would be used to commit or facilitate serious violations of IHRL," the report said.

That changed in April 2021 when the Canadian government said it now had "credible evidence' of Canadian hi-tech drone systems in Nagorno-Karabakh, provided to Turkey and used by Azerbaijan against the breakaway Nagorno-Karabakh region.

Canada and Turkey are allies through membership in NATO.