Canadian Forces members drive a Light Armoured Vehicle (LAV) onto Parliament Hill during the National Day of Honour in Ottawa on Friday, May 9, 2014. Saudi Arabia paid about $665 million on $3.4 billion in late payments it owes for a newer model of Canadian-produced LAVs, according to the latest quarterly financial results released by General Dynamics last week. (Sean Kilpatrick/THE CANADIAN PRESS)

Saudi Arabia is $3.4B behind on its payments for Canadian LAVs

Saudi Arabia owes about $3.4 billion in late payments for Canadian-produced Light Armoured Vehicles (LAVs), according to the latest quarterly financial results released by General Dynamics last week.

The Liberal government approved the controversial deal, signed by the previous Conservative government, to supply the Islamic Kingdom with hundreds of LAV 6.0 advanced combat vehicles used to transport troops on the battlefield in 2016.

The LAVs, wheeled military vehicles armed with various armaments, including automatic canons, machine guns, mortars and anti-tank missiles, are being produced by General Dynamics Land Systems – Canada (GDLS-C) at their plant in London, Ontario.

The roughly $14-billion contract was brokered and is being managed by the Canadian Commercial Corporation (CCC), a Crown corporation that helps Canadian companies in aerospace, defence, infrastructure and other sectors to land contracts with foreign governments.

According to CCC’s website “every contract signed has the legal effect of being signed in the name of the Government of Canada, providing foreign government buyers with the assurance that the contract will be delivered per the agreed terms and conditions, guaranteed.”

‘Slow’ payments

A Canadian LAV (light armoured vehicle) arrives to escort a convoy at a forward operating base near Panjwaii, Afghanistan at sunrise on Nov.26, 2006. A coalition of Canadian NGOs and advocacy groups is calling on Ottawa to cancel a $14-billion deal to supply a modernized version of the LAV to Saudi Arabia. (Bill Graveland/THE CANADIAN PRESS)

That arrangement means that the exporting company acts as a subcontractor and gets paid by the federal government — once Ottawa receives payment from the foreign purchaser.

During a third-quarter earnings call with market analysts on Oct. 23, General Dynamics Corp chairperson and CEO Phebe Novakovic admitted that the payments from Saudi Arabia “have remained slow.”

“There’s no dispute on the fact that it is owed,” Novakovic said. “It’s simply a question of timing. And we’re still hopeful that we resolve that by the end of the year.”

However, it’s unclear whether Canadian taxpayers might be on the hook for any interest and late payment fees accrued by the Saudis, according to experts.

General Dynamics said in its quarterly earnings report that the late payment amounts — totalling $2.6 billion US, or roughly $3.4 billion Cdn —will be billed to the Canadian government “in accordance with the agreed-upon contractual terms.”

“We continue to meet our obligations under the contract and are entitled to payment for work performed,” the company said in its earnings release. “Therefore, we expect to collect the full amount currently outstanding.”

Canadian taxpayers on the hook?

David Perry is vice president of the Canadian Global Affairs Institute, an independent foreign policy think-tank. He said the problem with late payments has been known for a while — but experts were surprised by their sheer scope of the unpaid sum.

“Ultimately, right now, it’s not the government of Canada in the short term that is on the hook. It’s not the taxpayers. It’s actually the company that’s facing the impact of this payment shortfall more so than taxpayers,” Perry said.

A spokesperson for CCC said the Crown corporation is bound by commercial confidentiality and is not able to disclose the details of specific contracts or their management.

“CCC works hand-in-hand with the Canadian exporter to resolve contractual and payment issues while protecting Canadian taxpayers,” a spokesperson for CCC told Radio Canada International in an email.

Help from the federal government

To help General Dynamics deal with the financial shortfall, the federal government announced on Aug. 16 that it would provide a repayable loan of up to $650 million to the company as it “navigates a challenging and dynamic international defence market,” officials with Global Affairs Canada said in an email.

On that same date, the federal government announced its intention to acquire 360 LAVs for the Canadian Armed Forces, which already operate a fleet of older LAV models. The $1.7-billion contract was formally awarded to General Dynamics on Sept. 5.

Work has begun on the program and General Dynamics expects to begin deliveries to the Canadian military in the first quarter of 2021, Novakovic said.

“The loan issue is a bit curious because there has been, as best as I can tell, absolutely no information put out about what specifically that’s for,” Perry said. “It seems very much like it’s tied in to this deal with Saudi Arabia.”

The deal for the purchase of 360 LAVs for the Canadian military could be linked to the wider deal to sell these combat systems to Saudi Arabia and the late payment issue, Perry said.

“But it’s one where I think on its merits it made a lot of sense to go ahead with that specific proposal because we already have a fleet that is mostly built on a different variant of the same vehicle type,” Perry said.

“So there is the potential to gain a lot of efficiencies by having the same basic chassis, the same basic parts supply, and the same basic types of training that you’d be providing to maintenance folks.”

Despite diplomatic crisis, arms exports continue

Saudi Crown Prince Mohammed bin Salman (left) and Canada’s Foreign Affairs Minister Chrystia Freeland (right) (Reuters)

It’s not clear why the oil-rich kingdom is late in their payments.

Saudi officials did not respond to Radio Canada International’s request for comment on the matter.

Relations between Canada and Saudi Arabia went into a tailspin in August of 2018, after a series of tweets by Foreign Affairs Minister Chrystia Freeland and Global Affairs Canada criticizing the arrests of women’s rights activists in the kingdom and urging their immediate release.

Saudi Arabia expelled Canada’s ambassador in Riyadh over what officials called “blatant interference in the Kingdom’s domestic affairs” and recalled its ambassador in Ottawa and halted all new investment and trade transactions with Canada.

Saudi dissident Jamal Khashoggi speaks at an event hosted by Middle East Monitor in London, Britain, Sept. 29, 2018. (Middle East Monitor/Handout via REUTERS)

In November of 2018, Canada in turn imposed sanctions against 17 Saudi nationals linked to the murder of dissident Saudi journalist Jamal Khashoggi, who was killed at the kingdom’s consulate in Istanbul, Turkey on Oct. 2.

However, despite the diplomatic crisis and criticism of the deal by human rights and civil society groups in Canada, the Liberal government has refused to cancel the LAV deal with Saudi Arabia.

Freeland has said that a review of all export permits to Saudi Arabia is on-going and no final decision has been made. During this review, no new permits have been issued, she said.

According to Global Affairs Canada statistics, Saudi Arabia was Canada’s largest non-U.S. destination for military exports in 2018, receiving approximately $1.2 billion in Canadian product.

That accounts for nearly 62 per cent of the total value of non-U.S. military exports by Canadian defence companies, according to the annual Report on Exports of Military Goods from Canada published by Global Affairs.

Categories: International, Politics
Tags: , ,

Do you want to report an error or a typo? Click here!

@*@ Comments

Leave a Reply

Note: By submitting your comments, you acknowledge that Radio Canada International has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Radio Canada International does not endorse any of the views posted. Your comments will be pre-moderated and published if they meet Netiquette guidelines.

When you express your personal opinion in an online forum, you must be as courteous as if you were speaking with someone face-to-face. Insults and personal attacks will not be tolerated. To disagree with an opinion, an idea or an event is one thing, but to show disrespect for other people is quite another. Great minds don’t always think alike—and that’s precisely what makes online dialogue so interesting and valuable.

Netiquette is the set of rules of conduct governing how you should behave when communicating via the Internet. Before you post a message to a blog or forum, it’s important to read and understand these rules. Otherwise, you may be banned from posting.

  1.’s online forums are not anonymous. Users must register, and give their full name and place of residence, which are displayed alongside each of their comments. reserves the right not to publish comments if there is any doubt as to the identity of their author.
  2. Assuming the identity of another person with intent to mislead or cause harm is a serious infraction that may result in the offender being banned.
  3.’s online forums are open to everyone, without regard to age, ethnic origin, religion, gender or sexual orientation.
  4. Comments that are defamatory, hateful, racist, xenophobic, sexist, or that disparage an ethnic origin, religious affiliation or age group will not be published.
  5. In online speak, writing in ALL CAPS is considered yelling, and may be interpreted as aggressive behaviour, which is unpleasant for the people reading. Any message containing one or more words in all caps (except for initialisms and acronyms) will be rejected, as will any message containing one or more words in bold, italic or underlined characters.
  6. Use of vulgar, obscene or objectionable language is prohibited. Forums are public places and your comments could offend some users. People who use inappropriate language will be banned.
  7. Mutual respect is essential among users. Insulting, threatening or harassing another user is prohibited. You can express your disagreement with an idea without attacking anyone.
  8. Exchanging arguments and opposing views is a key component of healthy debate, but it should not turn into a dialogue or private discussion between two users who address each other without regard for the other participants. Messages of this type will not be posted.
  9. Radio Canada International publishes contents in five languages. The language used in the forums has to be the same as the contents we publish or in one of the two official languages, English or French. The usage of other languages, with the exception of some words, is forbidden. Messages that are off-topic will not be published.
  10. Making repetitive posts disrupts the flow of discussions and will not be tolerated.
  11. Adding images or any other type of file to comments is forbidden. Including hyperlinks to other websites is allowed, as long as they comply with netiquette. Radio Canada International  is in no way responsible for the content of such sites, however.
  12. Copying and pasting text written by someone else, even if you credit the author, is unacceptable if that text makes up the majority of your comment.
  13. Posting any type of advertising or call to action, in any form, to Radio Canada International  forums is prohibited.
  14. All comments and other types of content are moderated before publication. Radio Canada International  reserves the right to refuse any comment for publication.
  15. Radio Canada International  reserves the right to close a forum at any time, without notice.
  16. Radio Canada International  reserves the right to amend this code of conduct (netiquette) at any time, without notice.
  17. By participating in its online forums, you allow Radio Canada International to publish your comments on the web for an indefinite time. This also implies that these messages will be indexed by Internet search engines.
  18. Radio Canada International has no obligation to remove your messages from the web if one day you request it. We invite you to carefully consider your comments and the consequences of their posting.

Your email address will not be published. Required fields are marked *


One comment on “Saudi Arabia is $3.4B behind on its payments for Canadian LAVs
  1. Avatar James Vandenblink says:

    It appears that I and other Canadian taxpayers are enabling the murder of innocent Yemeni children.
    This makes us war criminals!