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By John Helmer, Moscow

The Canadian Government announced last week it is giving away another
C$200 million to Ukraine, topping the $200 million handed to Kiev last September.

A spokesman for Foreign Minister Rob Nicholson concedes the money is not being audited as the announced loan agreements require. Nicholson, according to Johanna Quinney in Ottawa, doesn’t know whether the first $200 million has been spent through the Ukrainian budget on military operations in the civil war in the east, or against Russia. In signing for the money to fund the war, Nicholson, who is running for election in six months’ time in the Niagara Falls constituency near the US frontier, may be violating Canadian law, Ottawa sources say.

Nicholson (below, right) took public credit for the official signing of the $200 million loan on March 27 at a meeting with Oleksiy Pavlenko (left), Ukraine’s Minister of Agrarian Policy and Food.


Public credit for the first $200 million loan was taken by Canada’s Prime Minister, Stephen Harper, and Finance Minister Joe Oliver when the loan deal was signed during Ukrainian President Petro Poroshenko’s visit to Ottawa on September 17.

Left to right: Pavlo Klimkin, Ukraine Foreign Minister; Poroshenko; Harper; Oliver.

The loan terms are for a five-year tenure at a concessional interest rate reported to be just 1.43%. Releases from Nicholson’s foreign ministry and from Oliver’s finance ministry claim the purpose of the money is “to stabilize Ukraine’s economy and support programming consistent with Canadian development priorities.”

Last September the Canadian prime ministry claimed “the terms of the loan also include a provision enabling Canada to perform an audit of funds used during the course of the agreement, as well as an obligation for Ukraine to provide regular reports detailing the funds’ use.” Last week the foreign affairs department said the new money is to “help the Government of Ukraine to stabilize its economy and promote social development.” It repeated the earlier conditions — “a provision enabling Canada to perform an audit of funds used during the course of the agreement, as well as an obligation for Ukraine to provide regular reports detailing the funds’ use.”

Sources in Kiev and close to the International Monetary Fund (IMF) say an audit of the Canadian money is impossible because it has been paid into the Ukrainian budget, and from there its use is untraceable to the development and economic stabilization purposes Ottawa claims the loan agreements require. The sources say the Canadian money can, “and probably has been spent” on military operations.

Nicholson revealed yesterday through his spokesman that he does not know what audit results, if any, were received on the uses of the first Ukraine loan before he agreed to the disbursement of the second loan and signed its terms in March 27. On the question of whether Nicholson is aware that the Canadian money is being spent through the Ukrainian budget on the war in the east, Quinney refused to say.

On whether the Ukrainian government had complied with its “obligation” to Ottawa to make “regular reports detailing the funds’ use”, Nicholson is also refusing to say. “Answers will come from Finance Canada”, Quinney claimed.

4dQuinney (right) defended Nicholson, adding that interpretations of what he has said, or omitted to say that Kiev can do with the $400 million, “are false and would misinform your readers.” For more of Quinney’s tweets defending her minister, click here.

No Canadian official is willing to say, to date, how the cheques were made out, and which Ukrainian agency or bank received the cash last September, or last week. Export Development Canada (EDC), until recently directed by ethnic Ukrainian Stephen Poloz, has been identified by the prime ministry as the agent through which the money was delivered to Kiev. EDC is currently publishing warnings to Canadian exporters to beware of the high risk of losing their money in Ukraine “due to current situation.” Poloz (below) was promoted from EDC to head the Bank of Canada in July 2013.


The EDC’s most recent quarterly risk report for Ukraine issued a red alert, warning that the probability of default by the Ukrainian government on its loan obligations is high. “The sovereign’s risk profile has deteriorated significantly since the onset of the crisis, and rapidly rising public debt coupled with weak institutional strength and mounting external vulnerabilities has led to heightened risks. The government’s reticence in several areas of much-needed reforms has exacerbated economic structural weaknesses and has led to a rebuilding of external vulnerabilities.”

At Oliver’s Department of Finance a spokesman reveals that the Ukrainian Government has made no report to Ottawa on how it had spent the $200 million awarded in September before it collected another $200 million last week. According to a spokesman for Finance, the loan provisions refer to “annual [emphasis added] reports on the use of funds. Such reports will be prepared by the Government of Ukraine and provided to the Government of Canada.”

The finance ministry also reveals that Canadian officials don’t want to know what is happening to the money. “Canada has not yet elected to conduct an audit of these loans,” a spokesman for Oliver said.

The finance ministry has already announced on its website that Canada’s loans to Ukraine amount to what it calls “international financial assistance”, and for statutory reasons they must be audited to determine “whether the disbursements meet criteria stated under the Official Development Assistance Accountability Act. The Official Development Assistance Accountability Act came into force in 2008. Its purpose is to ensure that Canadian Official Development Assistance is provided in a manner that: Contributes to poverty reduction; Takes into account the perspectives of the poor; and Is consistent with international human rights standards.”

Last November, seven weeks after giving the Ukraine $200 million, Finance announced “it will begin reporting under the International Aid Transparency Initiative… [It will] seek comments on the Department’s contributions to…Canada’s financial assistance to Ukraine.” The ministry acknowledged the process was “required” by the Accountability Act and would be “open to the public.” That was five months ago. This week spokesmen at Finance aren’t saying how the Ukraine loans meet the stated government objectives or the legal requirements.

Quinney refuses to say if the foreign minister has obtained a legal opinion from the Attorney-General on whether he and other officials handing out the Ukraine loans are in violation of the Accountability Act.

Nicholson’s foreign ministry knows how to conduct audits if it wants to, or is obligated by statute. The department website can be searched for audits it has conducted of Ukrainian operations in the past. This reveals that in 2005 the Canadian Embassy in Kiev was audited. In 2011, there was an audit of Canadian development assistance spending between 2004 and 2009. The published report highlights the problem of corruption and oligarchs. The ministry claimed it was financing education, training, and scholarships for young Ukrainians “as a counterbalance to the vested interests and oligarchs that appear to have a stranglehold on decision making in Ukraine… to prepare them for positions of influence, as a means of building consensus for reform and ensuring a reform-oriented bureaucracy and civil society in the future.”

The ministry report also reveals how much its assistance spending was guided by Canadians of Ukrainian origin. This, the report claims, gave “a comparative advantage vis a vis other donors with the involvement of diaspora members with relevant expertise. It developed a niche in areas such as policy formulation at the central government level, credit union development and agricultural technology.”

In 2012 another audit admitted that Ukraine was a high-risk area, in which the Canadian officials were less prepared than they ought to have been. Whether the Ukrainian-Canadians benefitted from their hands-on experience is left unsaid. “Although program managers assessed and were well aware of the risks specific to the country, program and the recipients, and the measures used to manage and mitigate those risks, it was not evident how these risk factors were used in making programming decisions and establishing administrative requirements.”

The Canadian Auditor-General, an independent government organ, reports that it has undertaken no audit of government spending, loan repayment, or grant programmes in Ukraine.

The Ukrainian giveaway and war spend by the Conservative Party government, to which Harper, Nicholson and Oliver belong, come as they face a national parliamentary election on October 19. At present, Canadian polls report that two-thirds of Canadian voters are especially sensitive to spending cuts and loss of welfare benefits; they believe the country is in something between a recession and a depression.


“The Prime Minister has the worst approval rating of all leaders,” noted an EKOS report on the research organization’s findings. Notwithstanding, on the current forecasts he scrapes through as the poll winner. “We are therefore left with a bit of a head scratcher as to how the cumulative weight of a poor economy, lousy directional and approval ratings, and regime fatigue (which almost always augur very poorly for the prospects of incumbent success) do not seem to point to this fate for Mr. Harper.” The report suggests the reason Harper is keeping his slight lead over the other parties is his appeal to special interest groups, particularly among older Canadians.

War talk and money for fighting Russia, according to the polls, buy votes at home from Canadians whose families originate in Ukraine.


Harper and Nicholson are appealing to Ukrainian voters with lists like these of everything they are doing for the motherland – and against the hated Russians.

Christopher Alexander, another Conservative Party figure running for reelection and currently Minister for Immigration, told meetings of Ukrainians in Toronto in February and March that he favours Canadian financing for war against Russia. Like the war party in Washington, which is directed by Victoria Nuland (Nudelman) and Natalie Jaresko, the war party in Canada is led by Russia-hating emigres like Christia Freeland (Chomiak) (below left) and Jaresko’s investment company partner in Kiev, Jenna Koszarny (right).


Analysts in Moscow have noted that, although a small ethnic minority of 1.3 million in Canada’s population of 35.2 million, the Ukrainian concentration in Canada is larger than that of the US or Brazil, and second only to Russia, in numbers outside Ukraine. A widely reported Russian interpretation of the Canadian government’s Russophobia is that it serves the interest of Canadian companies in Arctic resources claimed by Russia, but sought by Canada.

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