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Canadian Defense Firm Goes Bust After Turkish Arms Embargo 

Canadian defense firm Telemus Systems Inc. has filed for bankruptcy months after Ottawa canceled export permits for military goods and technologies to Turkey over Ankara’s role in the Nagorno Karabakh war.

The decision prevented the Ontario-based electronic warfare systems manufacturer from fulfilling pre-existing deals with Turkish Aerospace Industries Inc.

According to Middle East Eye, Telemus had been selling a range of electronic warfare systems to the Ankara-based company for its Anka drone.

‘Credible Evidence’ Against Turkey 

Canada’s decision was based on “credible evidence” in a review revealing that Canadian technology was used during the war between Armenia and Azerbaijan last fall. Canadian Broadcasting Corporation (CBC) revealed that Canadian optical and target acquisition systems were found to have been used in Turkish drones.

“Following this review, which found credible evidence that Canadian technology exported to Turkey was used in Nagorno Karabakh, today I am announcing the cancellation of permits that were suspended in the fall of 2020,” CBC quoted from Canadian Foreign Affairs Minister Marc Garneau’s statement in April.

“This use was not consistent with Canadian foreign policy, nor end-use assurances given by Turkey,” he said.

Canadian Action

According to CBC, the Canadian government suspended 25 military goods and technology licenses related to Turkey last October and four more in November.  

Meanwhile, Telemus Systems’ trustee KPMG Inc. revealed in a report that the company couldn’t source its products and technology to new customers outside Turkey, as they were “subject to restrictions under federal Controlled Goods Regulations pursuant to the Defence Production Act.”

“As the result of the government sanctions, the company was no longer able to generate any revenue and was solely dependent on Parentco for financial support,” the report read.

KPMG Inc. incurred a loss of 360,000 Canadian dollars ($290,000) in 2020 and 1.1 million Canadian dollars ($890,000) in 2021. It shut down its operations on July 31 and filed for bankruptcy on August 24.

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