August 23, 2004

Mr. Fraser Reilly-King Co-ordinator,
NGO Working Group on EDC
Halifax Initiative
104-153 Chapel Street
Ottawa, Ontario K1N 1H5

Dear Mr. Reilly-King:

This is in response to your letter of July 15 to A. Ian Gillespie, President and CEO of Export Development Canada (EDC) concerning potential EDC support for the completion of the Belene Nuclear Power Plant in Bulgaria. EDC has been aware of the potential project as it is part of Bulgaria's overall strategy for the development of its energy sector. As indicated in your letter, we understand that the project is also at the preliminary bid stages and may represent a significant opportunity for Canadian exporters, including AECL, should they choose to bid and if they are successful.

As you know, EDC's mandate is "to support and develop, directly or indirectly, Canada's export trade and Canadian capacity to engage in that trade and to respond to international business opportunities." We are committed to fulfilling our mandate in a socially responsible manner. This includes the application of rigorous environmental review procedures, and strong processes to detect and deter bribery and other corrupt practices. EDC's participation in future transactions cannot be assumed as you propose, but depends on whether the transaction can meet those standards. It would not be prudent or responsible risk management to compromise the independence of our review of this, or any, transaction.

In the case of a nuclear power plant project, any potential future involvement by EDC would require extensive due diligence taking into account, in addition to normal credit considerations, all elements of our Environmental Review Directive (ERD), fulfillment of commitments under our Disclosure Policy, and our Anti-Corruption Program, all of which are fully described on our website.

Under the terms of our Disclosure Policy, EDC cannot confirm or deny whether it is currently looking at the Belene project. Any EDC participation would likely require advance public notice of that participation, and an opportunity for public concerns to be considered before any final decision regarding support.

Finally, with regard to your question regarding support for a transaction where the sponsor is under investigation by the Royal Canadian Mounted Police (RCMP), we have no knowledge concerning any action which the RCMP may have taken, or be considering, with respect to this matter. As you will appreciate, EDC is committed to taking appropriate action only after assessing all available facts and circumstances relevant to providing its support. EDC's actions would be governed by its conclusions, and not solely by the presence or absence of an investigation. You will appreciate that EDC will not normally have any knowledge of the circumstances and outcome of investigations other than the public record.

We would also highlight that EDC is fully aware of the grave hazard posed by involvement in projects tainted by corruption and takes action to ensure that it does not unknowingly support such a transaction. These measures include requiring customers to sign anti-corruption declarations, training for our staff to recognize indicators of the presence of corruption and educating our customers about these hazards.

Thank you for bringing your concerns to our attention.

Yours sincerely,

Rosemarie Boyle
cc: Robert Van Adel, President and CEO, Atomic Energy of Canada Limited
Darlene Pearson, Director, Office of the Auditor General of Canada