Canadian Company Files Bankruptcy Due to Arms Embargo on Turkey

Telemus Systems went bust after losing its contract to supply electronics for Turkish Aerospace Industries’ Anka drone, seen here in Ankara on 5 March 2021 (AFP)

(Middle East Eye)- A Canadian defense company has gone bankrupt due to an arms embargo Ottawa imposed on Turkey in response to Ankara’s military operations in Syria and Azerbaijan.

Telemus Systems Inc filed for bankruptcy last August because it lost its primary customer, Turkish Aerospace Industries (TAI), following an arms embargo imposed by the Canadian government in 2020, according to a report prepared by the trustee KPMG Inc

The company was selling a wide array of electronic intelligence and electronic support systems to the Turkish customer for a military drone known as TAI Anka. 

“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.”

The Canadian government decided in April 2021 to cancel Telemus Systems’ existing Turkish export permits as part of the arms embargo against Ankara, dealing the final blow to the company. 

The report indicated that Telemus incurred a net loss of $360,000 in 2020 and posted a net loss of $1.1m in 2021, before shutting down its operation on 31 July. 

Ottawa cancelled all defence exports to Turkey earlier this year after an investigation found that Canadian technology was used in the conflict between Azerbaijan and Armenia, the country’s foreign affairs minister said. 

Last year, Ottawa launched an investigation into whether Turkey had violated an end-user license agreement by selling Turkish armed drones to Azerbaijan.