A recent documentary by W5, a Canadian documentary and
investigative media program, reported that Steve de Jaray, a
Canadian businessman from Vancouver, was paid millions of dollars
by the Canadian government in a confidential settlement –
purportedly the second highest in Canadian history – after
the Canada Border Services Agency ("CBSA") charged him,
his daughter, and his company Apex-Micro Electronics with exporting
military technology to China in alleged breach of export controls
only to stay the charges one year later.
In December of 2008, the CBSA seized a Hong Kong-bound shipment
of computer chips and circuit boards at Vancouver International
Airport on the grounds the items were military technology
prohibited from export without an appropriate permit. The shipment
in question was an order for a subsidiary of Apex-Micro Electronics
called Caliber Solutions for electronics used to tune motorcycle
fuel injectors. The parts were being shipped to Kowloon, Hong Kong
for assembly and after which they were to be returned to North
America. W5 reported that the Department of Foreign Affairs and
International Trade (DFAIT) concluded the computer chips were
military standard related to U.S. Strategic Bombers.
On April 29, 2010, Mr. de Jaray, his daughter (who managed the
American operation of the business) and the company were charged
with two counts of exporting goods in breach of the Customs Act and
the Export and Import Permits Act and "Export Control
List" thereunder. This was preceded on February 13, 2009 by a
CBSA SWAT team raiding the Apex-Micro Electronic's factory and
de Jaray's personal residence.
The Export and Import Permit Act allows the Minister of
International Trade to issue an export permit to authorize the
export of items specified on an "Export Control List" or
items to a country specified on an "Area Control List."
Without an export permit, items listed on the "Export Control
List" are prohibited exports, and the export of any item to a
country on the "Area Control List" is prohibited. Many of
the goods and technology listed in the "Export Control
List" are military products and technologies. For this reason,
there is no surprise that such items cannot be exported without an
export permit. That said, other goods and technologies that have a
variety of lawful commercial applications are also subject to
export controls. Prosecutions of export violations can result in
fines (there is no cap on the amount), imprisonment for up to ten
years, or both. Moreover, directors and officers of corporations
who do as little as "acquiesce" to the commission of the
offence are personally exposed to conviction and punishment
regardless of whether the corporation has been prosecuted or
In his interview with W5, Mr. de Jaray asserted that the charges
and ensuing negative publicity surrounding the charges caused him
to lose his business, home, business network and friends. The
charges, Mr. de Jaray reported to W5, "effectively
branded" him "an arms dealer and an international
terrorist." Mr. de Jaray and his lawyers could not understand
why he had been targeted given that the components he was shipping
were openly available on the Internet and could be purchased
anywhere, including China. Mr. de Jaray hired two former DFAIT
employees as experts. One had assisted in drafting the "Export
Controls List" and the other had conducted numerous alleged
export violation investigations. Both concluded the goods in
question were not controlled goods. The charges were stayed shortly
after their expert report was delivered.
Mr. de Jaray went on to sue the Canadian Government. W5 has
reported that, the settlement, reached in 2013, is confidential,
but reportedly is the second highest paid in Canada's history.
There is no way to confirm the accuracy of this report. The highest
is $15 M.
This highlights the importance for Canadian businesses to ensure
compliance with Canada's export control regime. It also
demonstrates the importance of retaining experts when
export-related investigations by CBSA or RCMP are commenced.
While that agreement mandated export measures on Canadian softwood lumber exports destined for the United States, it also protected those lumber exports from the potential imposition of onerous import measures by the U.S.
On September 29, 2016, the Supreme Court of Canada issued its first tariff classification decision since Canada signed the International Convention on the Harmonized Commodity Description and Coding System in 1998.
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