Canadian firms in Russia push Ottawa for support

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Canadian companies operating in Russia are pleading with Ottawa to ensure they aren't sideswiped by sanctions as the federal government puts global security ahead of commercial interests in the region.

On Monday Prime Minister Stephen Harper said commercial interests are now secondary in the consideration of responses to the Russian moves.

"We don't like seeing disruption to investment or to markets or to trade but the fact of the matter is when you are looking at it from the standpoint of a greater national interest … this is not something we can subordinate to economic interests," Mr. Harper said.

One Canadian company with significant operations in Russia, Kinross Gold Corp., has told the federal government that Ottawa needs to take into account the impact on Canadian employees and shareholders when it takes action in response to the Russian annexation of Crimea. About 27 per cent of Kinross's production comes from Russian mines.

"We have communicated to the government of Canada our desire to see a balanced approach to resolving this situation in a way that considers Canadian interests in Russia," Kinross spokeswoman Andrea Mandel-Campbell said. "A number of major Canadian companies have investments in Russia, and these companies have thousands of Canadian employees and shareholders – including pensioners – who deserve a measured and thoughtful response from government on this issue."

Other firms with operations in Russia are also asking Ottawa to move carefully.

National Canadian law firm Gowling Lafleur Henderson LLP, which has had an office in Moscow for more than 20 years, has suggested to Ottawa – through talks with Canada's ambassador to Moscow – that it should use diplomacy before resorting to more punitive measures. "Over the last hundred years we've learned that diplomacy can prevent mistakes," said Gowlings chairman and chief executive officer Scott Jolliffe. "But certainly the rhetoric is at its highest level now on both sides, and doesn't seem to be calming down."

Gowlings practises mostly intellectual property law on behalf of Western clients in Russia.

While Mr. Jolliffe predicts that the current tensions will eventually subside and the world will accept a Russian Crimea, the stakes for his firm's 40-person outpost in Moscow, mostly staffed by Russians, remain high.

The office there depends on clients from the West and Asia looking to do business Russia. Even without formal sanctions, foreigners are pulling away from Russia, meaning they will have less need for Gowlings lawyers to protect their trademarks and patents there – potentially hitting the law firm's bottom line.

Silver Bear Resources Inc., a small Toronto-based company developing a silver project in Russia, has also expressed concerns to Ottawa. Silver Bear's chief executive officer Mark Trevisiol says if the conflict between western powers and Russia gets worse, it won't be positive for Silver Bear or for a lot of European or Russian businesses.

"I hope at some point we do get a cooling off period," he said. "Let's just hope that things don't go down a path that just drives more anxiety into the situation."

Still, many Canadian companies operating in Russia are trying to adopt a business-as-usual approach.

Valeant Pharmaceuticals International Inc., a Montreal-based drug distributor with $400-million of sales in Russia, does not see any sanctions that would have a direct impact on pharmaceuticals. "So far the only impact we feel in Russia is currency movement, which could continue to fluctuate," said spokeswoman Laurie Little. "Currently it is business as usual for Valeant."

Bombardier Inc., which has two key operations in Russia that bring in about $240-million in revenue, is "monitoring the situation closely," said director of communications Isabelle Rondeau.

Bombardier's rail operations, which has a joint venture in signalling and controls and 200 employees in Moscow, is continuing to operate normally. The company also sells business aircraft in Russia, and is in negotiations to set up a joint venture that will assemble some of Bombardier's Q400 turboprop airplanes. Last week Bombardier said those talks have slowed, and meetings are less frequent than they would have been, because of the current tensions over Crimea.