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Businessmen Ajay and Atul Gupta are seen in this 2011 file photo. Export Development Canada has abruptly terminated a loan that had allowed Bombardier Inc. to sell a Global 6000 jet to the powerful Gupta family of South Africa for $52-million.

Gallo Images/City Press/Muntu Vilakazi/Gallo Images/City Press/Muntu Vilakazi

The Canadian government's export agency, acknowledging a "political-exposure" risk, has cancelled a $41-million (U.S.) deal to help finance the sale of a luxury Bombardier jet to the controversial business tycoons at the heart of South Africa's biggest corruption scandal.

Export Development Canada, the Crown corporation that provides financial services to Canadian exporters and their clients, has abruptly terminated a loan that had allowed Bombardier Inc. to sell a Global 6000 jet to the powerful Gupta family of South Africa for $52-million.

Earlier: EDC's backing of Bombardier jet sale calls secrecy policies into question

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In recent weeks, the Guptas failed to meet their loan repayment obligations, and the political-exposure risks became a growing factor in the EDC's monitoring of the loan.

The jet was grounded for two days at a Johannesburg airport last month as the EDC began to take action to recover its money.

Bombardier had enthusiastically pursued the aircraft deal with the Guptas in 2014, recruiting EDC to finance the sale.

The credit agreement was approved in December, 2014, with the crown corporation agreeing to finance 80 per cent of the $52-million purchase price.

Leaked e-mails obtained by The Globe and Mail show that Bombardier had also been in the final stages of negotiating the sale of a second luxury jet to the Guptas as recently as last year. The second deal fell apart before it could be finalized, and now the first deal is also in deep trouble.

The aircraft deals with the Guptas have raised questions about due-diligence procedures at EDC and Bombardier. Critics argue that the Crown corporation and the Montreal-based manufacturer have been too willing to turn a blind eye to corruption, and that EDC has been too eager to finance Bombardier deals with any client. Both EDC and Bombardier have insisted that they follow their due-diligence rules strictly and carefully.

The India-born Gupta brothers, who immigrated to South Africa in the 1990s and created a sprawling business empire that ranges from media to mining, have been the subject of hundreds of media reports since 2010 on dubious insider deals between their companies and state-owned enterprises in which Gupta associates had gained influence.

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A government inquiry in 2013 found that the Guptas had wrongly used their official connections to obtain the use of a military airport for a planeload of wedding guests who bypassed the normal immigration and customs controls. Another public inquiry in 2016 heard testimony that the Guptas had offered bribes to cabinet ministers and gained influence over cabinet appointments.

The Gupta-owned Bombardier jet has remained active, despite EDC's efforts to recover its money. This week, the jet was flown from Zurich to an airport in northeastern France, according to flight-tracking websites.

While the Guptas apparently still hold the jet, EDC can now take steps to try to repossess the aircraft, unless the loan is repaid.

The agency has said little about the Gupta financing deal, except that it is now cancelled. "EDC monitored the performance of the transaction," Export Development Canada spokesman Phil Taylor told The Globe.

"Consistent with EDC's underwriting principles and policies, we exercised our contractual rights, and the transaction was terminated."

Asked whether EDC had any concerns about its decision to approve $41-million in financing to Gupta-owned Westdawn Investments to facilitate the Bombardier sale, Mr. Taylor acknowledged for the first time that EDC had been aware of the risks.

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"In 2014, we were aware of potential political-exposure risk, but we did not surface any opportunities for the potential risk to manifest within the transaction itself," he said.

"We felt that the indirect risks, which were speculative in nature but still present within the broader corporate structure and part of EDC's review, did not present a material risk to the transaction itself at that time."

Two British-based banks, HSBC and Standard Chartered, recently disclosed that they shut down a number of Gupta bank accounts in 2014 after concerns were raised about transactions by Gupta companies.

Asked why EDC's due-diligence procedures had failed to notice this, Mr. Taylor confirmed that EDC had been unaware of the action by the British banks, but said it would be "unprecedented for this kind of information to be publicly available."

Meanwhile, more than a year after selling its first Global 6000 jet to the Gupta family, Bombardier was pushing ahead with a second sale of the same model of luxury jet to another Gupta associate in early 2016, although the deal was ultimately never approved.

The Globe has obtained an e-mail, dated Feb. 19, 2016, in which a Bombardier sales director sought approval from a Gupta associate, Salim Essa, on options for the exterior paint design of a Global 6000 jet.

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Mr. Essa has been a partner of the Gupta family for many years, owning shares in several Gupta-controlled companies and acting on behalf of the Guptas in business deals.

Approval of exterior paint designs is normally one of the final steps in an aircraft deal, usually occurring after a purchase agreement is signed.

In an earlier e-mail in June, 2015, the same Bombardier sales director had told one of the Gupta brothers that he was "excited to be able to offer Mr. Gupta a second aircraft to meet their growing travel needs." He said he was talking to EDC about the possibility of financing the second aircraft.

The Bombardier e-mail in February of 2016 was sent to a senior executive at Oakbay, the main Gupta holding company. The Oakbay executive then forwarded the e-mail to three people: Mr. Essa, Tony Gupta, and Duduzane Zuma, a son of South African President Jacob Zuma and a long-standing partner in several Gupta companies.

The Global 6000 aircraft had a list price of $62.3-million in 2015. Manufactured in Toronto and Montreal, the jet has a range of more than 11,000 kilometres.

Asked about the negotiations to sell a second aircraft to the Gupta companies last year, Bombardier aviation division spokesman Mark Masluch said the company always conducts a "comprehensive review" and a "strict due-diligence process" before any aircraft sale is finalized. "In this specific case, the transaction was never completed, the aircraft never delivered," he said.

Asked about EDC's decision to cancel its financing for Bombardier's first aircraft sale to the Guptas, he said: "We understand that EDC has strict internal policies in place, like Bombardier, to govern its international business."

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