Canadian CEO loses bids to avoid extradition to US on fraud charges

Charges stem from a now-cancelled contract involving armoured vehicles destined for Iraq.

August 15, 2016   by Paola Loriggio

OTTAWA — The CEO of a Canadian company alleged to have knowingly delivered shoddy armoured vehicles to the US military has lost his bids to stave off extradition to face fraud charges south of the border.

William Whyte had challenged an order of committal issued by the judge presiding over his extradition hearing, as well as an order of surrender issued by the Minister of Justice of Canada cementing the court’s decision.

A court document says Whyte has been indicted in US District Court for the Western District of Virginia on three counts of major fraud against the United States, six counts of wire fraud, and three counts of making false claims against the United States.

The charges stem from a now-cancelled contract between the Joint Contracting Command-Iraq, an agency of the US Department of Defense, and Armet Armoured Vehicles Inc., a Canadian company that designs, manufactures and sells armoured vehicles.


The document says Whyte was the CEO, sole shareholder and sole director of Armet at the time and directed all aspects of the company’s business, including contracts and production decisions.

It’s alleged the company was hired in 2006 to produce 32 armoured vehicles for use in Iraq, but only delivered six that contained “inadequate protective equipment.”

“The JCCI had several complaints about Armet’s failure to abide by the terms of the contracts,” the Court of Appeal for Ontario wrote in describing the allegations, which have not been proven in court.

“Armet failed to make timely delivery of the number of vehicles required under the contracts. The vehicles that were delivered contained inadequate protective equipment. Plywood and Styrofoam were substituted as ‘blast protective materials’. One sheet of armoured steel was on the roof and floor, instead of two. The gearshift space was protected only by a rubber ring.

The vehicles were not equipped with run-flat tires. Instead, Armet had substituted cheaper tires that would not run when flat,” it wrote.

“Whyte knew about these defects and, in some cases at least, had authorized them. Yet he made no disclosure to JCCI.”

The US agency also alleges Armet, through Whyte, diverted funds received as progress payments to pay for expenses unrelated to the contract, including his personal expenses.

It further alleges that the company, again through Whyte, redirected at least six vehicles meant for the agency to the Nigerian government, repainting them to the specifications of that government and selling them at a greater price than what it would have received under the US contract.

In March 2008, the US government cancelled the Armet contract and demanded to be reimbursed for the $825,000 it had provided in progress payments, the court document says. Armet made two offers to settle in the following years but the US government did not respond.

Whyte maintains he was “open, honest and transparent in all his dealings” with the agency and that the vehicles “provided adequate protection,” according to the appeal court document. He argues the matter is “a civil contract dispute that does not rise to the level of criminal fraud under Canadian law,” it says.

Whyte’s lawyer did not immediately respond to a request for comment.

An Ontario judge committed Whyte to extradition in December 2014, and in August of last year, the Minister of Justice ordered Whyte to surrender for prosecution in the US. But Whyte appealed the committal, arguing that a lawsuit launched against him in the US on the same allegations had been dismissed after the judge made his decision. He sought to enter the dismissal as fresh evidence, saying it would be an abuse of process to allow criminal prosecution on charges that had failed in a civil claim.

He also requested a judicial review of the minister’s warrant for surrender, saying the minister was required to take into account the results of the lawsuit in weighing the extradition request.

The court dismissed both the appeal and the application for judicial review, ruling that extradition hearings are not meant to serve as criminal trials.

“As a general rule, evidence that establishes a defence or attempts to establish a different or exculpatory account of events is not admissible at an extradition hearing,” the three-judge panel said.

“This evidence does not affect the reliability of the requesting state’s evidence, rather has to do with the ultimate reliability of the requesting state’s evidence which is for the foreign court, not the extradition hearing judge to determine.”

The appeal court said Whyte will be free to argue that the charges should be dismissed when he is before the US courts.

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