OTTAWA -- The Department of National Defence wrongly allowed an officer to skirt the one-year cooling-off period and accept a job with a military supplier before he officially retired from the Canadian Forces, a helicopter maker is arguing in a lawsuit against the government.
In a recently amended statement of claim, AgustaWestland said that Walter Istchenko's move last year from the Canadian Forces into a position at rival General Dynamics Canada was the latest expression of a long-held federal bias against the EH-101 helicopter.
AgustaWestland had won a contract in the early 1990s to supply 43 EH-101 helicopters to the Canadian Forces, but the Chrétien government cancelled the order after coming to power in 1993.
AgustaWestland is accusing the federal government of doing everything it can to ensure that it did not win a subsequent competition to replace the Sea King helicopters.
Istchenko, who retired as a colonel, was the highest-ranking officer in the project office that awarded a $5-billion contract to Sikorsky in 2004 for the purchase of 28 maritime helicopters.
Mr. Istchenko got permission in 2005 to accept a job at General Dynamics, the Ottawa-based company that is one of the main subcontractors on the helicopter project. General Dynamics is providing the $1.5-billion "mission suite" for the Sikorsky helicopters, including the electronic equipment used by the pilots and the weaponry.
Defence officials normally go through a one-year waiting period before working for a company with which they had dealings as government employees. Mr. Istchenko got an exemption from the policy. He started working at General Dynamics last November before he officially retired from the Canadian Forces, given he was still using up accumulated vacation time.
In an interview yesterday, Mr. Istchenko said he is working on a different project at General Dynamics involving ground surveillance equipment for NATO. He said he has not been involved in the helicopter project and he is scheduled to move to Europe next year to continue working on the NATO contract. In that context, Mr. Istchenko said, the government determined he could accept the job offer from General Dynamics.
"The issue is whether the government believes there is a conflict or not, and the answer was 'no,' " he said. "I was moving on to something quite different."
A spokeswoman for DND confirmed the department gave Mr. Istchenko -- a test pilot and engineer -- the authorization to work for General Dynamics.
"The position was not related to the maritime helicopter project. As a result, [the director of ethics and conflict of interest at DND] provided Col. Istchenko with written confirmation that his submission complied with the department's conflict of interest and ethics provisions," Krista Hannivan said.
AgustaWestland, which lost the competition to replace the Sea Kings, stated in a 2004 lawsuit that the government was biased in its handling of the contract.
In particular, AgustaWestland argued that the requirements for the new helicopters were "dumbed down" by the project office to ensure that less powerful and cheaper aircraft qualified for the contract.
The Federal Court judge overseeing the lawsuit, Mr. Justice Michael Kelen, recently accepted an amendment to the lawsuit in relation to Mr. Istchenko's employment with General Dynamics.
The allegations in the statement of claim have not been proved in court. The suit is expected to be heard in Federal Court next year.
In the amended statement of claim, AgustaWestland states that Mr. Istchenko made decisions at the Canadian Forces that favoured Sikorsky over the EH-101, and later approved changes to the contract between the government and Sikorsky that financially benefited General Dynamics.
In the lawsuit, AgustaWestland said that Mr. Istchenko had "extensive direct contact with representatives" of General Dynamics, a company that "benefited substantially from advantageous contract changes that [Mr. Istchenko] approved shortly before he left DND."
Over all, AgustaWestland said, the fact that Mr. Istchenko received a dispensation to work for General Dynamics "exacerbates the apprehension of bias and continues a course of conduct in which the [government has] acted with actual bias and in breach of the public and private law duties owed" to AgustaWestland.
In the interview, Mr. Istchenko said that there is "lots of opinion and unfortunately not a lot of accuracy" in AgustaWestland's statement of claim.
