Tory asks for review of $144-million contract given to company partly owned by Russian oligarch

In this July 2, 2015 file photo, Russian metals magnate Oleg Deripaska is seen in Moscow, Russia. (AP Photo/Alexander Zemlianichenko, File)

Mayor John Tory has asked city staff to review a $144-million contract awarded to a construction company partly owned by a Russian billionaire now facing sanctions in Canada.

The Toronto Star first reported about Oleg Deripaska’s business interests in Ontario in an article published earlier this week, detailing approximately $1 billion in public sector contracts held by a company that he owns a minority stake in through a holding company.

According to the newspaper, the Austrian-based construction company Strabag won a $750-million contract for tunneling the Scarborough subway extension in 2021.

But its business interests in the region go beyond just that, having received a $144-million contract for excavation and tunneling work on a new pumping station at the Ashbridge’s Bay Treatment Plant from the City of Toronto back in 2019.

At the time Deripaska was already facing sanctions in the U.S., though the Canadian government only recently added him to its list of Russian oligarchs and officials now facing sanctions domestically.

In a statement provided to CP24 on Thursday, Mayor John Tory’s spokesperson Lawvin Hadisi noted that the contract was awarded “long before the attack on Ukraine and the imposition of the current Canadian sanctions.”

However, Hadisi said that that Tory has asked city staff to review the matter.

“The mayor would support taking any actions in response to the federal government's sanctions – up to and including cancelling the contract – if that is the advice of our city staff and recognizing that would likely be very challenging from a legal standpoint,” she said.

The city received a total of four bids for the Ashbridge’s Bay contract and the submission from Strabag ended up carrying a price tag that was nearly $50 million lower than the next closest bidder.

According to a staff report, about $90 million of the contract value has already been awarded with the remaining $53 million scheduled to be paid out between now and the end of 2023.

In a statement given to CP24, city spokesperson Brad Ross noted that the city “completed a comprehensive review of the tender submission in accordance with all relevant policies” at the time the contract was awarded and was not aware of the sanctions Deripaska was facing in the U.S. at the time.

“The City of Toronto is currently reviewing the details related to the sanctions imposed and the requirements of the current contract,” Ross said.

Deripaska is among nearly 400 Russian officials, oligarchs and other figures who have been sanctioned by the Canadian government since the country invaded Ukraine last month.

It should be noted that Strabag itself is not facing any sanctions that would prevent it from conducting business in Canada.