A person holds a smartphone set to the opening screen of the ArriveCan app in a photo illustration made in Toronto, on June 29, 2022.Giordano Ciampini/The Canadian Press
ArriveCan contractor Dalian Enterprises says its president, David Yeo, became a Department of National Defence employee only last year after work on the app was complete and set up a conflict of interest screen so that he would not be involved in the company’s interactions with his new employer.
The company issued a statement Thursday detailing Mr. Yeo’s history with the Canadian Forces and the Defence Department. It is the first time the company has commented since the department and federal ministers announced last week the government had suspended Mr. Yeo from the public service and stopped all contract work with Dalian.
Treasury Board President Anita Anand told reporters last week that she was “extremely surprised” to learn that the president of a leading contractor on the ArriveCan app for international travellers was also working as a public servant.
“In late September 2023, long after completion of all work on the ArriveCan app by Dalian, Mr. Yeo’s professional relationship with the Department of National Defence changed from that of IT professional services consultant to employee,” said a statement sent to The Globe on Thursday from the company. Mr. Yeo has said his company has two full-time employees.
The statement said that after accepting the public service position, Mr. Yeo took steps to address any conflict of interest concerns by entering into a “confidentiality, non-disclosure and no access agreement” with Dalian in which he agreed to refrain from participating in any Dalian proposal, project, contract, venture or other activity relating, directly or indirectly, to the Department of National Defence.
“Since becoming an employee of the Department of National Defence, Mr. Yeo has honoured that agreement, has had no involvement in the management or operations of Dalian, and has not had access to Dalian confidential information of any kind. Mr. Yeo has also made the appropriate conflict of interest filing with the Department of National Defence, has resigned as a director and officer of Dalian, and has put his shares in Dalian in a blind trust,” the company said.
Mr. Yeo testified to a House of Commons committee on behalf of Dalian in October and he did not mention that he had joined the public service. Dalian received $7.9-million to work on ArriveCan.
Dalian describes itself as an Indigenous company. Mr. Yeo told MPs last year that his great-grandfather is Robert Franklin, who is a past chief of Alderville First Nation.
The company regularly wins federal contracts under a set-aside provision of the federal procurement strategy for Indigenous business. It often operates in joint ventures with Coradix Technology Consulting Ltd., a larger company that does not bill itself as Indigenous.
Dalian and Coradix have received more than $400-million in federal contract work over the past decade. Public accounts records show National Defence spent $3.3-million with Dalian and $78-million with Coradix, for a combined total of $81-million.
Earlier this week, MPs on the House of Commons public accounts committee unanimously agreed to a motion calling on Mr. Yeo, Defence Minister Bill Blair and senior public servants to appear at a future meeting to answer questions on the situation.
Ottawa reviewing Indigenous contracting program linked to ArriveCan contractors, Hajdu says
The statement from Dalian also details Mr. Yeo’s experience with the Canadian Forces.
It said Mr. Yeo served in the Canadian Army for 14 years from 1987 to 2001, and then joined the Canadian Armed Forces Reserves for 10 years from 2001 to 2011. The company said Mr. Yeo was deployed to Cyprus from September, 1991 to February, 1992 and Afghanistan from August to November of 2010.
“Mr. Yeo was deployed to Afghanistan as a contractor for the Department of National Defence to deliver a high assurance security capability at Forward Operating Bases. His team received a Commander’s Commendation for its work,” the company said. “Mr. Yeo is a Tactical Security Specialist, with expertise in High Assurance Guard technologies for the Canadian Armed Forces both on mobile platforms and specialty areas.”
The statement said Mr. Yeo founded Dalian Enterprises in 2002, describing it as a hardware, software and cybersecurity company.
The federal government is Dalian’s primary customer. The statement said that from 2002 until September, 2023, Mr. Yeo was not an employee of the government and only provided IT services to the Department of National Defence through Dalian contracts.
The company said Dalian has been regularly audited by Indigenous Services Canada with respect to the Procurement Strategy for Indigenous Business. However, the Indigenous Services department told The Globe late last year that it has only conducted pre-award audits that examine whether a company is eligible for the program. It has never conducted a post-award audit to determine whether Dalian, or Dalian in joint venture with Coradix, followed through in meeting the obligations of the program.
After receiving questions from The Globe, Indigenous Services said it has decided to conduct post-award audits of Dalian and Coradix but also said the audit reports will not be made public.
Program rules state that when an Indigenous business qualifies via a joint venture with a non-Indigenous business, it must ensure that the Indigenous business has at least 51-per-cent ownership and control of the joint venture and at least 33 per cent of the total value of the work is performed by the Indigenous contractor or using Indigenous subcontractors.
Indigenous organizations, such as the Canadian Council for Aboriginal Business, have warned that a lack of oversight over the set-aside program leaves it vulnerable to predatory “phantom joint ventures” in which an Indigenous partner is used as a front by a non-Indigenous business.
On March 1, Public Services and Procurement Canada announced that it had suspended the security status of Dalian Enterprises “in response to information that recently came to light.” On Wednesday, the department said it had suspended contract work with Coradix and GCStrategies, another company that worked on the ArriveCan app.