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Family-owned business settles lawsuit with Canada

POSTED: January 19, 2014 11:31 p.m.

A family-owned Gainesville business has settled for an undisclosed amount in a $16 million dispute with Canada’s Department of National Defense.

Smith Consulting Group had been awarded a contract with the government in 2006 to sell military surplus assets to other foreign governments on a commission basis.

The company filed suit in December 2010, alleging “breach of contract associated with negligent misrepresentation” and “interference of economic relations.”

“We have listings, much like a real estate agent would,” SCG President Billy Smith said last week at his office at 742 Main St., explaining his business. “We don’t own these type of assets. We represent the government that owns them.”

In Canada’s case, “the government chose to attempt to deal with those projects themselves,” he said. “That’s paramount to ... a real estate agent (hired to list a home) learning later that the seller of that home went straight to a buyer. It left us out of the loop.”

The move “cost us well over $20 million (in commissions),” Smith said.

SCG announced the settlement in a news release issued last week.

Neither side, SCG or Canada, are permitted, per terms of the agreement, to comment on the settlement, including the final amount.

“Obviously, we didn’t settle for $16 million,” Smith said.

The company still mentions the Canada project on its website, noting it considered it to be “one of the most successful in our history.”

The project involved the sale of more than 100 armored personnel carriers used by Canada on a peacekeeping mission in Sudan.

“SCG was able to negotiate a deal that allowed for the vehicles to be sold and shipped directly from Sudan to the buying government,” the website states.

“SCG had the authority to sell thousands of military surplus assets,” the company’s news release states. “The assets consisted of armored tanks, armored personal carriers and other light military truck and support parts and components.”

The company “was on the path to close additional sales that might have amounted to $100 million.” The case had been in the Canadian federal court system since 2010.

Earlier in 2013, Canada agreed to mediation in an effort to move toward a settlement.

Mediation was set for Dec. 10, but the parties were able to reach a settlement in principle.

“The settlement could not be finalized until senior Canadian officials were able to sign off on the agreement,” the release states.

Many of those officials had accompanied a Canadian delegation to South Africa for the memorial service for Nelson Mandela, according to SCG.

Hundreds of thousands of dollars were spent on legal expenses just to reach the mediation stage, Smith said.

“When you’re a small company like us and you take on a big government, it doesn’t come cheap,” he said. “What they didn’t figure out is we’ve got our own little treasury, too. We deal in big-buck items.”


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