Two Canadian steel companies and one of their part owners have agreed to pay US$19 million as part of a settlement with the United States Department of Justice (DOJ), resolving allegations that they illegally circumvented duties on steel from China, Indonesia, Italy, Turkey, and Vietnam.
Details of the Settlement
Brampton, Ontario-based Royal Canadian Steel Inc., Farjess Inc., and Feroz Jessani, president and part-owner of both companies, were accused of misrepresenting the steel as being from Canada or the United States, according to the DOJ. The settlement resolves a civil suit filed under the False Claims Act.
Whistleblower Involvement
Shamsh Dhala, a broker who worked with Farjess, tipped off the government by filing a civil suit in the U.S. under the False Claims Act, which allows whistleblowers to receive a portion of any money recovered. The DOJ stated that Dhala would receive US$3.61 million from the settlement.
Alleged Misconduct
Between May 2019 and January 2025, Royal Canadian Steel, Farjess, and Jessani allegedly avoided duties by “knowingly misrepresenting … the country of origin of certain flat-rolled steel,” the DOJ said. In the U.S., companies must declare the country of origin and value of goods being imported to U.S. Customs and Border Protection (CBP).
Background on Steel Trade
U.S. steel companies have long complained that Canada has acted as a backdoor for cheaper, unfairly subsidized steel to enter the U.S. They, along with U.S. trade representatives, argue that Canada’s steel import regulations are too lax, allowing other countries to transship their steel through Canada and into the U.S.
Last year, U.S. President Donald Trump imposed 25 per cent tariffs on Canadian steel, later doubled to 50 per cent under Section 232 of the Fair Trade Act. These tariffs have affected all steel exports, including those compliant with the Canada-U.S.-Mexico Agreement, and have devastated domestic steel producers, many of whom relied on the U.S. for a major portion of their sales.
Impact on Canadian Steel Industry
Sault Ste. Marie, Ontario-based Algoma Inc., the only independently owned domestic mill in Canada, reported that the U.S. accounted for more than half of its revenues before the tariffs. It accepted a $400-million federal loan last year, and former chief executive Michael Garcia stated that the company could have faced insolvency without that support.
“Our border is the frontline of American industry. Approximately half of all U.S.-Canada land trade flows through our district,” said Jerome Gorgon Jr., U.S. attorney for the Eastern District of Michigan, where the case was filed, in a press release. “And we will continue to protect our businesses from foreign fraudsters.”
Jessani did not respond to emails, and a person who answered the phone at Royal Canadian Steel stated that he is currently on vacation outside of Canada. Royal Canadian Steel operates a processing plant in Brampton and has other facilities in China, Pakistan, and India, according to its LinkedIn page.
