A new UN panel report says a shipment of armoured personnel carriers to Libya from a Canadian-owned company's Mideast facilities several years ago violated an international arms embargo – an incident that raises questions about how extensively Ottawa should be policing the defence and military trade conducted by its citizens abroad.

The March 2016 report, which flagged a transfer of armoured vehicles produced by Streit Group, a company first established in Ontario in the 1990s, was drawn up by experts monitoring global compliance with the United Nations Security Council arms embargo against Libya in place since 2011.

Streit is owned by Guerman Goutorov, a Canadian citizen who lives in the United Arab Emirates. His Canadian-based company is Streit Manufacturing in Innisfil, Ont.

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The UN panel's reporting on what it calls an "illicit transfer" of armoured personnel carriers comes amid a growing debate in Canada over the military and defence goods that Canadians sell to Mideast countries – including a $15-billion deal with Saudi Arabia – and increasing concern that Ottawa is not doing enough to monitor, control and shine a light on this flourishing business.

Libya has been engulfed in civil war since dictator Moammar Gadhafi lost power in 2011. The top U.S. general in Africa last month described Libya as a "failed state."

In 2012, when this Streit shipment took place, transfers of armoured personnel carriers to Libya required advance approval from the UN sanctions committee overseeing the embargo. But, the UN report says, the United Nations wasn't notified about this 2012 delivery before it occurred – meaning "the transfer occurred in violation of the arms embargo."

Asked for comment on the matter, Canada's Foreign Affairs Minister Stéphane Dion's office left it to public servants at the Department of Global Affairs to answer questions.

A spokeswoman said Ottawa is in no way responsible for arms shipments between two foreign countries – even if there is connection to Canada.

"This is ‎an export exclusively from the United Arab Emirates to Libya, which is outside of Canada's export-controls jurisdiction," Amy Mills, a spokeswoman for Global Affairs Canada said in a prepared statement. "There is no information to suggest otherwise."

Canadian diplomats in the UAE have nevertheless publicly supported Streit as a Canadian company. Claudio Ramirez, an economic and finance counsellor who works at the Canadian embassy in Abu Dhabi, made a point of announcing on Twitter in 2015 when "Canada's Streit Group" expanded a UAE factory. Canada's ambassador to the UAE, Arif Lalani, used the social-media platform in 2013 to speak supportively of this "Canadian company" whose armoured vehicles he said once protected him.

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Ken Epps with Project Ploughshares, an anti-war group in Waterloo, Ont., that tracks the arms trade, said Canada is shirking its responsibility over the overseas defence business activities of Canadians. He said an exception exists today where Canadians can take blueprints and technology abroad and sell to foreigners while avoiding scrutiny by Canada's arms-control regime.

"It is a loophole and one that Canada should close," Mr. Epps said.

He pointed out that laws and regulations enacted by the Canadian government set penalties for Canadian citizens, even "outside Canada," when it comes to contravening UN arms embargoes.

Asked about this, another Global Affairs spokesperson said the government was studying the UN panel report.

The limited responsibility Ottawa assumes for overseas military and security sales differs from a far more interventionist approach it takes in other foreign activities of Canadian businesspeople.

For instance, several years ago, the government introduced corporate ethics rules, enforced with the threat of withdrawal of trade-promotion services, that govern the conduct of Canadian mining and energy operations in foreign countries.

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"If you don't play ball by doing business the Canadian way, then we won't go to bat for you," was how former international trade minister Ed Fast explained it in 2014.

Canada also claims jurisdiction over the conduct of Canadians abroad when it comes to bribery of foreign officials; federal legislation carries the threat of fines and imprisonment.

The UAE paperwork accompanying the 2012 shipment lists four countries of origin for the 131 armoured vehicles it says were transferred to Libyans: Japan, the United States, the UAE and Canada. Not all vehicles were armoured personnel carriers – the item of interest to the UN expert panel. Some were armour-plated cars.

Streit officials could not be reached for comment. However, the company told the UN panel that it did nothing wrong and had received export approval from the UAE.

Streit told the UN experts that it "strenuously reject[s] any suggestion that Streit Group could knowingly or otherwise break national or international law." The company said its actions were in complete accord with UAE laws and regulations.

The UN panel said the end user for this 2012 shipment was listed as the "Libyan Ministry of the Interior." But the transfer occurred amid the ongoing political upheaval in Libya, as factions jostle for control of the government and a black market for diverted weapons flourishes. The panel said it tried to get more details on the customer from the United Arab Emirates government, which should have notified the UN about the shipment in the first place, but, it said, "no response was received."

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The United Nations is having serious difficulty enforcing the arms embargo against Libya as it tries to ensure the UN-backed "government of national accord" succeeds in the face of challenges including Islamic State militants, the expert panel report said.

"Continuous violations … are having a negative impact on the security situation in Libya and its political transition: better-equipped armed actors may be less inclined to agree to ceasefires or to accept the authority of the future government of national accord and its security arrangements."

Since 2011, UN embargo rules have been relaxed so that a category of shipments to Libya that includes armoured personnel carriers no longer requires approval from sanctions officials. The experts monitoring Libya pointedly disagrees with this, saying these vehicles "significantly increase the military capability of armed groups."

In 2015, Streit incurred millions of dollars in penalties from the U.S. government for exporting armoured vehicles without obtaining proper approvals several years ago.

In September of 2015, the government agency responsible for enforcing American export controls announced it had imposed a $3.5-million fine on Streit Group affiliated companies and two corporate officers for completing at least nine unlicensed transfers, or sales, of U.S.-made armoured vehicles to foreign countries between 2008 and 2009. Of this penalty, $1.5-million was suspended.

Assistant Secretary of Commerce for Export Enforcement, David W. Mills, said in a statement on the September, 2015 announcement that it "highlights the fact that both exporters and foreign re-exporters face consequences if they do not comply with U.S. export-control regulations."