Spy agency warns of security risks as government reviews Nexen takeover
By Jason Fekete
OTTAWA — As the Harper government reviews a proposed takeover of a Calgary-based energy company by a state-owned Chinese oil giant, Canada’s spy agency is warning such acquisitions can pose a threat to national security.
The shareholders of petroleum producer Nexen overwhelmingly approved Thursday the $15.1-billion US foreign takeover of the company by the China National Offshore Oil Corporation (CNOOC). The proposed takeover— and the political environment for future foreign acquisitions — now rests in the hands of a Conservative government conflicted on the issue.
The vote by Nexen shareholders came the same day the Canadian Security Intelligence Service warned in its latest annual report that some state-owned foreign companies are pursuing “opaque agendas” in Canada and that attempts to acquire control over strategic sectors of the Canadian economy pose a threat to national security.
The CSIS report does not identify specific state-owned companies or associated countries, but highlights several potential security threats from foreign investment in Canada.
“While the vast majority of foreign investment in Canada is carried out in an open and transparent manner, certain state-owned enterprises (SOEs) and private firms with close ties to their home governments have pursued opaque agendas or received clandestine intelligence support for their pursuits here,” CSIS says in its annual report, tabled Thursday in Parliament.
“When foreign companies with ties to foreign intelligence agencies or hostile governments seek to acquire control over strategic sectors of the Canadian economy, it can represent a threat to Canadian security interests. The foreign entities might well exploit that control in an effort to facilitate illegal transfers of technology or to engage in other espionage and other foreign interference activities,” the report adds.
“CSIS expects that national security concerns related to foreign investment in Canada will continue to materialize, owing to the increasingly prominent role that SOEs are playing in the economic strategies of some foreign governments.”
The CSIS report also highlights that knowledge is power in today’s global economy, especially in areas of science and technology, meaning Canada is a prime target for economic espionage.
With that in mind, many countries are going to great lengths to find an advantage, the report says, which has led to “a noticeable increase in clandestine attempts” to gain unauthorized access to proprietary information or technology.
“As a world leader in communications, biotechnology, mineral and energy extraction, aerospace and other areas, Canada remains an attractive target for economic espionage. Several countries engage in economic espionage against Canada to acquire expertise, dual-use technology and other relevant information related to those and other sectors,” the report adds.
“It’s important to note that those who commit economic espionage are not just interested in domestic Canadian interests and resources. Canada’s commercial interests abroad are similarly vulnerable. The implications of economic espionage on Canada can be measured in lost jobs, in lost tax revenues and in an overall diminished competitive advantage.”
The CSIS warnings pose yet another challenge for a Conservative government examining CNOOC’s proposed takeover of Nexen under the Investment Canada Act and whether the deal is of “net benefit” to Canada.
Under the act, the government’s review will consider a number of factors, including whether CNOOC, as for all state-owned enterprises, adheres to Canadian standards of corporate governance as well as how and the extent to which the non-Canadian company is owned or controlled by a state.
The deal, which would give China a controlling interest in a major oilsands project, is a critical test of the Harper government’s warming political and economic relations with the superpower, including Tory promises to expand Canada’s energy export markets to China.
The takeover bid is sparking heated debate, including within the Conservative cabinet and caucus, about how much foreign investment Canada should allow when it comes to strategic natural resources such as oil and gas.
Calgary Conservative MP Rob Anders, an outspoken critic of China’s human rights record, said Thursday the Chinese “don’t play fair, they don’t believe in fair trade.”
He believes most Canadians oppose the deal and “have serious objections with China’s human rights abuses and frankly even their record on trade.”
With Nexen shareholders blessing the takeover, the pressure immediately ratcheted up Thursday on a government that must make a decision on the deal by mid-November.
The official Opposition is questioning whether the Harper government will simply let foreign countries “nationalize our resources.”
NDP Leader Tom Mulcair reiterated his party’s demand for open public hearings on the Nexen takeover, saying his party has “grave concerns” about the deal.
“We’re very concerned about the potential sale of a strategic Canadian asset, not only to a foreign enterprise but one that is wholly controlled by a foreign government that doesn’t follow the same market rules as Canada,” Mulcair told reporters.
Mike Lake, parliamentary secretary to Industry Minister Christian Paradis, maintained Thursday that Canada’s investment review process is sound.
“Our government has a clear track record of encouraging economic growth, job creation and prosperity in Canada. The minister will take the time required to carefully examine the proposed acquisition to determine whether it is in the best interest of Canadians,” Lake said.
jfekete(at)postmedia.com
Twitter.com/jasonfekete
The shareholders of petroleum producer Nexen overwhelmingly approved Thursday the $15.1-billion US foreign takeover of the company by the China National Offshore Oil Corporation (CNOOC). The proposed takeover— and the political environment for future foreign acquisitions — now rests in the hands of a Conservative government conflicted on the issue.
The vote by Nexen shareholders came the same day the Canadian Security Intelligence Service warned in its latest annual report that some state-owned foreign companies are pursuing “opaque agendas” in Canada and that attempts to acquire control over strategic sectors of the Canadian economy pose a threat to national security.
The CSIS report does not identify specific state-owned companies or associated countries, but highlights several potential security threats from foreign investment in Canada.
“While the vast majority of foreign investment in Canada is carried out in an open and transparent manner, certain state-owned enterprises (SOEs) and private firms with close ties to their home governments have pursued opaque agendas or received clandestine intelligence support for their pursuits here,” CSIS says in its annual report, tabled Thursday in Parliament.
“When foreign companies with ties to foreign intelligence agencies or hostile governments seek to acquire control over strategic sectors of the Canadian economy, it can represent a threat to Canadian security interests. The foreign entities might well exploit that control in an effort to facilitate illegal transfers of technology or to engage in other espionage and other foreign interference activities,” the report adds.
“CSIS expects that national security concerns related to foreign investment in Canada will continue to materialize, owing to the increasingly prominent role that SOEs are playing in the economic strategies of some foreign governments.”
The CSIS report also highlights that knowledge is power in today’s global economy, especially in areas of science and technology, meaning Canada is a prime target for economic espionage.
With that in mind, many countries are going to great lengths to find an advantage, the report says, which has led to “a noticeable increase in clandestine attempts” to gain unauthorized access to proprietary information or technology.
“As a world leader in communications, biotechnology, mineral and energy extraction, aerospace and other areas, Canada remains an attractive target for economic espionage. Several countries engage in economic espionage against Canada to acquire expertise, dual-use technology and other relevant information related to those and other sectors,” the report adds.
“It’s important to note that those who commit economic espionage are not just interested in domestic Canadian interests and resources. Canada’s commercial interests abroad are similarly vulnerable. The implications of economic espionage on Canada can be measured in lost jobs, in lost tax revenues and in an overall diminished competitive advantage.”
The CSIS warnings pose yet another challenge for a Conservative government examining CNOOC’s proposed takeover of Nexen under the Investment Canada Act and whether the deal is of “net benefit” to Canada.
Under the act, the government’s review will consider a number of factors, including whether CNOOC, as for all state-owned enterprises, adheres to Canadian standards of corporate governance as well as how and the extent to which the non-Canadian company is owned or controlled by a state.
The deal, which would give China a controlling interest in a major oilsands project, is a critical test of the Harper government’s warming political and economic relations with the superpower, including Tory promises to expand Canada’s energy export markets to China.
The takeover bid is sparking heated debate, including within the Conservative cabinet and caucus, about how much foreign investment Canada should allow when it comes to strategic natural resources such as oil and gas.
Calgary Conservative MP Rob Anders, an outspoken critic of China’s human rights record, said Thursday the Chinese “don’t play fair, they don’t believe in fair trade.”
He believes most Canadians oppose the deal and “have serious objections with China’s human rights abuses and frankly even their record on trade.”
With Nexen shareholders blessing the takeover, the pressure immediately ratcheted up Thursday on a government that must make a decision on the deal by mid-November.
The official Opposition is questioning whether the Harper government will simply let foreign countries “nationalize our resources.”
NDP Leader Tom Mulcair reiterated his party’s demand for open public hearings on the Nexen takeover, saying his party has “grave concerns” about the deal.
“We’re very concerned about the potential sale of a strategic Canadian asset, not only to a foreign enterprise but one that is wholly controlled by a foreign government that doesn’t follow the same market rules as Canada,” Mulcair told reporters.
Mike Lake, parliamentary secretary to Industry Minister Christian Paradis, maintained Thursday that Canada’s investment review process is sound.
“Our government has a clear track record of encouraging economic growth, job creation and prosperity in Canada. The minister will take the time required to carefully examine the proposed acquisition to determine whether it is in the best interest of Canadians,” Lake said.
jfekete(at)postmedia.com
Twitter.com/jasonfekete
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