Remember The Air Canada Fire Sale? How Soon We Forget!

Prime Time Crime

(Published in the La Presse Nov. 11, 2003 translated from the original French) CSIS and the RCMP have already investigated the family of the Air Canada saviour by André Noël Victor Li, the Chinese-Canadian businessman who wants to take control of much of Air Canada, has a family name that is well known to investigators in the Canadian Security and Information Service (CSIS) and the RCMP, who were very interested in his father, Li Ka-shing, in the late 1990s. Li Ka-shing was the focus of a special joint CSIS and RCMP probe, called Project Sidewinder. The report, called "Chinese Intelligence Services and Triads Financial Links in Canada," which was not widely distributed here, shows that Li Ka-shing is closely associated with the Chinese government. "The companies belonging to Mr. Li (one of the 10 richest men in the world) are not simply businesses that performed better than our own companies in a particular sector," explained one of the main authors of the report, Michel Juneau-Katsuya, during an interview yesterday. For years, Mr. Juneau-Katsuya headed the strategic investigation office for CSIS in the Asia-Pacific area. He retired in 2000 and now directs an international intelligence organization, the Northgate Group, in Ottawa.  "No American company has links with the political centres in Washington that are as close as the ones the Li family has with Beijing," he said.  "At the time of the investigations, Mr. Li was increasing his holdings in Canada. This raised a national security issue: to what extent can foreign companies be allowed to own important economic entities in Canada?" In addition to being a Chinese citizen, Victor Li, Li Ka-shing¹s son, has become a Canadian citizen, which permits him to acquire 31% of Air Canada¹s shares and to appoint five of the 11 members to Air Canada¹s board of directors. Victor Li, 39 years old, comes regularly to Canada, but lives in Hong Kong, like his father. Seven years ago, according to information that has never been confirmed, Li Ka-shing apparently handed over $125 million to men who kidnapped his son, Victor Li, in Hong Kong. According to reports, Mr. Ka-shing asked then Chinese President Jiang Zemin for assistance directly (when Hong Kong was still separate from China). CSIS and the RCMP set up the Sidewinder project in the late 1990s when they noted that a number of Triads members (Chinese criminal groups established in Hong Kong) were taking advantage of the immigrant investor program, launched by the Mulroney government in 1987, to obtain Canadian citizenship. Investigators did not confirm that there were ties between the Triads and Li Ka-shing. But in the course of investigation, they were surprised by the extent of his investments in Canada. They were also interested in his generous contributions to the election funds of the main Canadian political parties -  more than $100,000 in 1996 - through his wholly owned or partially owned companies, such as banks and the Husky Energy oil company. However, the Li conglomerate and the Chinese government are almost partners now, ever since the meeting between Li Ka-shing and the regime¹s former number one, Deng Xiaoping, to pave the way for reuniting Hong Kong with China in 1997, according to Mr. Juneau-Katsuya. While the RCMP was concerned about infiltration by the triads, CSIS investigators worried about the clandestine influence of the Chinese government in Canada, through companies like those owned by Mr. Li. "The massive influx of Chinese investors related to the Triads or the new associates of Beijing is a recent challenge for Canada¹s national security," said the report, drafted in 1997. "The proven method used by the Chinese is to buy a Canadian company to obtain a local identity, subtly camouflaging their foreign identity. Then the Chinese-Canadian company invests in or buys other companies, but always calls itself a Canadian company. In actual fact, control is still exercised from Hong Kong or Beijing."  The report cited some curious events, such as the seizure of a container filled with 2,000 AK-47 machine guns and other military weapons from a warehouse in California. The weapons had been manufactured by joint subsidiaries of the Chinese government and the Li Ka-shing conglomerate. One of these subsidiaries, Poly Technologies, was run by Deng Xiaoping¹s son-in-law and was associated with the People¹s Liberation Army of China. "The final destination of these weapons was never determined, but US officials suspect that they were intended for native Warriors (living in the Mohawk Akwesasne reserve on the border between New York State, Ontario and Quebec) and private American militia groups," said the report. It was the largest illegal weapons seizure ever in the US.  According to Mr. Juneau-Katsuya, US authorities were watching Sidewinder with a great deal of interest. At that time, FBI, and then the US Senate, were looking into the financing of the Democratic Party by Chinese companies associated with the Beijing government ­ the infamous "Chinagate." The Sidewinder group had recommended continuing with the investigation, said Mr. Juneau-Katsuya. The RCMP was very interested, "but CSIS officials were afraid of the controversy," he said yesterday. He believes CSIS destroyed the report and all the documents used for writing it.