Survivors from Yichun air crash transferred to other hospitals

45 injured survivors from the Yichun air crash have been transferred to major cities like Beijing and Harbin for better treatment. The other 9 survivors will stay in hospitals in Yichun as their injuries can be treated there.
On Saturday afternoon, a plane from China's Southern Airlines arrived at Beijing International Airport with 10 injured survivors.
The aircraft was altered to accommodate stretchers so patients could be more comfortable.
An injured passenger said, "Thank you, thank you. That's all I can say."
The 10 patients were taken to two hospitals in Beijing soon after landing. This is the fourth group of survivors that have been transferred to other provinces for better treatment. They suffer from fractures, burns and psychological trauma.
Guo Jinhe, Beijing Municipal Health Bureau, said, "We have appointed two hospitals who specialize in treating burns and fractures. We have prepared a lot."
In Harbin, capital of Heilongjiang Province, 32 injured survivors are receiving treatment in a major hospital. 15 of them are still in critical condition. Medical crews are trying their best to save their lives. Doctors say they have allocated a medical team to each of the survivors to provide them with comprehensive medical treatment and psychological therapy.

45 injured survivors from the Yichun air crash have been transferred to major cities like Beijing and Harbin for better treatment.

Thieves raid huge rhino horn haul in Mozambique

Mozambican officials are arrested on suspicion they aided the theft from a police storeroom.

Thieves raided a police storeroom holding Mozambique’s largest- ever haul of confiscated rhino horn and ivory, making off with 12 horns valued at about £700 000.

The 65 rhino horns and 340 tusks (170 elephants) were seized from the house of a Chinese citizen living in Maputo. Worth millions of rands on the black market, the cache was reportedly secured with just three padlocks.

A police spokesperson told the investigative journalism group Oxpecker that the horns had ­disappeared from the police headquarters in Maputo early last Friday morning and had not been recovered.

Four state officials guarding the store were arrested on suspicion of aiding the theft.

A further two suspects were arrested for producing bull horn replicas to switch with the stolen horns. The suspects were due in court in Maputo this week.

Rhinos are extinct in Mozambique. The horns probably came from South Africa, where a rhino-poaching crisis centred on the Kruger National Park has spiralled out of control in recent years.

Vulnerable gatewayGovernments across Africa have become increasingly hostile to the international crime gangs that operate the trade in ivory and rhino horn. In Mozambique the gangs have found a vulnerable gateway to the markets of China and Vietnam.

Peter Knight, the executive director of Wild Aid, said: “Mozambique has fenceless borders with the largest supply of rhino horn – Kruger National Park in South Africa. Powerful gangs, similar to Colombian drug cartels, can walk across the border, poach and then escape home with horn to safety as police are either bribed or intimidated.”

Sabri Zain, director of policy at the wildlife trade monitoring group Traffic, said the Mozambique government’s credibility had been damaged by the ­security breach.

“The reported disappearance of rhino horns from a police warehouse just days after they were seized is a serious cause for concern and puts Mozambique’s law enforcement actions firmly back into the limelight for all the wrong reasons,” he said.

Mozambique under scrutinyColman O’Criodain, a World Wide Fund for Nature (WWF) wildlife trade analyst, said the country was under scrutiny by the standing committee of the Convention on International Trade in Endangered species (Cites) for its failure to combat rhino and elephant poaching and this breach could lead to sanctions under the convention.

John Scanlon, the standing committee’s secretary general, said: “We are extremely concerned by news of the theft of 12 rhino horns from a police facility after a very successful seizure.” He said the organisation’s Maputo office would assist in the attempt to retrieve the stolen horns.

WWF’s Mozambique director, Anabela Rodrigues, said: “The Mozambican authorities must do everything in their power to recover the stolen horns before they are smuggled overseas and to arrest and prosecute all those involved – both the wildlife criminals and corrupt officials.”

David Higgins, head of Interpol’s environmental security unit, said “corruption, bribery, murder and fraud are at play across the entire illicit trade chain”.

“As can be expected, some countries are more advanced than others in their law enforcement response, which means criminals target the countries that have greater law enforcement vulnerabilities. Mozambique faces some challenges that it is working to address, but the international community also has a role to play in providing support to Mozambique to help them confront the challenges,” he said.

Mozambique’s President Filipe Nyusi used an address to a police anniversary celebration this week to lament police involvement with trafficking. “When policemen are caught in the gangs trafficking in rhinoceros horns, elephant tusks and ­various drugs, or facilitate these same crimes, I am unable to sleep,”” he said.

The founder of wildlife charity Born Free, Will Travers, called on Nyusi to personally intervene to stop police corruption.

He asked: “What is the point of carrying out enforcement in the field, tracking and intercepting wildlife crime and putting the lives of rangers and other officers at risk if ­confiscated high-value wildlife ­products can be so vulnerable to corruption and insecurity?”

In a separate incident this month, Kenyan airport authorities arrested a Vietnamese man carrying $82 000 worth of rhino horn between Mozambique and Hanoi when he was on a stopover in Nairobi.

Mozambique has lost half its elephant population to poaching in five years, the Wildlife Conservation Society said on Tuesday.

The Mozambique government was not available for comment. The Chinese embassy did not return calls asking for comment on the alleged involvement of Chinese citizens. – © Guardian News & Media.

Carly Fiorina Calls The Chinese Unimaginative Idea Thieves

The Huffington Post  |  By Lydia O'Connor

 

  05/26/2015

GOP presidential contender Carly Fiorina tells a reporter in a video that surfaced Tuesday that Americans shouldn't fear compe tition with China bcause its people lack creativity.

Fiorina, while speaking out against Common Core education standards with the Iowa politics blogger Caffeinated Thoughts in January, said the policy isn't the answer to concerns that American students are lagging behind China's.

“I’ve been doing business in China for decades, and I will tell you that yeah, the Chinese can take a test, but what they can’t do is innovate,” said Fiorina, a former Hewlett-Packard CEO. “They’re not terribly imaginative. They’re not entrepreneurial. They don’t innovate. That’s why they’re stealing our intellectual property.”

The video was mostly unnoticed until Tuesday, when Buzzfeed shared it, along with an excerpt from Fiorina's 2015 book, Rising to the Challenge: My Leadership Journey, in which she makes similar comments about the Chinese.

Proponents of Common Core argue that we must compete with the Chinese in subjects like math and science. I agree that we must compete, but we will not win by becoming more centralized and standardized in our education methods. Although the Chinese are a gifted people, innovation and entrepreneurship are not their strong suits. Their society, as well as their educational system, is too homogenized and controlled to encourage imagination and risk taking. Americans excel at such things , and we must continue to encourage them. A centralized bureaucracy in Washington shouldn’t be telling teachers how to teach or students how to learn. Our states have been described as “laboratories of democracy.” They are also laboratories of innovation.

China warned over 'insane' plans for new nuclear power plants

 
China Warned
 
China’s plans for a rapid expansion of nuclear power plants are “insane” because the country is not investing enough in safety controls, a leading Chinese scientist has warned.

Proposals to build plants inland, as China ends a moratorium on new generators imposed after the Fukushima disaster in March 2011, are particularly risky, the physicist He Zuoxiu said, because if there was an accident it could contaminate rivers that hundreds of millions of people rely on for water and taint groundwater supplies to vast swathes of important farmlands.

China halted the approval of new reactors in 2011 in order to review its safety standards, but gave the go-ahead in March for two units, part of an attempt to surpass Japan’s nuclear-generating capacity by 2020 and become the world’s biggest user of nuclear power a decade later.

Barack Obama recently announced plans to renew a nuclear cooperation deal with Beijing that would allow it to buy more US-designed reactors, and potentially pursue the technology to reprocess plutonium from spent fuel.

The government is keen to expand nuclear generation as part of a wider effort to reduce air pollution and greenhouse gas emissions, and cut dependence on imported oil and gas.

He, who worked on China’s nuclear weapons programme, said the planned rollout was going too fast to ensure it had the safety and monitoring expertise needed to avert an accident.

“There are currently two voices on nuclear energy in China. One prioritises safety while the other prioritises development,” He told the Guardian in an interview at the Chinese Academy of Sciences.

He spoke of risks including “corruption, poor management abilities and decision-making capabilities”. He said: “They want to build 58 (gigawatts of nuclear generating capacity) by 2020 and eventually 120 to 200. This is insane.”

He’s challenge to the nuclear plans is particularly powerful because of his scientific credentials and a long history of taking a pro-government stance on controversial issues, from the 1950s destruction of Beijing’s city walls to the crackdown in the 1990s on the religious group Falun Gong.

He would like to see China stop its expansion once the plants that have been approved or are now under construction are finished, and then gain a few decades experience of running them safely before expanding again. Almost all the country’s working reactors started up after 2000.

“China currently does not have enough experience to make sound judgments on whether there could be accidents,” he said. “The number of reactors and the amount of time they have been operating safely both matter.

“The safety reviews after Fukushima found some problems, but only minor ones, and the final conclusion is that China’s nuclear power is safe. But the safety checks were carried out under the old standards and the standards themselves clearly need big improvements.”

Chinese government officials argue that nuclear technology has improved since the Chernobyl and Three Mile Island accidents, He said, but that ignores the role human error and flawed safety regimes played in both cases.

The operator of Japan’s Fukushima plant has admitted that the company failed to take stronger disaster prevention measures ahead of the earthquake and tsunami, for fear of lawsuits and protests.

“Japan has better technology and better management, and yet it couldn’t avoid an accident despite the fact that it tried very hard to learn from the US and USSR,” He said, adding that China’s nuclear monitor has sparser staffing than Japan’s, and offers low salaries that will not attract the best young scientists.

China had considered and then rejected stronger standards, He said, because of the huge pressure for a rapid expansion and companies powerful enough to put corporate profits ahead of national security.

“There were internal discussions on upgrading standards in the past four years, but doing so would require a lot more investment which would affect the competitiveness and profitability of nuclear power,” He said. “Nuclear energy costs are cheap because we lower our standards.”

Rather than encouraging debate to expose weaknesses, the government tries to stamp it out, and in a country where challenging officials is risky, there is no mechanism to encourage or protect whistleblowers.

He said: “At the moment, the ministry of environmental protection is considering a new watchdog. When they invited me over for a discussion, I told them: ‘Your safety watchdog is not independent. It listens to the national nuclear corporation and hence the scrutiny is fake’.”

One of He’s biggest concerns is the proposal to meet the aggressive expansion plans by building nuclear plants inland. Three provinces have already chosen locations for plants and started preliminary work, and several more have been proposed.

China is short of water, and areas with enough water to cool a plant in daily operations or an emergency are densely populated. He said: “They say they could build the plants in deserts, but the problem is there isn’t any water in the deserts.”

If plants are built near cities and farmland, any accident would put millions of people at risk from immediate fallout and long-term contamination similar to theradioactive leaks at Fukushima.

“If they build plants in places with a lot of water, the consequences of a nuclear leakage would be extremely grave,” He said. “I wouldn’t oppose it if they can guarantee it is 100% safe, but no one can guarantee this.

“To be honest, as I’m already 88, it won’t affect me much whether or not nuclear plants are safe. But I am concerned about the welfare of our children and think we shouldn’t just evaluate the profitability of new projects.”

US urges end to island-building in South China Sea

Proposed Murray River mine to rely primarily on Chinese workers

 

Proposed Murray River mine to rely primarily on Chinese workers

WENDY STUECK

VANCOUVER — The Globe and Mail

Published Friday, Jan. 09 2015

If the proposed Murray River coal project goes ahead, more than half of its employees would be temporary foreign workers in 2018 – potentially the first year of operation – and it would take nearly a decade for all the hourly jobs at the project to be filled by Canadians.

HD Mining has previously discussed its plan to shift from a work force that is mostly foreign to one that is mostly domestic, saying in 2013 the mine would have a “full Canadian work force” after 10 years of production.

HD Mining projected employment figures

Comparing estimates for Canadian and overseas workers.

SOURCE: HD Mining

EXPLAINER

Everything you need to know about temporary foreign workers

But documents recently filed as part of an environmental-assessment process provide more detail about that transition, and an updated estimate of the cost to build the mine of $554.9-million, compared with a previous estimate of $300-million.

According to an executive summary, the number of temporary foreign workers at the project, for which preparatory work began in 2014, would peak in 2018 at 494 – 382 hourly and 112 management employees – out of a total of 764, or nearly 65 per cent. By 2027, plans call for zero hourly foreign workers and 20 managers out of a total of 764. Those levels are projected to stay the same for the rest of the mine’s life.

The environmental assessment is taking place nearly two years after HD Mining sent more than a dozen Chinese miners home in January, 2013, over uncertainty related to a high-profile court battle.

In 2012, two B.C. labour unions asked the Federal Court to overturn 201 labour-market opinions, or LMOs, that were issued to the company, arguing that it did not do enough to recruit Canadians. (Employers must obtain LMOs to hire temporary foreign workers.)

In 2013, a federal court judge dismissed the unions’ case, writing in his decision that “there is nothing on the record that establishes he [the person who approved the LMOs] was wrong in his assessment that sufficient efforts had been made to recruit Canadians, either when he made that assessment or in hindsight.”

That decision cleared the way for HD Mining to resume preparatory work and bring Chinese workers to Tumbler Ridge. The court proceedings also brought attention to the federal Temporary Foreign Worker Program, which has since been overhauled.

The Murray River project, 12.5-kilometres southwest of Tumbler Ridge, would be an underground operation producing metallurgical coal for steelmaking. The coal would be extracted by longwall mining, a method that is not used in Canada but is used elsewhere, including China.

Citing safety concerns, HD Mining said it needs foreign workers because of a shortage of trained and experienced longwall miners in Canada.

That irks the two B.C. unions.

“The whole town is basically unemployed,” Brian Cochrane, business manager with Local 115 of the International Union of Operating Engineers, said on Thursday. “So if any jobs are going to be available … you want to hold people’s feet to the fire and say, ‘Why aren’t we creating the appropriate actions so people from the local community are getting access to some of the employment?’”

Tumbler Ridge has been hit by a downturn in the coal sector, with mine closings affecting more than 1,000 jobs.

HD Mining said its project would employ hundreds of Canadians.

Currently, 48 workers from China and more than 50 Canadians are on the site, HD vice-president Jodie Shimkus said this week in an e-mail.

In addition, she said, more than 1,000 Canadians from about 200 companies have worked on the project to date, accounting for $100-million in spending “almost entirely in the community.”

A summary of concerns raised by government agencies says “social, economic and health issues” related to temporary foreign workers “need to be addressed.”

The company says it has invested $15-million in worker housing, will provide English-language training and “seek to sponsor community events that serve to bring TFWs together with current Tumbler Ridge residents.”

A public comment period for the assessment is open until Jan. 29.

Fortune Lost: The short, brutal and costly ride of China Investment Corp. in Canada

Peter Koven and Claudia Cattaneo | May 29, 2015

As May 19th, 2015 approached, China Investment Corp. was faced with a scenario that every pension or sovereign wealth fund dreads: whether to allow one of its key investments to live or die.

SouthGobi Resources Ltd. has become a sad story in Canada’s mining sector. The Vancouver-based company, which operates in Mongolia, is almost entirely out of cash. Its operations are deep in the red. Its CEO recently resigned. And a Mongolian court this year fined the company US$18.2 million in a very dubious tax-fraud case.

SouthGobi had a US$7.9 million interest payment coming due to China Investment Corp. (CIC) on the 19th that it was in no position to pay. State-owned CIC had two options, neither very attractive: call the loan and potentially force SouthGobi into creditor protection, or defer the payment and let the company stagger along for another couple of months trying to seek rescue funding. Not surprisingly, CIC chose the latter.

The mess at SouthGobi is just the latest misfortune among several significant bad calls CIC ended up making in its investments in Canada. Since beginning to stake major capital here six years ago, the corporation’s short experience in Canada is a story of lousy timing, costly miscalculations, and an investment strategy too vulnerable to the allure of speculative ventures talked up by sophisticated stock promoters — and not enough on conservative plays better able to withstand volatile commodity markets.

The Chinese sovereign wealth fund’s involvement with SouthGobi dates back to 2009, when it committed an impressive US$500 million to the company. That same year, it invested $1.7 billion in Teck Resources Ltd. Those deals, which were done shortly after the global financial crisis, when many companies were seeking capital, were the first signs that CIC was interested in Canadian resource companies.

Todd Korol for National PostPhil Hodge, CEO of oil junior Pine Cliff Energy Ltd., has in previous jobs travelled extensively to China and made connections with Chinese investment industry representatives.

And as it turns out, they were only the start of its Canadian buying binge.

“They liked the stability of the investment climate, they definitely were looking for more resource exposure, clearly that was a mandate, and the CIC energy (investment) group had just been formed,” said Phil Hodge, CEO of oil junior Pine Cliff Energy Ltd., who in previous jobs travelled extensively to China and made connections with Chinese investment industry representatives.

Beginning in 2010, CIC made four strategic investments in the oilsands worth about $1.9 billion in total: $500 million in the initial public offering of Athabasca Oil Corp., considered one of the most overpriced IPOs in Canadian history; $1.25 billion in a pair of deals with Penn West Petroleum Ltd., which has been rocked by an accounting scandal and other problems; US$150 million in Sunshine Oil Sands Ltd., a junior oilsands company that at one point had to halt development of its West Ells project because it ran out of money; and MEG Energy Corp., where CIC invested $100 million before the company went public.

MEG shares have plunged 45 per cent since the 2010 IPO. Remarkably, that makes it the fund’s best major oilsands investment over the period. The other transactions were poorly timed near the top of the market, and the companies that received the money are among the very poor performers in the oilpatch.

The investments have led to massive losses and much soul-searching at CIC. Today, the corporation’s big bets on Canadian resources, not counting Teck, are worth less than 20 cents on the dollar.

“In hindsight, it’s unfortunate that with Athabasca and MEG and Penn West and Sunshine, they had some of the poorest investment returns we have had in our sector,” Hodge said. “It’s unfortunate that those were the companies they chose to invest in.”

Doug Kanter/BloombergThe mess at SouthGobi Resources is just the latest misfortune among several significant bad calls China Investment Corp. ended up making in its investments in Canada.

But given the role that Canadians played in CIC’s adversities in this country, we have nothing to brag about, either. What started off as a promising match of interests — Chinese cash looking for resource exposure in a stable country, and Canadian resource companies looking for money to boost output — failed miserably to meet expectations.

“We are blessed with a magnificent resource base and many other attributes that put Canada on the world stage,” said John Zahary, who was CEO of Sunshine Oil Sands after the junior company secured money from CIC and other Chinese entities. But, he said, we “are not decisive enough, we are not fast-moving enough, we are not entrepreneurial enough — though we fancy ourselves as being all of these things.”

We are not decisive enough, we are not fast-moving enough, we are not entrepreneurial enough — though we fancy ourselves as being all of these things

CIC has not made significant investments in Canada for the last couple of years. At this point, that is unlikely to change. The executive team in the fund’s Toronto office has shifted to focusing on trying to manage its best with the hapless investments it already has, in the face of a weak commodity price environment and with limited ability to recover its money.

The humbling experience has made CIC much wiser about what it takes to make money in a country like Canada, such as improving local relationships and investing with more knowledgeable partners. It’s more aware that, in a market economy, it takes more than winning government investment approvals to succeed.

The bullish Canadian entrepreneurs who lured the CIC and its deep pools of Chinese-state capital, no doubt started with the best intentions, but suffered from setbacks typical of emerging companies, including overly optimistic views about the potential of their projects and the rude awakening of a broad global downturn in commodity prices.

CIC was established in late 2007, and immediately became one of the largest money pools in the world. The holding company had two big pieces: a US$200-billion sovereign wealth fund that invested some of China’s foreign reserves abroad, and a fund that held domestic assets, such as government stakes in the Bank of China and the China Development Bank (together, the two funds are worth about $600 billion today). CIC had a very capable CEO at its launch in Lou Jiwei, a former high-ranking executive in China’s State Council.

Jerome Favre/Bloomberg NewsCIC had a very capable CEO at its launch in Lou Jiwei, a former high-ranking executive in China’s State Council.

After launching the sovereign wealth fund, Jiwei and his team immediately started looking for strategic resource investments in overseas markets. The Chinese government of the day was focused on rapid economic expansion that fuelled demand for commodities, and it was keen to buy up stakes in natural resource interests wherever it could find them.

The tricky part would be finding secure places, as several markets were growing wary of Chinese influence. In less stable parts of the world, including certain African markets, the Chinese were increasingly worried about the security of their staff.

But the United States had suddenly become a major question mark after powerful American political opposition in 2005 had forced China’s state-controlled energy giant CNOOC Ltd. to drop an US$18.5-billion takeover bid for Unocal Corp.

The Australian government, meanwhile, had introduced a rule mandating that every investment by foreign state-owned enterprises would be reviewed before approval, no matter how small.

They lost the Unocal deal, Australia got tough, and they looked at Canada and felt: ‘These guys are friendly, let’s go there’

Canada, on the other hand, looked like it made perfect sense for CIC and other Chinese firms looking to expand globally. This was well before Ottawa would pass its own laws restricting Chinese investment, following CNOOC’s 2013 takeover of Nexen Inc., and Canada appeared much more open to investment in natural resources than other Western countries. Most importantly, Canada had a surplus of large energy and mining companies hungry for capital.

“They lost the Unocal deal, Australia got tough, and they looked at Canada and felt: ‘These guys are friendly, let’s go there,’ without spending enough time thinking about the actual business and what it would take,” said Hodge.

Unocal via Bloomberg NewsUnocal workers are pictured at a Unocal gas facility in Thailand in this undated company photo.

When CIC opened its first foreign office in 2011, it stunned many onlookers by choosing Toronto ahead of New York or London. It was read as a signal that the company was excited about Canada’s investment prospects.

In 2009 and 2010, Hodge helped introduce CIC to many oilpatch executives, including at Penn West. He said it was the Chinese that were aggressively pursuing deals in Canada, not the other way around.

When word got out that China’s sovereign wealth fund was targeting Canada, CIC was inundated by pitches from investment bankers and stock promoters eager to get a piece.

Ultimately, CIC would take few of these pitches too seriously. But its first big investment simply came out of a one-time opportunity that was plainly hard to resist.

Related

• China’s great energy pause could have big impact on global oil and gas
• Rocked by accounting scandal, Penn West has now turned the corner, CEO says
• Why China’s mood is souring on Canada’s oil patch

Teck Resources has long been a well-run mining major with a decades-long track record of success. But in the wake of the 2008 financial crisis, it had run into balance sheet problems and was on the hunt for a capital injection. CIC was happy to step up, making a $1.7 billion investment in the miner in 2009. The deal gave CIC a 17.5 per cent stake in Teck, and CEO Don Lindsay said it would provide his company with much greater knowledge of the Chinese market.

At first, the deal looked like a massive winner for CIC. It financed Teck at $17.21 a share, and the stock subsequently shot above $60. But plunging coal prices have since taken a brutal toll on Teck, which recently slashed its dividend and just this week announced it would shut down six of its Canadian mines for parts of the summer. The company’s stock now trades in the $15 range.

The firm’s next big move was the disastrous US$500-million investment in SouthGobi convertible debentures. According to a source close to the negotiations — who because of the eventual problems with the investment agreed to speak on condition of anonymity — the two sides found each other, with both firms very eager about the partnership.

SouthGobi was backed by Robert Friedland, arguably the world’s most famous mining promoter. But for the negotiations with CIC, SouthGobi called in another influential ally: former Canadian prime minister Jean Chrétien, who it had hired as a senior adviser. SouthGobi was pitching numerous Chinese firms for an investment at the time, including CIC, and the worldly Chrétien was proving to be an ideal ambassador.

THE CANADIAN PRESS/Chris YoungFormer Canadian prime minister Jean Chrétien was hired as a senior adviser by SouthGobi.

“(SouthGobi) would have these dinners where Chrétien would be wheeled out as a speaker,” the source said. “The generation of Chinese people at the time were fascinated to hear these anecdotes about the generation of leaders from 10, 15 years before.”

Much like Teck, SouthGobi was thrilled about a partnership with CIC, figuring it would provide closer links to the Chinese market. Indeed, CIC explicitly pledged to provide “advice and services” to SouthGobi as the miner tried to expand its sales of Mongolian coal to China.

In practice, that never really happened, according to the source. SouthGobi called on CIC numerous times as it tried to make headway with state-owned entities in China, and never felt it got much assistance. And while CIC had won the opportunity to nominate a director to SouthGobi’s board, it never bothered to exercise that right.

“Once the dollars were in the bank, there was no support,” the source said.

Once the dollars were in the bank, there was no support

The SouthGobi situation went off the rails in 2012, after Friedland agreed to sell a majority stake in the company to Aluminum Corp. of China Ltd. Mongolia, with its longstanding distrust of China, was furious to see one of its flagship mines slip into Beijing’s hands. SouthGobi soon found itself the target of a mysterious anti-corruption probe, and its business started to unravel. CIC may recover very little from the SouthGobi investment, apart from some prior interest payments.

Bill Andrew was the president and CEO of Penn West when the Chinese came calling in 2009. His company was trying to sell a big property in the Peace River region of the oilsands because it didn’t fit with its light oil focus.

CIC was just one of many groups that were knocking on Andrew’s door. The parade of interested buyers was so long that he recalls meeting several times a month with investors.

“The McMurray oilsands were booming at that time, and the dreamers among them saw an opportunity with the size of the asset,” said Andrew, who left Penn West in 2011 and is now running Long Run Exploration Ltd., a junior explorer.

Negotiations with CIC, which teamed up with PetroChina to act as its technical partner, took several months and many meetings in Beijing and Calgary. The Chinese visited the properties, although there was little activity happening there at the time.

They knew what they were doing, Andrew said. “Our engineering team went over there (to China), and they went into some of PetroChina’s operations in the interior of China, where they have been involved in heavy-oil production and steaming for decades,” he said. “I would say they were farther up the curve than we were on heavy oil. The Chinese technology on enhanced recovery is very, very good.”

In 2010, CIC paid $817 million for a 45 per cent interest in the Peace River project. The Chinese firm also agreed to pay $435 million for a five per cent interest in Penn West itself, hoping for a long-term relationship with the Canadian company.

Just four years later, however, Penn West would find itself in deep trouble, after the company admitted in 2014 that it had discovered senior finance and accounting personnel had misstated results. Things only got worse after the company grew strained with too much debt when oil prices collapsed that same year. Just this week, Penn West was able to strike a deal with creditors that would buy it more time, agreeing to sell assets to pay back bondholders. One of the assets on the block is the Peace River project. Today, the company’s entire market capitalization is worth barely more than the CIC’s original investment.

Handout/ Penn West EnergyOne of the Penn West assets on the block is the Peace River project.

While Andrew says he regrets that the deal didn’t live up to expectations, he maintains that the oilsands are a long-term game that will pay off over time.

But CIC’s investment in another oilsands play, Athabasca Oil’s IPO, would serve as another major letdown from a plan once so full of promise. CIC purchased $500 million of the company’s much-hyped $1.35-billion offering at $18 a share in 2010 — a deal that made a fortune for insiders including former chairman Bill Gallacher and former CEO Sveinung Svarte.

Athabasca’s stock is worth about $2 a share today. The company had a series of setbacks, including problems with oilsands partnerships with PetroChina.

CIC can claim at least one decent bet in Alberta’s oilsands: its investment in MEG Energy, the oilsands producer that has successfully developed several in-situ properties. Of course, like its peers, MEG has lately been heavily challenged by low oil prices. And CIC’s initial investment was, in any case, relatively small at $100 million. It has since been further reduced, although CIC hasn’t disclosed by how much.

These days, meetings at CIC’s offices over potential Canadian investments are far less frequent than they used to be.

Felix Chee, the former head of the Toronto office, stepped down in 2013 as major Canadian losses mounted, although he retains a seat on Teck’s board of directors. Chee was succeeded by Winston Wenyan Ma, a New York University-educated lawyer who relocated from Beijing. Ma is CIC’s only managing director outside of China.

Kevin Van Paassen/BloombergWinston Wenyan Ma, managing director and head of the North America Office for China Investment Corp., speaks during a panel discussion at the Bloomberg Canada Economic Summit in Toronto, Ontario, Canada, on Thursday, May 21, 2015.

The Canadian losses have contributed to CIC’s disappointing overall performance. From its 2007 launch to the end of 2013, the fund’s cumulative annualized return from its overseas portfolio was 5.7 per cent. That’s a far poorer record than the S&P 500’s, up 21 per cent over the same period (CIC’s 2014 performance numbers are not yet available).

Nor have all those bad bets gone unnoticed back in Beijing. In June 2014, China’s National Audit Office accused CIC of mismanagement. An audit found that there was dereliction of duty and inadequate due diligence in 12 investments made abroad between 2008 and 2013. It did not, however, identify the companies by name.

CIC has never commented publicly on its unpleasant Canadian investment experience. Perhaps the closest it has ever come was in its 2013 annual report, where the firm revealed that it overhauled its risk management strategy. CIC noted that it reinforced its “pre-investment risk identification” and closely scrutinized investments with “high concentration and underperforming strategies, sub-strategies and external managers.”

“As CIC embarks on steady growth, we will redouble our efforts to identify, monitor, evaluate and respond to investment and operational risks, and refine our risk management at all levels,” it added.

Certainly the oil downturn has been responsible for a lot of CIC’s lousy track record in Canada. But Hodge notes that the corporation had more than its share of bad luck. The companies it picked had some of the poorest investment returns in the sector.

They just didn’t choose the right management teams

“They just didn’t choose the right management teams,” he said. “If they had been invested in ARC (Resources Ltd.), or Vermilion (Energy Inc.), or Bonterra (Energy Corp.), they would have still suffered, because all the companies are down. But not nearly in the same degrees.”

At the same time, CIC did not get involved in the biggest and least volatile companies in the oilsands, such as Suncor Energy Inc. and Canadian Natural Resources Ltd. Of course, those firms didn’t need CIC’s money back in 2010, and perhaps they did not want the challenges associated with having a strategic Chinese investor.

“(CIC) doesn’t play in the market much. They want to have a direct connection to the company, and it takes two to tango,” said Joyce Lee, a partner at McCarthy Tetrault LLP who has worked on many deals between Chinese and Canadian companies.

To some degree, the poor performance was also partly self-inflicted by Chinese government policy. The country’s priorities changed under President Xi Jinping, who has favoured slower growth, more domestic consumption, and a reduced dependence on non-renewable resources. That change has contributed to globally weaker commodity prices, particularly oil.

SAUL LOEB/AFP/Getty ImagesChina’s priorities changed under President Xi Jinping, who has favoured slower growth, more domestic consumption, and a reduced dependence on non-renewable resources.

But Zahary, the former Sunshine Oil Sands CEO, said Canada bears some responsibility as well. He believes China’s poor performance reflects badly on the country’s investment market and other global investors are taking note.

The Chinese deployed their cash in Canada based on assumptions that this is a country that welcomes foreign investment and offers political and fiscal stability, added Zahary, who is now the president and CEO of Altex Energy Ltd.

In reality, what they found were unusually high costs, inefficient government decision-making, fierce activist opposition to new energy infrastructure, and a general ambivalence towards Chinese capital.

“The world is a big place and these are big (Chinese) companies and they can go to other locations,” Zahary said. “They haven’t given up on these assets, and they hope to reclaim their investment and make a good rate of return, but for the time being, they are not pounding lots of money into this until we get our act together.”