Conservatives call for national-security review of Aecon sale to Chinese company

Conservatives call for national-security

 review of Aecon sale to Chinese company

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Aecon Group construction employees are seen working on the John Hart Generating Station project in Campbell River, B.C.

OTTAWA

PUBLISHED FEBRUARY 7, 2018UPDATED FEBRUARY 7, 2018

The Conservative Party is calling for a formal national-security review of the $1.5-billion sale of Canadian infrastructure firm Aecon to a Chinese government-owned construction giant.

Federal Innovation Minister Navdeep Bains, whose department is overseeing an Investment Canada "net-benefit test" of the takeover, faced a series of questions about the contentious transaction in the House of Commons on Wednesday.

"The Chinese company poised to take over Canadian construction giant Aecon is rampant with corruption and has just been blacklisted by Bangladesh for that very reason," Conservative MP Tony Clement told the House. "We know Aecon has been awarded numerous sensitive Canadian government contracts, including working with our military and in the nuclear sector. When Bangladesh is sounding alarm bells, why is Canada staying silent and not calling for a full national-security review of the takeover of Aecon?"

Mr. Bains would not say whether the Aecon takeover by China Communications Construction Co. (CCCC), which is 63 per cent owned by China's one-party state, would be subjected to an in-depth national-security review.

Instead, he told MPs that all foreign takeovers face a national-security review when, in fact, most of them only go through preliminary security screening.

"All such transactions are subject to a national-security review," Mr. Bains said. "We have been very clear when it comes to national security that we will never compromise on that. We will do our due diligence, we will follow the process, and we will make sure that the outcome will benefit all Canadians."

Investment Canada data show that more than 700 foreign takeovers underwent a routine security screening in 2016-17. But, the data show, only five underwent a full-scale review. Four were ordered by the cabinet and one was the result of a Federal Court of Canada order.

The more far-reaching probe by Canadian security agencies analyses the potential impact of the investment on defence, technology and critical infrastructure.

Canada's construction industry wants Ottawa to block the sale on national-security grounds, citing Aecon's involvement in nuclear energy, pipelines, transit and hydroelectric projects such as the massive Site C dam in British Columbia.

Wesley Wark, a national-security expert at the University of Ottawa, said the Aecon sale should be a prime candidate for an official national-security review, given that the company answers to China's political leaders and that Chinese Communist Party officials are embedded in the management team.

"It is difficult to imagine a bigger negative impact to the security of Canada's critical infrastructure than to have a Chinese state-owned enterprise, close to the Beijing government, deeply embedded in both military and civilian critical infrastructure," he wrote in a Wednesday column in The Globe and Mail. "The Aecon takeover would also fatally undermine Canada-U.S. co-operation on critical infrastructure protection."

CCCC and its subsidiaries have a long track record involving allegations of corruption and bribery on infrastructure projects in the developing world.

Last month, Bangladesh barred a CCCC subsidiary – China Harbour Engineering Company – from government contracts after officials in Dhaka discovered it had allegedly offered bribes to its officials.

Conservative MP Glen Motz told the House that CCCC should not be allowed to buy Canada's third-largest construction company unless the transaction has been thoroughly vetted by federal security agencies.

"The list of reasons to stop the Communist China takeover of Aecon continues to grow. The state-controlled company has been connected to bribery, corruption and collusion in many countries," he said.

The Aecon sale is backed by Canadian construction unions, largely because company CEO John Beck has developed a bond of trust with the trade unions and promised to maintain collective bargaining.

Robert Blakely, Canadian operating officer for Canada's Building Trades Union, said his organization also supports the deal because Aecon will have access to Chinese capital, enabling it to become more competitive.

The union leader said he was unaware that China has ordered CCCC to include Communist Party officials in its management. He acknowledged, though, that he has concerns about corruption allegations that have followed the Chinese state firm.

"Is it unsavoury? Yes. Is it the standard of business to which we would like people to adhere? I think the answer to that is of course we would like business to be relatively pristine," he said in an interview.

Chris McNally, the chair of the Canadian Construction Association, told The Globe that Aecon would be able to underprice domestic rivals on infrastructure projects in Canada if the takeover is approved by Ottawa. That's because state-owned firms have easy access to Chinese government money and do not have to pay market rates for loans, he said.