Former CSIS director says Chinese takeover of Aecon would threaten national security

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The former director of the Canadian Security Intelligence Service (CSIS) has warned that the proposed Chinese state-controlled business’s acquisition of Aecon Group Inc. would threaten Canada’s national security.

Ward Elcock was quoted by the Financial Post as saying that it would be extremely hard for Ottawa to draw specific parameters around the $1.5-billion Aecon deal that would both act as a fail-safe against national security threats while also allowing the company to operate in Canada’s free market system.

“In that context it seems to me that it’s very difficult for the government to approve the Aecon acquisition without incurring significant risk to national security,” he was quoted as saying, also that a Canadian government decision to reject the deal would spur a “sharp reaction” from China..

Elcock said it would “certainly not be my recommendation” to allow the deal to move ahead, and pushed back against the notion that Canada could effectively monitor the proposed Chinese buyer of Aecon through intelligent policy restrictions that effectively limit its powers.

“It will not make them anything other than an opaque entity operated entirely in accordance with the goals of the state of China,” he said.

The financial publication quoted experts as saying Chinese state-owned enterprises (SOEs) function directly as an arm of the Communist Party of China in its broader geopolitical manoeuvring, and that those enterprises are compelled to act on behalf of the state if asked.

Aecon has rejected fears around the proposed takeover by China Communications Construction Co. (CCCC), saying Canada’s construction sector is already inundated with foreign conglomerates from Europe, the U.S., South Korea and elsewhere.

The federal cabinet subjected the deal to a full national security review in February.

Elcock also said  if the deal is rejected, China might respond potentially through soft moves like restricting Chinese residents from visiting Canada, in turn damaging its China-dependent tourism industry.

“Other experts warn that it would lead to a broader pullback of Chinese capital investment into the country, or that it could sour Canada-China free trade talks, which have yet to begin in earnest,” the Financial Post reported.

Elcock was speaking on April 25 at a panel discussion hosted by Ottawa-based think-tank Macdonald-Laurier Institute (MLI).

Duanjie Chen, a senior fellow at the MLI who has closely studied past Chinese takeovers, warned that China has “created monsters” over recent decades in the form of SOEs with the explicit intention of expanding its reach into developed countries through acquisitions.

“It’s not aiming at profit but market share — particularly in developed countries,” she said.

 

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