[加拿大新聞] Ottawa blocks Chinese takeover of Aecon over national security concerns

Quest

The federal cabinet has invoked a national security threat to turn down the proposed $1.5-billion takeover of Canadian construction giant Aecon Group Inc. by a Chinese state-owned enterprise, sources say.

The sale of Toronto-based Aecon to China Communications Construction Co. Ltd. (CCCC) was opposed by Canadian construction rivals and by two former directors of the Canadian Security Intelligence Service.

Sources with knowledge of the cabinet decision said the government accepted the findings of a national security review that determined the takeover was not in the country’s national security interest.

Cabinet ordered a full national security review of the takeover bid earlier this year under section 23.5 of the Investment Canada Act, a measure invoked when the federal government believes an investment could be “injurious to national security.”

Aecon, led by chief executive officer John Beck, has downplayed concerns that have been raised about its involvement in critical infrastructure projects, such as nuclear facilities – contracts that would pass on to CCCC if the transaction was approved by Ottawa.

Two former CSIS directors, Ward Elcock and Richard Fadden, recently voiced their concerns about the takeover as not being in Canada’s strategic interest.

“Allowing a Chinese state-owned company which is controlled by the state of China and does what the state of China tells it is not something we necessarily want to encourage,” Mr. Elcock said. “They represent the Chinese government on everything they do.”

Mr. Fadden said: “There is a significant question about whether we should tolerate Chinese state-owned companies which are essentially under the thumb of the Chinese government, that we should tolerate Chinese companies buying into the Canadian market.”

Several of Aecon’s largest competitors asked Ottawa to block the takeover on the grounds that CCCC – which is one of the world’s largest infrastructure companies – had a poor track record when it comes to safety and corruption, and that a state-controlled Chinese entity is not suited to work on projects with security concerns.

Aecon was put up for sale last August and struck a deal to be acquired by CCCC for $1.5-billion in October. The Fortune 500 giant is China’s second-largest engineering construction firm and owned 63 per cent by the one-party state.