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Federal Politics

Federal Government Blocks Aecon Sale to Chinese Company

Move prevents involvement in Site C dam and bidding on billions in Canadian infrastructure spending.

Andrew Nikiforuk 24 May

Andrew Nikiforuk is an award-winning journalist who has been writing about the energy industry for two decades and is a contributing editor to The Tyee. Find his previous stories here.

In an unusual move, the Trudeau cabinet has rejected the sale of Canada’s third largest construction company to a notorious Chinese state-owned enterprise for “national security” reasons.

That means the China Communications Construction Company International Holding (CCCI), one of the largest companies owned by the Chinese Communist Party, will no longer be involved in building the controversial Site C dam.

Last year CCCI offered to buy out Aecon for $1.5 billion.

Shortly afterwards Aecon secured a $1.2-billion contract as part of a group of three companies to build the spillway and generating station for Site C, a venture now over budget and over schedule.

In a prepared statement released on May 23, Navdeep Bains, minister of innovation, science and economic development, said the government’s national security agencies had reviewed the proposed sale of the Aecon Group to CCCI and recommended it not be approved.

The purchase of Aecon would not only have made CCCI a major player in the Site C dam, but given the state-owned enterprise a chance to bid on an expected $185 billion in infrastructure projects planned by Canadian governments over the next decade.

Elizabeth May, Canada’s sole Green Party MP representing Saanich-Gulf Islands, welcomed the blockage of the sale.

"As the first MP to raise the Aecon sale in Parliament, I am very relieved it has been rejected. Premier Horgan now has more freedom of action to increase regulatory measures for Site C to ensure worker safety and restrict the inevitable, and to me, unacceptable, environmental damage," she said.

The CCCI has a history of corruption and workplace safety issues in projects around the world.

In 2009 the World Bank barred the company from bidding on its projects for seven years due to fraudulent practices in the Philippines.

Last year Canada’s biggest construction firms pointed to those issues as well as national security concerns as they quietly lobbied the federal government to reject the takeover.

The last time the federal government blocked a foreign corporate takeover was in 2010 when mining giant BHP Billiton put up $39 billion for the Potash Company of Saskatchewan Inc., which mines a highly strategic resource essential for agriculture.

Analysts suggest that the Trudeau government only rejected the CCCI deal to appease the combative and erratic Trump administration, which might have viewed the Aecon sale to China as a threat to NAFTA.

In the U.S., both Congress and the Committee on Foreign Investment in the United States have been tightening their scrutiny of Chinese companies interested in buying American firms.

In contrast the Trudeau government has been actively courting the authoritarian regime of Xi Jinping, who recently was successful in removing term limits to his presidential office.

Last year the Liberal government allowed Chinese investors to buy out Vancouver’s Norsat International, which makes hi-tech satellite technology, without a national security review.

Nor did the Liberal government object to the takeover of Montreal-based ITF Technologies, which specializes in making sensitive military laser technology.

Lu Shaye, China’s ambassador to Canada, has said it is “immoral” to criticize the takeover of Canadian firms by Chinese state-owned enterprises because the critics are attempting “to weaken the competitiveness of Chinese enterprises by defamation.”

“While we are disappointed with the government’s decision, Aecon is and will continue to be a leading player in the Canadian construction and infrastructure market,” said John M. Beck, president and chief executive officer, Aecon Group Inc.  [Tyee]

Read more: Federal Politics

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