Canada Rejects China’s Aecon Corp Takeover, China is Angry

This plays out exactly the same in many countries, so one should not be at all surprised. A Chinese company wants to buy a foreign company, the foreign government blocks the sale, Chinese Government gets upset, calls the blocking racially motivated and implements trade sanctions on the foreign country. There are many cases in many different countries that I see this as one from China’s economic trade playbook.

And so it is with Aecon, Canada’s largest infrastructure binding company. A Canadian competitor offered to buy Aecon for $20/share, and China’s China Communications Construction Co. Ltd. (CCCC) bid $20.37. Aecon is currently selling at $14.61/share. At 60,223,203 shares that is $22,282,585 over the Canadian competition. Due to national security concerns the Aecon sale was blocked yesterday. As usual China was outraged and threatened retaliation. Yet again, this pattern is from the CCP playbook.

China Communications Construction Co. Ltd. (CCCC):

  • was disbarred by the World Bank until 2017 for fraud and collusion in bidding in the Philippines. CCCC cannot bid for any World Bank projects within this timeframe.

    Washington, July 29, 2011−The World Bank today announced the debarment of China Communications Construction Company (CCCC) Limited, and all its subsidiaries, for fraudulent practices under Phase 1 of the Philippines National Roads Improvement and Management Project. Under the sanction, CCCC is ineligible to engage in any road and bridge projects financed by the World Bank Group until January 12, 2017.

    “A debarred company cannot be engaged in World Bank-financed projects until it is released off the debarment list,” a World Bank spokeswoman told MLex.

    The World Bank’s website indicates that CCCC was debarred from Jan. 12, 2009 to Jan. 11 2017, for fraudulent practices — specifically, misrepresenting facts to influence procurement or contracts, including anticompetitive collusion in pricing. Initially, the World Bank had debarred CCCC subsidiary China Road & Bridge Corp over an infrastructure project in the Philippines, but the eight-year ban extends to CCCC and all the companies it controls, the bank said. source

    CCCC is blacklisted by the World Bank, the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, the European Bank for Reconstruction and Development, and it’s on at least two blacklists in the US because of its Iran-Armenia railway project. The company is set to remain on the World Bank’s blacklist until 12 January, 2017: in the meantime, it is ineligible to engage in any road or bridge projects financed by the World Bank Group. source

  • CCCC is 63% owned by the Chinese Communist party

    The Fortune 500 giant is China’s second-largest engineering construction firm and is owned 63 per cent by the one-party state.

  • CCCC subsidiary blacklisted for trying to bribe a Bangladesh secretary
  • CCCC helped China assert sovereignty by building artificial islands in the disputed South China Sea.
  • Blacklisted Chinese bridge building company has history of backhander deals: Mentions shady dealings in Malta, Tanzania, Kenya

Aecon in Canada has construction contracts for

  • nuclear power plants

    Spanning five decades and more than 400 nuclear energy projects, Aecon Nuclear’s portfolio of building, refurbishing, maintaining and decommissioning nuclear power facilities reflects a record of project success that ranges from small but essential maintenance contracts to major construction endeavours. Aecon supports clients…based on the nuclear industry’s fundamental principles of safety, reliability, quality and predictable performance.

    Aecon is a partner in the the $2.7-billion refurbishment of Ontario’s Darlington Nuclear Generating Station, is building the massive Site C hydroelectric dam in B.C., and until recently was bidding with a team to construct and operate the $4.8-billion Gordie Howe International Bridge connecting Windsor and Detroit. The Trudeau government said it could not allow Aecon to bid on that project because of U.S. objections over the proposed Chinese takeover. source

  • Aecon built the CN Tower
  • Aecon Utilities, Nuclear, Cogeneration, District Heating / Cooling Networks, Electrical Distribution, Fabrication and Module Assembly, Hydroelectricity, Mining, Natural Gas, Natural Gas Distribution, Oil and Gas, Renewable Energy, Urban Infrastructure, Telecommunications, or so they say on their web site
  • 30% of BC’s Site C dam infrastructure

    “CCCC’s poor safety record, weak labour standards and environmental track record should be enough to persuade Premier John Horgan to reverse his ill-advised approval of Site C,” she said. source

      All of Aecon’s areas of expertise seem to have potential national security issues. It is not rocket science to see that the lack of approval to a CCP company was widespread. These are but a few irrefutable national security issues. Canada would not want the CCP to have any control of this infrastructure.

      There are other issues such as CCCC’s poor record in safety and corruption, the possibility of having a huge influx of cheap Chinese workers, the transfer of construction plans back to China, etc. While these are as yet unsubstantiated, they cannot be outright dismissed. CCCC is also 63% owned by the Chinese Government. Even if this were not the case, all large companies in China have CCP members on their Board of Governors. It would be impossible for a Chinese owned company operating in Canadian to not provide the CCP with any and all information they request. No Chinese company, religion or entity in China is able to disobey the CCP, none.

      Clement said any purchase of a Canadian firm by a state-owned enterprise — whether it’s Chinese, Russian, Saudi or from some another country — should be questioned.

      “If they are making investments, first of all they are not making investments necessarily based on market decisions because they are directed by a country, directed by a state. They could be making those investments for strategic or political reasons,” he said. source

      That China is outraged and plays the race card is expected. That Canada should not react is also expected. That there may be trade retaliation clearly shows that China works as an economic entity and is unfriendly to Canada. No country should threaten another country because of a commercial dispute.

      China’s actions in Canada and Australia hint at influencing the government towards China’s objectives. Short-term profit and greed are less important than Canada’s national security. I hope that Canada can stand with Australia on this subject.

      Addendun 2018 May 25 Blocked Aecon deal casts chill on China trade talks

      “The concern is that aside from profitability, China has other geo-strategic reasons for wanting to have access to certain projects,” he said. “From that point of view, because Aecon is dealing with infrastructure, making it into a function of the Chinese state would not be in Canada’s best interests.”…

      “Canada is not a critically important trade partner for China so it’s conceivable something of an example will be made by the Chinese government of this. That way other countries will know if they refuse Chinese bids to acquire companies in the West there will be consequences.”

      That said, China does not allow foreign countries to build infrastructure in their country, Burton noted.

      “So it’s not reciprocal. The Chinese government would like to buy mining and oil companies but they would never extend that possibility to us. That complicates things again.”

      2018 May 27 We need to be better at balancing national security and Chinese investment

      From a national-security perspective, Chinese investment raises at least three concerns. The first relates to intellectual property and technology transfers…

      However, even with civilian technology, a second issue arises – namely, that the Chinese government could be using its close ties with its large telecommunications companies as a way to clandestinely collect strategic information and intelligence that could pass through their systems and equipment…

      The third issue is more nebulous and challenging from a national-security perspective. Chinese companies are seeking the knowledge and know-how of Western technology, including Canadian companies, in order to improve upon their patents and then produce these goods at a far cheaper rate.

      UK bans ZTE equipment

      Addendum 2018 June 17 U.S. lawmakers warn Canada about Chinese telecom giant Huawei

      Chiefs of six U.S. intelligence agencies and three former heads of Canada’s spy services recently said that Huawei is one of the world’s top cyberintelligence threats and its 5G technology could be used to conduct remote spying and maliciously modify or steal information or even shut down systems…

      “Certainly this threat demonstrates the need for a concerted, co-ordinated response among allies,” Mr. Warner said in a statement to The Globe. “The significant U.S. presence – government, corporate and citizen – in Canada, the vulnerabilities telecom equipment and infrastructure can present, should underscore that concern, as does China’s use of coercion, forced co-operation and co-option to acquire sensitive technologies.”…

      Former Canadian Security Intelligence Services directors Ward Elcock and Richard Fadden, and John Adams, the former head of this country’s CSE, have told The Globe that Huawei products and 5G technology could provide China with the capacity to spy on Canadians.

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