The Canadian government has refused permission to a Chinese state-run overseas investment firm from taking control of a 140-year Canadian construction company on national security grounds.
The proposed takeover of Aecon Group Inc by CCCC International Holding Ltd has been mired in controversy and the decision to block the deal was taken despite lobbying by Beijing. That final judgment call came on Wednesday, with Canada’s ministry of innovation, science and economic development confirming it.
“We listened to the advice of our national security agencies throughout the multi-step national security review process under the Investment Canada Act. Based on their findings, in order to protect national security, we ordered CCCI not to implement the proposed investment,” minister Navdeep Bains was quoted as saying by Bloomberg.
Established in 1877, Aecon has several landmarks construction projects to its credit, including Toronto’s iconic CN Tower and Vancouver’s SkyTrain and work on the airports in Toronto and Montreal.
CCCCI is a subsidiary of China Communications Construction Company Ltd, which has the Chinese government as its majority owner. CCCC Ltd has been involved in several projects, including at Gwadar as part of the China-Pakistan Economic Corridor, and in building artificial islands in the South China Sea.
The potential deal was worth $ 1.5 billion.
The sale of Aecon had attracted much criticism from former heads of Canadian intelligence and opposition parties. Others who opposed the sale included Anita Anand, the director of the Centre for the Legal Profession and Program on Ethics in Law and Business at the University of Toronto.
In an email to the Hindustan Times, she said: “I strongly support the federal government’s decision to intervene and block the Aecon take over bid. The federal government has the ability under the Investment Canada Act to prevent the transaction if it reasonably believes that the transaction presents national security concerns. In this case, on the basis of the evidence, the federal government made the right decision.”
Shuvaloy Majumdar, senior fellow at the Ottawa-based Macdoland-Laurier Institute said: “The decision taken by the Canadian government to end the Aecon takeover is laudable, if late, and after an unnecessary flirtation with the People’s Republic (of China).”
“MLI has long been advocating caution with respect to Chinese state owned investment. From CNOOC (China National Offshore Oil Corporation) to Aecon, Canada’s engagement with China must be carefully considered and always in Canada’s national interest,” he added.
Former cabinet minister Tony Clement tweeted: “Glad to see the Liberal Government make this responsible decision after many including me urged reconsideration.” He also called for an “comprehensive review” of investments by Chinese state-owned enterprises that are “flying under the radar and purchasing strategic assets below the automatic review trigger.”