Aecon deal nixed over fears of Chinese access to data on key infrastructure

OTTAWA — The federal government rejected the Chinese takeover of a Toronto-based construction firm on national security grounds because it would have given Beijing access to a trove of sensitive data about some of Canada’s most-critical infrastructure, such as nuclear power plants and the Toronto subway, says a senior government source.

The Trudeau government cited national security for its decision this week to decline the proposed $1.5-billion purchase of Aecon Group Inc. by CCCC International Holding Ltd., also known as CCCI.

The insider, who spoke on condition of anonymity due to the delicate nature of the file, described the decision as black and white. The source said it was largely due to deep concerns about the potential consequences of a state-owned enterprise controlling Aecon — along with its extensive historical records from major infrastructure projects over decades.

In addition to information that would have been collected through future projects, the source said the Aecon takeover would have given CCCI access to intellectual property from the company’s long history of construction in Canada, particularly its work on transportation, telecommunications and electricity grids.

Aecon has worked on many key Canadian projects such as the CN Tower, Vancouver’s SkyTrain, the St. Lawrence Seaway, the Halifax shipyard, the refurbishment of Ontario’s Bruce nuclear plant and the Toronto subway.

A national security review by Canada’s intelligence agencies examined CCCI’s record around the world and its other, similar transactions and found there was seller’s remorse in other jurisdictions, the source said.

The recommendations were clear and the government made the call because it didn’t want to compromise national security, even though the decision could have an impact on Canada-China relations, the insider said.

On Thursday, Beijing’s top envoy in Canada said he was very disappointed with the Trudeau government’s move to reject the takeover.

Lu Shaye, China’s ambassador to Canada, told the Canadian Press he hoped the decision was not guided by “prejudice” toward his country’s state-owned companies.

Chinese state-owned enterprises, like CCCI, are no different than multinational firms in western countries in the sense that they want to expand their profits while strictly adhering to the rules of the market, he said.

If Ottawa’s refusal was based on the fact it was a state-owned company, Lu said he would consider it a move made under “measures of prejudice.”