Opposition calls for security review of offer to acquire Sandvine Corp.

Critic fears Canadian tech could be used against activists, dissidents

The federal government must do a complete and formal security review of the proposed sale of Waterloo-based Sandvine Corp., says the Conservative party’s public safety critic.

Tony Clement said in an interview Monday the Liberal government can’t turn a blind eye to the national security concerns raised by the sale of Sandvine to PNI Canada Acquireco Corp., an affiliate of Francisco Partners and Procera Networks.

Francisco Partners is a private-equity investment fund in San Francisco that controls Procera Networks and The NSO Group, an Israeli cyber warfare company. Those companies are associated with technology sales to Turkey, Mexico and the United Arab Emirates. The technology involved was then used to crack down on dissidents, human rights activists, journalists and lawyers.

“That’s when the alarm bells went off in my mind,” said Clement.

Sandvine shareholders will vote next month on the proposed sale, although no specific date has been set.

“I believe we have national security interests of both Canadians and our allies at stake,” said Clement.

Sandvine announced a deal July 17 to sell all issued and outstanding common shares to PNI Canada Acquireco.

The deal would see PNI pay $4.40 a share for Sandvine, valuing the Waterloo company at about $562 million. The deal was unanimously endorsed by the board of directors.

“The specific concern is that we want to make sure that Canadian-developed technologies are not being utilized to undermine human rights,” said Clement.

“This acquirer, Francisco Partners, has already come under international scrutiny via the companies that it controls,” said Clement.

After Francisco Partners acquired Procera Networks, some Procera employees resigned when their technology was sold to the Turkish national telecommunications company, fearing it would be used to spy on opposition politicians, and prodemocracy dissidents.

Francisco Partners also controls the Israeli cyberwarfare company NSO Group, which sold spyware to the Mexican government called Pegasus. It was used against journalists, human rights advocates and anti-corruption activists. NSO also sold that tech to emirates in the Persian Gulf that was used against human rights activists.

Sandvine Corp., which was founded in 2001, provides software and hardware to better manage networks.

It has expertise in what’s called deep-packet inspection, which can be used to improve the flow of traffic through the internet, or for mass and targeted surveillance.

“This is yet another case of the Liberals turning a blind eye to highly sensitive security and military technologies companies being sold to outsiders and what the impacts of that could be,” said Clement.

Clement, who was the industry minister under former prime minister Stephen Harper, said Ottawa can impose conditions before, during and even after the sale of Canadian technology to foreign companies.

“And there were times when I didn’t allow the sale to go through because of national security concerns that were triggered,” said Clement.

“You can have very extensive conditions, demand representations and promises that will protect our national security interests, and to ensure that the deal would comply with Canadian policy and Canadian law,” said Clement.

Clement’s comments echo an earlier call by Ron Deibert, director of The Citizen Lab at the University of Toronto’s Munk School of Global Affairs, for the automatic review of deals that involved dual-use technology. That is tech that can be used for something good, such as network management, or something bad, such as spying on activists.

The first step is for the companies involved to commit to a transparent and open review so everyone can see how Canadiandeveloped technology is being used by others, said Deibert. Ottawa can also provide incentives to tech companies that agree to monitor how their dualuse technology is deployed overseas.

“You can have reporting mechanisms, you can have regular reporting by the company to make sure they are abiding by the conditions that are set forth,” said Clement.

“There has to be transparency and there has to be a regular mechanism for compliance.”