Chinese firm for embassy gear caused concern in U.S.

Nuctech has close ties to the china’s military

Canada’s decision to select a Chinese company to provide embassy security equipment sparked major concerns at the White House last year.

While U.S. officials sounded the alarm about the July 2020 deal to have Nuctech provide X-ray machines to Canadian embassies, bureaucrats in Ottawa at Procurement Canada and Global Affairs Canada didn’t see any problems.

Nuctech has close ties to the Chinese military and the Chinese Communist Party.

A July 17 National Post article about the Nuctech deal caught the attention of the White House, prompting a phone call from a senior U.S. security official to a Canadian diplomat in Washington.

“U.S. is ‘quite concerned’ that GAC has apparently agreed to purchase security equipment for embassies from a Chinese company,” diplomat Martin Loken said in a July 20 email to Global Affairs assistant deputy minister Dan Danagher. A meeting was being set up to discuss the situation but Loken wanted “holding lines” he could send to the White House in the meantime.

GAC had come up with a statement that noted there were no security concerns with the $6.8-million deal.

But the same day Loken emailed Danagher in Ottawa, the department’s own security officials were presenting a report that highlighted the threat that Nuctech posed to Canada.

“The standing offer for X-ray machines and their maintenance at Canadian missions abroad could be leveraged for technical and insider spying against GAC,” the GAC security team warned. “The Nuctech supplier — banned from U.S. airports contracts since 2014 — represents an elevated threat because of the company’s direct relationship to, and legal obligations toward Chinese authorities.”

The GAC and Procurement Canada records were provided to the House of Commons government operations committee as part of its examination of the controversial deal.

The National Post article also prompted an email from the Chinese embassy in Canada to GAC official Matthew Pal. The contents of the Chinese email are completely censored as is the name of the Chinese official.

But the missive prompted Pal to point out that in a democracy journalists are free to report on matters. “As you know, Canada believes in freedom of expression and media freedom,” Pal, the trade commissioner assigned to the China division, noted in his response.

Press freedom in China is severely limited. In December, a Chinese citizen journalist was sentenced to four years in prison for reporting on the COVID-19 outbreak in Wuhan. In the past, China has complained to the Canadian government about the press coverage it has received from Canadian news outlets.

Procurement Canada passed over a Canadian firm offering X-ray machines and instead awarded the standing offer to Nuctech. The decision was based on the Chinese X-ray machines meeting the requirements at the lowest price.

Among the records provided to the Commons committee was a June 11, 2020 email from Procurement Canada official Cassandra Shannahan, who pointed out to a colleague she was very familiar with Nuctech as she had awarded several contracts to them for X-ray equipment for the Canadian Border Services Agency. She noted in that email that in 2019 she had been contacted by Canadian security officials asking why she had awarded a border services contract to a Chinese company without a security requirement. Shannahan explained to those officials that there was no security requirement for the CSBA deal. “I want to reiterate that I have no concerns with issuing this standing offer to Nuctech from a contractual standpoint,” she noted in the June 11 email.

The Global Affairs security review, done days after news of the Nuctech deal was made public, warned that Nuctech had direct connections to the People’s Liberation Army and the Chinese Communist Party.

Government procurement officials did note in some of their emails that the deal with the Chinese firm was coming at what they called a sensitive time.

Relations between China and Canada significantly deteriorated after China imprisoned Canadians Michael Kovrig and Michael Spavor in December 2018. Their imprisonment is widely viewed as retaliation against Canada for arresting Huawei Technologies Co. chief financial officer Meng Wanzhou, who has been charged with fraud in the U.S.

Global Affairs Canada, in an emailed response to this newspaper, noted that the department “has not and will not use the Nuctech standing offer.”