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Winnipeg Free Press - PRINT EDITION

Foreign buyouts can be threat: CSIS

By: Jim Bronskill

Posted: 09/21/2012 1:00 AM | Comments: 0

OTTAWA -- The same day shareholders of a Calgary-based energy company agreed to a takeover bid by a state firm from China, Canada's spy agency is warning such purchases can pose a threat to national security.

In its latest annual report, the Canadian Security Intelligence Service says the majority of foreign investment in Canada is carried out in an open and transparent manner.

However, certain state-owned enterprises and private firms "with close ties to their home governments have pursued opaque agendas or received clandestine intelligence support for their pursuits here."

The CSIS report for 2010-11, tabled in Parliament on Thursday, says when companies with links to foreign intelligence agencies or hostile governments try to acquire control of strategic sectors of the Canadian economy, it can represent a threat to security interests.

The spy service's report came just as shareholders of oil-and-gas company Nexen Inc. solidly voted to support the high-profile takeover by the China National Offshore Oil Co., a deal that still requires federal approval.

Two years ago, CSIS director Dick Fadden made headlines by openly speaking of provincial cabinet members and municipal politicians coming under foreign influence. Though Fadden was cagey about the alleged foreign interference, he broadly suggested China posed concerns.

While it does not name specific countries or companies, the newly released CSIS report says foreign entities involved in takeovers might try to exploit new-found control in an effort to make illegal transfers of technology "or to engage in other espionage and other foreign-interference activities."

"CSIS expects that national-security concerns related to foreign investment in Canada will continue to materialize, owing to the increasingly prominent role that (state-owned enterprises) are playing in the economic strategies of some foreign governments."

The report says CSIS continued in 2010-11 to investigate foreign interference -- the attempt by governments or their agents to clandestinely influence Canadian policies and opinions, or to spy on and intimidate diaspora groups in Canada.

"Foreign interference is particularly nefarious because it can have the effect of disrupting the multicultural harmony that is central to Canadian identity," CSIS says.

The spy service's report underscores other threats to Canada, including cyber-attacks, the proliferation of weapons of mass destruction and the lingering possibility of terrorist attacks in the post-9/11 era.

It notes that in January 2011, online attackers targeted the networks of the Finance Department and Treasury Board. "Unfortunately, attacks like this are not a rare exception. The Government of Canada is now witnessing serious attempts to penetrate its networks on a daily basis."

The main target of cyber-spies is the aerospace and high-technology industry, with the oil-and-gas business and universities involved in research and development also eliciting interest, CSIS says. "From the attackers' perspective, it is significantly cheaper and often less difficult to steal research than to develop it."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition September 21, 2012 B4

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