The Manchurian Liberals

U.S. criticizes Ottawa's oversight of Chinese high-tech takeovers
By ROBERT FIFE AND STEVEN CHASE

The head of the House Armed Services Committee in Washington is urging Ottawa to be “more vigilant” in its national-security process when Chinese investors want to buy Canadian high-tech firms that specialize in sophisticated military hardware.
Representative Mac Thornberry was responding to The Globe and Mail reports on a bid by Hytera Communications Corp. of Shenzhen, China, to take over Vancouver-based Norsat International Inc., which sells satellite technology to the U.S. military and NATO.
The government approved the sale without a formal national security review.
Mr. Thornberry, chair of the House of Representatives committee, warned that China is taking advantage of weaknesses in Western oversight of foreign investment to buy cutting-edge technology that may help its military.
“I have growing concern that countries like China are investing in various projects, exploiting the seams of regulatory structures, and using other methods to obtain key defence technologies,” Mr. Thornberry said in a statement to The Globe when asked to comment.
“The public and private sectors of the U.S. and key friends and allies must be more vigilant and must take steps to prevent this sort of exploitation,” he added.
Representative Walter Jones, who also is on the committee, joined in the criticism and called for the U.S. military to review its contracts and relationships with Norsat.
“The United States cannot stop Canada from allowing the Chinese takeover of Norsat,” Mr. Jones told The Globe.
“We can and should, however, re-evaluate any business dealing that potentially affects our defence initiatives.”
This is the second warning from the U.S. capital that Ottawa is taking a laissez-faire approach to investment from China and jeopardizing U.S. national security interests.
Last week, a key member of a U.S. congressional watchdog agency urged the U.S. Defence department to “immediately review” its business arrangements with Norsat.
In early June, the Trudeau cabinet approved the sale of Norsat to Hytera, a Chinese telecom giant that has been accused of stealing U.S. technology.
Hytera is facing a lawsuit from U.S. rival Motorola, which accuses the firm of massive intellectual property theft.
Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which reports to Congress, said “the sale of Norsat to a Chinese entity raises significant national-security concerns for the United States as the company is a supplier to our military.”
He said the Liberals are willing to sacrifice national-security interests of Canada’s most important ally in exchange for a bilateral free-trade deal with China.
Two former directors of the Canadian Security Intelligence Service – Richard Fadden and Ward Elcock – have said the transaction should have been subjected to a full-scale security review.
The office of Innovation, Science and Economic Development Minister Navdeep Bains is refusing to say whether Canada will subject the Hytera deal to further scrutiny.
His director of communications, Pauline Tam, and his press secretary, Karl Sasseville, did not respond to repeated requests from The Globe to say whether Ottawa will re-examine the deal.
Norsat is the second case in a matter of months in which the Liberals have approved a controversial sale of sensitive technology to Chinese investors. 
In March, the government approved the sale of a Montreal high-tech firm, ITF Technologies Inc., to O-Net Communications of Hong Kong, a firm partly owned by Beijing.
The former Conservative government had blocked the deal on the grounds that it would undermine Western armed forces’ technological edge over China.
At the time, security officials had recommended against the takeover, saying the ITF technology transfer would give China access to advanced military laser technology and would diminish “Canadian and allied military advantages.”
Justin Trudeau has defended the Liberals’ decision to forgo a national security review in the Norsat sale, saying Canada consulted Washington before concluding Hytera’s takeover would not pose any national security risks.
Trudeau has refused to answer repeated questions in Parliament on who the government talked to in the Trump administration, and whether they expressed any concerns. 
The U.S. embassy in Ottawa has refused to comment on whether Washington was consulted and whether it raised any national security issues.
Security experts fear China’s private-sector companies are subject to influence from Beijing.
The Chinese Embassy in Ottawa said the purchase is a normal business transaction and should not become politicized.
“From Canadian media’s relative reports, in these commercial merger cases China is often regarded as an enemy that jeopardizes Canada’s national security,” spokesman Yundong Yang said in a statement.
“Absurd thoughts like this totally go against the mutually beneficial co-operation between China and Canada.”
Hytera‘s bid to buy Norsat triggered a requirement under the Investment Canada Act that Ottawa to examine foreign-owned firms’ attempts to take over Canadian companies for national security concerns.
Earlier this month, Norsat officials said they were told a preliminary review determined a full national security review was not needed, paving the way for the takeover.
The purchase was delayed when a U.S. hedge fund made an unsolicited offer last week, which Norsat rejected.
The Vancouver company entered into a definitive agreement on Tuesday to be bought by Hytera for $70.6-million (U.S.) after it turned down a $67.3-million bid from Privet Fund Management.
Privet said it was surprised by Norsat’s decision, given the security concerns raised in the U.S. capital and in Parliament by the opposition parties.
“We find it incredible that the Norsat board believes an identical offer from Hytera represents the best interests of all stakeholders in light of the mounting political scrutiny and regulatory uncertainty surrounding a transaction with Hytera,” said Ryan Levenson, managing member of Privet.
The Liberals have made closer ties to China – including a potential free-trade deal – a cornerstone of their government’s foreign policy. 
China has publicly deplored Canada’s national security reviews as protectionism and demanded the process be on the table in free-trade talks.
Since the Liberals came to power, they have been more open than the previous government to investment from China in a number of key sectors.
In February, Ottawa approved the sale of one of British Columbia’s biggest retirement-home chains to Beijing-based Anbang Insurance Group, which has a murky ownership structure, in a deal that gave China a foothold in Canada’s health-care sector.
Last week, Chinese security authorities arrested Anbang chair Wu Xiaohui.
Michael Byers, Canada Research Chair in Global Politics and International Law at the University of British Columbia, said the Norsat purchase should proceed to a full review.
“A review by CSIS would have warned that investments by the same Chinese company have raised security concerns in other countries,” Dr. Byers said.
“In Britain, Hytera’s takeover of a mobile digital-radio equipment maker was only approved after strict security protections were imposed.”
He said the former Harper government added the national security review process to the Investment Canada Act “precisely to avoid ad hoc approaches of the kind the minister took here.”

Rogue Nation

Former CSIS directors question Canada’s pursuit of extradition treaty with China
By STEVEN CHASE, ROBERT FIFE AND NATHAN VANDERKLIPPE

OTTAWA and BEIJING — Two former Canadian spymasters are questioning the wisdom of pursuing an extradition treaty with China, an undertaking the Liberal government announced shortly after Prime Minister Justin Trudeau made his first official visit to the Asian power.
Australia paused efforts to enact a similar accord with China this week in the face of opposition, even from within Prime Minister Malcolm Turnbull’s own party.
China immediately appealed to the Trudeau government not to follow Canberra’s lead. 

A cross-Pacific extradition treaty “is for mutual benefit. It deserves serious consideration,” Foreign Ministry spokeswoman Hua Chunying said Tuesday. 

But Ward Elcock, who served as director of the Canadian Security Intelligence Service from 1994 to 2004, said Tuesday he doesn’t think Canada should ink an extradition deal with China.
Long demanded by China, an extradition treaty would commit Canada to transferring fugitive Chinese officials to a country known for biased courts and harsh interrogation methods – and where the death penalty can be imposed even for non-violent crimes.
He raised concerns about whether Canada would be able to obtain sufficient guarantees that individuals shipped back to China would be treated properly.
“The reality of the Chinese justice system is it is totally unlike our justice system, so we will have almost no guarantees in sending somebody back to China – even for what we would regard as a normal criminal prosecution,” Mr. Elcock said.
“Unless you were to extract specific guarantees from the Chinese with respect to things like [the] death penalty or whatever, I don’t think you would have any assurances that the Chinese justice system would provide the kind of fairness that we would expect in a trial procedure in Canada.”
Mr. Elcock said China is seeking such a treaty not only because it wants to more easily repatriate fugitives but also because it’s “looking for approval … as a great power”
Another former CSIS director, Reid Morden, said it would be extremely difficult for Canada to conclude an extradition treaty with China that would measure up to Canadian standards for human rights.
Mr. Morden, who headed the spy agency from 1988 to 1992, said China has shown little interest in improving human rights, pointing to the “fairly strident” comments that China’s new ambassador to Canada made to The Globe and Mail last week.
In his first interview since arriving in Canada in March, Ambassador Lu Shaye said that China does not want human rights to be used as a “bargaining chip” in free-trade talks with Canada.
“I don’t see how you could do an extradition treaty until you make up your mind on how tough you are going be on human rights and the peculiarities of the Chinese judicial system,” Mr. Morden said. “Getting a sufficient number of assurances and guarantees that would stand up to what is supposedly our test over human rights would be extremely difficult.”
In his interview with The Globe, Mr. Lu acknowledged that Canada has been dragging its feet on negotiating an extradition treaty, but did not elaborate on the reasons for the delay.
“China is very willing to discuss and sign the extradition treaty with Canada,” he said. 

“However, it hasn’t started maybe because Canada has some concerns. We hope to strengthen our co-operation in judicature and law enforcement, jointly cracking down on all crimes including abuse of power and economic crimes and making all crimes intolerable.”
This weekend, a senior Canadian official cast doubt on Ottawa’s willingness to complete an extradition treaty with China so long as its system remains permeated with abuses.
An agreement to hold bilateral talks on an extradition treaty was reached in Beijing on Sept. 12 between a top Communist Party official and the Prime Minister’s national security adviser Daniel Jean. 

A day later, a Chinese court ordered the deportation to Canada of jailed Canadian missionary Kevin Garratt.
“The two sides determined that the short-term objectives for Canada-China co-operation on security and rule of law are to start discussions on an Extradition Treaty and a Transfer of Offenders Treaty as well as other related matters,” according to an official communiqué released at the time.
The two men also agreed to finalize negotiations on a pilot project “where Chinese experts will be invited to assist in the verification of the identity of inadmissible persons from mainland China in order to facilitate their return from Canada to China.”
Canada usually forbids the extradition of people to countries with the death penalty, although Chinese fugitives have been repatriated on the condition they are not executed and that Canadian diplomats are permitted to visit them in prison.
During an official visit to Ottawa last September, Li Keqiang made it clear that high on China’s agenda is an extradition treaty to enable Beijing to seek the return of corrupt officials. 

More than 40 other countries, including France and Australia, have signed extradition treaties, he said.
But Australia’s Prime Minister had to shelve his country’s extradition treaty with China on Tuesday after a revolt from members of his own party made it clear it would not survive a vote in the country’s Senate.
Australia’s stern rebuke to China serves as a warning to Canada and other Western countries about the merits of co-operating with an autocratic regime whose judicial system condones torture and is susceptible to political interference.
“As long as China’s justice system is controlled by an authoritarian party, it would be very difficult for Canada to ensure that its extradited nationals are going to be given a fair trial,” said Maya Wang, China researcher for Human Rights Watch and one of the authors of “Special Measures,” a landmark report documenting abuses in the shuanggui system. 

That system is used by China’s Communist Party to extract confessions in a sweeping corruption crackdown that has extended to countries such as Canada.
Ottawa, Ms. Wang said, “should set clear benchmarks for China – abolishing shuanggui, freeing rights lawyers and committing to an independent judiciary – before giving China’s legal system such a vote of confidence.”
China’s detention and questioning of hundreds of lawyers in the past two years has brought new attention to the country’s judicial conduct, particularly after reports emerged that those lawyers were tortured in custody.
Beijing is eager for an extradition deal with Canada to help speed the return of people it accuses of being corrupt fugitives. 

China has named Canada one of the top destinations for such people and, without the ability to extradite, has mounted a campaign of intimidation and persuasion against those it says should be brought back to China to face justice.