Federal government stops Chinese takeover of Aecon:
CCA applauds decision
Canadian Design and Construction Report staff writer
The federal cabinet has blocked the proposed $1.5 bil-
lion takeover of Toronto-based Aecon by a Chinese-gov-
ernment owned company, citing national security
threats. The decision follows extensive lobbying by other busi-
nesses in the Canadian construction industry, repre-
sented in part by the Canadian Construction Association
(CCA), which asserted that the state ownership of the
business would create unfair advantages to the foreign
business. The decision against the takeover by China Communi-
cations Construction Co. Ltd. follows a national security
review that the Globe and Mail reports determined was
not in Canada's national security interest.

The newspaper reported: “Intelligence agencies in
both Canada and the United States have warned that
companies owned or partly owned by the Chinese gov-
ernment are not merely profit-seeking operations; they
are also prone to passing on information or technology
to Beijing and making business decisions that could con-
flict with Canadian interests but serve the agenda of the
authoritarian Communist Party of China.”
"Our government is open to international investment
that creates jobs and increases prosperity, but not at the
expense of national security,” innovation minister
Navdeep Bains said in a statement.

Aecon reported to investors that it is reviewing the de-
cision and will have a “more detailed response in due
course.” “While we are disappointed with the government’s
decision, Aecon is and will continue to be a leading
player in the Canadian construction and infrastructure
market,” Aecon chief executive officer John Beck said in
a statement.

“While we have been prevented from pursuing the
transaction, we are moving forward from a position of
strength.” Ward Elcock, a former CSIS director who had urged
for the deal to be rejected, welcomed Ottawa’s decision,
the Globe and Mail reported.

“A state-owned company will always do the bidding of
China,” Elcock said in an interview with the newspaper.

“At the end of the day, China is not an ally of Canada. It is
a trading partner – and a crucial one. … But having said
that, the interests of China are not always going to be
the interests of Canada.”
He said the problem with allowing Aecon to be pur-
chased by a Chinese state firm is that the Canadian com-
pany plays a significant role in major infrastructure
projects, from the refurbishment of nuclear facilities to
British Columbia’s massive Site C hydro-electric dam. Mr.

Elcock said he thinks the difficulty facing federal deci-
sion-makers was that they couldn’t fashion a workable
constraint on Aecon’s future activities under Chinese
state ownership.

“The problem, I suspect, is there is really no way to
put in a restriction that prevents a company that simply
pours concrete one day from undertaking a major infras-
tructure project on another day,” he said.

The Chinese embassy in Ottawa said the decision will
hurt Canada’s economy. “There is no doubt that the deci-
sion made by Canadian government is by no means
good news for the investment co-operation between
China and Canada,” the embassy said in a statement.

“This will seriously undermine the confidence of Chi-
nese investors.”
In a statement, the Canadian Construction Association
(CCA) said it is pleased with the decision.

“CCA wishes to express its satisfaction with the gov-
ernment’s confidence in the Canadian construction in-
dustry,” said CCA president Mary Van Buren. “We are
happy that the government recognizes the fact that gov-
ernment-owned or controlled entities have no place to
compete against private and publicly-traded companies
in the Canadian construction industry.”
CCA said has always advocated for the establishment
and maintenance of a free-flowing international system
of trade, both in terms of goods as well as services. CCA
supports international free trade agreements, including
provisions respecting government procurement.

The Canadian construction industry is highly complex,
using sophisticated, technology-forward and innovative
techniques. From drones to IoT on bridges to 3D mod-
elling, Canadian know-how is exceptional, and CCA wel-
comes the government’s commitment to encouraging
entrepreneurialism. The Government of Canada is engaging in a massive
infrastructure program, investing more than $180 billion
of Canadian taxpayers’ money. CCA members are proud
that the government is trusting the close to 1.4 million
Canadians making their living in construction to build a
better Canada.

The Canadian Design and Construction Report — Spring 2018 – 11