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Liberals criticized for not conducting security reviews on foreign takeovers

Conservative MP Tony Clement said the Liberals appear to be signalling a return to an earlier time.

Chris Wattie/REUTERS

The Trudeau government's failure to conduct national security reviews on two significant corporate takeovers by Americans – an Internet backbone that carries confidential federal government data and a satellite equipment maker – suggests the Liberals are loosening Canada's controls on foreign investment, critics say.

As The Globe and Mail reported this week, a $465-million deal to sell the coast-to-coast Allstream fibre-optic network to Zayo Group of Boulder, Colo., is raising fears the U.S. government will find it easier to gain access to confidential Canadian data. This comes after the Liberals decided not to conduct a formal national security review of the deal.

Similarly, the Trudeau cabinet opted against bringing the same official level of scrutiny to bear on the $455-million sale of Com Dev International Ltd.'s space hardware business to U.S. technology conglomerate Honeywell International.

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The ease with which these transactions passed Ottawa stands in contrast to how the Conservatives blocked similar deals.

In 2013, the Harper government blocked the sale of Allstream to an Egyptian telecom group on the grounds that it "provides critical telecommunications services to businesses and governments, including the government of Canada." In 2008, then-industry minister Jim Prentice stopped the sale of MacDonald Dettwiler and Associates' space arm to Minnesota-based Alliant Techsystems, preventing the technology that built Canada's Radarsat-2 remote sensing satellite from falling into American hands.

Michael Byers, a political science professor at the University of British Columbia, said these transactions are the sort of deals that Canada's national security test for foreign investment was introduced to address. The Harper government created the test in 2009 as a tool for Ottawa.

Former Conservative industry minister Tony Clement said the Liberals appear to be signalling a return to an earlier time.

"We're now back to the Chrétien-Martin period where 100 per cent of these [foreign] acquisitions went through and I don't think that's appropriate," Mr. Clement, now Official Opposition foreign affairs critic, said.

The federal government did not respond Wednesday when asked whether it would cancel the government telecom contracts with Allstream now that it's in American hands and what safeguards it had put in place to protect Canadian government data traffic on that network.

Prof. Byers said the lack of scrutiny is cause for concern.

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"Com Dev builds parts for Canadian military satellites. Allstream carries government telecommunication traffic," he said. "Either [the Liberals] are consciously choosing not to have a rigorous assessment, in which case they are being pretty cavalier about Canadian national security, or they got caught unprepared, poorly advised and not yet in position to make good decisions."

He noted the Trudeau government is fond of saying it will rely on "evidence-based decision-making" when taking action.

"This is not evidence-based decision-making … the whole point of a national security review is so you hear all of the considerations from all interested parties so you are not just taking advice from a group of civil servants or the companies themselves."

The NDP has written Innovation Minister Navdeep Bains demanding to know why the Liberals allowed the Allstream sale to proceed without a national security review.

"Allstream could be compelled to disclose sensitive, classified information to the U.S. authorities as a result of this transaction," NDP innovation critic Brian Masse wrote in the letter. "What measures has your government undertaken to ensure that sensitive government data is not compromised?"

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About the Author
Parliamentary reporter

Steven Chase has covered federal politics in Ottawa for The Globe since mid-2001, arriving there a few months before 9/11. He previously worked in the paper's Vancouver and Calgary bureaus. Prior to that, he reported on Alberta politics for the Calgary Herald and the Calgary Sun, and on national issues for Alberta Report. More

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