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CSIS director Richard Fadden.

Foreign espionage is surely not a "net benefit to Canada." That phrase is the essential criterion for the approval of takeovers by foreign companies, under the Investment Canada Act. It is striking that the most recent annual report of the Canadian Security Intelligence Service, released last Thursday, implicitly draws a connection between foreign-investment policy and security and intelligence – a point that decision-makers and policy-makers need to bear in mind.

In particular, CSIS's report says that "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."

To be fair, it must be said that the International Energy Agency published a paper last year, which said that CNOOC Ltd. and two other state-owned Chinese oil companies are not "state-run" but "state-invested." CNOOC's application to Investment Canada for its purchase of the Canadian oil company Nexen Inc. is pending. The IEA's opinion clearly suggests that CNOOC is not among the unnamed SOEs with "unduly close ties" to a state that is also its controlling shareholder. Indeed, CNOOC is traded on the New York Stock Exchange and has numerous Canadian shareholders.

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It is noteworthy that, in April, when CNOOC and Nexen were negotiating, Nexen had a meeting with Richard Fadden, the director of CSIS, having to do with "security," according to a routine (and required) report to the Office of the Commissioner of Lobbying. The fact that a friendly takeover is proceeding, and was announced in July, invites an inference that Mr. Fadden saw no particular problem with CNOOC.

CSIS's report is much more clearly and prudently worded than Mr. Fadden's confusing comments on television, and in a speech at a club in June, 2010, some of which were directed at China. Such a document as this belongs to a literary genre far better suited to Mr. Fadden.

The IEA's opinion carries weight but of course it is not an infallible judge. On CNOOC's application, Christian Paradis, the Minister of Industry, Investment Canada, and indeed the cabinet in its ultimate deliberations ought to ask questions of CSIS about just how little – or how much – of a political animal CNOOC may be.

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