Canadian construction giant Aecon would be prevented from working on the new Gordie Howe International Bridge connecting Windsor and Detroit if it’s acquired by a Chinese state-owned firm currently seeking Ottawa’s approval for a takeover, sources say.
Toronto-based Aecon Group Inc. is part of a consortium that is bidding to build and manage the massive $4.8-billion bridge, a critical crossing to speed up the movement of goods and people between the United States and Canada. The new span is a top infrastructure priority for Ottawa, which is trying to broaden Canada’s most-vital trade conduit.
Senior federal sources say the Trudeau government has made the decision that it would be unacceptable for any U.S. administration – but particularly one led by President Donald Trump, who regards China as a security and trade threat – to have one of the most important infrastructure projects connecting both countries to be built and run by a Chinese government-backed firm.
The winning bidder in the competition to construct the Gordie Howe crossing would not only build the bridge, but manage it for the next 30 years as part of a design-build-operate contract.
This would give China access to key data on the flow of goods and people, including military components and armed forces traffic between Canada and the United States. One official described the data as a treasure trove of information that would be available to a hostile state.
Aecon was put up for sale last August and was sold to China Communications Construction Co. Ltd. (CCCC) for $1.5-billion in October, pending government approval. The Fortune 500 giant is one of the world’s largest engineering and construction firms and is 63-per-cent owned by the Chinese government.
The Trudeau cabinet in February issued a special order to prolong Ottawa’s scrutiny of the Aecon deal, invoking a section of law used when the federal government believes an investment “could be injurious to national security.” This national-security review continues.
Barring Aecon from working on the Gordie Howe bridge – a lucrative project – would raise questions about the viability of the $1.5-billion acquisition and whether it’s still worthwhile for CCCC to complete the transaction. One senior official suggested it’s possible Ottawa might also order Aecon to divest itself of other critical infrastructure work in the energy sector, such as the $2.75-billion contract to refurnish the Darlington Nuclear Generating Station in Clarington, Ont. Aecon is also working on the massive Site C hydroelectric dam project in British Columbia.
Cabinet ordered a full national-security review of the Aecon takeover bid last month under section 23.5 of the Investment Canada Ac This review has been extended another 45 days.
Sources say there are multiple ways to prevent Aecon from participating in the bridge work.
Ottawa could make approval of CCCC’s aquistion of Aecon contingent on the latter withdrawing from the Gordie Howe Bridge bid, officials say.
Aecon is one of three shortlisted bidding teams and security concerns could prevent the team it belongs to – the “Bridging North America” team – from being selected. Alternatively, the government could require the team to remove Aecon as a participant. Or the team itself could replace Aecon with another participant. Finally, either the Canadian or U.S. government could bar Aecon from participating.
The U.S. government has tremendous power over the bridge project, including a presidential permit for the crossing which could be revoked.
Michael Wessel, a key member of the U.S.-China Economic and Security Review Commission which reports to the U.S. Congress, told The Globe and Mail there are “widespread concerns” in Washington about a Chinese state-owned takeover of Aecon because of the firm’s involvement in critical infrastructure.
“These concerns go not only to their material utilization, and recognition of the importance of steel, aluminum and other products to our national-security interests, but the very design of the bridge itself,” he said. “While we hope never to have a conflict with China, their involvement in critical infrastructure not only provides them with information regarding key vulnerabilities, but the potential for building-in those vulnerabilities. Those are risks that demand attention and mitigation.”
Canada and the United States had already agreed back in 2012 that overseas steel and iron would not be used to build the Gordie Howe bridge. An agreement signed between Canada and the state of Michigan stipulated that all iron and steel for any component of the bridge, or the approaches and customs plaza on the U.S. side, must originate from either Canada or the United States. The measure is an attempt to reassure Michiganders who were warned by bridge opponents that the steel might come from cheaper overseas suppliers in China or South Korea.
Aecon declined to comment when asked whether the company was concerned about the prospect of being blocked from working on the Gordie Howe bridge.
The company instead provided a statement that said: “Post-transaction Aecon will have enhanced capabilities and capacity, while continuing to adhere to the standards and practices that it always has. Our focus now remains on continuing to win new projects and working with the government through its ongoing review of our transaction.”
Aecon, led by chief executive officer John Beck, has played down concerns that have been raised about its involvement in critical infrastructure projects, such as nuclear facilities – contracts that would pass on to CCCC if the transaction is approved by Ottawa.
“Aecon does not own any intellectual property related to nuclear energy; nor does it possess any other sensitive proprietary technology,” the company said in a statement last month. “Aecon offers construction and refurbishment support to clients in the nuclear industry.”