CSIS said to be probing financial links between First Nations, China
Jul 25, 2012 – 10:09 PM ET
CALGARY — Canadian intelligence services appear to have probed financial links between First Nations groups and Chinese companies as scrutiny continues to mount on China’s interest in this country’s natural resources sector.
This week, Chinese oil company CNOOC Ltd. announced a $15-billion takeover bid for Calgary-based Nexen, a proposal that will have to pass scrutiny under the Canada Investment Act. The deal seems to be raising warning flags among politicians who fear the energy-hungry superpower’s influence in Canada’s oil patch.
But scrutiny of China’s investment reach appears to stretch back several years.
Vancouver-based lawyer Merle Alexander said he was approached by Canadian Security Intelligence Service agents twice, in 2010 and in 2011, after presenting seminars on a memorandum of understanding signed between the Kaska Nation and Silvercorp., a B.C. company with Chinese links.
He said they identified themselves with CSIS badges and “appeared interested in determining whether there is direct involvement or influence between the Chinese government and First Nations governments,” he said.
CSIS declined to comment.
According to the CBC, Nexen’s CEO also met with CSIS director Richard Fadden in April of this year to discuss security issues.
As China’s economy has continued to grow in the face of the global economic slowdown, its appetite for natural resources has become ever more voracious. And that has led capital-rich investors to resource-rich Canada.
Last year, the China Investment Corporation — one of the largest sovereign wealth funds in the world — established its first overseas office in Toronto.
In 2009, the fund purchased almost one-fifth of the shares of Teck Resources, a Canadian company with 13 mines around the world.
China has also made several purchases in the Alberta oil patch: in 2010 Sinopec snagged a 9% stake in Syncrude for $4.65-billion and, more recently, PetroChina purchased 40% of the MacKay River project from the Athabasca Oil Sands Corp. for $680-million.
China's CNOOC announced a $15-billion takeover bid earlier this week for Calgary-based Nexen. The proposal will have to pass scrutiny under the Canada Investment Act.
The massive Nexen proposal — one of the largest investments China has attempted in the oilpatch to date — is expected to generate much political fretting according to Theodore Moran, a senior fellow with the Peterson Institute for International Economics. He published a paper in March examining Canadian concerns with Chinese involvement in the resource sector. Fears tend to circulate around three issues, he said; firstly, that China will become such a powerful player in the global oil market that the country will be able to manipulate supply; secondly that sensitive technological information will be leaked to the superpower and, lastly, that China could gain a foothold in Western nations’ information technology, leading to privacy concerns and spying.
Although Mr. Moran said the latter concern was legitimate, many of the other concerns are overwrought. Even the Nexen deal is small by global standards: it wouldn’t give China enough of a foothold to manipulate or limit access to Canada’s oil supply, he said.
“Energy is almost visceral,” he said. “This is what God gave Canada or this is what God gave Texas. Those are very sensitive issues.”
Add to the sensitivity around resources, First Nations groups have been the subject of surveillance in Canada for more than 40 years, said Gary Kinsman, a professor of sociology from Laurentian University who has written widely on national security issues.
Police and intelligence services have typically targeted activist and, lately, environmental groups.
“There’s nothing new about this at all, nothing surprising,” he said. “What’s interesting is the new interest and concern about foreign investment that seems to be turned against the environment movement on one hand and First Nations communities on the other.”
The groups under watch raise the question about whose national security is being protected, he added.
“It certainly doesn’t sound like they’re talking about the national security of First Nations communities, but the security of the business elites who might want to develop these resources for themselves.”
As the market for Canada’s resources continues to heat up, aboriginal activist Calvin Helin said it should come as no shock that the Chinese are becoming more adept at dealing with First Nations groups directly.
The Chinese “are the biggest source of investment in the world right now, particularly in economies that have a lot of commodities.”
The author of Dances with Dependency, a book that encourages First Nations groups to take on more economic independence, Mr. Helin said he’s been leading delegations of Canada’s aboriginal groups to China since 1994.
China’s economic prowess presents a potential bonanza for First Nations communities, many of which have a major stake in oil, gas, mining and lumber developments.
“In the last three or four years, things have really gotten busy,” he said. “It’s no secret that China needs every conceivable kind of commodity. All the base metals, lumber, food sources.”
In the past, many of these foreign investment firms might have made only token offerings to local native groups, he said. But that’s changed.
Aboriginal groups are becoming more vocal about what will and won’t be permitted on their territories — several nations have mounted an effort to stop the Northern Gateway pipeline, for example, which proposes to ship Alberta bitumen to a port in Kitimat, B.C.
“The era of companies coming to Aboriginal groups and throwing beads and trinkets is over. All the companies doing business in Aboriginal territory have to do so on the basis of a real partnership, and that means revenue sharing.”
The Chinese understand this, he said.
“They don’t have preconceived ideas about dealing with Aboriginal people. It’s an interest group that has leverage and power over projects. Chinese people are generally practical.”
Mr. Helin said he doesn’t begrudge CSIS examining deals between First Nations communities and China, but said it’s a bit odd.
Mr. Alexander agreed, saying most Aboriginal people don’t necessarily have a preference about with whom they do business.
However, “In my opinion, the Chinese, are developing a more sophisticated understanding of the duty to consult and impact benefit agreements,” he said. “Most Canadian-based companies see the duty to consult simply as a liability, not an asset.”