Third and final installment of Playing with the Dragon series coming next week.

Posted on April 12, 2012 10:46 am by Laila

“We cannot enter into alliances until we know the designs of our neighbours.” ~ Sun Tzu

It should come as no surprise to anyone, that the script of a 6th century general and military strategist has been converted into a business playbook. Yes, Sun Tzu 孫子, author of The Art of War, was indeed a brilliant strategist and in this day when war is a business and business is war, his words are referred to by many for guidance.

Canadians would do well to take heed, and find a copy to read. Not only will it offer you a deeper understanding of the strategies used by many corporations, it will also help you to understand why the Chinese government is so interested in investing in Canada, if not only for our natural resources.

Indeed,as many news reports show, China seems to have decided – after several years of little to no investment – that Canada is one again a good place to invest. Therein lies the heart of this post.

Are all these new Chinese corporate or state investments and ownership good for Canada ?

Or has China simply played the part of the sleeping dragon for another reason, waiting for our government to become willing again to allow such open and easy access to our resources, our technology and our proximity to the United States? What is the real motive for China’s increasing interest in Canada ?

Although I have followed foreign investment interest in British Columbia for some time, via the Macquarie group in particular, it was Richard Fadden’s remarks in 2011 that really sparked my interest in the potential for foreign influence over domestic governments.

Fadden took an incredible amount of flack from then premier Gordon Campbell, along with several provincial MLA’s and municipal politicians after remarking that in B.C., CSIS was investigating foreign influence over several politicians/ government employees.

Oddly enough, this revelation was considered a racial swipe at the entire Chinese community in B.C.,as if every immigrant were suddenly tarred by the actions of a few associated with foreign governments. In fact, Fadden did not single out China as the only foreign country of influence, and it was clear that this was not a racial issue, but a government influence issue.

This is the full Fadden interview, with reference to his now infamous speech. Please watch in its’ entirety, for a pre-cursor to what comes next.

There you have it.

If anything, I think Fadden was trying to warn Canadians, British Columbians, to wake up and smell the coffee.

Look what has happened in our country – look what may be happening now.

Of course, he became the object of many B.C. politicians wrath and ire for his statements, had to do some damage control, but again, most assumed he was referring specifically to Chinese influence, and perhaps he was, but the interview does not reflect that.

You have to have some background understanding of espionage threats in Canada- most of which are vastly under the radar of average Canadians, but I think he wanted to let those know who might be too friendly with foreign governments, that CSIS was watching.

Others have looked at the American influence on BC politicians, and while I do agree that is occurring, there has been much discussion and attention in the past to China.

That is why, it was with great interest this article popped up on my alerts recently: China trying to politically infiltrate NZ and Australia.

Not because it involved China, but because the article details an alleged leaked intelligence briefing for Australian law enforcement agencies that boldly refers to the Sidewinder Report… a report many assert was killed, debunked and shredded directly because of political pressure.

In fact, in the comments section below this very brief preview of the article online, someone tries very hard to negate the reference and again, debunk Sidewinder as conspiracy, even over ten years after the fact.

When you consider that an ex-envoy who defected from the Chinese consulate in Australia came to Canada with evidence of a Chinese spying program in Australia, stating the Chinese used the same methods in western countries to exert political influence over sensitive issues… this alleged leaked intelligence brief takes on a new significance for Canadians.

Here is that brief preview, the full article is available only with a subscription:

“A leaked intelligence briefing for Australian law enforcement agencies suggests China may have already deeply penetrated Australian and New Zealand political and business circles for espionage purposes.

The document, reprinted in the new Investigate magazine out this week, says the pattern of Chinese “investment” in Australia and New Zealand is following exactly the same lines as it did in Canada, where intelligence agencies discovered Chinese government agents posing as rich investment migrants had bribed and corrupted Canadian politicians and officials.

“Few of you will have heard about the “Sidewinder Report”,” states the briefing paper published in Investigate.

“Allowing it was tabled over a decade ago, after which money, influence and corruption were all brought to bear to have copies shredded, that isn’t surprising. Fortunately a single digital copy survived, so we can still analyze/learn from this in-depth and rather alarming study, which is a very good example of Asian/Triad/Organized crime/long term planning.

“I personally believe a similar scenario exists/is being established in the likes of NZ and Australia, where similar immigration policies are in force. For this reason, I want to give you a detailed breakdown of the report, and you can perhaps reach your own conclusions.

“The report was commissioned in the mid 1990′s codenamed “Sidewinder” and was a joint effort prepared by Canada’s Secret Intelligence Service and the National Security Division of the Royal Canadian Mounted Police. Its mandate was to look at Chinese Triad involvement and integration into Canadian Financial and Governmental sectors.

“The report clearly found that over a period of time many Chinese triads, agents of the Chinese Secret Intelligence Service, and Hong Kong tycoons, had firmly established themselves in Canada and had acquired Canadian nationality.”

The document states that Western governments have relied on official Chinese agencies to “vet” prospective immigrants to Canada, the US, Australia, UK and New Zealand, because local law enforcement has no way of independently verifying the identity or history of migrants.

That’s allowed China to slip its own agents into Western nations under the guise of immigration vetting.

“Canadian and Chinese consular staff were selling visas to members of the Chinese mafia and China’s intelligence service, prices were as high as $100,000 per visa,” says the leaked report.

In return for being approved to live and do business in the West, the migrants were given orders on how they could repay the favour to Chinese intelligence.

“They were instructed to make donations and get involved with political parties. Children studied hard and were directed at Government positions, many becoming well established in the ranks of the Immigration dept.  [Name withheld] was Minister of [Portfolio withheld] during the 90′s. He forged close links which China. “Somehow” he and his cronies are now all millionaires.

“By the year 2000, Chinese people affiliated to Triads owned one-third of downtown Vancouver. China invested over one billion dollars in 2001 to buy Canadian businesses in strategic areas and is also a large stockholder in Canada’s Imperial Bank.  It controls 15 corporations in the country’s technology sector.   By 2002, over 200 Canadian Companies were under the direct control of China’s International Trust & Investment Corporation (CITIC).

“CITIC (Pacific) has many links to major Australian and NZ businesses. The Pengxin Group currently bidding to buy Crafar farms in New Zealand are linked to CITIC. CITIC operates directly under the general staff of the People’s Liberation Army (PLA). It is also the world’s largest private operator of container terminals, having lucrative stakes in 17 ports in Europe alone.”

The full report is in the latest Investigate magazine, but its publication coincides with reports this week that Australian intelligence has vetoed the involvement of communications giant Huawei in Australia’s broadband network, for fears it will help China spy on Australia.

Huawei has already been given approval to take part in New Zealand’s broadband rollout.

The chairman of Huawei was formerly a senior official in the Chinese state intelligence agency, and its founder was formerly a solder in the People’s Liberation Army.

Huawei denies any involvement in espionage, but this week its links with US corporates were also cut over similar fears.”

How interesting, that an intelligence document alleged to have been leaked from an overseas source trusted enough to publish it, would mention Sidewinder after all these years.

Sidewinder, for those of you who may have not have heard of the scandal, was a controversial report worked on and put together by a group of RCMP and CSIS officials in the late 1990′s, that was ultimately suppressed, denied as conjecture and theory rather than fact by the SIRC – the Security Intelligence Review committee – the government agency that oversees CSIS.

All copies and supporting materials were ordered destroyed, however several copies were leaked to various media outlets, as well as  several writers across Canada. A full accounting of the scandal can be found here http://www.primetimecrime.com/Articles/Media%20Articles/2000110Sidewider.htm

From Operation Sidewinder – there are many, many other media reports, this is the most concise, comprehensive article:

“It was Sidewinder that sounded the first alarm bells that China is one of the greatest ongoing threats to Canada’s national security and Canadian industry.

But even after Sidewinder was side swiped by former Prime Minister Jean Chretien, intelligence proves that there is no doubt that an active Chinese Intelligence Service has been able to gain influence on vital sectors of the Canadian economy, including real estate, high technology and security. The bottom line is that this unprecedented influence gave China ongoing access to economic, political and some military intelligence in Canada.

Operation Sidewinder met with a fate that silenced ringing alarm bells. Officially entitled Chinese Intelligence Services and Triads Financial Links in Canada, it was buried. Following orders from persons unknown, CSIS watered down Sidewinder’s worrisome conclusions and replaced it with a revised document called, Echo.

CSIS officials maintain that they buried Sidewinder because it relied on nothing more than conspiracy theories—even though http://www.asianpacificpost.com heralded the news in August 2003 that some 3,500 Chinese spy companies had been identified operating in Canada and the United States.

While CSIS claimed that conspiracy caused them to go mum, other intelligence sources are saying that political pressure forced CSIS to abandon the Sidewinder report.

Prominent among Sidewinder’s case studies was The Chinese, state-owned China International Trust Investment Company (CITIC), which already has a subsidiary up and running in Canada. CITIC has spent about $500 million to buy a Canadian pulp mill, a petrochemical company, vast real estate and hotels. At the time of the Sidewinder report. CITIC already had connections with one large Canadian corporation.

Add to that portfolio, the Alberta oil sands, ownership of which is currently being contemplated by a state-owned Chinese company and a Toronto-based mine company, Noranda Mines–a deal worth more than $7 billion.

~snip~

Conspiracy theories were tossed out the window when U.S. Congressman Dana Rohrabacher revealed that the U.S. Bureau of Export Affairs, the U.S. Embassy in Beijing and the Rand Corporation had identified Li Ka-Shing and Hutchison Whampoa (Li’s primary business) as financing or serving as a conduit for Communist China’s military in order for them to acquire sensitive technologies and other equipment.”

To read what remains of the SideWinder report, you can access it in PDF format here:  http://www.primetimecrime.com/Articles/RobertRead/sidewinder.pdf

At this point, I will mention that two men were, with calculated dedication, targeted with respect to their careers and reputations because of what they knew about SideWinder and because they would not drop it.

Cpl Robert Read, was fired from the RCMP for a ‘lack of loyalty to the government’, after a long legal battle. You can read about his battles, here: http://fairwhistleblower.ca/links/canadian_wbs_links.html#Robert_Read

Brian McAdam, a former Canadian diplomat, had his career toppled after discovering the sale of Canadian Visas and government connections to organized crime. You can read his story here: http://fairwhistleblower.ca/news/articles/2008-08-25_one_mans_china_crusade.html

Read those stories and you can see why I find it so interesting that an alleged leaked intelligence briefing, reported overseas, would candidly refer Sidewinder with clear respect for the information.

In my opinion, it bears re-examination of the past to learn for our future. And yet our government still denies all of the SideWinder report as conspiracy theory, even after ex-CSIS head Jim Judd had declared China the number one concern for espionage in Canada and that the agency spent half its counter espionage budget on dealing with China.

It is no wonder foreign governments mock Canada as the country bumpkin cousin.

Here is a telling( even the cached version is no longer available following the posting of this article)  2011 report from Embassy Magazine, Canada’s foreign policy newspaper, titled : Are Chinese spies getting an easy ride?    It is an absolute eye-opener,  and I recommend you read the entire story, however here is an excerpt:

“Since 2008, there have been at least 57 defendants in US federal prosecutions involving Chinese espionage or efforts to pass classified information, technology or trade secrets to operatives in China, according to a May 7 Associated Press report.

Armed with legal tools, and a sense of urgency fuelled by reports to US Congress citing a paramount risk to American technological superiority, the FBI enthusiastically goes after spies in their midst. One US judge, in the 2010 case of a former B-2 bomber engineer convicted of sending cruise missile technology to the Chinese, said he wanted to send a signal to China to “stop sending your spies here.”

But in Canada, several individuals with expertise in the field argue that a mix of federal agency infighting, insufficient legal frameworks, difficulties with prosecuting espionage cases, and fear of upsetting ongoing investigations has resulted in Canadabeing unable to bring any spies to court in the last few years.

They also say Canada’s “new era” of business-friendly relations with China, recently highlighted by Foreign Minister John Baird’s trip, has led to a hesitation by government to pursue legal action against spies.

Historic warnings

The lack of Chinese espionage prosecutions presents an odd situation for a Conservative government that burst into power carrying ominous messages about Chinese espionage in Canada, and that has recently been hit by a major hacking incident that was traced back to the Chinese embassy.

In 2006, then-foreign minister Peter MacKay told CTV the government was “concerned” that Chinese spies were stealing industrial trade secrets, and said it was something he would raise with the Chinese government.

For years, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service have assessed the threat posed by Chinese organized crime and intelligence services on Canadians. There were reports in 2005 suggesting that there were as many as 1,000 Chinese economic spies operating in Canada, for example.

And despite earlier efforts to downplay the threat, CSIS has been trying in the last few years to alert the public. In 2007, CSIS director Jim Judd told a Senate committee that China “pretty much” ranked as the top country sending agents to Canada, with “close” to 50 per cent of all agents in the country.

Most memorably, in June 2010, CSIS director Richard Fadden told the CBC that municipal officials and provincial Cabinet ministers from two provinces were under the influence of foreign governments, and hinted that the Chinese government was one of the culprits.

Chinese-Canadian groups criticized him for inciting needless widespread suspicion, and he subsequently backed off his comments. Yet in another speech, he said that the recent explosion of Canadian technological prowess in the areas of agriculture, aerospace, biotechnology, mining and other sectors makes it a prime target for economic espionage from countries like China. And CSIS’s report to Parliament in June made some similar comments.

This year, the Treasury Board, Department of Finance and Defence Research and Development Canada computers, as well as the computer system of the House of Commons, were hacked and sensitive government information was stolen. Reports said the attack was traceable to the Chinese Embassy as well as computers in Beijing, but the Chinese government denied involvement. “

It brings me back to my headline: Exactly who is looking after Canadian interests while China seemingly outwits our governments?  Is anyone? Who is watching the watchers?

Considering the past and current BC Liberal agenda seems nearly at times entirely dependent on investment and trade with China and other asian countries, who is making sure the political decisions being made are right for British Columbia, and Canada as a whole? Yes, we as a country, and here in B.C. as a province, are banking on trade with China as an economic force to keep the economy strong, but is this happening with our eyes wide shut? I’m not saying bring it all to a grinding halt, I’m saying we as Canadians need to be asking our politicians some serious questions here.

I’m not the only person questioning our politicians motives and agendas, by far.

In this recent Edmonton Journal article, the direct link is made to a large majority of Chinese state control of the Enbridge Pipeline project ( 2014 update, cached version of this article is no longer available either) :

“More recently, the Chinese have turned their attention to securing control of the pipeline infrastructure that would take Canadian bitumen to refineries in China.

Perhaps you thought the Northern Gateway pipeline was solely a project of Canadian pipe-line company Enbridge Inc. Think again.

Enbridge offered a limited group of investors the right to equity ownership in the project in return for financing the National Energy Board regulatory approval process and predevelopment of the project. For $10 million each, these funding participants receive preferred access and toll rates as shippers on the pipeline.

Only six of the funding participants have identified themselves. This means there might be four others, or, perhaps some of the six participants hold more than one partnership right. The six companies are Sinopec, MEG Energy Corp., Nexen Inc., Cenovus Energy, Suncor Energy Marketing Inc., and Total E&P Canada.

With these funding partners, almost all roads lead to Chinese state control.”

~snip~

All of this raises serious questions about the Harper government’s decision to champion a “rip-it-and-ship-it” export strategy over a value-added strategy for Canadian resources.

It’s not a surprise, nor is it inappropriate, for the Chinese to look after Chinese national interests. That’s why they want the Northern Gateway pipeline.

But the resources in question are not owned by the Chinese or the Americans. They’re not owned by oil companies. They’re owned by the citizens of Canada.

Who, we ask, is looking after the Canadian interest?”

Terry Glavin, goes even further in his recent column in the Ottawa Citizen, (***yet another error 404 in 2014, but here is another for you:  http://www.canada.com/business/Defenceless/6947427/story.html ) examining the seeming about-face Harper has taken with respect to policies, regulations and the Northern Gateway project.

His column is an absolute must read from beginning to end, to understand the flips and flops the Conservatives have taken on this, but here is an excerpt:

“Sinopec had barely settled into its director’s chair at Syncrude’s board table when it revealed that it was partnering on Enbridge Inc.’s proposed $6-billion pipeline from the oilsands to awaiting supertankers at Kitimat on the B.C. coast.

Checkmate. Well, that’s odd, you might say. Isn’t this the same pipeline that Harper and Industry Minister Oliver are now calling a project that is vital to Canada’s national interests? Anyone can see how it’s in Beijing’s interests. But Canada’s?

It all depends on what you mean when you talk like that.

Way back in the 1980s, the Security Intelligence Review Committee was urging amendments to the Canadian Security Intelligence Service Act to spell out what Canadians mean when we talk about foreign-power connivings that are “detrimental” to Canada’s national interests. “It is almost wholly subjective: no criteria are provided to offer any standard for determining what is ‘detrimental’,” a SIRC report once pointed out.

The definitions in the CSIS Act still don’t clearly define what “detrimental” means, but unlike Investment Canada, CSIS has muddled through and is properly content to couple Canada’s “national security” with “the security and economic welfare of Canada.” Until late last year, Harper himself was happy to use language just like that whenever he returned to his solemn vow to keep Alberta’s oilsands jobs and investment opportunities in Canada, and not ship bitumen offshore to countries with haywire environmental rules like China. It was a Conservative party pledge in 2006 and 2008 and 2010.

But the rules had got hollowed out, and after Sinopec’s checkmate at the Syncrude table, everything went sideways.

Now, Harper is insisting it’s Enbridge’s Sinopec-backed bitumen-export project that is in Canada’s national interests. It’s positively vital to Canada’s interests and furthermore, it’s something we must all rally around because Canada’s very future depends on it…”

Glavin ends his column with this passage:

“Sinopec has managed to get away with being Iranian president Mahmoud Ahmadinejad’s most reliable sanctions busting ally. It succeeded as the protector of the genocidaire Omar al-Bashir’s regime in Khartoum. It’s still getting away with being the guarantor of the mass murderer Bashar al-Assad’s bottomless bank account in Damascus.

And Sinopec is Canada’s new best friend. We are all sitting ducks.”

Defenceless indeed, when Harper seems to be more than eager to push this pipeline though, gut regulations and allow transactions and buyouts that give the Chinese government tremendous leverage over our land, resources and yes, our governments.

And to be honest, I still don’t know who exactly is looking after Canadians interests – if anyone – while China continues to make strategic acquisitions and takeovers. Our governments seem to be only giving constant applause as they do.

( Also worthy of a read are the comments under the original post https://lailayuile.com/2012/04/12/playing-with-the-dragon-who-is-looking-after-canadian-interests-while-china-outwits-our-governments/ )