$6.8 million Nuctech deal rejected after security review

Ottawa has increased its national security requirements based on a risk review, and as a result, Global Affairs Canada will not proceed with a £6.8 million contract with a partially Chinese[1] state-owned security company that was to install and run X-ray scanners in Canada’s embassies around the world. In July, Ottawa posted details[2] of a “standing offer” from Nuctech, which would see the Beijing[3]-based company install X-ray scanning equipment and software in 170 Canadian embassies, consulates and high commissions worldwide. However, after critics raised concerns the company is closely associated with Chinese Communist Party leaders, Global Affairs Canada (GAC) announced a review.

Read more: Canadian minister promises review after security contracts awarded to Chinese-state tech company[4]

In a hearing Wednesday in Ottawa, a GAC official said a review by Deloitte Canada recommended the federal government only install security equipment in Canadian embassies, from companies with national security clearances. Story continues below advertisement Nuctech was not reviewed for national security in the GAC procurement process, the hearing was informed.

The GAC official said when Ottawa accepted Nuctech’s standing offer, existing security requirements judged that Nuctech’s equipment would not present a security risk, because it would only be installed in public areas and would not be connected to Canada’s secure information networks.

1:43China ‘totally took us down’: former Nortel cyber-security investigatorChina ‘totally took us down’: former Nortel cyber-security investigator – Aug 25, 2020

Michele Mullen, director-general for the Canadian Centre for Cyber Security, said the centre wasn’t approached by GAC to do a risk review on Nuctech’s bid.

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“We only perform assessments when we are approached by departments making decisions,” she said. Mullen said Ottawa now recognizes, after the Deloitte review, the types of equipment Nuctech was to provide, could be used to access information networks, if installed in Canadian foreign missions. Story continues below advertisement

“The nature of the technology has evolved so that (X-ray machines provided by Nuctech) actually could gather information,” Mullen said.

READ MORE: Ottawa likely to follow U.S., U.K. national security bans of Huawei, experts say[7] Global News has reported that since 2017, Nuctech had been awarded four border security and customs warehouse contracts valued at £6.5 million to provide scanners and lab equipment to Canada Border Services Agency (CBSA), according to procurement documents. This is despite mounting concerns among some national security experts about Nuctech’s growing access to sensitive facilities worldwide.

Nuctech, which was headed by the son of former Chinese President Hu Jintao for several years, has accumulated a number of airport and border security infrastructure contracts around the world. According to the Nuctech website, the company has customers in 160 countries.

Read more: Inside the Chinese military’s attack on Nortel[8] However, Nuctech has also garnered criticism over alleged corruption in its business dealings in Africa[9].

According to Lorenzo Ieraci, assistant deputy minister for Public Services and Procurement Canada, Nuctech was one of seven companies considered for bids on the GAC security equipment contract, in December 2019. The other companies were from the U.K., Canada and the United States, he said. Story continues below advertisement

“How could we overlook that a Chinese Communist Party state-owned company would put equipment into our embassies?” Ieraci was asked by an elected official. “The way forward is to make these decisions based on a more rigorous security assessment than we have done in the past,” Ieraci answered. “We are now aware of risks, that we were not previously.” A CBSA official said the border agency will also reassess its dealings with Nuctech.

“We are looking at our life-cycling (of existing Nuctech equipment) given our new security requirement guidelines,” he said.

(C) 2020 Global News, a division of Corus Entertainment Inc.

References

  1. ^ Chinese (globalnews.ca)
  2. ^ details (buyandsell.gc.ca)
  3. ^ Beijing (globalnews.ca)
  4. ^ Canadian minister promises review after security contracts awarded to Chinese-state tech company (globalnews.ca)
  5. ^ Pfizer says final results show coronavirus vaccine is 95% effective, no safety concerns (globalnews.ca)
  6. ^ Canada’s coronavirus vaccine rollout: Who will get it first? (globalnews.ca)
  7. ^ Ottawa likely to follow U.S., U.K. national security bans of Huawei, experts say (globalnews.ca)
  8. ^ Inside the Chinese military’s attack on Nortel (globalnews.ca)
  9. ^ Africa (www.nytimes.com)

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