Canada under fire for approving Norsat sale to China’s Hytera Communications
VICTORIA, British Columbia — The Canadian government has come under fire for approving the sale of a Vancouver-area satellite technology company to a Chinese firm.
Opposition MPs in the House of Commons are accusing the Liberal Party government of turning a blind eye to national security after it approved the sale of Norsat International to Hytera Communications Corp. of Shenzhen.
Norsat’s list of defense clients includes the U.S. Department of Defense, U.S. Marine Corps, U.S. Army, Republic of Ireland Department of Defense, Taiwan Army and Scandinavian defense forces.
The proposed sale dominated debate in the House of Commons June 13 and June 14.
Canadian Prime Minister Justin Trudeau defended the sale, adding that his government consulted with U.S. officials. “We take the advice and feedback from our national security agencies very seriously, and based on that advice we proceeded with this transaction,” he told members of Parliament. “In this particular case, our security agencies did consult with key allies, including the United States.”
Trudeau said his government determined the acquisition of Norsat, based in Richmond, British Columbia, would not affect national security.
But opposition MPs pointed out the Canadian government conducted only standard security checks and not a full-fledged national security review.
In a new development, Norsat announced June 14 it was considering an unsolicited counter-bid from a U.S. investment fund, Privet Fund Management of Atlanta. The Privet offer is for $67.3 million U.S., slightly higher than the Hytera bid.
Hytera now has until June 20 to make a higher offer. If that does not happen, Norsat intends to accept the Privet proposal, the company noted in a news release. Privet already owns about 17 per cent of Norsat’s common stock.
The Chinese Embassy in Ottawa issued a statement pointing out that there should be no security concerns linked to the Hytera bid. “From Canadian media’s relative reports, in these commercial merger cases China is often regarded as an enemy that jeopardizes Canada’s national security,” Yundong Yang, a spokesman for the Chinese Embassy said in the statement. “Absurd thoughts like this totally go against the mutually beneficial co-operation between China and Canada.”
In March, Motorola Solutions of Chicago filed a lawsuit against Hytera, alleging the Chinese firm had obtained proprietary information illegally. Motorola claimed that three of its former engineers stole more than 7,000 proprietary technology files and provided them to Hytera.
Norsat makes microwave components, portable satellite systems, maritime communications equipment and RF antenna products. In January it announced that it had sold portable satellite terminals to the U.S. DoD in a deal worth $3.3 million. In 2015, it announced it had sold satellite terminals to a “major Eurasian defense contractor” as well as to the U.S. DoD.
Two former directors of the Canadian Security Intelligence Service have raised concerns about the proposed sale to Hytera. Richard Fadden and Ward Elcock told The Globe and Mail newspaper that they would have recommended an in-depth national security review of the Norsat transaction.