Chinese billionaires, gangsters, and spies have been influencing Canadian real estate for ages

REUTERS/Carlos Barria

Remember when the RCMP and CSIS accused the Chinese government of purchasing real estate in Canadian urban centers as a method of threatening Canada? No? That’s because the recommendations from a former classified program called Sidewinder was abandoned. All documents were ordered destroyed, and buried in 1997 by the Liberal government. Turns out we were as anxious to build ties with China then as we are now. Despite our national spy services advising the government that, well…this would happen to real estate.

In a report titled Chinese Intelligence Services and Triads Financial Links in Canada, an RCMP-CSIS joint task force allege that the Chinese government is using legal and legitimate businesses to gain control over the economic levers of Canada. They also warn that the “Canadian economy is concentrated in three or four large urban centres.” Consequently, “[Canada] is more vulnerable [than other countries] because of the many legislative loopholes governing finance and the concentration of financial power in the hands of few”.

20 years ago, when people thought Barbie Girl was great music, this seemed like our top spies were spinning a far-fetched conspiracy theory. Analysts even referenced how far fetched it seemed in the actual document. They preface the report with “this document does not present theories but indicators of a multifaceted threat to Canada’s national security based on concrete facts drawn from the databanks of the two agencies involved [the RCMP and CSIS].”

The report also warns that “if you look at a single individual, the threat does not seem to be there, but because of their associations and their alliances with China, the facts analyzed lead us to believe that a gain of influence is the object of a concerted plan and that could constitute a threat to Canada.” Reading the details today, these ideas seem less far-fetched than ever.

“China remains one of the greatest ongoing threats to Canada’s national security and Canadian industry.”

— Chinese Intelligence Services and Triads Financial Links in Canada

Chinese Billionaires, Gangsters, And Spies

Canada’s top spy agencies claimed that they have identified distinct groups of people that are “working with the Chinese government to gain influence through some of their ‘financial ventures’ in Canada.” They further allege that the Chinese government is using tycoons, triads, and spies to “attain influence over the economic levers and prominent Canadian figures”.

Chinese-Canadian Tycoons
Well known (and loved) Chinese-Canadian business tycoons are said to be a threat. Stanley Ho (Casino barron, former owner of Ramada), and Li Ka-shing (founder of Concord Pacific) are both named in the report for their aggressive investments in Canadian real estate, and financial institutions. At one point they estimate that Li Ka-shing and his son (Terry Hui) owned at least ⅓-⅙ of downtown Vancouver at the time. The report also notes the recent buy of 18 hectares by the CN Tower, which is over 1% of downtown Toronto.

The report claims that the two were selected by Beijing to be the unofficial leaders of Hong Kong after the departure of the British. While Sidewinder doesn’t explain why they’re concerned, the American government lays it out on the table. The US government wrote in a report that the RCMP identified Ho as having links to Kung Lok, a branch of the Triads.

Canadian analysts don’t quite say why Li Ka-shing is on their radar. They do infer that his acquisition and interest in Canadian banks is worrisome, but not why. When China launched CITIC, a state-owned investment firm, Li Ka-shing was appointed to the first board of directors. Additionally the U.S. Embassy in Beijing has claimed Li Ka-shing’s Hutchinson Whampoa is “financing or serving as a conduit for communist China’s military”. So maybe that’s it?

Hong Kong’s Triads
The report also alleges that Triads have developed large businesses in Canada, both legitimate and not-so-much. For those that don’t know, the Triads are one of the largest organized crime groups in the world. They have significant operations in Canada, mostly around Vancouver and Toronto. They’re discreet and intelligent, not street goons. Police forces around the world allege they do everything, from drug trafficking to smurfing. Although they do have much more legitimate operations, like making movies and real estate development.

The report claims Beijing is giving them a free pass in exchange for sharing influence. RCMP-CSIS analysts also claim they have identified triads, amongst legitimate immigrants, using “investor” and “entrepreneur visas” to come to Canada. They note that Canada is an “excellent place to invest in companies to launder the profits derived from criminal activities while securing a portion of their assets outside of Hong Kong and obtaining a Canadian passport.” Back then they must’ve been unaware thatCanada is an excellent place to launder any money.

Chinese Spies
The report also accuses the Chinese Intelligence Service (ChIS) of using specialists, students, and shell companies to “pursue their acquisition of economic intelligence.” They additionally claim that ChIS is attempting to position themselves in a way in which they can impact the management of the country.

Real Estate, Banking, And Technology

Sure, we watch television. We know spies are sent around the world to gather military and economic secrets. What’s interesting in this report is something that’s been undiscussed for 20 years. RCMP-CSIS analysts claim China is after “soft” sectors, such as “real estate, hotels, transportation, oil companies, and travel agencies”.

Activity in “soft” sectors doesn’t attract the scrutiny of larger, regulated industries. A look at Lenovo’s rejected bid for handset maker Blackberry vs. Anbang’s successful bid for the Bentall Centre in Vancouver is an example of this. The former received great scrutiny because it was technology, the latter not so much. The analysts further noted that investments in commercial sectors “at first site do not involve any security risks and did not attract the attention of the Canadian services responsible for security.”

They go on to say “the scale of their venture or investments has now made them some of the most important figures present in the major centres [of Canada], and their decisions to invest in one place or another are not a matter of indifference to anyone. Such projects are seen by the local or national business community as a ‘favour’ or a ‘chance’ not to be missed”. Sounds vaguely familiar.

Influence In Politics

The report notes that they’re not interested in Canada because of our sweet maple booty. It’s because of our political influence. They allege that the 3 groups of people are attempting to control our political base. According to the report, there’s two methods in which they use – donations and constituency.

“The triads, the tycoons, and ChIS have learned the quick way to gain influence is to provide finance to the main political parties. Most of the companies identified in this research have contributed, sometimes several tens of thousands of dollars, to the two traditional parties, that is, the Liberal and Progressive-Conservative Parties.”

Those sentences are concerning for two reasons: First, terrible grammar. Second, politicians feel a sense of duty to repay political donors. At the very least, they often grant them favours to keep the money flowing for campaigning. We restrict foreign donations to our political parties for this reason. Unfortunately, what happens when “domestic” companies make donations to help foreign influence? We can’t do a whole lot about that, now can we?

“The triads, the tycoons, and ChIS have learned the quick way to gain influence is to provide finance to the main political parties. Most of the companies identified in this research have contributed, sometimes several tens of thousands of dollars, to the two traditional parties, that is, the Liberal and Progressive-Conservative Parties.”

Leveraging Legitimate Desire

No, the report isn’t racist and thinks the whole country should be on edge with all Chinese people. In fact, the analysts say the “great majority” of Chinese immigrants are “legitimate”. They allege that spies and triads are hiding amongst the ranks of regular families. Despite this, the report claims “Canadian authorities detected a significant presence of Chinese organized crime” using Canada’s generous immigration schemes.

Notably present in the table of contents but not included in the draft is a section on Canadian schools. A copy hosted by retired police officer Leo Knight has a section called “University of Toronto and University of Western Ontario”. The actual information was redacted unfortunately. I guess we’ll never know what mysteries our universities and student visas contain.

It’s Probably Nothing…Sidewinder Gets Disbanded

Operation Sidewinder was abruptly disbanded before the document was leaked. Apparently all copies were ordered destroyed, and the “rest were lost”. No one’s quite sure who ordered the documents destroyed. It’s believed the project died under pressure from within and outside the agencies.

The internal struggle reads like an argument between kids, then covered up by the oldest one. Senior RCMP officials say CSIS officials tried to alter information and delete materials in ways that “undermined the report’s integrity”. CSIS claims the report did not meet the analytical rigour. The Security Intelligence Review Committee (SIRC) did a final investigation into the matter, and claimed the report was “deeply flawed”. They did determine that the final draft was up to standard, but it did not present a credible threat.

They also disclosed in a second report that documents were improperly handled. One agent in Toronto had his car broken into, and files stolen. They concluded “petty thieves intent on supporting a drug habit” committed the crime. They also say the classified documents stolen were “unread”, disposed of in a dumpster, and emptied at a landfill site…but they were never recovered. Which is a lot of details considering they have no idea what happened after the burglary.

Political Response To Sidewinder

As you can guess, this report didn’t sit well with anyone in government. It alleges a powerful country is conducting a spy mission, using influential Canadians. They even scrutinized a company whose board Prime Minister Chretien’s son-in-law sat on. The company was China’s state-run CITIC, but still. Right or wrong, it wasn’t going to sit well.

The whole report went mostly silent, with a few exceptions. Once, when RCMP officers involved filed an obstruction-of-justice complaint. They alleged senior officers covered up their investigation. Another time in Parliament, when they noted that whistleblowers are punished in Canada. They used two of the CSIS agents that had their careers ruined shortly after Sidewinder as an example.

Most notable was in 2010, when then CSIS director Richard Fadden mentioned it in a CBC interview. He alleged two BC cabinet ministers are under the influence of foreign governments, but didn’t substantiate the claims. Afterall, it’s not like Vancouver’s politicians are flying China’s flag over city hall or anything. Wait, that happened? That’s six kinds of weird. Vancouver Mayor Gregor Robertson said at the time “it’s frustrating and unfortunate that local elected officials in BC had aspirations cast upon them without any justification”. Yeah, that Gregor.

Seriously, WTF?

I know, bringing up Sidewinder brings up more issues than it clears. In fact, some of you might think this was a hate piece written to attack the Chinese and politicians. Completely not my intention. In fact, I receive at least a couple emails a day saying I’m too pro-China for some of my articles.

Our point was, often we sweep things under the rug because they’re uncomfortable to talk about. We do so at our own peril. Canadian politeness often gets taken advantage of by politicians, businesses, and (if we believe our top spies) foreign countries. In exchange, we seem nice but get Royally screwed. I’m just one Canadian though, what do you folks think?

Drop us a comment below, or share this with a friend and discuss. We’d love to hear what Canadians think about the Sidewinder report 20 years later. We’ll be exploring how crazy Sidewinder is over the next few posts. Like us on Facebook to be notified when the next post goes live.

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