Hydro-Québec has said that it hopes to gain about 10 per cent of the $3-billion global electric-battery market by 2030.Ryan Remiorz/The Canadian Press
RCMP have laid the first economic-espionage charge in Canadian history against a researcher in Quebec who is accused of obtaining trade secrets for the benefit of China.
Yuesheng Wang, 35, faces four criminal charges involving an alleged conspiracy to spy on his employer. He has spent six years working for Hydro-Québec, which said in a statement that he was doing research into battery materials for the utility’s Centre of Excellence in Transportation Electrification and Energy Storage.
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In 2020, Hydro-Québec made a big push into the electric-battery market by announcing plans to design and sell industrial energy-storage units to transmission providers and other power companies. The utility has said that it hopes to gain about 10 per cent of the $3-billion global market by 2030.
Quebec Premier François Legault has said that he wants to build a supply chain to feed the fast-growing electric-car industry, and the utility sees the centre as a “world-class” innovation hub for battery research.
On Monday, the RCMP announced charges against Mr. Wang alleging that he had been involved in obtaining trade secrets, fraud for obtaining trade secrets, breach of trust and unauthorized use of a computer. He is to appear in a Longueuil court on Tuesday morning.
“The RCMP has a mandate to detect and disrupt foreign interference attempts,” the police force said in a statement. It said that Hydro-Québec is a crucial Canadian entity and “a strategic interest to be protected.”
In an interview with The Globe and Mail, RCMP Inspector David Beaudoin confirmed that the case marks the first time that a suspect has been charged under a law against economic espionage passed by Parliament more than two decades ago.
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Section 19 of the Security of Information Act aims to protect valuable trade secrets controlled by Canadian companies and Insp. Beaudoin said it will be used more often now that many companies are awakening to the risk of foreign spying.
“We’re starting to see that such collaborations are becoming more common as awareness is becoming more widespread across companies associated with critical infrastructures,” he said. “This type of charge might be getting more common in the future.”
During a press conference, Insp. Beaudoin told reporters in Montreal that Mr. Wang used Hydro-Québec’s trade secrets for China’s benefit.
“Mr. Wang allegedly used his position to conduct research for a Chinese university and other Chinese research centres,” Insp. Beaudoin said. “He reportedly published scientific articles and submitted patents in association with this foreign actor, rather than with Hydro-Québec.”
In court documents, the RCMP says the conspiracy began back in 2018, but that it began putting the case together in August. That was the month it received a complaint from Hydro-Québec’s corporate security branch alleging that Mr. Wang wrongly obtained proprietary information.
In a statement, Hydro-Québec said it had terminated Mr. Wang’s employment “for serious violations to the company’s code of ethics.”
“Our detection and intervention mechanisms allowed our investigators to bring this matter to the attention of the RCMP, with whom we have worked closely ever since,” said Dominic Roy, an official in charge of corporate security at Hydro-Québec.
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According to a LinkedIn profile, Mr. Wang joined the Hydro-Québec centre in 2016, after getting his doctorate in philosophy from the physics department of the Chinese Academy of Sciences and doing postdoctoral research in the United States and Britain. Public records show he holds several patents relating to the chemical compositions of battery materials.
He has co-authored academic papers, including ones involving researchers at the Hydro-Québec centre and other researchers in China. Property records show he bought a house on the outskirts of Montreal three years ago, paying $290,000 for a property in the South Shore community of Candiac.
The Security of Information Act was enacted in 2001. Section 19 of the act lays out the punishments for anyone who uses a “trade secret for the benefit of foreign economic entity.” Anyone convicted of obtaining intellectual property “at the direction of, for the benefit of or in association” with a foreign country can spend up to 10 years in prison.
Court records show Mr. Wang is accused of breaking this law “for the benefit of the People’s Republic of China, to the detriment of Canada’s economic interests.” It is not clear what information was at stake.
Electric-vehicle batteries rely on metals in short supply, such as lithium, and Ottawa has lately taken a hard stand against Chinese encroachment into the Canadian critical-minerals sector. Last month, the federal government said it would only approve investments by foreign state-owned companies into such Canadian mining companies on an “exceptional basis.”
Early this month, Ottawa ordered Chinese state-owned companies to divest their interests in three Canadian battery minerals companies: Power Metals Corp., Lithium Chile Inc. and Ultra Lithium Inc.
China currently dominates the global market for battery metals. It is a major miner of lithium and controls about two-thirds of refining processes globally. The only lithium mine in operation in Canada is the Chinese-owned and operated Tanco mine in Manitoba.
Economic-espionage criminal cases are relatively common south of the border. For years, the U.S. Department of Justice ran a dedicated investigative bureau, where police and prosecutors placed China’s alleged activities under scrutiny.
The Canadian criminal justice system has less experience with addressing such threats. “I haven’t seen anything like this before in Canada,” said Richard Fadden, a former national-security adviser to Prime Minister Justin Trudeau. “There are quite a few incidents of this sort in the United States. I’m not surprised that it’s happening.”
Police and prosecutors in Ottawa have faced setbacks in other kinds of espionage cases. A marathon eight-year prosecution ended last year when an Ontario judge tossed out Security of Information Act charges for unreasonable delay. That case had started in 2013 when the RCMP had accused a shipbuilding engineer in Ontario of trying to leak naval secrets to China. The police evidence was that he had been overheard speaking to the Chinese embassy in Ottawa, thanks to a wiretap that Canadian security officials had put in place.
Trial is pending in another matter. Last year, the RCMP charged an internationally recognized agriculture expert in Saskatchewan with fraud and breach of trust. The allegation is that he secretly received money from a Chinese university while he was employed by a federal department, Agriculture and Agri-Food Canada.
Robert Gordon, another former federal intelligence official, said Security of Information Act prosecutions are always significant. While past cases have alleged that suspects have tried to leak or steal government secrets, this one opens a new front.
“When you start to get into economic espionage, it’s specifically related to things like a trade secret,” Mr. Gordon said. “The business will come along [to police] and say ‘We think this is a trade secret of ours – it’s a formula, it’s a pattern we use, it’s a unique process to us. And if we lose that, we will lose our competitive edge.’ ”
With a report from Stephanie Chambers