Canadian government suspends RCMP radio contract with Chinese-owned company

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The federal government has suspended a $550,000 contract to supply the RCMP with radio equipment made by a Canadian company with Chinese owners after a backlash over the deal.

Sinclair Technologies, the supplier, is a division of Norsat International, a Vancouver company purchased by China’s Hytera Communications Corp. in 2017. Hytera was blacklisted by the U.S. government in 2021 over national security concerns.

Back then, the Trudeau government approved the sale to Hytera without a formal extended national security review, a decision that was criticized in Canada and the United States.

Alexander Cohen, director of communications to Public Safety Minister Marco Mendicino, said the suspension of the RCMP-Sinclair contract took effect Thursday.

Trudeau government to review RCMP equipment contract with ties to China

He did not say whether this is a prelude to cancelling the contract, but Ottawa would have to secure an alternative supply of radio equipment before doing so.

The government has been under fire in the House of Commons over the contract, with the opposition saying it puts national security at risk and enables foreign espionage.

Hytera, a company that sells two-way radios, is 10-per-cent owned by the Chinese state through a Shenzhen-based government pension fund, according to a filing the company’s lawyers made to U.S. regulators in 2021.

In February, the U.S. Department of Justice brought criminal charges against Hytera, accusing it of conspiring with Motorola Solutions employees to steal the American company’s digital mobile radio technology.

Sinclair told The Globe on Thursday that it’s an independent company registered and operating in Canada and its products “are trusted by public safety agencies globally for over 70 years.”

Pam Damoff, the parliamentary secretary to the Pubic Safety Minister, said the RCMP is conducting a review ”to ensure the integrity of our infrastructure is in place.”

“Given the current geopolitical dynamics, we are taking all actions to combat foreign interference,” Ms. Damoff told MPs.

The House of Commons is examining Beijing-directed interference operations in Canadian domestic affairs, including democratic processes. In its recently announced Indo-Pacific strategy, the government vowed to combat foreign interference from China and said the world’s second-largest economy was an “increasingly disruptive” global power.

Conservative public safety critic Raquel Dancho said Prime Minister Justin Trudeau should not only suspend the contract but cancel it and order all the Sinclair radio technology be stripped out of RCMP operations.

“My understanding is that they’ve actually implemented a lot of the technology already in Saskatchewan and Ontario,” Ms. Dancho said. Mr. Trudeau “has the responsibility to ensure that that’s removed, first and foremost.”

Mr. Trudeau dismissed security concerns when Hytera purchased Norsat, even after a U.S. congressional watchdog warned against the takeover of a company that supplied goods to the Pentagon.

“We would not move forward with approving investments under the Investment Canada Act if we were not assured and comfortable that there is no risk to national security. Period,” Mr. Trudeau said in 2017.

Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which reports to Congress, said “the sale of Norsat to a Chinese entity raises significant national-security concerns for the United States as the company is a supplier to our military.”

Mr. Trudeau was criticized by opposition parties for not subjecting the Norsat deal to an extended national security review. The takeover went through a routine national-security screening that all foreign takeovers of Canadian firms undergo.

A more far-reaching probe would have analyzed the potential impact on Canada’s defence capabilities and investigate how the transfer of this proprietary technology outside Canada might affect this country’s interests or those of its allies. It would also consider how the transaction could enable foreign espionage or injure Canada’s foreign relationships. And it would consider the potential of the investment to hinder intelligence or law-enforcement operations.

In a partly redacted indictment unsealed in Chicago this February, the U.S. government said Hytera Communications recruited Motorola employees in Malaysia to steal proprietary trade data about the radios, known as walkie-talkies.

Daniel Le Bouthillier, head of media relations at the Department of National Defence, said the military is examining its past contracts with Sinclair, from before China took over Norsat.

“We are aware of the concerns surrounding Sinclair Technologies,” Mr. Le Bouthillier said. “We are investigating these procurements and the way in which this equipment is used, alongside counterparts in other government departments.”

With a report from Reuters