U.S. takeover of network carrying sensitive federal data raises security concerns
A U.S. takeover of a national fibre optic network in Canada that carries sensitive federal government telecommunications traffic is raising security concerns that the United States will find it easier to gain access to confidential Canadian data.
In a transaction that closed this month, Manitoba Telecom Services Inc.’s Allstream unit [website here] has been bought by U.S.-based Zayo Group [website here]. Allstream, with its coast-to-coast Internet backbone network, is under contract to carry data for 43 Canadian departments and agencies, including the Department of National Defence, the RCMP and Canada Revenue Agency [emphasis added].
In 2013, the Harper government blocked a deal to sell Allstream to Egypt’s Accelero Capital Holdings on the grounds of national security. Ottawa said it kept Allstream out of foreign hands because it “provides critical telecommunications services to businesses and governments, including the government of Canada [emphasis added, see links at end of the post].”
Manitoba Telecom [website here] and Zayo announced the deal in November, and the Trudeau government declined to conduct an official national security review [emphasis added–hmm].
“The 45-day period during which the government could raise national security concerns has passed,” said Stéfanie Power, a spokeswoman for the Department of Innovation, Science and Economic Development, which screens foreign takeovers through its investment review division.
Critics say the net result of the deal is that a foreign entity now owns and controls a network carrying extremely confidential Internet traffic for Ottawa. No other major domestic network supplier to the federal government is foreign owned and controlled.
The Allstream takeover was announced weeks after Prime Minister Justin Trudeau took office. The period for review by Ottawa ended in early January…
Legislation such as the U.S. Patriot Act gives the United States power to compel a U.S. company to produce information, including communication possessed by a foreign subsidiary…
Manitoba Telecom’s chief corporate and strategy officer, Paul Beauregard, said his company worked long and hard to provide sufficient information to satisfy the government that “Zayo would be an appropriate purchaser from a security perspective.”
Innovation Minister Navdeep Bains defended Ottawa’s conduct in this case, saying every foreign investment is “subject to a due diligence process.”
He declined to explain why the Liberals decided against a formal national security review, saying these are ordered only when the government feels “investment could be injurious to national security.”
Washington has made it clear it considers data held by U.S. companies abroad part of its purview…