CANADA CONCERNED ABOUT CONTEMPLATED FORSYS SALE AND IRAN NEXUS

S E C R E T OTTAWA 000627

SIPDIS

STATE FOR ISN/RA - J. ALLEN-CLOSE AND N. MENKHOFF, WHA, AF,
AND T

E.O. 12958: DECL: 08/13/2019
TAGS: PREL, PARM, MNUC, KNNP, IR, CA, NA
SUBJECT: CANADA CONCERNED ABOUT CONTEMPLATED FORSYS SALE
AND IRAN NEXUS

REF: STATE 84119

Classified By: PolMinCouns Scott Bellard, reasons 1.4 (b) and (d)

1. (S) Canada shares U.S. concerns regarding the pending sale
of the Valencia uranium mine in Namibia from Canadian company
Forsys to Belgian company George Forrest International (GFI),
according to Department of Foreign Affairs and International
Trade (DFAIT) Director of Foreign Intelligence John Di Gangi.
He added that Canadian Assistant Deputy Ministers (Under
Secretary equivalent) from DFAIT, Public Safety, Industry
Canada, Royal Canadian Mounted Police, Canadian Border
Services Agency, and Canadian Security and Intelligence
Service have convened twice to discuss the implications for
Canadian national security and the options Canada has for
upholding its international obligations to combat Iranian
proliferation.

2. (S) DFAIT Nuclear Non-Proliferation and Disarmament
Director Andre Francois Giroux explained that a new law
passed by Parliament in March provides the Canadian
government with the ability to veto proposed acquisitions of
Canadian companies on national security grounds. Giroux and
Di Gangi both expressed concern that Canada was "in uncharted
waters" since the law was still so new, however. Di Gangi
cautioned that Canada was now trying to determine whether the
new legislation would indeed permit the government to veto
the sale, since the acquiring company was not Iranian but was
only contemplating doing business with Iran in furthering its
nuclear weapons capability. He also explained that the law
would require Forsys to notify Industry Canada of its
intention to sell the company to any company specifically
because of the uranium nexus; the government could then,
essentially, call a "time out" to seek further information on
the details of the transaction. No one from Forsys had yet
contacted the government and no Canadian officials have
engaged the company, according to Di Gangi and Giroux.

3. (S) Di Gangi and Giroux expressed thanks for the reftel
demarche, commenting that it would serve as an action forcing
event for senior officials and provide ministers with a
plausible reason -- aside from the actual intelligence we
have shared -- that could potentially allow them to quash the
sale. Di Gangi affirmed that the government would "almost
certainly" have to make public its reasoning for quashing the
sale if it decides to take that step. He noted that, absent
our demarche, Canadian officials would have been left with
the options of being forced to reveal the substance of shared
U.S. intelligence or acquiescing to the sale.

4. (S) Di Gangi described Canadian senior officials as
"actively seized" in evaluating possible options. He
underscored that U.S. concerns expressed in reftel will
"figure prominently" in those deliberations. Di Gangi
declined to be drawn out on the existence of any Canadian
investigation, but acknowledged that if and when Forsys
informs Canada officially of its intention to sell the
Valencia mine, the Canadian government would likely explore
whether GFI had informed Forsys executives about its
discussions with Iran.

Visit Canada,s North American partnership community at
http://www.intelink.gov/communities/state/nap /

BREESE