VZCZCXYZ0000
OO RUEHWEB

DE RUEHOT #0627 2252057
ZNY SSSSS ZZH
O 132057Z AUG 09
FM AMEMBASSY OTTAWA
TO SECSTATE WASHDC IMMEDIATE 9753

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

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.