Chinese state-owned fund among backers of company handling Canadian visa applications

Worrisome. Of note, however, according to their website TT Services lists Australia, New Zealand and the USA as clients, so the issue is broader than just Canada:

One of China’s largest state-owned investment funds is among the biggest backers of a company the Canadian government uses to collect and process personal information from visa applicants around the world.

The ownership structure has prompted some of Canada’s former foreign intelligence leaders to warn that Ottawa should think carefully about trusting sensitive information to a company partly owned by the Chinese state.

Documents filed with Britain’s corporate registry, Companies House, show Chengdong Investment Corp. as one of the most significant contributing partners to the parent company of TT Services, which runs visa application centres for the Canadian government in 24 countries. Its services include collecting fingerprints, photos, biographical information and other personal data.

Chengdong is a subsidiary of China Investment Corp., a Chinese state-run giant with more than US$1-trillion in assets.

TT Services is owned by VFS Global, which calls itself the “world’s largest visa outsourcing and technology services specialist.” Headquartered in Dubai, VFS operates in 144 countries.

Immigration consultants in Canada have raised concerns about the contract with VFS since 2008, when the company began processing visas in China, where police can access corporate offices. Chinese national law also requires any organization operating inside the country to co-operate with intelligence services.

Richard Kurland, a Vancouver-based immigration lawyer, said the amount of personal information VFS handles is immense.

“Passing through their hands are the family trees of applicants,” Mr. Kurland said. “The VFS organization may have more personal information on applicants for immigrant services than entire countries do.”

VFS was founded in 2001 by Zubin Karkaria, an Indian entrepreneur who remains its chief executive officer. But today, its majority owner is EQT VII (No. 1) Limited Partnership, whose registered office is in Edinburgh. That company, British documents show, has numerous partners.

Two of the largest are Eight Finance Investment Co. Ltd., which belongs to the Hong Kong sovereign wealth fund, and Chengdong Investment Corp.

The records show that both Eight and Chengdong made €25,000 ($39,000) in capital contributions, considerably more than other investors, which include pension funds and banks – some of whom contributed as little as €20.

The small figures belie the importance of those investments. In limited partnerships, investments are often made as loans, the size of which can far outstrip the capital contributions. Larger contributions usually entitle investors to a larger share of profits.

In general, “if you contribute more, you get more out of the investment,” said Bobby Reddy, a lecturer at the University of Cambridge Faculty of Law.

VFS and the Canadian government say their agreement includes privacy safeguards. And under British law, limited partners such as Chengdong are meant to be “passive or silent investors,” Mr. Reddy said.

But Richard Fadden, a former director of the Canadian Security Intelligence Service (CSIS) who served as national security adviser to two prime ministers, said he does not think it is appropriate for a company with Chinese state-enterprise ownership to handle visa applications for the Canadian government.

He said that Foreign Affairs Minister François-Philippe Champagne recently ordered a review of a deal in which a Chinese state-owned company would provide new X-ray security equipment for Canadian embassies.

“It seems to me that if there are concerns in Ottawa about a company that is owned by the Chinese company operating X-ray machines in Canadian embassies, then there should be an equal amount of concern about the possibility that a Chinese company might have access to all sorts of information about foreigners wanting to come to Canada,” Mr. Fadden said.

“This is information that might be just as useful to the Chinese state, especially, if and when, they reach Canada.”

In a statement to The Globe, EQT spokesman Daniel Ketema confirmed that EQT VII (No. 1) holds majority ownership of VFS, but declined comment on the role of Chengdong.

“We are not allowed to disclose names of investors or their stakes in EQT’s funds,” Mr. Ketema wrote in an e-mail.

VFS chief communications officer Peter Brun said “VFS Global does not store any personal data related to a visa application. All data is purged from its systems in accordance with regulations set out by client governments.”

“The EQT VII fund doesn’t have access to any data from VFS Global nor any of its other portfolio companies,” he said.

The Chinese government has in recent years asserted more intensive control of companies inside its borders, both state-controlled and private entities alike. In September, the Communist Party urged privately owned companies to employ “politically sensible people” who will “firmly listen to the party and follow the party.”

State-owned firms also form a key pillar of Chinese foreign policy, and the country has sought to boost the overseas reach of its financial institutions.

Ward Elcock, a former director of CSIS, said the connections of a Chinese state-owned firm and the Hong Kong sovereign wealth fund to VFS Global need to be investigated further to determine whether the threat is serious.

“I think that the role that Chengdong plays ought to raise a few eyebrows, even if it is as part of a limited partnership,” Mr. Elcock said. “Visas and the associated applications would, I suspect, be of interest to the Chinese, so there is at least the risk that they would want to find some way to obtain access.”

“In the current environment, it would be less than wise to ignore the potential risks,” he said. “As to the Hong Kong sovereign wealth fund, we would not have thought of them as a problem until recently, but increasingly it is clear that the Hong Kong of the past will not be the Hong Kong of the future. Instead, it will simply be an extension of the regime in Beijing with a few bells and whistles retained … so, again reason for more enquiries.”

In Canada, the Liberal government has said it wants to bring in 1.2 million immigrants over the next three years, including 401,000 new permanent residents in 2021.

In other countries, VFS shares revenues with governments. Canada’s government “does not receive a portion of revenues from VFS for premium services nor does it collect any revenues from VFS Global,” Béatrice Fénelon, spokesperson for Immigration, Refugees and Citizenship Canada, said in a statement.

“Safeguards governing the protection of personal information are built into the terms of the contract between the VACs and the government of Canada,” Ms. Fénelon said.

She declined comment on the VFS ownership structure, but said using the company allows the Canadian government to “offer extended hours of operation and more points of service that make it convenient and accessible for applicants to submit their application and provide their biometrics.”

The contract with VFS will remain in place until Oct. 31, 2023. It can be extended for up to three years, but late this summer, Ottawa began a process to replace current contracts.

The government is seeking input on what visa application centres might look like in the future, including promotion of Canada as a destination of choice; collection of biometric information; premium services that would be offered for a fee; and tighter links with the government through provision of “interview facilitation, interview rooms, and videoconferencing.”

Source: https://www.theglobeandmail.com/politics/article-chinese-state-owned-fund-among-backers-of-company-handling-canadian/

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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