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Post under ‘atomic energy’ tag

French connection in AECL sale sparks conflict concerns

28 June 2021 at 10h21
June 25, 2021

Joan Bryden


OTTAWA—French nuclear giant Areva may have been given the inside track to snap up Atomic Energy of Canada Ltd.’s reactor business, critics say.

Some industry watchers and politicians are raising concerns about potential conflict of interest after learning that N.M. Rothschild and Sons — the investment bank hired by Ottawa to develop the restructuring plan for AECL — has also acted as financial adviser to Areva on numerous acquisitions and takeovers in the past.

The bidding process for AECL’s commercial reactor business is a closely guarded secret. But there are only a handful of major nuclear players in a position to bid and industry insiders say the Paris-based, state-owned Areva is likely one of them.

Finalists could be announced as early as this month.

“I’m calling that an incestuous relationship,” said Liberal Senator Celine Hervieux-Payette, who uncovered the link during examination of the Harper government’s massive budget bill.

“The investment banker that is analysing (the bids) on behalf of our government has a very close relationship with a company that I suspect has made a proposal.”

The omnibus budget bill has been approved by the House of Commons and is currently being studied by a Senate committee. It contains a host of non-budgetary provisions, including provisions for the potential privatization of AECL.

Hervieux-Payette’s suspicions were further fuelled when she discovered that Areva, which for years employed a small army of outside consultants to lobby the federal government, abruptly stopped all lobbying activity three months after the government hired Rothschild in May 2009.

According to the federal lobbyist registry, no one has lobbied on Areva’s behalf since last August.

“By some coincidence, they have been using (lobbyists) for many years … and all of a sudden, no more, they don’t need anybody,” Hervieux-Payette said in an interview.

“Well, if they have somebody inside, they really don’t need a lobbyist.”

Rothschild did not respond to repeated requests for comment.

Roger Alexander, president and CEO of Areva Canada Inc., confirmed his company “has been engaged with the Rothschild process with the federal government” related to restructuring proposals for AECL.

He would not confirm or deny that Areva has made an offer for AECL, citing confidentiality of the bidding process.

Other than that, he said: “I’m not aware of any prior relationships that Areva and Rothschild may have had in the past.”

However, records show Rothschild was listed as financial adviser to Areva on numerous deals around the globe, including the $2.5-billion takeover of UraMin, an international uranium mining company with operations in Canada, in 2007.

Also that year, Rothschild advised Areva on a strategic alliance with Summit Resources Ltd. and the acquisition of Northern Uranium Ltd.

Alexander acknowledged Areva’s parent company may have worked closely with Rothschild — hardly surprising given that both are based in Paris. He likened it to a Canadian company seeking financial advice from the Royal Bank.

But he doubted any of the deals involved operations in Canada.

In any event, Alexander said, Rothschild is running an “independent, verifiable” process for evaluating AECL proposals and doubted any concerns about apparent conflict of interest with regards to Areva would arise.

“I can’t imagine that there’s any issue with any of that.”

Natural Resources Minister Christian Paradis’ office referred questions about Rothschild’s relationship with Areva to a departmental spokesman who, in turn, referred the matter to the Public Works Department, which awards government contracts.

Public Works spokeswoman Marjolaine Rocheleau said in an email that Rothschild was chosen through a competitive process from a list of 25 candidates to advise the government on AECL’s restructuring.

As part of the terms of its contract, she said Rothschild “must not have a conflict of interest in connection with the performance of its obligations and is required to declare any such conflict should it arise at any time.”

As for the sudden absence of lobbyists employed by Areva, Alexander said that’s “not related to the AECL activity or Rothschild’s activity.”

“Just for internal Areva strategic and financial reasons, we decided to not continue with those lobbying relationships,” he said.

Still, some industry players are concerned that Areva’s past relationships with Rothschild may give the company a leg up when it comes to AECL.

If Rothschild ends up recommending the sale of AECL to Areva, David Shier, president of the Canadian Nuclear Workers Council, said: “I definitely think it would be more than us saying, hey, there’s a conflict there.”

Indeed, sale of AECL’s reactor business to Areva is among the worst-case scenarios envisaged by some of those involved in the Canadian nuclear industry. They fear Areva, which manufactures a reactor that is incompatible with AECL’s unique Candu technology, would move the cream of Canadian nuclear engineers to France while shutting down the entire Candu operation in Canada.

“Of all the competitors out there, Areva is the one I’d be most concerned about grabbing the talent pool and basically shutting down the business,” said Chris Hughes, president and owner of Laker Energy Products Ltd., which manufactures Candu components.

“If Rothschild is working tightly with them, the more I think about it, the more concerned I get.”

Shier echoed the concern: “We’re quite clear on the fact that if it was bought by Areva, then that would be the end of our industry. … There’d be lots of jobs in France but there wouldn’t be that many left in Canada.”

However, David Novog, associate professor of nuclear engineering at McMaster University, said Areva shouldn’t be viewed as “the bogeyman.”

Whether AECL ends up in Canadian or foreign hands or in some sort of public-private partnership doesn’t matter, he said, provided the restructuring ensures the continued survival of the domestic nuclear industry with its many ties to the high tech, nuclear medicine and university sectors — the combination of which has made Canada a world leader in nuclear science.

Done properly, Novog said: “I think (AECL) can come out of this much stronger than they were before.”

Nevertheless, Novog said he’s concerned the entire process has been carried out secretly thus far so there’s no way of knowing if such matters are being taken into consideration.

“So far, there’s been no information available on how that process will work or how we ensure that we’re getting the appropriate debate or public input with respect to those indirect but very important parts of the industry.”


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