Qing Quentin Huang, 53, was arrested Saturday and accused of plotting to send classified information on Canada's shipbuilding strategy and marine sovereignty to the Chinese. He will appear in court on Wednesday to answer to the allegations he faces.
Employed by Lloyd's Register, Huang, who is a Canadian citizen, would have had access to intimate details of new warship designs, most notably the Conservative government's marquee Arctic Offshore Patrol Ship program.
Such information on the ship's capabilities and modest weapons systems would be of particular interest to the Chinese, which have shown a heightened curiosity about Canada's Far North and its potential resources wealth, said Dave Perry, a defence researcher at Carleton University and the Conference of Defence Associations.
Lloyd's Registry was asked to review and validate the patrol ships' design, according to a 2012 internal defence slide deck briefings, obtained by The Canadian Press under the Access to Information Act.
The company, in a written statement Sunday, confirmed its involvement in the project, and said it had just begun working as sub-contractor for Irving Shipbuilding Inc., which is the federal government's go-to yard for construction of navy combat ships.
Yet, the British firm with deep roots in the shipping industry stretch back to the 1700s said Huang, structural design appraisal engineer, "did not have security clearance and was therefore not involved in any work nor did he have direct access to any classified or controlled information pertaining to (arctic ships) or (national shipbuilding procurement strategy)."
Halifax-based Irving Shipbuilding rushed Sunday to counter the perception that the program, which has been praised politically, had become leaky.
"Security of information surrounding the AOPS project, and all NSPS programs is tightly controlled at Irving Shipbuilding," said Kevin McCoy, the yard's president. "We adhere to all security protocols required by our customers."
If Huang did not have access to classified information, the question becomes what was so sensitive that the RCMP had to swoop down on him within days of learning about his activities, defence experts wondered.
Perry said that two decades of budget cuts at National Defence, especially in the acquisition branch, have meant that technical evaluations are now often subject to third-party, independent reviews, which involve the sharing of sensitive and classified information.
In developing its much-advertised shipbuilding strategy, the federal public works department pointed with pride to its independent assessments.
"The third-party reviews are embedded throughout, not only with all aspects of NSPS, but it is also part of the wider shift public works is taking in their new smart procurement initiatives," Perry said. "They're asking for input on everything from decision-making, fairness monitoring, validation of design, procurement approach. That entire process is going to enabled by third-party assistance."
The federal government says it has a stringent security system, but Perry said events over the weekend should give officials some pause to consider what kind of information is being shared with contractors.
Huang's arrest comes just as the Harper government was putting to rest a scandal involving spying on the navy. Earlier this year, a former naval intelligence officer was convicted of passing top secret information to the Russians.
In that case, the Canadian Security Intelligence Service was tipped off to the activities of former sub-lieutenant Jeffery Delisle and waited months before bringing in the RCMP to build a criminal case.
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