Business Brief: OK, let’s talk about cheating

Canada’s soccer scandal is threatening to tarnish not only the team’s accomplishments but the country’s reputation. The outcry is all a bit precious, though, isn’t it? A quick scan of headlines would have one wonder whether Canada has birthed a new evil upon an otherwise virtuous world.

We aren’t advocating for spying, cheating, or any manner of ne’er–do–welling. We would like to observe, however, that this sudden surge of moral certitude strikes us as slightly disingenuous – not just in the world of sport, but against a global backdrop of corporate cyberattacks and intellectual property theft. Below, with Canada under the spotlight, we point one back. J’accuse!

Up top

• Energy: TC Energy Corp. will sell a minority stake in its massive Nova Gas Transmission Ltd. and Foothills natural gas pipeline systems for $1-billion to a consortium of dozens of Indigenous communities. Emma Graney reports.
• Aviation: Chorus Aviation Inc. says it has reached a deal to sell its underperforming Britain-based aircraft leasing division for $814-million − a little over two years after acquiring it, Eric Atkins writes.
• Sustainability: Some of Canada’s largest institutional investors support quick adoption of a slate of new sustainability reporting standards, Jeffrey Jones reports. Energy and mining companies, meanwhile, want disclosure to remain voluntary and to exclude items such as indirect carbon emissions.

In focus

Dial ‘C’ for corporate espionage

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Never mind cheating at the Olympics, which history shows could warrant its own event. It’s a long-accepted fact that many competitors in sports and in business subscribe to the belief – variously attributed to wrestler Eddie Guerrero, several NFL coaches, and electric-boat enthusiast Tom Brady – that “if you aren’t cheating, you aren’t trying.”

In 2022, the federal government warned of forces making a concerted effort at “trying,” in the Tom Brady sense, to target “universities, medical research institutes and laboratories, pharmaceutical companies, and high-tech companies.”

And a report yesterday showed Canadian organizations hit by data breaches pay an average $6.32-million to resolve the incidents. In Canada and beyond, Ticketmaster, AT&T, Giant Tiger, London Drugs have been targeted by data attacks in the past year alone.

We spoke with Trevor Neiman, the Business Council of Canada’s vice-president of policy and legal counsel. The organization has been vocal in calling for the federal government to give CSIS the ability to share more information with businesses – a key part of a recent spate of changes made in June to Canada’s CSIS Act.

How common is state-supported corporate espionage?

Let’s just say that between nations, espionage – spying on each other – is common practice. We’ve been doing it since time immemorial. The difference, though, between states is the type of spying that they engage in and the extent in which they engage in it.

So Western nations engage in political espionage trying to understand the motivations, the intent, the capabilities of our adversaries to combat threats. But other countries take it further in the sense that they’re not just looking for political intelligence, they’re also looking for economic intelligence. And that’s a material difference. Canada does not engage in commercial espionage, but other countries do.

What are some of the other common risks to Canadian companies?

There’s all sorts of threats we’re facing. We’re facing weaponized trade, or economic coercion, as some people call it. We’re facing cyber attacks, so things like ransomware, where computers are locked out until individuals or corporate entities pay a ransom. And more disruptive attacks in cyberspace, where we see a cyber campaign transform into a physical effect – you know, shutting down a supply chain or a communications network.

On economic espionage, why are companies in Canada being targeted?

Canada is an advanced, free-market economy. We’re home to many of the most successful and innovative companies in the world. And that has made us a major target for states that are seeking to advance their domestic industries through economic espionage.

How is information stolen?

State-sponsored threat actors, they have a variety of different tools that they can use to covertly steal commercially valuable information, such as confidential business plans, proprietary manufacturing processes, and intellectual property.

They include the “man in the fedora,” the conventional intelligence officers, as well as state-affiliated hackers, and corporate insiders. So those could be people that work at large corporations that have legitimate access to sensitive information. And we see state actors using seemingly benign joint ventures or university research partnerships.

How is that information being used?

Canadian ingenuity is being essentially used against us. Canadian ingenuity is being used to build or enhance foreign states’ companies and their products. And without having to make decades worth of costly investments in research and development to create these products. This theft of Canadian ingenuity really gives these foreign companies a leg up over Canadian businesses.

Can we attach a number to the financial impact of espionage?

Unlike the United States, there’s no precise estimate of the cost of economic espionage. But based on inferences we can make, the cost to Canadians is likely in the tens of billions of dollars annually. So this is not insignificant, right? This is a pretty big chunk of Canadian GDP.

How does spying affect the research and innovation part of our ecosystem?

There’s all sorts of factors that are going into that, including the government not having the right kind of market framework, over-regulation, and lack of strategic investments. But I would be confident to say that economic espionage is contributing to our lagging competitiveness, including as it relates to these advanced technologies that are really important to long-term economic prosperity.

What’s an example of Canada getting it wrong in protecting business?

The Government of Canada is spending billions of dollars, tens of billions of dollars each year to help transition our economy to a more green, sustainable economy. As far as I’m aware, there’s not a lot of consideration going on within government over the economic security threats that will be targeting those investments, including to consider intellectual property theft or the theft of proprietary manufacturing processes.

This interview has been lightly edited and condensed.

The lookout

On our radar and reading list

In public: Earnings include Meta, Mastercard, Boeing, Etsy, TMX Group, Agnico Eagle Mines, Cameco, Fortis, Kinross Gold, Western Forest Products.

Around the world: The expectation is that the Fed will hold its overnight lending rate today and save the scissors for September. In Canada, monthly real GDP is reported.

Online: U.S. Senate passes bill to make tech companies accountable for harmful content.

Morning markets

Global shares rose as markets focused on interest rate decisions from central banks in Japan and the U.S.

Wall Street stocks were set for gains, with futures gauges showing advances of between 0.4 per cent and 1.5 per cent.

TSX futures jumped nearly 1 per cent as oil and gold prices advanced.

Overseas, the pan-European STOXX 600 was up 0.97 per cent in morning trading. Britain’s FTSE 100 gained 1.34 per cent, Germany’s DAX rose 0.51 per cent and France’s CAC 40 increased 1.44 per cent.

In Asia, Japan’s Nikkei closed 1.49 per cent higher, while Hong Kong’s Hang Seng was up 2.01 per cent.

The Bank of Japan raised its short-term policy rate to 0.25 per cent, levels unseen since 2008. The hawkish pivot sparked gains for the Japanese yen.