Belgian Intelligence Warns Against Acquisition by State Grid Corporation of China

On September 27, Beijing’s largest state-owned company, the State Grid Corporation of China (SGCC), faced yet another potential roadblock to its power investments abroad after Belgian media revealed the existence of a letter from the country’s State Security Service urging the country’s ministers to exercise “extreme caution” regarding State Grid International Development’s (SGID) investment in Eandis, a leading Belgian gas and electricity infrastructure and distribution company.  Specifically, the letter warns that the deal would allow SGCC, the parent of SGID, a company with allegedly close ties to China’s military-industrial complex and intelligence services, to spy on citizens and acquire sensitive technology.  The letter references, in this connection, Australia’s decision to block the sale of Ausgrid to SGCC and Cheung Kong based on national security concerns.

SGID began negotiations in June to acquire a 14% stake in the company for around $930 million.  Now, 229 local Flemish municipalities and councils that own the company are voting on the deal, but the ultimate decision lies with Eandis’ management.  For its part, Eandis is still in favor of the deal and points out that the size of the stake would not allow for interference, nor would the technology be of any special interest.  This issue of operational control being withheld (for various reasons) in Chinese efforts to procure critical infrastructure in foreign countries has frequently been used as a reason for moving forward.  Critics, however, point to the clear influence and access that comes with taking stakes of this magnitude.  Accordingly, this case has now become a focal point for Belgian national leadership.  For instance, the Flemish Energy Minister Bart Tommelein recently spoke out against the deal, after expressing support for it previously.  A decision on the matter is expected by the end of next week.