09/24/2009 05:12 am ET Updated May 25, 2011

China Is a Lousy Partner

Ottawa officials and politicians are encouraging Canadians to do business in China and with Chinese entities. So are other countries. But here's a cautionary tale about the pitfalls of doing business with the "Middle Kingdom."

Canadian Natural Resources Limited has built Phase I of the gigantic oil sands project known as Horizon Oil Sands where it awarded a contract to a subsidiary of Sinopec, SSEC Canada Ltd. (whose parent company is Sinopec Shanghai Engineering Company Ltd.) for the construction of two tank farms comprising eleven storage tanks and the supply of the required labor.
SSEC Canada Ltd. brought in temporary foreign workers into Canada to do the work in 2006 and 2007. On April 24, 2007 an accident on site occurred. Two Chinese workers died and five more were injured, two seriously.

Safety of Chinese workers and laws allegedly ignored

An investigation by Alberta health and safety officials, along with employment standards personnel, ensued and this spring 53 charges were laid in total against the three companies for allegedly unsafe working conditions which led to the fatalities and injuries -- SSEC Canada Ltd., Sinopec Shanghai Engineering Company Ltd., and CNRL, said Barrie Harrison with Alberta Employment and Immigration in Edmonton in a phone interview last week.

Accidents happen all the time but there are two other problems that have arisen since dealing with the Chinese entities. The first is that the court case had to be delayed because of Sinopec and the second issue is that the Chinese workers were not paid by their Chinese employer even though they worked four months before the accident and their quick departure.
"Sinopec now claims that they have no representatives in Canada so we are unable to 'serve' them and the court case was delayed until we can establish who their official representatives are and serve them notice," said Chris Chodan, spokesman for the Alberta Occupational Health and Safety Branch. "The next court appearance is scheduled for 14 September. The court case could actually proceed without Sinopec being present, however."

Chinese didn't pay their workers then sent them home
The issue of non-payment is also preoccupying Alberta and other officials.
Barrie Harrison explained the situation: "There are two issues here. One is the OHS [health and safety' investigation and subsequent charges being laid]. Another is an employment standards investigation that led to the discovery of the 132 Chinese workers not being paid for their work from the date of the OHS incident (April 2007) to July of that year. The Alberta government is in receipt of $3.17 million and is in the midst of tracking the workers and determining a process to get this money back in the hands of workers."
CNRL has fully cooperated by handing over the payment, which has been put into a trust account by the government. CNRL also has had to pay other contractors to tear down, then re-do the work which was stopped after two of the tank structures collapsed, one of which led to the fatalities.

Governments take note of Chinese treatment of workers
Alberta is working with federal immigration authorities to find the workers and the families of all the unpaid workers in order to dispense the back pay and benefits.
This contract was the first time a large group of temporary workers was brought in under one umbrella for one specific job. It has not happened since and the lesson learned is that "employers cannot delegate away safety but had also better be on the site supervising workers," said Chris Chodan.

As several of these matters are now before the courts, CNRL cannot provide any comments at this time, said a company email to me last week.

Diane Francis blogs at National Post.