Li Ka-Shing conglomerate loses Israel deal amid US push

Hong Kong

THE Hong Kong conglomerate founded by billionaire Li Ka-shing lost a bid for a major infrastructure project in Israel, weeks after the US asked its Middle Eastern ally to review potential security threats posed by China-based companies.

An affiliate of CK Hutchison Holdings Ltd, the flagship of the tycoon's sprawling business empire, lost the contract to build and operate Israel's biggest desalination plant to IDE Technologies, a local company, the Israeli government said. In the past, Hutchison Water International Holdings Pte had operated a desalination plant in the vicinity of the planned facility in partnership with IDE.

Israel's decision to choose a domestic bidder is the latest blow to Mr Li's son and successor, CK Hutchison chairman Victor Li, two years after his bid to buy a gas pipeline operator in Australia was blocked on national security concerns. Representatives for CK Hutchison in Hong Kong did not immediately respond to requests for comment, and the US Embassy in Israel had no comment.

Hutchison lost its Israeli bid at a time of rising friction between the US and Beijing over trade and the deadly novel coronavirus that originated in China. Israel has found itself caught in this conflict, under pressure from the US to cool its relations with Beijing, rather than expand them as it had hoped. Just two weeks ago, US Secretary of State Mike Pompeo flew to Israel for discussions with Prime Minister Benjamin Netanyahu on issues including China's role in the Israeli economy.

The Trump administration is pushing allies to avoid Chinese businesses perceived as threats to their national security, and according to a report on Tuesday on the Ynet news website, Mr Pompeo specifically raised concerns regarding Hutchison's participation in Israel's desalination plant tender.

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"We do not want the Chinese Communist Party to have access to Israeli infrastructure, Israeli communication systems, all of the things that put Israeli citizens at risk, and in turn put the capacity for America to work alongside Israel on important projects at risk as well," Mr Pompeo told Israeli media after his meeting with Mr Netanyahu.

Israel may also find itself under pressure to reject Hutchison again as it tries to re-enter the country's telecommunications sector. After foreclosing on a failed loan to Israeli-born media mogul Haim Saban, the Hong Kong-based group is waiting for Israeli government permission to retake control of mobile phone operator Partner Communications Co.

Overseas acquisitions and projects have been central to CK Group's push to diversify from its mainstay businesses of telecommunications, retail, property and ports; and infrastructure has remained one of its most defensive investments during economic downturns such as the coronavirus pandemic crisis. BLOOMBERG