OTTAWA ─ When he was fired from the Canadian Food Inspection Agency in 2011, top scientist Dr. Klaus Nielsen was on the verge of gaining unfettered access to government secrets for a private Chinese company he helped control.Follow @Canoe
And by the time he was arrested in October 2012 ─ en route to China with 17 vials of a potentially lethal bacteria stashed in a child's lunch bag wedged in his suitcase ─ he had nearly crippled an American biochemical company while building up his own.
Nielsen, 68, pleaded guilty Wednesday to breach of trust by a public official and to violating federal statutes regulating the control and transportation of dangerous materials.
His government lab colleague Wei Ling Yu, also faces charges but she is believed to be hiding out in China.
The case centres on a quick and easy test for brucellosis, an agricultural scourge that causes abortions in animals and taints their meat and milk.
The potential for profit was enormous.
But the profits were mainly destined for an American company called Diachemix, which helped develop the test with Nielsen as part of a research agreement between the company and the Canadian government. (Canada would also have received royalties on Diachemix's sales.)
In 2009, China, had hoped to join the World Organization for Animal Health and needed to come up a detailed plan to control brucellosis and Diamchemix stood to cash in by testing millions of cattle.
Diachemix president Donald Coombs was thus displeased to find an upstart Chinese company had started marketing the same tests and charging less money for them, which forced Diachemix to cut their prices by nearly half.
Dr. Klaus Nielsen is seen in this 2003 government photo. (GOVERNMENT OF CANADA PHOTO/QMI AGENCY)
And Coombs was particularly angry to learn that Nielsen ─ relying on his reputation and global network of contacts ─ was pushing the Chinese company's product.
Coombs tipped off the government and an internal investigation found the Chinese company ─ Peace River Biotechnology Company ─ had been founded in March 2006 by Yu, whose career with the food inspection agency had flourished under Nielsen's supervision.
RCMP detectives learned Nielsen and Yu had planned their Peace River venture as early as 2005.
According to an agreed statement of facts filed in court, they had initially planned to manufacture the brucellosis kits in China and give the Chinese government a cut of the take.
Greed would seem the obvious motive, but court heard there is no evidence Nielsen profited from his side business.
Instead, Nielsen appears to have resented the high price Diachemix was charging for the tests.
In a police interview, he said he'd told Diachemix the tests were overpriced, but he was instructed to return to his lab.
The investigation also showed that Niesen worked with an Argentine company called Biotandil ─ a former distributor of Diachemix ─ to develop their own version of the brucillosis test.
With Biotandil's success, Diachemix was entirely cut out of the Argentine market, which had been their largest.
Nielsen had also advocated "twinning" his government lab with Peace River -- without declaring his interest in it -- which would have allowed food inspection agency managers to transfer technology to it, thus giving Nielsen and Yu the potential for greater access to the agency's intellectual property and that of its collaborators.
Nielsen returns to court Oct. 14.