News that foreigners are circling around another important Canadian company, Viterra Inc., is upsetting and again begs the question as to what is in Canada's "national interest".
The question of "national interest" is what Investment Canada must evaluate if foreigners win the bid for Viterra, or any Canadian company.
But the question is easily answered. Losing any sizable head office to a foreigner is never in the "national interest".
And legislation to that effect should be passed immediately.
To use a military metaphor, Canada is at war with the world for living standards. Its head offices are its beachheads, and strategic institutes. Its CEOs are its generals and are answerable, and often helpful policy-wise, to governments. They are responsible for making their operations profitable but they must also uphold Canada's laws.
But if head offices are moved to another jurisdiction, the loyalty, and respect for laws, moves with them. Foreign CEOs, or generals, will move Canadian operations, patents, research, employees, and tax expenditures around the world to suit their purpose, and to suit the purpose of the jurisdiction in which they operate.
They have no allegiance. They offer only low-level or middle-management jobs. They support no ballet companies, clinics for kids, theater troupes, work support programs for disabled Canadians, hospital wings for the cities in which they operate. They do not confer at think tanks, or with politicians to improve their knowledge of the world of business.
Put another way, allowing a large head office to be acquired allows foreigners to acquire pieces of the country's upside, its living standards, reputation, opportunity, tax base, intellectual property, and networks. This is like selling the family jewels.
Those who would defend unfettered buyouts argue that restrictions are contrary to market rules, and efficiencies. Others may argue that restrictions are unfair considering that Canadian corporations go all over the place snapping up other countries' head offices.
But markets are not an entity with a vote, or a soul. They do not operate in a vacuum, and operate in a context, at the pleasure of the jurisdiction they occupy. The context in this case is a Canada where too many head offices have been allowed to disappear, and no branch plants have ever grown into a world-beating head office.
As for the argument that Canada cannot prohibit head office buyouts when its corporations are doing the same, I would counter that this is totally irrelevant. Countries do what they must do. Besides, good luck to those Canadian companies who can snap up valuable head offices in countries too foolish to realize what they are allowing. Believe me, many countries have restrictions, and more will as time goes on.
I opposed the foreign buyout of Potash Corporation, and the Toronto Stock Exchange because both were strategic assets that were irreplaceable. The Potash situation was even more unacceptable because the company was licensee to some of the world's greatest underlying resources in Saskatchewan.
Fortunately, the stock exchange deal was withdrawn, due to criticism, and Potash's takeover was nixed because Saskatchewan's Premier Brad Wall opposed it. He is not opposing the buyout of Viterra, formerly the Saskatchewan Wheat Pool, because it does not involve strategic resources. I think he's great, but I beg to differ.
Faced with another big beachhead about to disappear into foreign hands, Ottawa should stop playing boy scout to the world's corporate predators. No resource company in this country, over $330 million in assets or value, should ever be sold to foreigners. And a moratorium should be imposed on all buyouts, in any industry, until this government, and the people of Canada fully understand the implications of losing big head offices.
I have also argued that Investment Canada, in light the US Steel and Vale fiascos where promises made were flouted, should have sufficient power to require foreigners to post enormous performance bonds. This is so that if they renege, the Canadian taxpayers do not suffer. This has not happened either.
If you want to see how "branch plants" behave, one need only look at the case of worker deaths in Alberta and charges laid against a subsidiary of Chinese giant Sinopec Shanghai Engineering Company Ltd. named SSEC Canada Ltd. That company has refused to appear in court concerning dozens of workplace safety charges, and has not paid millions to its hundreds of Chinese workers either. Even so, Sinopec Engineering was allowed a couple of years later to buy a huge stake in Syncrude and part of the oil sands pipeline project to the Pacific Coast.
In spite of such goings on, the federal government has left in place an ad hoc approach to this "national interest" issue.
Thus we have Viterra and a vacuum. What will Ottawa do when Chinese companies make a bid for Suncor, Teck, Canadian National, Air Canada, Research in Motion, or any one of Canada's great corporations.
What has to be understood is that other countries don't allow this, and too many have gone already. The hollowed-out operations of the former Alcan in Montreal and others are reminders of this country's irreversible policy mistakes.Suggest a correction