Opposition issues warning over foreign takeover regulations9/18/2012
OTTAWA — The Harper government is again under pressure to spell out clear rules on foreign investment following yet another spurned bid and in advance of the next big ask — the proposed Chinese acquisition of a major Canadian oil company.
NDP and Liberal critics blasted the government for sitting on the issue for two years, saying they now are facing a decision this fall whether to accept China National Offshore Oil Corp.’s (CNOOC) $15.1-billion deal to buy Calgary-based Nexen Inc. without clear guidelines.
Earlier Monday, U.S.-based Lowe’s withdrew its bid to acquire the Rona hardware chain, citing the Quebec company’s opposition.
But analysts said another consideration was likely the political barriers put up from both leading parties in the province, including the Parti Quebecois minority government, that might have made approval under the Investment Canada Act problematic.
“We don’t know what the Canadian government would have done with the Rona takeover, although clearly the government of Quebec was against it and that would have been an important factor in the process,” said Oliver Borgers, a partner in McCarthy Tetrault’s competition law group.
The act calls for a demonstration of a “clear benefit” to Canada, but is unclear what that means beyond that a deal would create or preserve jobs, and generally benefit the economy.
And that’s the problem, say critics — the ambiguity and secrecy of the process allows for too much discretion, including political pressures.
“Ad hockery is what you get when you get when the government is negligent in setting the framework,” said Liberal deputy leader Ralph Goodale, a former finance minister.
“What you’ve got is complete and utter chaos because it will all boil down to what Stephen Harper had for breakfast this morning and how he’s feeling about it.”
The question of political factors coming into play was given more fuel Monday when Conservative MP Rob Anders said he opposed the Nexen takeover, referring to China as a “non-benevolent country.” He added that other MPs in the caucus agree.
NDP energy and natural resources critic Peter Julian called on the government to conduct public hearings on the Nexen bid, accusing the government of listening mostly to CNOOC lobbyists.
Although he did not answer the question directly, Industry Minister Christian Paradis said the Nexen deal will be “scrutinized very closely.” He added that what the NDP was proposing would “deter any form of investment in the country.”
Following the 2010 rejection of BHP Billiton’s bid to buy Potash Corp. (TSX:POT), Ottawa suggested it would clear the confusion of what constitutes “net benefit” under the act, but has not issued new guidelines.
(The Associated Press)