The man who famously flung open Canada’s doors to foreign investment 27 years ago is speaking out against a Chinese state-owned petroleum company’s takeover bid for a major Alberta oil producer.
Sinclair Stevens was industry minister in the mid-1980s when the Mulroney government undertook a major rewrite of the rules governing foreign buyouts of homegrown companies.
Now 85 and living north of Toronto, Mr. Stevens warns allowing Beijing to take control of Calgary-based Nexen Inc. would grant the Chinese state a disturbing foothold in the oil sands. “They don’t live by the same rules that other companies have to live by.”
He is still bullish on outside investment because it brings Canada much-needed capital.
But Mr. Stevens says allowing a foreign state-owned entity to take control of Calgary-based Nexen Inc. would cross a dangerous line – one that he predicts Canada would find it hard to stop from crossing again. “It would be a breakthrough for them. How would you say ‘No’ to the next fellow?”
In 1985, he replaced the regulation-heavy Foreign Investment Review Agency – which reviewed all non-Canadian takeovers – with the more capital-friendly Investment Canada Act.
Mr. Stevens said the architects of the Investment Act were against allowing foreign state-owned firms to snap up Canadian companies.
“While we didn’t put it in the act, the departmental view was very firm: you can’t tolerate state-owned firms taking over anything in any substantial way in Canada,” Mr. Stevens said.
The act allows the industry minister to reject a foreign takeover if it does not provide a “net benefit” to Canada, as the Conservatives have done in recent years with bids for MacDonald Dettwiler and Associates Ltd.’s space technology division and Potash Corp. of Saskatchewan Inc.
The former minister said he doubts Beijing would similarly grant Canada the same sort of buying opportunity as China National Offshore Oil Corp. seeks in Nexen.
“If Canada changes policy and permits foreign state-owned corporations to buy majority interests in our resource industry we will have set a precedent Canadians will regret.”
Mr. Stevens said the lack of opposition to the proposed deal in Alberta surprises him. He considers it bizarre that the Alberta oil patch lobbied for Ottawa to relinquish its ownership of Petro-Canada, but is willing to accept the Chinese state instead.
“It is truly strange that the oil and gas industry, particularly in Alberta, lobbied to have Petro-Canada … de-nationalized in the 1970s while today, in 2012, many in the same industry see nothing wrong with the Chinese government owning one of our important oil and gas companies,” Mr. Sinclair said.
“In short, is Canadian government nationalization wrong but Chinese nationalization is fine?”
Mr. Stevens said he believes Prime Minister Stephen Harper has already made up his mind to permit CNOOC to buy Nexen and will override any concerns within the Conservative caucus. “Unless there’s a bit of a rebellion there, I think any anxiety over this would be quickly overwhelmed.”
Mr. Stevens’s political career ended in 1986, when he resigned from the Mulroney cabinet over allegations that that he mixed private business with his public duties. More than a year later, a judicial inquiry found him in conflict on 14 occasions. In 2004, however, the Federal Court of Canada set aside the inquiry’s finding.
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