How worried should we be about foreign takeovers?
There's an opportunity for investments from China into Canada today. The innovation minister was forced to stand in this. House acknowledged that he misled when he said that the company. He's selling our retirement homes to was Canadian. Under Chinese ownership. You could be forgiven if you missed some of the stories that inspired today's episode. I mean look. It's my job to be tuned into all the big stories. And I know I miss them. The fact that moves like this one. Don't register on. Most of our radars might be a problem. Right now obviously Canadian businesses are suffer. Not all of them are going to make it through Colfax now. And that makes some of them. A tasty target for foreign buyers who are looking to acquire assets in a stable and relatively prosperous. And in some cases, those investments are badly needed in other cases, though especially when the purchasing company has direct ties to a foreign government. There are real security concerns. I mean. Why would a foreign government have interest in owning a failing Canadian business? So much interest that they are willing to pay more than anybody else. What kinds of risks do we take on when we allow Canadian companies to come under control of state owned businesses. How can candidate government balanced the need for foreign investment especially during an unprecedented economic crisis? With the red flags being waved by our security and intelligence agencies. And also just. Why, don't most of us know or care about this? What part of the big picture is missing here? Jordan Heathrow, and this is the Big Story Stephanie Carbon is an assistant professor of International Affairs at the Norman Paterson School of International Affairs at Carleton University. She also has a book coming out this fall on you, T. press, which is called stand on guard, reassessing threats to Canada's national security. Hi Stephanie. I want you to start. If you can buy explaining a recent deal that kind of put this question in our minds in his why we reached out to you, can you just tell me a little bit about The Hope Bay Gold Mine Project, and what it kind of means for national security in general, so the Hope Bay Gold Mine is a mine eighty S. he was a Canadian control. It was it was kind of being run by. by US t, T MAK RESOURCES INC and it unfortunately unperforming, it's one of actually three mines that have been unperforming recently where there's been some kind of take over, but this kind of raised eyebrows because it's been a basically taken over by a company called Shandong Gold Mining Company, which I also goes by St. Gold and the concern is that this company is considered to be a state owned enterprise. The Chinese government has a forty seven percent. Share in this company, and often when you at the other owners, the you can dig down and find that there's actually probably more links to the state. Generally, so this seems to be an a case of a Chinese state owned enterprise, taking over a Canadian natural resources firm something that you know has raised concerns in the past say in the last ten years and seems to be happening even in this Cova era or perhaps because of it. Why does it raise concerns? I? Mean pretend I know nothing what's wrong with them? So. This is a really good question. Canada is is a small country, right? We're a country, thirty, seven, thirty eight million people, and that means we. Need for an investment in order to grow our economy. especially up north I mean it's very expensive to develop things up north, and we know that successive governments have wanted to encourage business up north to try and improve the lives and conditions of people who live there, but we get concerned when we see these government, company or state owned or even state champion enterprises coming into the market in order to provide that foreign investment, and sometimes they are the only companies that are interested in providing that financial assistance to get these companies going. So you know the first concern is for a long time. We saw the government trying to get of business. Right privatizing various companies, but we're seeing. Despite the Canadian government getting out of these businesses, we're seeing other governments. Take their place, and this is something that actually Stephen Harper warned about in two thousand and twelve thousand thirteen. Canada has spent a long time. Trying to privatize its into industry, but not in such a way that we want foreign governments coming in and taking over those. Businesses instead, so this is. This is something that we've worried about for some time and. Part of the reason that these state-owned enterprises are problematic is that we often don't understand what they are trying to do in. You've taken a normal company right? McDonald's any other company. You know that they're trying to make money, right? That's what they do, but with state owned enterprises. Is there some kind of geopolitical or Geo? Objective that they have in mind. Particularly in the natural resources sector that we have to maybe be concerned about you know, are they trying to strategically placed themselves in such a way that they have control over Canadian resource in a way that perhaps maybe Canadians or the Canadian government would be uncomfortable with. Do we have any examples of that happening that we can look at and say you have this was A. A mistake we shouldn't have gone down that path so a really good example of this would probably be nexen people would point to next is of course a oil company. It's out in Alberta and in two thousand twelve. It was kind of putting itself on the market, and it was taken over by Seahawk. which is a Chinese state owned enterprise, a petroleum company and there was some concern that you know. Do we actually get want. These kind of government owned enterprises owning these businesses, and it paid well over the market price in order to get access to accent. A Louis. Some national security concerns that were raised at the time. Eventually, the Harper government did let it go through, but you know a lot of the promises that were made as a part of the deal. Really haven't gone very well. the business hasn't been as profitable as as was hoped. There's been some safety issues. Accidents with regards to nexen owned critical infrastructure, and even recently we've seen a number of layoffs. I mean. There's so many layoffs in that industry anyways in my heart goes out to the the oil workers, but. It. Really just hasn't performed as well as hopes, and this is one of the concerns that I think has often been raised. Is that state owned? Enterprises can't fail they are. Backed by the state. They're not subject to the same pressures as a normal company like again. Going back to McDonald's. You