November 22, 1979

MESSAGE FROM THE SENATE

PC

Geoffrey Douglas Scott

Progressive Conservative

The Acting Speaker (Mr. Scott, Victoria-Haliburton):

Order. I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-10, to provide supplementary borrowing authority for the fiscal year 1978-80, without amendment.

Topic:   GOVERNMENT ORDERS
Subtopic:   MESSAGE FROM THE SENATE
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THE ROYAL ASSENT

PC

Geoffrey Douglas Scott

Progressive Conservative

The Acting Speaker (Mr. Scott, Victoria-Haliburton):

have the honour to inform the House that a communication has been received which is as follows:

Government House Ottawa

November 22, 1979 Sir,

1 have the honour to inform you that the Honourable Julien Chouinard, Q.C., C.D., Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy Governor General, will proceed to the Senate chamber to-day, the 22nd day of November, at 5.45 p.m., for the purpose of giving royal assent to a bill.

1 have the honour to be. Sir,

Your obedient servant, Edmond Joly de Lotbiniere Administrative Secretary to the Governor General

Foreign Investment Review Agency

Topic:   THE ROYAL ASSENT
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PROCEEDINGS ON ADJOURNMENT MOTION

SUBJECT MATTER OF QUESTIONS TO BE DEBATED

PC

Geoffrey Douglas Scott

Progressive Conservative

The Acting Speaker (Mr. Scott, Victoria-Haliburton):

It is

my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Blainville-Deux-Montagnes (Mr. Fox)-The Canadian economy-Request for restoration of Tellier task force to prepare answer to white paper on sovereignty-association; the hon. member for Hamil-ton-Wentworth (Mr. Scott)-Airports-Expansion of Mount Hope-Hamilton Airport-Government position; the hon. member for Saint-Henri-Westmount (Mr. Johnston)- Finance-High interest rates-Steps to assist small business.

It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely notices of motions (papers), private bills and public bills.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   SUBJECT MATTER OF QUESTIONS TO BE DEBATED
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PRIVATE MEMBERS' MOTIONS FOR PAPERS

LIB

Harold Thomas Herbert

Liberal

Mr. Hal Herbert (Vaudreuil) moved:

That an order of the House do issue for copies of all agreements, correspondence, notes and other communications relating to the requirement by the Foreign Investment Review Agency that Tate and Lyle Limited reduce its shareholdings in Redpath Sugars Limited.

He said: Mr. Speaker, I have only a few remarks to make this afternoon, and I will start off by advising any hon. members who might be interested that if they want to have the story on this particular issue, they can refer to my remarks in this House on December 15, 1977, at pages 1916, 1917 and 1918 of Hansard.

Why is this subject being debated this afternoon? First, I asked for the production of the papers because I am concerned that a commitment of the Redpath company made as a result of a FIRA order has apparently not been complied with. Before I go any further, the last time I spoke on this subject, two years ago, I immediately had some difficulty with the Redpath company which felt that I was being somewhat unfair to it.

I point out here for the record that I fully understand the motivation of companies. I do not take issue with that. Their job is to make profits and so forth. Nevertheless, my job is to ensure that the regulations and laws which are passed through this House are maintained.

November 22, 1979

Foreign Investment Review Agency

In this particular case 1 have had quite a few pieces of correspondence with the ministers concerned. 1 will refer first of all to a letter of December 4 of last year sent to me by the then minister of industry, trade and commerce. He wrote as follows:

-some two years ago, in conjunction with the takeover by Redpath Sugars Limited, of two small packaging companies, there was a commitment given that Tate & Lyle Limited, the major shareholder in Redpath Sugars, would over time marginally reduce its equity to less than 50 per cent.

He also said in another letter, and this one is dated May 14 of this year, and again 1 quote:

-the commitment by Tate and Lyle Investments Limited to increase participation by Canadians in the capital stock of Redpath Industries Limited from 45 per cent to 52 per cent.

1 assume the holdings would be reduced to 45 per cent. He said:

It will be implemented ... as soon as the financial position of Tate and Lyle recovers sufficiently to enable it to do so without jeopardizing future growth and earnings potential.

By that I assume that the share values will have increased so that Tate and Lyle will be getting a few more bucks for its shares, which also means, of course, that the Canadians buying those shares will have to be paying a few more bucks to acquire that Canadian interest.

I also point out at this stage, as it will not escape anybody, that reducing an interest to 45 per cent does not necessarily relinquish control. In the same letter the minister goes on to say:

-it would not be of benefit to Canada if implementation of an undertaking, given by a foreign investor in particular circumstances and based to a degree on conjecture about the future, would result, in different circumstances, in hardship to the companies involved.

That I will accept. A previous minister of industry, trade and commerce said when speaking to the Standing Committee on Finance, Trade and Economic Affairs on June 5, 1973, and I quote:

In principle, all undertakings-

We are talking about the undertakings to the Foreign Investment Review Agency, of course.

-are binding. In those cases where a person fails to comply with undertakings, the minister may apply to the courts for an order directing that the undertakings be fulfilled. This, however, is likely to be a procedure of last resort.

In normal circumstances the inability to fulfil undertakings will lead to discussions with the minister and perhaps to the negotiation of new undertakings. Like any contract, an undertaking can be modified with the consent of both parties.

That is all very well, but why am I getting a little upset about what is going on? "July 13, 1978, allowed, No. 1284", on the listing of takeovers, "Redpath Sugars Limited, ultimately controlled by Tate and Lyle Investments Limited of England." I will read extracts from this document.

The right to acquire ... a business (which) .. . would operate a cornstarch sweetener plant to produce, through new technology, high fructose syrup from domestically-grown corn.

Why am I somewhat upset? We see what is developing with these takeovers. There is a group which has been making its presence felt not just in Canada but also in other countries of

[Mr. Herbert.)

the world; and I will read from "A Newsletter on Issues of Concern to Sugar Workers", as follows:

On Sept. 27 Redpath Sugars (subsidiary of U.K.-based Tate & Lyle) announced plans to close its Montreal refinery by January 1980. It will mean the loss of 360 jobs. The announcement came on the same day as Canada Starch Co. Ltd. opened 65,000 ton-per-year. HFCS (high fructose corn sweetener) facilities at Cardinal, Ont. Redpath, itself a partner in a HFCS plant due to open next year at London, Ont., blamed competition from the corn sweetener for the closure.

I am obviously concerned, but not about the action of Redpath. I reiterate that I am not criticizing the Redpath company either for the closing of its plant or for its desire to acquire other businesses. That is its job. That is its right. But I am concerned about the legislation which we have on the books which seems not to be having the desired effect. Certainly at the moment we can see that we have encouraged plants in part of this country where there is not as great a need for their development, and as a result we have seen the closing of plants in other areas where there is a greater need to provide employment.

Concerning the foreign Investment Review Act I will quote from an article which was written in the Montreal Gazette in the earlier part of this year as follows:

The legally binding undertakings made by a firm in the course of winning approval from the agency are in most cases .. . not published.

There is no public accounting of how well companies have fared in meeting the undertakings to provide "significant benefit." .. . The agency estimates 20 per cent of cases fail to meet the original undertakings . . .

For the public . . . there is no clear definition of "substantial" compliance.

"We need more data to maintain public confidence in the integrity of the process,"-

This was taken from an article written by Jennifer Lewing-ton. I thank her for her lucid comments which have enabled me to make these remarks this afternoon.

I have one or two more comments to make on this issue. I have always been concerned that we in Canada have not taken a lead as a government in trying to help the development in Third World countries. I am particularly concerned that we have made no direct effort, because of our lack of desire to involve ourselves in this industry, in the development of the sugar industry in the two countries of Jamaica and Barbados.

Before concluding I want to quote from a letter which I received from the chairman of the board and president of the Export Development Corporation, because I believe it is relevant. It has to do with the EDC involvement in a cane sugar complex in the Ivory Coast. It reads in part as follows:

In the case of the Redpath complex, we disclosed all relevant facts-amounts, terms, participating lenders, buyers, etc-but did not disclose such items as the interest rate, which is a highly competitive factor in international business. Thus you and other interested Canadians are aware of the basic details surrounding the transaction in question, but cannot become party to information which, if released, might put Canadian firms at a competitive disadvantage . . .

Thus suggestions that EDC's involvement in this project represents a federal subsidy to Redpath, or anybody else, are simply without foundation.

I respect the opinion of Mr. MacDonald but I also suggest that any intervention by a government agency which assists any Canadian company in promoting its wares in another

November 22, 1979

country in the export market is surely of direct benefit to that organization. So I take issue with the statement that we are not helping Redpath by the aid available through the Export Development Corporation.

My point is that we have two illustrations here where our regulations are such that information is not available to the public, and that includes members of Parliament, for us to be able to judge whether the decisions that are being made by officials are in fact in the best interests of Canadians as a whole. We have heard a lot from this government about disclosure and the freedom of information act, about their desire to present all. I suggest that they might start in this case by explaining to us-

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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?

An hon. Member:

It is against the law.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

It may be against the law, but the government has the power to change the law if it so desires, and to change the regulations of FIR A if necessary, in order that we may be able to judge whether these actions that I have enumerated this afternoon of closing off a plant in Montreal and the takeovers in other parts of the country are really in the best interests of Canadians.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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PC

Michael Holcombe Wilson (Minister of State for International Trade)

Progressive Conservative

Hon. Michael Wilson (Minister of State for International Trade):

Mr. Speaker, the hon. member has moved:

That an order of the House do issue for copies of all agreements, correspondence, notes and other communications relating to the requirement by the Foreign Investment Review Agency that Tate and Lyle Limited reduce its shareholdings in Redpath Sugars Limited.

When that motion was put to the House on November 7, 1979, the Parliamentary Secretary to the President of the Privy Council (Mr. Kilgour) informed the House on my behalf that FIRA had been advised by its senior legal counsel that the papers in question were privileged under section 14 of the Foreign Investment Review Act. The hon. member was therefore invited to withdraw his motion but did not do so.

I am surprised that the hon. member would ask that the government ignore the specific requirements of an act passed by this Parliament. Section 14 of the act is quite explicit. It reads:

Except as provided in this section, all information with respect to a person, business or proposed business obtained by the minister or an officer or employee of Her Majesty in the course of the administration of this act is privileged and no person shall knowingly, except as provided in this act, communicate or allow to be communicated to any person not legally entitled thereto any such information or allow any person not legally entitled thereto to inspect or have access to any such information.

That provision was purposely incorporated in the Foreign Investment Review Act to safeguard the commercial interests of investors who are obliged to submit their investment proposals for review under the act. When an investor files notice of his intentions, and in any discussions that may occur later, he usually, if not invariably, imparts to the government through the agency a good deal of highly confidential information regarding his plans and intentions relating to the investment he is proposing. Therefore, he has the right to expect that information of that sort will not become known, prematurely at least, to others, notably potential competitors.

Foreign Investment Review Agency It is clearly necessary, in the administration of the Foreign Investment Review Act, for the government to seek and obtain a considerable amount of information about an investor and his investment plans, his parent company, if any, and other affiliates, in order to be able to carry out an assessment of significant benefit to Canada as the law requires. It would be unreasonable to expect investors to provide much of this information without the protection afforded by section 14 of the act, and without such information the act could not be administered effectively.

Section 14 of the act goes on to provide:

Any information with respect to a person, business or proposed business obtained by the minister or an officer or employee of Her Majesty in the course of the administration of this act may,

(a) on request in writing to the agency or by or on behalf of the person to which the information relates or by or on behalf of the person or group of persons carrying on or proposing to carry on the business or new business to which the information relates, be communicated to any person or authority named in the request, or

(b) for any purpose relating to the administration of this act, be communicated to a minister of the Crown in right of any province or to an officer or employee of Her Majesty in right thereof on such terms and conditions and under such circumstances as are approved by the minister.

In other words, the minister may only release privileged information concerning an investor, other than for purposes of the administration of the act, with the express written consent of the person who provided the information.

We have sought the consent of the company concerned but they have declined to give it and I can well understand why. The papers referred to in this motion contain, among other things, highly confidential information about the financial affairs of Redpath Sugars Limited and its parent, Tate and Lyle. This information was provided to the government in confidence. It has not been made public by the companies and I can understand why they would not want it made public at this point.

The issue of confidentiality versus disclosure of information is a particularly vexing one and has bedevilled those charged with responsibility for the administration of the Foreign Investment Review Act almost from its inception. I can assure the House that it has caused me and my colleagues who have been involved in the whole process a considerable amount of concern, and that is why we are proceeding in the way we are in these reviews. It is one of the issues we asked officials to address when we set up an administrative review of the Foreign Investment Review Act, which should be completed shortly and the results of which will be announced shortly.

Also the issue is one which we have singled out for consideration by a special committee of this House. It was included in the proposed terms of reference for that committee published in the order paper for November 5. But unless and until the statute is changed in this respect, I am obliged to respect and abide by the law as it now stands.

November 22, 1979

Foreign Investment Review Agency

Section 14 provides an exception to the general prohibition concerning the communication of privileged information with respect to the following:

-information contained in any written undertaking given to Her Majesty in right of Canada relating to an investment that has been allowed by order of the governor in council.

The section continues as follows:

But no minister of the Crown and no officer or employee of Her Majesty may be required, in connection with any legal proceedings or otherwise, to give evidence relating to or otherwise to disclose any information contained in written undertakings where, in the opinion of the minister, the disclosure of such information is not necessary for any purpose relating to the administration or enforcement of this act, and would prejudicially affect the person who gave the undertaking in the matter or conduct of his business affairs.

That construction clearly obliges the minister to use discretion, even in releasing information contained in undertakings. Even if 1 felt able to release the undertakings themselves in this case, it would not satisfy the terms of the motion moved by the hon. member, which call for the production of all documents and communications relating to the matter.

The motion refers to an undertaking given to the Crown in 1976 by Redpath Industries Limited of Montreal and its parent, Tate and Lyle Limited of England. This undertaking was given in consideration of allowance by the governor in council of the acquisition by Redpath of two Canadian companies: Merry Packaging Limited of Don Mills, Ontario, a custom supplier of flexible packaging material, and Holway Paper Box Manufacturing Limited of Agincourt, Ontario, a manufacturer of folding paper boxes.

When these decisions by the governor in council were announced on October 7, 1976, the government of the day also announced the undertaking given by Redpath and its parent, Tate and Lyle, "to increase the participation by Canadians in the capital stock of Redpath from 45 per cent to 52 per cent." That is still their commitment. The undertaking given in 1976 was framed in the light of circumstances at that time. Some time later, as a result of changed circumstances, it became apparent to Redpath and Tate and Lyle that they would not be able to fulfil their commitment as quickly as they originally had expected without considerable handicap. Therefore, they approached the agency with a view to renegotiating the terms of their undertaking.

The government of the day was satisfied with the representations made by the companies. Following negotiations between the agency and Redpath, the government agreed to revised terms under which participation by Canadians in the capital stock of Redpath would be increased in stages. The new agreement contains specific measurable benchmarks relating to the financial affairs of the companies which would reflect their ability to increase Canadian participation, and thus would serve as an unambiguous trigger for fulfilment of the commitment. I want to emphasize that the commitment itself is unchanged-that is, to increase Canadian participation in Redpath from 45 per cent to 52 per cent.

I have been speaking about agreements entered into by the previous administration, but 1 do not want to leave the impression that administration necessarily would deal with the

matter any differently. In the matter of enforcement of undertakings given under the Foreign Investment Review Act, I believe common sense and understanding are very important parts of the administration of the act. These must prevail. This issue was addressed when the foreign investment review bill was being considered by Parliament in 1973 prior to its enactment. When the bill was before the Standing Committee on Finance, Trade and Economic Affairs, the minister speaking on behalf of the government of the day said the following:

In principle, all undertakings are binding. In those cases where a person fails to comply with undertakings, the minister may apply to the courts for an order directing that the undertakings be fulfilled. This, however, is likely to be a procedure of last resort.

You will recall that I suggested some undertakings at least would be based on the medium-term plans of the acquiring company. These plans would, to some extent, be based on the conjecture about the future and therefore would simply reflect the company's anticipation concerning its future development. They would not be guaranteed in their entirety. Thus, flexibility and good sense must be exercised by the minister.

In normal circumstances the inability to fulfil undertakings will lead to discussions with the minister and perhaps to the negotiation of new undertakings. Like any contract, an undertaking can be modified with the consent of both parties. If, however, the failure to comply with an undertaking is clearly the result of changed market conditions-for example, the undertaking to export frisbees is followed by the collapse of the frisbee market-

That was said in 1974, I should point out. It continues:

-the person would not be held accountable. It should be remembered, however, that some undertakings may be tailored to a range of market expectations.

The purpose of the Foreign Investment Review Act is to ensure that certain forms of foreign investment will be of significant benefit to Canada. I do not believe it would be of benefit to Canada for the government to administer the act in a Draconian or unreasonable manner by insisting that in all circumstances commitments given in good faith by investors on the basis of their expectations for the future must be fulfilled to the letter even when circumstances have changed and implementation of those undertakings would impose an unexpected hardship on the investor concerned. In this regard we intend to continue the practice of the previous administration, tempering our enforcement of undertakings with good sense.

In response to the comments of the hon. member in relation to the desire for a greater degree of openness in the administration of the various acts and agencies of this government, 1 should point out that we are proposing to have a full discussion of this matter in the parliamentary review which should commence shortly. It has been addressed in the administrative review. We are proposing to do some things which we will announce shortly to create a greater degree of openness in the Foreign Investment Review Act. I suggest that the hon. member should make his representations when the parliamentary committee is sitting. If there are other interested parties in Canada, people who have been affected by the review process, as well as those who have been constant practitioners in connection with the review process, I suggest they should make their views known. We want a better understanding of how the publication of certain of these aspects relating to the review process will affect people in the country, having had the experience of five years of the administration of the act. I

November 22, 1979

believe the outcome will be a more positive degree of administration of the act itself.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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?

Some hon. Members:

Hear, hear!

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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PC

William James Kempling (Chief Government Whip; Whip of the Progressive Conservative Party)

Progressive Conservative

Mr. Bill Kempling (Burlington):

Mr. Speaker, I know that the hon. member has put his motion on the order paper because he has some concerns about this particular issue. The hon. member through his motion seeks to release information provided in confidence to the government. While the hon. member's motion relates to information provided in one specific case, its import is much broader. It implies that privileged information supplied in confidence to the Foreign Investment Review Agency by a corporate citizen could be arbitrarily made public through a motion of this House. I suggest that that is a very dangerous thing.

Though the Minister of State for International Trade (Mr. Wilson), who answers to the House for all questions concerning FIRA, has already dealt with this issue, I think it bears repeating, that the act which was debated and passed in this House under the government led by the hon. member's party specifically prohibits any such communication. Why the hon. member persists ignoring this fact, is beyond me.

To divulge information provided in confidence by a corporate citizen for the purpose of complying with the act would be counterproductive to the objectives and the effective application of this act. Beyond the legal and purely administrative imperatives for not disclosing this information is the fact that it is wrong in principle. I ask the hon. member to consider the implications of such a move. Does he not realize that it would constitute a breach of confidence? Does he not recognize that in a very real sense it would be a violation of the privacy of a corporate citizen?

The hon. member surely understands that making such private and confidential information public would be as abhorrent as arbitrarily revealing income tax information or other types of private information which citizens give to this government for very specific and limited use, on the understanding that it will be kept secret. Is the hon. member implying in his motion that there should be two laws in this country, one for the private citizen and one for the corporate citizen? 1 would he shocked if he were implying such a principle because I do not believe that that is what he really means to do.

The freedom of information bill, which we on this side have proposed, includes exceptions for private and commercial confidences because its authors were realistic enough to recognize the importance of respecting the citizens' right to confidentiality, and by citizens I mean corporate citizens as well as individual private citizens. Even the most ardent supporters of freedom of information would not suggest that the government should be able to arbitrarily disclose information that, if published, would prejudice the well-being of private or corporate citizens and which was provided in the strictest confidence. Indeed, Mr. Speaker, this issue is at the very heart of the whole question of having effective dialogue and uninhibit-

Foreign Investment Review Agency

ed co-operation between citizens and their government. This is not an argument against freedom of information; it is an argument for the intelligent and judicious application of that principle.

If confidence and the citizen's right to privacy are at the heart of effective relations between the government and people of this country, it can be said that Canadian participation is at the heart of the Foreign Investment Review Act, if not the whole issue of foreign investment in Canada. The way in which FIRA seeks to increase Canadian participation was described in a supplement to the agency's annual report for 1978-79 which was released recently by the minister. Generally speaking, FIRA seeks to ensure Canadian participation on three fronts; ownership, direction, and management.

These three forms of Canadian participation are very basic to Canadian control of the economy because at the level of individual firms they ensure an effective Canadian presence in decision-making. They ensure that a Canadian point of view is taken into account in decisions made by firms which will affect not only employees, but also related industries and the community in which the firms operate. Through experience it has been found, however, that the potential value of Canadian participation in all its forms can vary with each case which FIRA reviews, depending on the nature and circumstances of the proposed investment.

But take the case of a non-Canadian who acquires a firm which is already foreign-owned and controlled. Obviously, there would be no loss of Canadian ownership, because the firm was not Canadian-owned in the first place. In such cases, investors have often made some provision for increasing Canadian participation in ownership, direction, and management. So, one sometimes finds the curious phenomenon of Canadian participation increasing as a result of a non-Canadian acquiring a firm in Canada. In the supplement to FIRA's annual report it is stated that slightly over half of all allowed acquisition proposals and over 60 per cent of allowed new business proposals have offered benefits to Canada in terms of one or more of the three forms of Canadian participation mentioned above.

I would like to take a brief individual look at the three forms of Canadian participation. On the question of the participation of Canadians as shareholders, it is recognized that, while Canadians should have the opportunity to participate in the ownership of Canadian businesses, it would be impractical to require all foreign investors to sell shares to Canadians. Mandatory Canadian share ownership was one of the options considered in the Gray report, but rejected in favour of the investment review process, principally because such a share-ownership rule would be a powerful deterrent to some foreign investment that is highly beneficial to Canada. It was decided that the desirability and feasibility of Canadian equity participation should be considered on a case-by-case basis during the review process in light of the investor's current and forecast positions. This policy provides the flexibility necessary for an investor to frame plans and undertakings according to both the

November 22, 1979

Foreign Investment Review Agency

nature of his investment and the circumstances in which it is made.

A wide variety of undertakings related to ownership have been made by investors in their applications to FIRA, from a relatively small degree of Canadian equity participation to majority Canadian ownership. The time frames involved have also varied from immediate implementation of the target level to implementation over a specified period. Depending on the circumstances of the investor, the sale of shares to Canadians has been either public or private. Other ways of ensuring Canadian equity participation are the sale of stock or stock options to managers or other employees, the issuance of quasiequity securities such as convertible debentures or debt with warrants attached. Some investors have secured Canadian equity participation by arranging joint ventures with Canadian partners, whereas others have undertaken to maintain Canadian ownership at or near the existing level. The few comments I have made on this question of Canadian ownership serve to underline the complexity of the issue, even when it involves a principle with which all honourable members would agree.

Another important form of Canadian participation is as directors on the boards of the companies which apply to FIRA. The Canada Business Corporations Act and the companies acts of various provinces require that a majority of the directors of a company be residents of Canada. FIRA's experience with investors is interesting. In the supplement to its most recent annual report the agency states the following:

Investors have provided undertakings to maintain the number of Canadians on their board of directors above the level required legally by the jurisdiction within which the company is incorporated. In cases where the Canadian company is incorporated in a province which does not require that corporate directors be Canadians, applicants have nevertheless seen fit to appoint a proportion of Canadians. Also, numerous applicants have undertaken to secure the appointment of a majority of Canadians to their board immediately, rather than within the period of grace provided in the legislation.

Everyone recognizes the importance of having an effective Canadian point of view in the policy and decision-making of enterprises in Canada. Such a presence within a corporation ensures that Canadian interests will rank very high in the corporation's priorities.

As to the participation of Canadians as managers, it must be contingent on the availability of Canadians qualified to hold those positions. I know all of us have run into the situation at some time or other where businesses coming into the country have to bring in some of the management personnel so that Canadians can be trained to take over. In some cases employment of foreign personnel may be essential, at least at the outset. This is especially the case for products not previously made in Canada, and for the use of production techniques never before used in Canada. To succeed, companies need managers who have the requisite specialized knowledge and skills. Even well-established businesses may find it necessary to have recourse to foreign experts in cases where they are introducing a new product or where they face a particularly difficult problem which is beyond the ability of their managers to solve. We have run into the situation many times in business

where a licensing agreement is made with the company and then it turns out there has to be an ongoing arrangement with the management of the new firm in order to ensure that the project is successful.

Various investors have undertaken to ensure that the management of their company be carried out by Canadians, to hire Canadians for senior management positions on the condition that qualified people are available to fill specific positions in management with Canadians, and to train Canadians for management positions. Mr. Speaker, the bottom line is that Canadian participation ranks as high as anything else as a criterion forjudging whether or not given investment proposals will be beneficial to Canada.

The hon. member's motion refers to one particular case in which an investor has agreed to provide for greater equity participation by Canadians. The information recently released by the minister on the agency's operations indicates the variety of ways in which Canadian participation can be and is being enhanced through a flexible and effective application of the relevant parts of the Foreign Investment Review Act. I am sure the hon. member supports that effort. I would suggest to him that if this House were to adopt the motion he has put forward, not only would it be a breach of the provisions of the act itself, it would also undermine the agency's opportunities to negotiate benefits to Canada. Without the safeguards the act provides, the government would simply not be able to obtain the information necessary for the effective administration of the act.

Many of us have some sympathy for the view that the hon. member expressed regarding aid to Third World countries and the development of industry that has come into this country as a result of the Foreign Investment Review Act. The minister has already stated, however, that a committee of this House will do a thorough review of the Foreign Investment Review Agency. I hope the hon. member will come before that committee and present his views, not only on the publication of information on one company. I know he has attended meetings of the finance committee regularly in the years that I have been in this House and he has made a valuable contribution there. Perhaps we could arrange for him to be called as a witness when this matter is reviewed, because I know he has been concerned about it for a number of years and could make a useful and worth-while contribution. We will look forward to that, and I hope the hon. member will co-operate with us to that extent.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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PC

Paul Wyatt Dick

Progressive Conservative

Mr. Paul Dick (Lanark-Renfrew-Carleton):

Mr. Speaker, I just wanted to say that I fully appreciate and understand the problems the hon. member faces in presenting this motion. I do not feel, however, that he would want Parliament to break the law and, as it stands, the law is contrary to his motion. In fact the law prohibits the release of this information. His party introduced the law, and I think we have to leave it in place until Parliament decides otherwise.

November 22, 1979

It was suggested that since this party is now in government it could introduce an amendment to change the law. I would point out to the hon. member for Vaudreuil (Mr. Herbert), however, that his party has been holding up legislation in this House for weeks now with their obstructionist tactics-at least until the events of yesterday. It was only on Monday of this week the estimates were finally passed after the hon. member's party had talked on them for longer than we did in 1974 when we were in opposition. The opposition took up a lot of time in the House and in committee so that legislation proposed by this government could not be brought forward and debated. It is only this week that we have progressed to relatively new legislation. Until then the legislation dealt with was of a housekeeping nature, to clean up the mess left behind by the previous government.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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LIB

Harold Thomas Herbert

Liberal

Mr. Herbert:

On a point of order, Mr. Speaker, I would draw your attention to the remarks of the hon. member and ask if he could be brought back to the subject in question.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
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PC

Paul Wyatt Dick

Progressive Conservative

Mr. Dick:

I would be glad to deal with the subject in question, Mr. Speaker. The hon. member suggested that we could have amended this legislation. It should be noted, however, that we cannot bring forward our own legislation because of the obstructionist tactics of his party.

I feel that a lot of the money spent and actions taken by the government are conducted in secrecy. If the opposition would co-operate, we could bring in legislation and debate it in two or three days to provide a freedom of information act. The House leader on the other side, however, will not even attend meetings which would give some indication of how long it would be before the legislation could be passed.

Regarding the motion before us, Mr. Speaker, I think we have to realize that we cannot change the rules in mid-course. If these people have been promised that the material will be kept confidential, we cannot turn around and change the rules of the game. That is neither fair nor just. There would have to be a change in the legislation to the effect that from this day forward all undertakings would become public at the time a company entered into an arrangement with the Foreign Investment Review Agency, if that is what is decided.

I am equally concerned about secrecy under DREE where companies in some cases receive millions of dollars from the public trough and do not have to account for it. I would sooner demand accountability for that money and any relevant agreements than in the case before us where the government has not necessarily advanced any money but has just made an arrangement to allow the people to come into this country. I tend to agree that there should be disclosure of such undertakings, but the legislation would have to be changed to make it clear that all the agreements would have to be disclosed at the time they were made. That would be the time to do it, not change the rules half way through the game. Those companies that already have undertakings would be allowed to keep them secret. If there was an amendment to the legislation, however, undertakings would be disclosed at the time of the agreement being made. That is, of course, only after an amendment.

Royal Assent

I think this amendment is the type of thing the select committee examining the Foreign Investment Review Act might examine. Hopefully, it will be set down on the order paper and get under way shortly. I would think that suggestions of this nature are ones which this committee should be examining. I would encourage more openness with the Canadian public on what FIRA is doing. For example, at the same time I would hope that FIRA might, before entering into a commitment, advertise for potential Canadian investors so that Canadian entrepreneurs would have an opportunity of having first crack at that. If that did not happen, then it would be opened up to the foreign-owned company to take over ownership.

I feel that the entire legislation dealing with FIRA needs to be fully examined and that we cannot go at it in a piecemeal manner, nor can we go against the present legislation as it now stands. I feel that the agreement about how soon a motion will be debated depends on the party of which the hon. member for Vaudreuil (Mr. Herbert) is a member, namely, the official opposition, being the Liberal party. I understand there has been agreement by the NDP to debate the four motions to set up the four select committees in one day so that we can go ahead and get the job done and let the committees undertake the work. But it has been the Liberal party that will not send members to the meetings of the House leaders. They have not indicated they would be willing or satisfied with one day, and have indicated that maybe more than one day would be required, again eating up the time of the House. This is why these motions have not been debated and why these committees have not been set up. It is precisely because of the obstructionist tactics of the member's own party, the Liberal party, that we have not been able to get on with the job.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   PRIVATE MEMBERS' MOTIONS FOR PAPERS
Sub-subtopic:   CORRESPONDENCE RELATING TO FIRA REQUIREMENT THAT TATE AND LYLE LIMITED REDUCE ITS SHAREHOLDINGS IN REDPATH SUGARS LIMITED
Permalink

THE ROYAL ASSENT


A message was delivered by the Gentleman Usher of the Black Rod, as follows: Mr. Speaker, the Honourable Deputy to the Governor General desires the immediate attendance of this honourable House in the chamber of the honourable the Senate. Accordingly, Mr. Speaker with the House went up to the Senate chamber. And being returned: Mr. Speaker informed the House that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bill: Bill C-10, an act to provide supplementary borrowing authority for the fiscal year 1979-80-Chap. 3.


November 22, 1979