Mr. Howard (Skeena):
Mr. Chairman, something much more fundamental is involved in this bill than the mere purpose stated by the sponsor. True, on the surface, the intent is to change the name of the company. But what is of much more fundamental importance, something that has been explored on many occasions in the house, is the extent to which parliament is being asked to give formal endorsation to the concept of further inroads made by foreign capital into the Canadian economy, and whether it is desirable to accede to such request.
London and Midland General Insurance Company is not a simple, uncomplicated company with a Canadian structure, as the name would lead us to believe. It is a company that is involved in as large an international or multi-national corporate entity as exists anywhere, especially in the finance or insurance field.
When this bill was first considered before the committee, a Mr. David Alexandor, the parliamentary agent for the company, gave certain evidence. I should like to refer to that evidence to indicate the intricate involvement of London and Midland General Insurance Company in the finance and insurance world.
Mr. Alexandor initially explained, as did the sponsor of the bill, what appears on the surface of the bill to be its purpose. Then, he went on to make reference to Delta Acceptance Corporation, indicating that it was incorporated as a public company under the laws of Ontario on March 26, 1954. Then, in July 1962 Delta Acceptance Corporation Limited acquired all the outstanding share
capital of London and Midland General Insurance Company. In other words, since 1962 London and Midland General Insurance Company ceased to be a Canadian company in the full sense of the word, and in fact became a wholly owned subsidiary of Delta Acceptance Corporation. Delta Acceptance Corporation subsequently changed its name to Avco Delta Corporation Canada Limited.
Perhaps, it would be worth while to set out, as did Mr. Alexandor, the extensions that Avco Delta Corporation has in the insurance, finance and other fields, in order to indicate we are not dealing here simply with a proposal to change a name. Perhaps I should read from the text what Mr. Alexandor said:
In addition to London and Midland General Insurance Company the following companies are also subsidiaries of Avco Delta Corporation Canada Limited. Avco C.F.C. Limited which was formerly C.F.C. Finance Corporation Limited, Avco Delta Dominion Limited which was formerly Delta Acceptance Canada Limited, Avco Delta Quebec Limited, which was formerly called D.A.C. (Quebec) Ltd., Avco Finance Limited, which was formerly The Crescent Finance Corporation Limited, Avco Highland Plan Limited, which was formerly called Highland Trial Plan Limited, Avco Delta Realty Limited, which was formerly Grand Prairie Investments Limited, Adanac General Insurance Company of Canada, Avco Delta Realty, Manitoba, Limited, which was formerly called the North West Mortgage and Finance Company Limited, Consolidated Finance Western Limited, Empire Acceptance Corporation Limited, General Finance Company Limited, Lorne-Bruce Motors Limited and Waverly Finance Company Limited.
The latter company, Waverly Finance Company Limited, wishes, or at least wished at the time of the committee hearings, to make an application to change its name to Avco Security Canada Limited. Adanac General Insurance Company, which we are told by Mr. Alexandor conducts a very limited operation, will be wound up in a short time.
Then, Mr. Alexandor goes on to indicate further involvement of the other companies. He says:
Four out of the last five companies named which were Consolidated Finance Western Limited, Empire Acceptance Corporation Limited, General Finance Company Limited and Lorne-Bruce Motors Limited are non-operating and it is intended to wind most of them up in the near future pending, for example, the distribution of a designated surplus, the maturing of debentures and the transferring of any old business still remaining. One or two of these companies are just corporate shells. Therefore, in effect, there are ten companies in this group which are operating at this time. All of these ten operating companies bear the name "Avco" in their corporate name except for Adanac General Insurance Company of Canada and London and Midland General Insurance Company.
July 25, 1969
I would like to point out that prior to the change of name of Delta Acceptance Corporation Limited to Avco Delta Corporation Canada Limited that Company became an almost wholly owned subsidiary of Avco Delta Corporation which is a Delaware company. This occurred in 1984. In turn, Avco Delta Corporation is a wholly owned subsidiary of Avco Corporation of New York. There is one other Canadian company using the name "Avco" which is not a subsidiary of what we call the parent company,-
Then, Mr. Alexandor goes into more detail. From that recitation of the company's corporate involvement we see very clearly that the purpose of changing the name of the company from London and Midland General Insurance Company is to tie the company more closely in a psychological way to the massive Avco Delta finance structure. In other words, the present name of the company is detrimental to Avco Delta, which seeks not only the continuation of the subsidiary position of what was at one time a Canadian company, but in addition to that to give the company the stamp of Avco's own corporate international or multi-national structure.
[DOT] (4:10 p.m.)
This brings us to the question of government policy as it relates to foreign ownership in the field of finance, in the field of insurance and to Canadian economic activity in general. London and Midland General Insurance Company is simply one facet of it. There has been ample dialogue in the country, ample discourse of ideas and ample expression by many people in Canada, about the necessity of taking some steps to halt and eventually reverse the trend toward a greater and greater domination of our Canadian economy by foreign interests. We all know that while foreign ownership presumably carries with it certain benefits, mainly the benefit of investment money in the nation, it also carries with it a far greater number of detrimental effects.
One of these is the siphoning out of the country by way of dividends part of our national wealth expressed in terms of dollars. Another awkward feature is the tendency of these multi-national foreign companies resident in another nation to concentrate a great part of their research activities and the like in the structure of the company in the foreign country. In other words, they disregard the Canadian section of their activities in so far as research, engineering and other matters are concerned. This is detrimental to us.
[Mr. Howard (Skeena).l
There is a tendency to do a certain amount of the total administrative research and engineering work in the parent company. There is also a tendency to offer an inducement to Canadians to leave Canada and work in the head office of the parent company in the United States. This trend is also detrimental to Canada.
There is a tendency for the parent company, and this has happened on a number of occasions, to make decisions about what it will do economically based on the political and economic considerations in the foreign country rather than on the necessities that may exist in Canada. In other words, as has been shown in a number of instances, not in the finance field but in the manufacturing field, the decisions of the United States Congress, the laws of which are applicable to resident companies within the United States, have extra territorial effect and are detrimental to Canadian interests.
The more we sell out our economic interests to foreign capital, the more we sell out the possibility that we ourselves can use our national resources and our own wealth for the greatest possible advantage of Canada. There has been ample public conversation and discussion about this. The Prime Minister (Mr. Trudeau), apropos of what he said this afternoon, does not really need any great period of time for an interchange of ideas in the cabinet. He does not need a lot of cabinet committees to understand and appreciate the difficulties attendant upon Canada in so far as foregoing ownership in concerned.
We had a very extensive royal commission to examine all these prospects, the report of which was made and subsequently hidden in some recesses of a government office. The government has had an opportunity to do something about this. In so far as the insurance industry is concerned, representatives of the Canadian government told the insurance industry in a private way, not in public conversation, not to worry about the objections being raised in Canada about the incorporation of foreign insurance companies. The government would take steps to protect the interests of foreign investors in Canada.
Representatives of the insurance companies went home contented and happy, knowing they were going to receive that protection. They knew they would no longer have to explain their activities by way of the private bill process in parliament. They knew they would no longer have to come before a public body, such as the standing committee, to ex-
July 25. 1969
plain what they wanted to do. The Canadian government told the insurance and finance industries in the United States, because that is where most of the owners are, not to worry and fret because their interests would be protected.
The government lived up to its word. It sold out Canadian interests and introduced bills in order to carry out that commitment. There are a number of pieces of legislation on the order paper designed to amend the Canada Corporations Act, The Foreign Insurance Companies Act, the Loan Companies Act, the Trust Companies Act and the Canadian British Insurance Companies Act. A reading of those companion pieces of legislation shows that the government has not considered the views of Canadians about foreign ownership and the detrimental effects of it. It has considered the vested interests of the foreign corporations and has come down four-square on the side of foreign domination of our industry.
These bills are certainly not having any trouble in the other place, with all the boards of directors endorsing everything that is protective of foreign investment. If those bills subsequently become law, it will mean companies like the Avco Delta Corporation, Seaboard Finance-which has appeared before parliament and has not a very good relationship with its borrowers-and other similar companies who have a large chunk of the Canadian economy in their grasp will be able to walk into the office of the Minister of Consumer and Corporate Affairs (Mr. Basford) and offer him whatever is necessary to obtain a charter. They may get a change of name, an alteration in their capital structure or a stock-spilling arrangement. Such companies will be able to obtain whatever alteration they need with the complete sanctions and blessing of the Canadian government. All this will be done in the close confines of the minister's office.
These companies will no longer have to come before the Canadian public, the standing committees of the House of Commons, to explain why they want the particular changes, why they want to split their stock. They will be able to engage in all sorts of relatively underhanded corporate activities to preserve their own position and increase the ownership they have of the Canadian economy. The government studied the matter carefully, weighed the interests of the foreign owners of the United States corporate entity against the interests of Canadians, opted for
the foreign owners in the United States and disregarded the interests of the Canadian public. This is a preposterous insult emanating from the government of Canada. The Prime Minister and the Minister of Consumer and Corporate Affairs have talked publicly about the value of Canadian companies. They talk publicly about the necessity to protect our whole national economy and the various interests of Canadians, but privately, quietly and secretly they act in the opposite way. This, of course, is typical not only of this government but of previous governments which have been stamped with the same label, namely that of being two-faoed about most matters; they say one thing and do another.
[DOT] (4:20 p.m.)
Subtopic: LONDON AND MIDLAND GENERAL INSURANCE COMPANY