No to Chineese for Nexen Inc.

Quebec Droite - PaysJe suis d’accord avec la position du Financial Post, aucun investissement de fonds souverain (camouflé en cie privé) ne devrait acquérir nos richesses naturelles.

Saviez-vous que les Chinois se situent au quatrième rang sur mon site, voici les stats d’aujourd’hui.

Quatre articles intéressants.

Extrait de : Why we should say no to CNOOC, Patricia Adams, Special to Financial Post, Nov 22 2012

The Canadian government will soon decide whether to let China’s state-owned oil giant CNOOC buy Nexen Inc., the Calgary-based oil and gas producer. A survey released this week shows that 72% of Canadians oppose the prospect of this Chinese Communist Party-led enterprise operating in Canada, with good reason.

China’s state-owned enterprises (SOEs) are controlled by the Chinese Communist Party and their role is political — to keep the Communist party in power. They receive subsidized financing from state-owned banks that receive subsidized savings from captive Chinese citizens who are not allowed to invest their money freely, as we in the West can. SOEs typically receive other subsidies and privileges such as free land, monopoly control over their markets, expedited licences, and exemptions from the need to meet environmental and other standards. In China, a country where the rule of law languishes, China’s SOEs get away with pretty much anything, often at the expense of a bribe to a local official.

Though many are in awe of China’s “rise,” it is a Potemkin village of misallocated capital that, at its root, depends on the suppression of consumer, labour, environmental, and investor rights. Fisher Investments calls it “crony communism.”

That is why researchers at the Transition Institute, a Beijing-based think-tank, want Chinese SOEs privatized and forced to operate according to market discipline and the rule of law, and not by political favour. They are not alone. The Chinese economist, Mao Yushi, the recent winner of the Milton Friedman Prize for Advancing Liberty, calculated that China’s state-owned sector received 7.5 trillion yuan ($1.2-trillion) in subsidies between 2001 and 2009, without which they would have realized a negative average return on equity of 6.3%. The World Bank argues that China’s SOEs represent a problem for China and is calling for their reform into real market-disciplined institutions, not ones that operate by dint of Communist party favours.

Thanks to their status as the “special children” of the Communist party, Chinese SOEs have become flush with cash at the expense of Chinese citizens, who must overpay for everyday products, who must endure the destruction of their environment and the seizure of their land, and who suffer the suppression of their right to sue to defend themselves. Waving cash obtained through such unethical means, Chinese SOEs are now on a shopping spree around the world for investments such as Nexen.

CNOOC’s proposed takeover of Nexen can’t go ahead until the government of Canada approves the $15-billion purchase under the Investment Canada Act, something it can only do if the takeover is likely to be of net benefit to Canada and not injurious to our national security.

The act requires foreign investors to adhere to our standards of free and fair enterprise, and to be accountable under the law. But Chinese SOEs do not ordinarily operate by our standards. They are notoriously secretive, they have inefficient cost structures and low productivity, and it would be virtually impossible to stop them from distorting the Canadian economic environment. Should a political issue arise between Canada and China, the SOEs would necessarily do the bidding of their owners — the Chinese government.

Should a Chinese SOE make money by virtue of its Canadian investments, it will indirectly strengthen its master, the Chinese Communist Party, in its control over ordinary Chinese citizens. If a SOE loses money by its Canadian investments, it will directly hurt ordinary Chinese consumers and taxpayers, who will need to make up the shortfall.

Because of these disbenefits to the Chinese citizenry, reformers in China want the SOEs reformed in much the same way the West has reformed so many of our own SOEs — by privatizing them, as Canada did with Petro-Canada and the U.K. did with British Petroleum. Because of the dubious economic benefit to the Canadian economy from renationalizing key parts of our economy — and with the national being a foreign dictatorship to boot — the government of Canada should simply say no.

Extrait de: Ottawa’s foreign investment concerns coming into focus, Claudia Cattaneo, Financial Post, Nov 23, 2012

The world is hanging on every word from Canada as it braces for new guidelines on foreign investment.

Few seem to be in the know, and there are tales of government consulting widely and scrambling to design complex policies against a tight timetable.

But after months of debate, some leaked information and measured words from the Prime Minister and key cabinet ministers, a picture is emerging of the federal government’s key areas of concern and how they may be addressed.

This kind of policy making is something that will stick around

They include: maintaining Canada’s attractiveness to foreign capital; improving the governance and productivity of state-owned enterprises (SOEs) that make acquisitions in Canada; keeping Canada’s top energy companies and most strategic assets under Canadian control; maintaining good relations with China and the United States; and getting re-elected.

The last one is probably the most important as it’s about self-preservation for Conservatives, who were elected in May, 2011, and are facing stronger opposition from the NDP and the Liberals. Canadians seemed disinterested in foreign ownership of Canadian oil and gas, but snapped to full attention when China-controlled CNOOC Ltd. bid to acquire Nexen Inc. on July 23.

The takeover offer was so bold — it’s China’s biggest so far — it raised awareness about the influx of foreign SOEs such as those from China into Canada’s energy sector and has turned into one of the country’s most emotional policy debates. If the new guidelines fail to address Canadian concerns, there is a risk all future deals involving foreign takeovers will become flashpoints and dog Mr. Harper’s government all the way until the next election, scheduled for 2015.

 “This kind of policy making is something that will stick around,” said one observer. “They can change it if they are not happy, but usually they try to get it right the first time.”

Jack Mintz, chair of the School of Public Policy at the University of Calgary, said the government could have better managed the issue by working on the guidelines earlier, rather than let the issue spin and become political.

“There were [Chinese] takeovers happening with smaller companies and you could see the Chinese were testing the waters,” he said. “And so Nexen is [China’s] next-level test, and this is the one that Harper has to worry about.”

Ottawa also seems concerned about keeping the markets happy or at least neutral after inviting global investors to participate in the development of Canada’s natural resources. Global investors, arbitrageurs, hedge funds, have a lot of money at stake in the $15.1-billion CNOOC-Nexen deal and in the $5.2 billion takeover bid for Progress Energy Resources Corp. by Malaysia’s Petronas.

Ottawa’s rejection of the Petronas bid last month came as a shock. International investors were unaware of Canada’s debate and its plans to issue new guidelines.

Ottawa is evaluating the deal (Petronas has submitted a new bid). Decisions are expected in the next few weeks; the decision on Nexen is due Dec. 10. Around the same time the government also plans to announce a policy framework on direct foreign investment, building on guidelines for investments by SOEs introduced in 2007.

Investors are now keeping tabs on every political statement and every rumour, talking directly to the media, and even watching a by-election in Calgary Centre Monday in which Chinese investment has become an issue. If the Conservatives lose the long-held seat, there is a chance Mr. Harper will take a harder line against the Nexen deal, said one U.S. investor.

State-owned enterprises represent a different kind of player and obviously those are some of the issues that are before us today

“On something like this we need to stay one step ahead,” said the investor.

Meanwhile, uncertainty about what the government will do is holding back merger and acquisition activity in the sector.

Ottawa seems to broadcasting to the market that Canada will remain open for business through statements like those of Finance Minister Jim Flaherty, who told the CBC on Thursday: “We know we don’t have enough capital in this country to develop our resources that we want to develop over the next generation, so we have to have some accommodation with respect to foreign direct investment.”

At the same time, it’s also prepping the market to expect a change in the way it handles bids by SOEs.

In what is being interpreted as a shift in thinking, Mr. Harper said that his government would treat SOEs differently than private-sector companies.

“We created guidelines specifically for state-owned enterprises because, yes, state-owned enterprises represent a different kind of player and obviously those are some of the issues that are before us today,” he said in a question-and-answer session Monday at the Canadian American Business Council.

The changes seem to revolve around ensuring SOEs keep their promises, are productive, are transparent and have strong governance.

Both Petronas and CNOOC are working to improve their bids to meet those higher hurdles. According to reports, Petronas has proposed to list shares of Progress within five years — a move that would make its Canadian operations more transparent and come under greater Canadian regulatory oversight. It has also offered to appoint independent directors to Progress Energy’s board. CNOOC is looking at greater employment and capital spending commitments. Ottawa could make the CNOOC-Nexen takeover more palatable by forcing the sale of Nexen’s 7.23% stake in the Syncrude oil sands project.

The most significant change may come in new ownership limits aimed at ensuring Canada’s top remaining companies cannot fall under the control of SOEs. The view is popular even in Alberta, where there is concern about Chinese companies gaining too big a piece of the oilpatch and altering the business environment.

Murray Edwards, chairman of one of those large companies, Canadian Natural Resources Ltd., said Friday that Ottawa should model its rules after Australia’s and include restrictions on how much of the country’s resources SOEs can acquire, spelling out resource industry “champions” that are off limits.

He also said the Canadian government should allow CNOOC’s bid for Nexen with conditions, citing “transparency, disclosure, agreeing to adhere to Canadian law.”

A proposal by Mr. Mintz for a tiered system of foreign ownership limits based on company asset size is getting a lot of federal government attention. Under the system, junior companies could be owned outright, midsized companies could be majority owned, but larger companies would be restricted to minority stakes or less than 50%.

The new system could be designed to allow the takeovers of both Progress and Nexen. With foreign ownership restrictions of its own, China would be hard pressed to argue against them.

Maintaining good relations with the United States and China is also high on the Harper agenda. The U.S. government has said little publicly about whether it likes or dislikes China’s increased presence in Western Canada. China is watching closely Harper’s handling of the Nexen bid.

“One way to resolve it is you pick your threshold so that CNOOC gets through, and then everybody will know the rules for the future,” Mr. Mintz said. “I think the public will generally be happy. There is not much ownership by SOEs yet, but the bigger issue is down the road.”

China could do its part. While it may ultimately win Nexen in some form, it may want to be careful about trying again.

Extrait de: Who owns the oil sands?, Financial Post Staff, Oct 31, 2012

Oil sands

 Oil sands-1

Oil sands-2

Extrait de : We ignore risks of foreign buyouts and China trade deal at our own peril, Diane Francis, Financial Post, Nov 23, 2012

The China-Canada trade deal and allowing buyouts by state-owned enterprises from countries like China are clearly not in the national interest nor popular.

I’ve written about Sinopec Shanghai Engineering’s workplace incident in 2006 and its attempt for years to circumvent workplace safety penalties by arguing it was above Canadian laws in the courts. The Supreme Court of Canada finally refused to hear its case this summer, leading the company’s subsidiary to plead guilty to negligence that led to the deaths of two workers and injuries to four others.

There’s also the case of Canadian mining company Khan Resources and its attempt to sue a Russian government company for $300-million in Canadian courts. This so far has been stymied because Russia refuses to let foreign commercial interests serve court papers on its companies, according to some arcane clause in a treaty. Similar attempts in the U.S. and UK have been laughed out of the courts, but not here.

Here are three more examples of questionable business citizenship:

1. Terry Hendrickson, CEO of Hendrickson Construction Co. Ltd. and other Manitoba suppliers have had huge difficulties with Chinese-owned CaNickel Minerals Inc. They are claiming millions in payment for work they have done.

“I do not want a repeat by another Chinese company until firm ground rules are in place with financial safeguards to protect other Canadian companies like myself,” wrote Hendrickson.

The Chinese management accused the Canadians of tricking them or of not doing the work. It also put in place managers without expertise, alleges Hendrickson.

“At one point the Chinese brought on site a man from China who could not speak English and lasted only one month because he knew very little,” he claims.

Manitoba Workplace Safety and Health Division issued stop work order at the mine in May 2012 over concerns about blasting.

2. Canadian Dehua International Mines Group Inc. in British Columbia is about to bring in 200 Chinese temporary workers for its coal mines, with plans to bring in 2,000 more. Immigration Canada has allowed this, with BC’s blessing, because the company claims Canadian workers are not available. But the company has offered below-market wages to Canadians to make a case to bring in its own labor, according to local unions.

Pauvre Canadien vous coûtez trop chers,
on va faire venir des petits chinois à la place !

Canadian Duhua has offered $10 to $17 an hour, half or less the going rate. Eventually, the company reportedly intends to bring in thousands more workers, a salami-slice strategy that all Chinese companies around the world have deployed. They concoct a case local workers are unavailable then bring in their own.

That is when, says a BC union official, China exports its unacceptable and unsafe workplace conditions to the target country.

“These workers will not complain. Would you complain if you know if you’re brought in and if you complain, you are going to be sent out on the next plane?” he said. “Normally, inspections start with the concerns of the crew. Are there going to be sufficient safety committees? Is there going to be a real, working safety committee? Doubt it. Are workers going to be able to stand up for their own air quality and underground conditions to make sure they’re treated properly? Doubt it.”

3. In 2008, Yukon Zinc Corp. was bought by China’s Jinduicheng Molybdenum Group Co. Ltd. and Northwest Nonferrous International Investment Company Ltd. and taken private. In 2009, one of its workers died when his brakes failed underground and Yukon’s sub-contractor, Procon Mining and Tunneling, pleaded guilty to two of eight charges involving unsafe vehicles. In 2010, a second worker died from a cave-in. Yukon Zinc and Procon were charged in connection with the death and a large portion of the mine was closed for safety reasons.

In February 2011, a massive cave-in occurred but workers escaped injury.

“One fatality in a small hard rock mine in Canada is, these days, real news. Two separate incidents should be seen as shocking,” wrote S. Mark Francis, a business consultant with CNSX Western Canada Advisor.

China’s track record in Canada is checkered, to say the least, and yet the China-Canada trade deal would open the floodgates to tens of thousands of sovereign enterprises then exempt them from Investment Canada scrutiny if they want to buy more. This means that CNOOC, which wants to buy Nexen Inc., and its sister giants like Sinopec Shanghai, PetroChina or Chinmetals will, in theory, be able to buy other mining, oil company and oil sands projects in Canada. So could the Russians and others.

These incidents are not theoretical. They happened. Ottawa, Immigration Canada and the politicians cannot ignore them nor can they ignore the wishes of Canadians who are overwhelmingly opposed to the Canada-China trade deal and buyout of their important corporations.

Immigration Canada must behave responsibly. Foreign companies cannot be allowed to game our system by bringing in workers without offering Canadians market wages, benchmarked to reality, and then by saying Canadians are not available. On top of that, they should pay foreign workers market wages and be prevented from placing wages into company-controlled bank accounts, as has happened before, that the workers will never get.

Most importantly, sovereign-owned entities, from China or countries that do not offer reciprocal benefits and protections to Canadians, should be restricted to 10% ownership of resource, farmland and infrastructure companies or assets, as is the case with Canada’s banking system.

As a former executive with a sovereign-owned Chinese giant said to me “you absolutely do not want to let these guys run riot all over your economy. That’s for sure.