TORONTO, Feb. 10, 2012 /CNW/ - CAW National President Ken Lewenza
calling on the federal government to release detailed financial data
associated with Caterpillar's 2010 acquisition of Electro-Motive
That acquisition went ahead without being formally reviewed under the
Investment Canada process, purportedly because the Canadian company was
too small under the regulatory threshold (which was $299 million for
that year). But no public, independently verifiable data was provided
to support that claim, and it is not clear that federal officials ever
checked the accuracy of the claims submitted by Caterpillar (through
its subsidiary Progress Rail).
Lewenza noted that Caterpillar's own financial statement reported $1.3
billion (U.S.) in assets associated with its takeover of the entire
Electro-Motive business. Electro-Motive's Canadian subsidiary
represented its largest and most strategic asset, and almost half of
its total employees.
"Unless this data is divulged and independently authenticated, we're
simply taking Caterpillar's word for it that this acquisition was not
subject to Investment Canada review," Lewenza said. "That's no way to
deal with powerful, self-interested corporations like Caterpillar.
Corporations cannot be left to police themselves."
In a letter to federal Industry Minister Christian Paradis (who oversees
the Investment Canada process), Lewenza has asked for the public
release and independent verification of the data associated with the
purchase. If that data turns out to be inaccurate, Lewenza noted, the
government can impose penalties on Caterpillar up to and including
annulling the acquisition.
The letter pointed out that the Minister and the federal government
retain considerable policy flexibility to intervene in foreign
investments that pose a danger to Canada, as demonstrated by its ad-hoc
interventions in previous controversial acquisitions (such as MDA and
Lewenza's letter also called on the government to strengthen regulations
over foreign investment, including by:
Improving transparency of the ultra-secretive Investment Canada process.
Allowing broader stakeholder input to reviews.
Closing loopholes that exempt most takeovers from scrutiny (including
takeovers that are "too small" or reflect "indirect purchases" of
Strengthening and more clearly defining the "net benefit" test.
Ensuring that government can enforce commitments attached to approved
The government must address the immediate circumstances of the
Caterpillar case, while also taking on the longer-run task of
strengthening the regulations, so that the terrible situation at
Electro-Motive does not continue to repeat itself in other locations.
"Failure to act by your government reflects not legislative weakness,
but a political unwillingness to defend Canadian citizens," said
Lewenza's full letter to Minister Paradis can be read here: http://www.caw.ca/en/10948.htm
SOURCE Canadian Auto Workers Union (CAW)
For further information:
CAW Communications Shannon Devine (cell) 416-302-1699 or Angelo DiCaro (cell) 416-606-6311