Thursday, Apr 10, 2008
Globe and Mail
Ottawa rejects space firm's sale to U.S.
The Globe and Mail reports this morning that the federal government has rejected the sale of Canada's leading space company to a U.S. defence manufacturer on the basis that the deal would not be in Canada's best interests.
U.S. defence manufacturer, Alliant Techsystems, wanted to purchase the Canadian firm, MacDonald, Dettwiler and Associates (MDA). MDA built a satellite, the Radarsat 2, with $400 million of Canadian tax dollars. The Globe and Mail notes that the satellite, which allows observation of Canada's Arctic, can see through clouds and nighttime cover and spot any vessel larger than three metres in length. MDA is also the company that built the Canadarm, the robotic limb used on the space shuttle and the International Space Station.
If the sale had gone through to Alliant, the satellite could be subject to control by the U.S. government under the Patriot Act or other American national security laws. This could affect Canada's ability to use the satellite in the event of a national emergency or a territorial dispute with the U.S. (such as the dispute over the Northwest Passage), thus undermining Canadian sovereignty. The Globe and Mail notes that politicians of all stripes have expressed opposition to the deal, concerned that U.S. security laws could force Alliant to withhold satellite images from Canada, or allow U.S. agencies to obtain such data even if Canada banned its transmission.
SGM's Steven Shrybman was retained by the public interest group, Rideau Institute, and the Canadian Auto Workers union, which represents some MDA employees, who oppose the sale. He told the House industry committee last week that, once the sale takes place, U.S. law will apply to Alliant and its subsidiaries and it will have no option but to comply.
The Globe and Mail says that Alliant is not willing to concede that the deal is dead. It has 30 days to make further submissions to the Federal Industry Minister, Jim Prentice. But, says the Globe, "Mr. Prentice's move signals his intention to take the unprecedented step of blocking a major corporate takeover, in an issue that has been fraught with controversy as opponents argued that the sale of MDA could impair Canadian sovereignty." If the Minister confirms the rejection after the 30 day period, it will be the first time the federal government has ever rejected a takeover in thousands of foreign-investment reviews since the Investment Canada Act went into effect in 1989.
