Nortel sale review required by law: Opposition
Last Updated: Friday, August 21, 2009 | 8:23 PM ET
CBC News
The Liberal Opposition wants the federal government to review the $1.13 billion sale of Nortel's wireless assets to Sweden's Ericsson, insisting it is required by law.
"This technology was developed with the support of Canadian taxpayers," said Liberal Leader Michael Ignatieff in a statement Friday. "If Stephen Harper and [Industry] Minister [Tony] Clement do not review this sale, they are wilfully turning their backs on their own law and the future of Canada's technology sector."
Nortel, a telecommunications company that was once the crown jewel of Canada's high-technology sector, filed for bankruptcy protection in January in Canada and the United States and is liquidating its assets. Courts in both countries approved the wireless sale to Ericsson on July 28.
At that time, Clement had said the government was reviewing the bid. Prime Minister Stephen Harper confirmed Aug. 11 that the federal government won't block the sale.
Clement's spokesman, Darren Cunningham, told CBC News on Friday afternoon that by law, the minister was unable to comment on the matter.
Under the Investment Canada Act, transactions involving foreign takeovers are automatically reviewed if their book value exceeds $312 million and the industry minister has 45 days to determine whether or not to allow the investment.
Although the sale of the wireless unit was for $1.13 billion US, Nortel said the book value of the assets was only $149 million US.
In response to Ignatieff, Ericsson Canada Inc. president and CEO Mark Henderson reiterated that the book value of what his company is buying is far below the level that triggers a review.
Henderson also said the technology Ericsson wants to buy from Nortel is not taxpayer-supported because much of the work was done outside of Canada and therefore not eligible for government grants or tax credits.
Liberal Industry critic Marc Garneau said in a statement that Clement "can't play games with the numbers."
"If Ericsson is willing to pay $1.1 billion US for Nortel's wireless assets, that's what they're worth. Before the deal can go through, it must be subject to a mandatory review," he said.
Earlier this week, Research in Motion issued a statement also calling for a review. The Waterloo-based BlackBerry smartphone maker has claimed certain conditions kept RIM from bidding for Nortel.
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