Manulife's CEO calls for action on foreign takeovers

It's time to consider foreign ownership restrictions in more sectors of the economy, the CEO of one of Canada's biggest corporations says.

Dominic D'Alessandro, CEO of Manulife Financial, spent a portion of his address to shareholders Thursday lamenting the increasing pace of corporate takeovers in Canada by foreign interests.

"I worry sometimes that we may all wake up one day and find that as a nation, we have lost control of our affairs," he said.

He noted that more than 100 public companies were taken over last year, including"some of the oldest and most well established companies across a broad spectrum of industries — everything from hotels to retailing, to metals and mining."

D'Alessandro suggested it's time to look at ownership restrictions. He said the restrictions that currentlylimit foreign investment in Canada's financial institutions have "served the country well."

He said there was no shortage of competition in financial services and, without those restrictions, there is little doubt that all of them would be foreign-owned.

"I find it particularly bothersome that so many of our natural resource companies — which I would argue represent unique and irreplaceable assets — are now owned elsewhere."

D'Alessandro acknowledged that some might be surprised by his misgivings about foreign ownership, since his company grew to its current huge size because of its own foreign acquisitions — especially its $15-billion purchase of Boston-based John Hancock Financial in 2003.

Canada vulnerable

He said he is not against foreign investment, saying he supports globalization and believes Canada should always be "open for business" from foreign investors.

However, he said, Canada is in a more vulnerable position.

"The world is awash with capital," he said. "We are a small country with a relatively small population. Canadian companies typically aren't of a size to be global players."

D'Alessandro also suggested that securities laws be reformed to give Canadian companies that are targeted by foreigners more time to work on alternatives.

"Many feel that Canada now has the most bidder-friendly environment in the world," he said.

Critical of tax change

D'Alessandro also added his voice to many others who havecriticized a tax measure introduced in the March federal budget thatwould prevent companies from writing off the costs incurred to finance overseas expansion.

D'Alessandro called it "a misguided and damaging proposal."

When criticism of the measure surfaced, Finance Minister Jim Flaherty saidit was designedto close a loophole affectingoffshore tax havens.

But critics have said the effect will be to make Canadian companies less competitive and more vulnerable to foreign takeovers.

Flaherty has defended the thrust of the new policy, but told reporters last month he would listen to the arguments he's heard from the business community.