It was a swell soiree. Last week Calgary’s oil-patch elite turned out the welcome mat for possibly the richest man in Hong Kong. The guest of honor was Li Ka-shing, who on April 22 officially acquired 43 per cent of Husky Oil Ltd., Canada’s 12th-largest oil producer. Also present was his 23-year-old son, Victor Li, who acquired nine per cent of Husky, and representatives of Li’s friendly banker and business partner in Hong Kong, the Canadian Imperial Bank of Commerce, which has five per cent of Husky’s shares. The party, hosted by Husky Oil’s chairman and noted economic nationalist, Bob Blair, was attended by about 400 VIPs who circulated between bars and linen-clad tables laden with hors-d’oeuvre and bubbly on ice.
The gathering marked the fact that Canadians were once again celebrating foreign investment on a lavish scale. Husky’s hospitality was especially significant because it represented the disavowal—with some luck forever and in spite of opposition party complaints to the contrary—of that favorite old saw of Canadian politics: the evils of foreign ownership in the oil business. “I like Canada because the government treats us like ordinary Canadian people,” Li told Maclean ’s.
Li has paid $484 million for his Husky stake and may invest as much as $1 billion more. His commitment is also proof that Canada has a distinct edge over others competing in the sweepstakes to attract fleeing Hong Kong capital. The British colony of 5.5 million people reverts back to China in 1997, and although taipans—business chiefs—such as Li deny they are worried, they continue to put their economic eggs into other baskets as quickly as those diversifications make sense. Another Hong Kong tycoon scouting Canada’s oil patch is Ronald Fook Shiu Li, head of the Hong Kong Stock Exchange—and a director of the Bank of Alberta and a large-scale landlord in Canada.
Li Ka-shing’s $6-billion electricity, shipping, real estate and finance empire has never included sizable oil assets. “We have a promise from the Chinese government that nothing will happen for 50 years after 1997,” Li said. “But we have 90 per cent of our assets in Hong Kong, and my companies represent 15 per cent of the market capitalization there so we cannot buy too much more there.”
According to bank insiders, Li is also
the largest individual shareholder in the Bank of Commerce—holding the legal maximum of nearly 10 per cent of the bank’s shares—and is also a significant shareholder and vice-chairman of the Hongkong Bank of Canada, which just took over the Bank of British Columbia. In addition, there is his huge property portfolio in Canada, including Toronto’s Hilton Harbour Castle where he stashes his family’s stretch Rolls-Royce. “I do not answer questions about my bank shares because it is a personal, longterm investment,” he said politely when questioned.
Warm receptions for influential capitalists such as Li are important for the country’s economic well-being, said Dome’s former president Bill Richards. He acted as a marriage broker in the Husky deal for a rumored seven-figure fee and is still on retainer as an acquisitions consultant to Li and other Hong Kong tycoons. “He has long coattails,”
The benefits of foreign capital have escaped nationalists—even though our resources are owned primarily by the people
Richards said. “He is viewed with great respect, and that will mean that if he thinks Canada is a good bet, many others there will.”
Of course, deals such as the sale of Husky and the proposed sale of Dome Petroleum Ltd. to Chicago-based Amoco Corp. still inspire stridency on the part of our opposition parties. Li’s Husky acquisition was opposed by the Liberals and New Democrats as a thinly disguised foreign takeover. The reason: along with the nine per cent owned by Li’s son, Victor—who only just became a Canadian citizen—Li’s family now controls 52 per cent of Husky shares. “He bought his shares with capital I gave to him and is completely free to vote his own way,” said his father, who still carries a British-Hong Kong passport.
Opposition members have also complained about the proposed sale of Dome. Liberal Leader John Turner, at first opposed to the sale, softened his stance after meeting with Dome chairman Howard Macdonald in late Aprilthen got tough again the following day. “John Turner’s a fine fellow who understands the need [to sell Dome to the I
highest bidder],” Macdonald commented. “But what else can he do? He can’t handle the lefties in his party.”
But the opposition’s flailing is long on emotion and short on logic. Indeed, the enormous benefits of foreign infusions have escaped nationalists for years—despite the fact that Canadians have never actually had to worry about foreign ownership of resources. In fact, mineral wealth is primarily owned by the people. In Alberta, for instance, some 80 per cent of the land mass is so-called “Crown lands.” This means the subsurface mineral rights have been retained by the provincial government. Only the remaining 20 per cent of Alberta’s land is “freehold,” sold to railways or homesteaders before the Prairie provinces joined Confederation, with privately owned rights to mineral deposits. And Ottawa owns Canada’s vast offshore acreage—potentially rich in oil and natural gas deposits.
Crown lands are never sold. Instead, they are leased to companies in return for fees and drilling pledges. If drilling is successful, proceeds are shared with the people in the form of royalties on oil and gas production set by governments. Even where lands are freehold—39 per cent of Dome’s land, for one, is freehold-provinces collect royalties called “surface mineral taxes.” In Alberta, where almost 90 per cent of Canada’s oil and gas is produced, the royalty rate can be as high as 30 per cent. In other words, the people of Alberta are getting as much as 30 cents out of every dollar of oil and gas produced.
Governments can also tell oil companies what kind of oil they can produce, at what price, in what quantity and to whom they can sell it. By law, governments can also control exports, profits— by dictating prices and sales volumes— treatment of the environment and their own tax takes. In other words, whether corporations are producing oil or harvesting trees, the people of Canada are partners in the proceeds to an extent that depends upon how hard a bargain politicians drive. Development of the country’s resources is never exploitation by marauding multinationals, as opposition politicians would have us believe. It is a partnership.
And that is what Li Ka-shing has firmly in mind—as do his two sons, who both intend to reside permanently in Canada. After toasting the country, Li walked over to Bob Blair and said quietly with emotion, “Partners forever.” For everyone’s sake, let’s hope he is right.
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