Canadian minister warns Nexen takeover bid needs close scrutiny

Mon Sep 24, 2012 1:58pm EDT

* State-owned firms need particular scrutiny, Kenney says

* Amnesty, others say rights should be central consideration

* Kenney says government takes human rights into account

OTTAWA, Sept 24 (Reuters) - Ottawa should pay very close attention to proposals by state-owned foreign companies to take over big Canadian resource firms, a high-profile cabinet minister said on Monday, referring to a Chinese bid for oil company Nexen Inc.

Citizenship and Immigration Minister Jason Kenney, a powerful minister who has long been a critic of China's human rights record, made his remarks during a news conference in which he was asked about the $15.1 billion bid for Nexen by China's CNOOC Ltd.

"Most Canadians want to ensure that the government applies a rigorous lens to acquisitions of large Canadian resource companies, particularly by state-owned enterprises," he said, adding that Industry Minister Christian Paradis would make an impartial decision on whether to approve the Nexen takeover.

Ultimately, the decision on whether the transaction would be of net benefit to Canada will be made by Prime Minister Stephen Harper, whose cabinet is having "robust discussions" on the issue, according to one insider.

Kenney spoke as news emerged about a letter to Paradis by a coalition of groups, including Amnesty International, declaring it vital that human rights be given central consideration during the review of the bid.

"That includes assessing China's troubling general human rights record (of particular importance given that CNOOC is state-owned), CNOOC's own human rights record, and the existing human rights policies and practices of Nexen," the group said in the Aug. 16 letter, made public on Monday.

"All of those considerations must be thoroughly and transparently taken into account during your review, with a full accounting to Canadians as to how they have been weighed."

Kenney, asked if human rights should be part of the calculus, said it was not for him to comment, but then he made a reference to balancing trade with human rights.

"Our government has articulated a balanced approach on Canada-China relations, one that advances both our interests, such as trade and commerce, and our values, such as the importance of human rights," he said.

"I think the prime minister has done an excellent job of giving expression to that kind of balanced policy."

The Canadian Coalition on Human Rights in China, the group that sent the letter to Paradis, said it had long expressed concern about the subordination of human rights to trade and investment in Canada's policy on China.

It said Nexen had frequently shown leadership on human rights. "This track record stands in contrast to allegations that CNOOC may have operated in ways that contributed to human rights violations," it said in the letter.

It referred to reports, which it said could not verify, that CNOOC may have been involved in oil exploration in Myanmar that damaged villagers' crops and eliminated their income from small-scale oil drilling operations.

"Numerous villagers have reportedly faced arrests and interrogations at the hands of the Burmese army because of their participation in protests against the confiscation of their land and local refinery operations," the coalition letter said.

It also cited concern about CNOOC's operations in Tibet, and said serious concerns had arisen about the labor rights record of other Chinese companies in the Canadian oil sector.

A Canadian spokesman for CNOOC was not immediately available for comment.

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