Very interesting read on the RIM/Nortel issue today in the Globe, "Why Nortel failed to win a bailout." For those not following the situation, there's a frenzied auction bidding process for Nortel's valuable wireless technology assets set for Friday. RIM has made a late bid but outside of the formal rules and is essentially making a play for the Harper government to assist by reviewing the sale of the assets on "national security" grounds under the Investment Canada Act. The Globe piece has to do with a bit of the politics and the decision-making surrounding the Harper government's rejection of Nortel's pitch for a bailout in the period of October through January.
The timing of the discussions referenced is very interesting. During the election, Nortel met with "senior bureaucrats from the Industry and Finance Departments and the Privy Council Office, the central government department that reports to the Prime Minister." After the fall election, Clement and Flaherty met with Nortel executives in November. Follow-up meetings were held with officials and then in January another meeting occurred, attended by Clement, Day and Baird as well. Over the course of these many meetings, business plans were presented and "hundreds of millions" were requested. The Harper government decided to reject the funding request and Nortel proceeded on to bankruptcy.
You have to wonder about the obvious political backdrop on the timing, a government that held an election that wasn't needed in October, that almost self-destructed in November and was totally preoccupied with its political survival throughout November, December, January, coincident with these Nortel discussions. Distracted by politics to say the least, not to mention the auto industry situation. And clearly the key Harper players were involved, the decision to do nothing was a bona fide Harper government team effort.
Now that RIM is trying to prevent the loss of these valuable IP assets to foreign ownership, the Harper government's inaction to date is coming into focus. News last night that Ericsson, another foreign telecommunications giant, wants in on the "bidding war," joining Nokia and a N.Y. investment firm, in addition to RIM. The assets seem kind of important to them. And another individual weighs in as well:
Liberal Leader Michael Ignatieff said the government is allowing important Canadian assets to fall into foreign hands, something European governments would never allow to happen to companies such as Nokia and Ericsson.No "vision thing" present among the Harper Conservatives to enable them to consider the scenario presently playing out for Canada's high tech industry.
“At a time when they were rescuing GM and Chrysler, they didn't ask the simple question: Could we restructure Nortel to preserve the enormous intellectual property and research capacity in Canada,” Mr. Ignatieff said Wednesday. “It's a huge loss, and it means a leading Canadian player – RIM – is going to be faced with competition from intellectual property that was originated in Canada and is now being sold to foreign companies.”
And by the way, for your "fun headlines" file, from the Financial Post yesterday: "Tony Clement has people befuddled, and worried." That was in connection with the RIM/Nortel situation too. And you know, it all makes one think...maybe the Industry Minister should give the tourism file back to Ablonczy for a while. He seems to need a little more time to properly assess the big matters in front of him.
Update (4:30 p.m.): From op-ed in the Star (h/t BCer):
Soon, about five billion of us will be connected by wireless networks, the technology for which was largely funded by Canadian taxpayers who subsidized Nortel during most of its 127 years, and are now being made to subsidize its sale to foreigners. Stephen Harper, with not much by way of a track record as PM, will have to think hard on whether he wants to be remembered as the man who killed Nortel or another Canadian firm's prospects of becoming the global leader in a technology that will define the 21st century.Update II (6:00 p.m.): Travers:
What the federal government needs to decide – and Canadians should stop barbecuing long enough to consider carefully – is whether or not it's in the national interest to let Nortel's bits, pieces or valuable patents slip offshore.
Industry experts and high-tech gurus are unusually consistent in their response. Whatever its past mistakes, and many were doozies, Nortel remains an asset too vital for the country to lose. It's a symbol of what Canadians can achieve out on the leading edge.