The federal government's announcement an Egyptian-based company cannot purchase MTS Allstream has delivered a serious setback to the Manitoba company, while raising questions around the world about Canada's openness to foreign investment.
Accelero Capital Holdings had been pursuing Allstream for two years when a $525-million purchase deal was reached last May. Then, 136 days later, Ottawa announced the deal could not proceed because of unspecified national security concerns under Canada's foreign investment rules.
Meanwhile, Allstream is out of pocket about $35 million in restructuring costs and its share prices have dropped because of the sudden turnaround in its fortunes. This is not an acceptable practice, and it has again raised concerns Canada's foreign investment rules are opaque and arbitrary.
The government owes MTS an explanation as to why it waited so long to issue its ruling, particularly when Ottawa's bureaucracy has been dealing with Accelero for at least five years in connection with other business deals that were approved. Ottawa even went to court to overturn a CRTC ruling against Accelero's financing of another telecom.
MTS Allstream is apparently a security matter because its fibre-optic network is used by corporate customers, some provinces and the federal government. But if Accelero is truly untrustworthy, presumably because of its Mideast connections, then someone in Ottawa must have been aware of it long before Monday's abrupt ruling.
An independent review is needed to determine if the government's security concerns are valid and if the delay in reporting its findings were unavoidable. MTS, and the general public, need assurance beyond the government's three-paragraph statement that it acted quickly and in the best interest of Canadians.