REVIEWS

Parting the curtain
on corporate power
and concentration

CONTROLLING INTEREST. by Diane
Francis. MacMillan, 1986, Cloth $24.95.
Available at People’s Co-op Bookstore.

“Canada’s thirty-two wealthiest families,
along with five conglomerates, already con-
trol about one third of the country’s non-
financial assets, nearly double what they
controlled four years before.

“Canada has become a collection of fam-
ily dynasties and management fiefdoms
with more billionaires per capita than the
United States.”

These quotes illus-
trate the theme of
Controlling Interest
by Diane Francis in
which she examines | |_|
the alarming degree | (3
of economic con- }
centration in Can-
ada, the unprec-
edented increase in
mergers and take-
overs since 1979, DIANE
and the consequent FRANCIS
harmful results for all Canadians.

The author describes the holdings, his-
tory and in some cases the lifestyle of 32 of
Canada’s wealthiest families. Topping the
list are billionaires such as the Reichmans,
Irvings, Eatons, Edgar and Charles Bronf-
man, Westons, and Thomson. Others
included in her book are such well. known
families as Edward and Peter Bronfman,
Paul Desmarais, Robert Campeau, Conrad

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The media in Canada has not escaped
corporate control and centralization. Three
groups are in control — Thomson, Torstar
and Southam, with Eaton’s owning CTV.
Cross ownership (with newspaper chains
also owning radio and TV stations) is com-
mon.

The author calls media corporations and
shopping centres “money machines.”

The degree of corporate concentration
has become so great that it is causing con-
cern even within the business community.

Bernie Ghert, president of the developer
giant Cadillac-Fairview, predicts that “in a
number of years there will be six groups
running the country.”

Henry Knowles, formerly Canada’s top
security watchdog, warns, “we must
grapple with the problem of concentration
of substantial economic power in Canada in
the hands of a new aristocracy consisting of
twenty or thirty powerful families and the
Canadian banks.”

Richard Thomson, chairman of the
Toronto Dominion Bank, is concerned for
another reason. “I worry about the political
backlash if it is not dealt with,” he declared.
“This could lead to socialism.”

The corporate takeover artists have deve-
loped a whole series of ingenious but ques-
tionable methods to achieve their aims.
These include “junk bonds” in which the
collateral becomes the wealth of the target
company; “greenmail” a form of corporate
blackmail involving a payoff to avoid being
taken over; “insider trading” where specula-
tors receive advance information on
mergers; and “poison pills”, the takeover by
a target company of still other companies so
that it will become too big or too unpalat-
able for the acquisitor to swallow.

What are the results of this growing cor- _

porate concentration for Canada? Here the
author does not mince words.

“Unbridled concentration forces Cana-
dians to overpay for many goods and servi-
ces, removes job opportunities, hurts small
investors, taxes the poor to help the rich,
weakens our competitive position as a trad-
ing nation, and ultimately threatens our
democratic process.

“Instead of building world class competi-
-tors, corporate Canada is preoccupied with
collecting unrelated assets at home and
gobbling up the accomplishments of other
players in unrelated fields, through the cun-
ning use of tax avoidance and the games
that only paper entrepeneurs can play. It is a
parasitic game that will not make the eco-
nomic pie grow. It will shrink, as the pieces
change hands and workers are thrown out
of jobs because of duplication.

“Competition among Canadian capital-
ists rarely breaks out in the absence of any
meaningful competitive laws within or for-
eign rivalry from without. This means that
instead of a lively, competitive marketplace
yielding jobs, innovations or opportunities
for new entrepreneurs, Canada has far too
many cash cows controlled by far too few
proprietors. The net result is that, whether
buying beer or tranquillizers, gasoline, eye
glasses, or shopping centre space, Canadian
consumers pay too much. Like economic
serfs, we are paying private sector sur-
charges, levied by a diminishing number of
families and faceless conglomerates, on just
about everything.”

How could this economic concentration
come about so quickly? The author cites
several reasons, including:

@ Ineffective anti-combines laws and the
complete absence of legislation to control
mergers as such.

10 e PACIFIC TRIBUNE, FEBRUARY 18, 1987

Company (head office)

Canadian Pacific Ltd. (Montreal)

Ford Motor Co. of Canada (Oakvilie, Ont)
Bell Canada Enterprises inc. (Montreal)
George Weston Ltd. (Toronto)

Imperial Oll Ltd. (Toronto)
Alcan Aluminium Ltd. (Montreal)
Chrysler Canada Ltd. (Windsor)
‘Shell Canada Ltd. (Calgary)
Guif Canada Corp. (Calgary)

PetroCanada (Calgary)

Hudson's Bay Co. (Toronto) Jan. /86
Canadian National Railway (Montreal)
Provigo Inc. (Montreal) Jan. /86
‘TransCanada Pipelines Ltd, (Calgary)

Ontario Hydra {Toronto}
Hydro-Québec (Montreal)
Brascan Ltd. {Toronto}
Texaco Canada inc. (Toronto)

Steinberg Inc. (Montreal) July/85
Sears Canada Inc. (Toronto)

tmasco Lid. (Montreal) Mar /85
Canada Safeway Lid. (Winnipeg)

Noranda Inc. (Toronto)
Nova eisoigin {Calgary} :
Canada Development Corp. (Toronto)

SSSus
SSRs

aster! eense| 3

IBM Canada Ltd. (Toronto)

Oshawa Group Ltd. (Toronto) Jan. /86

BESES

seess

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: Gonstar Corp. (Vancouver)
400 ¢ :

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Saskatchewan

_ Dofesco Inc. (Hamitton)
Amoco Canada Petroleum Co. (Calgary)
___ FW. Woolworth Co. (Toronto) Jan /86

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[@saec| asses

General Motors of Canada Ltd. (Oshawa, Ont}

_ Canadian Wheat Board (Winnipeg) July/85

Hiram Walker Resources Ltd. (Toronto) Sept /85

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1,146,658
2.332.112
5,748,000
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Bo —s«,009,479

16 6,240,659
14 6,352,064
12 7,259,000
at. 4,401,961
Sf 2,064,000

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128 867,684
104 619,492
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3 2,904,505
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708481
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2,079,285
668,993

The country’s top 50 corporate giants: according to the president of Cadillac-
Fairview Corporation, soon “there will be six groups running the country.”’

@ Tax concessions of many kinds such as
those which allow corporations to deduct
from income tax the interest they pay on
loans designed for takeovers, and allowing
conglomerates for income tax purposes to
deduct losses from companies in one sector
against the profits of companies in another
and completely unrelated sector, and
exempting corporate income tax.

® The availability to corporations of the
huge amounts of capital in private and pub-
lic pension funds, which she says now total
$238 billion and is growing at the rate on
$19 billion a year.

@ The growing corporate practice of
appropriating for themselves the interest
generated by company pension plans.

©@ Government grants and subsidies to
corporations.

Diane Francis also gives some other rea-
sons for the rapid growth of corporate con-
centration to which the labor movement, I
am sure, would take strong exception.

She opposes, for example, what she calls
“misplaced nationalism, ’and “‘harmful for-
eign investment curbs” such as the Foreign
Investment Review Agency , set up by the
Trudeau government and abolished by
Mulroney. In fact she even claims that “in
the forestry, mining and oil businesses, for-
eign investment is never exploitation; it is
always a partnership with the people of
Canada because foreign investors
exploiting our resources must lease lands
and pay royalties to government.” :

What is to be done about the high degree
concentration of wealth in our country?

Diane Francis is opposed to those who
“would merely nationalize certain indus-
tries or companies to counteract concentra-
tion.” But she does call for divestment of
holdings by some of the corporate giants.
The four major oil companies “should be
forced to sell at least half of their stations to
independent business and to sell their refin-
eries.”” Large department stores should not
be allowed to own shopping malls. The
Reichmans should not be allowed to own
portions of rivals such as Trizec, Bramalea

and Cadillac-Fairview. Canada runs big”

political risks in the future if corporate

media concentration is not countered with

“forced divestiture or more competition.”

To stop any further mergers which may —

be harmful to Canada she proposes that
Investment Canada (which replaced FIRA)

should investigate all mergers to see whose —

interests they serve. “Mergers,” she says,
“must become a privilege, not a right.”

The author favors a “free trade” agree-_

ment with the U.S. but qualifies this by
stating that “tariff barriers should not be peeled
away if this means large American compan-

ies can flood the Canadian market with

goods and services,” and we must not allow
well-financed foreign conglomerates “to
snap up smaller Canadian conglomerates.”
Apparently she does not realize that this is
precisely the aim of the Reagan and Mulro-
ney administrations in the advocacy of free
trade. :

She also calls for revision of securities,
banking and tax laws “which do not force
the rich to pay their fair share” of taxes,
adding that “‘a greater proportion of the tax
burden must be shouldered by those who
can afford to pay.”

Throughout the book the author also

makes clear that she favors more foreign -

investment.
Unfortunately, her book does not deal
with the extent of U.S. control of our econ-

omy that already exists and its harmful
effects. It has distorted our economy, pre-—
vented us from developing a strong manu-—
facturing base, reduced us to a supplier of
raw materials and electricity for U.S. indus-

tries and undermined our independence.
Notwithstanding such

j

shortcomings,
Controlling Interest is a well researched,
well written and informative book that
should be read by every Canadian con-

cerned with national policies. It is an impor-

tant contribution to the growing debate

over what path Canada should take if out”

country is to realize its potential.

— Ben Swankey —

‘

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