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TORONTO (Reuters) - A panel of Canadian business leaders slammed a report on Monday that suggested a wave of foreign takeovers of Canadian corporations provided a net benefit for the country.
The report, by the Conference Board of Canada, sought to debunk concerns over a "hollowing out" of corporate Canada following high profile takeovers in the last few years of blue chip names such as Inco and Falconbridge.
It said the big infusions of capital from the takeovers benefit the operations and shareholders of the targets companies, and warned that any new rules on foreign direct investment would be harmful to the country.
But a panel of executives that the Conference Board assembled in Toronto to discuss the report's findings had other ideas.
"There's a total absence of any passion, all of it is numbers," said Dominic D'Alessandro, chief executive of Manulife Financial (MFC.TO), Canada's biggest insurer and an aggressive buyer of foreign assets.
"There's something wrong when you have too few leaders. Every country needs its heroes, and I think Canadians are poorly served by the point of view that says, 'It doesn't matter'."
Goldcorp (G.TO) Chairman Ian Telfer called the loss of nickel producers Inco and Falconbridge -- to Brazil's Vale (VALE5.SA) (RIO.N) and Anglo-Swiss Xstrata XTA.L respectively -- "a shame," and lamented the loss of Canada's global mining reputation.
"I don't think anyone should be allowed to take over a Canadian company if they themselves can't be taken over," Telfer said of the C$19.35 billion buyout by Vale, previously known as CVRD, in which the Brazilian government has a golden share.
"I would have stopped that. I don't think that's fair," he later said on the sidelines of the conference.
Canada has emerged as a net seller in the global acquisition game, resulting in fewer senior managers and board members in the country. However, the effect of takeovers by foreign firms raises Canadians' standard of living, the Conference Board report said.
The wave of takeovers, which also gobbled up aluminum producer Alcan, retailer Hudson's Bay Co, and a handful of steelmakers, drove the Toronto Stock Exchange's main index .GSPTSE to record highs before U.S. credit woes hit stocks last summer.
In response to growing "hollowing out" concerns, the Canadian government said it has plans to toughen its review of foreign investments to ensure deals are transparent and based on market principles.
Finance Minister Jim Flaherty said on Monday the Conservative government would introduce by the end of June a national security test for foreign takeovers.
But the Conference Board's report, also released on Monday, warned that any new rules that would block foreign state-owned firms from buying Canadian corporations would harm Canada's economy and its shareholders.
"The federal government should proceed very cautiously before introducing any new restrictions," Anne Golden, president of the Conference Board, said in a statement. "Restrictions should only be considered where takeovers present a potential risk to Canadian security."
Foreign companies now control nearly 30 percent of operating revenues and about 20 percent of the corporate assets in Canada, the report said.
It said the government should concentrate on laying fertile ground for smaller firms to prosper, replacing the corporate icons that disappear.
To which panel member Stanley Hartt, chairman of Citigroup Global Markets Canada Inc (C.N), responded: "You could argue that the rate of lemmings going over the cliff doesn't matter, as long as there are more lemmings."
Reporting by Jonathan Spicer