(Updates with comments from Boeing and Pentagon)
By Matt Scuffham
NEW YORK, June 28 (Reuters) - Quebec’s largest pension fund has dismissed as “absolute nonsense” claims by Boeing Co that its $1.5 billion investment in Bombardier Inc’s rail business amounted to an unfair subsidy to the Canadian company.
Caisse de depot et placement du Quebec’s Chief Executive Michael Sabia said in an interview with Reuters on Wednesday that the U.S. aerospace company, headquartered in Chicago, was itself a recipient of state aid.
“I guess the guys at Boeing are so used to being subsidized by the defense department in the United States that they can’t understand what a subsidy is anymore because they live off them,” he said.
In April Boeing asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Bombardier’s CSeries airplane, accusing Bombardier of having sold 75 of the planes to Delta Air Lines Inc last year at a price well below cost.
The U.S. International Trade Commission last month gave approval to the U.S. Commerce Department to begin preparing anti-dumping and anti-subsidy duties against new jets from Bombardier
“It is just outrageous that a company that’s subsidized by the U.S. government as Boeing is presumes to take such an action,” Caisse’s Sabia said.
However, Boeing spokesman, Dan Curran, said, “Rulings by the World Trade Organization prove that assertions about subsidies to Boeing are incorrect.
“Our petition to the International Trade Commission seeks to restore a level playing field in the U.S. single-aisle airplane market. This is the normal course of resolving such commercial trade disputes between two companies, and we will let that process play out.
Pentagon spokesman, U.S. Navy Commander Patrick L. Evans said, “Secretary Mattis’ priority for the Department of Defense is clear: to increase military readiness while gaining full value from every taxpayer dollar spent on the defense of our nation.”
The Caisse has a dual mandate both to maximise returns for depositors and support economic growth in the Canadian province.
Sabia said the Caisse operated independently of the Quebec government and the decision to invest in Bombardier was a commercial one.
“If somebody would give me another dozen of those I would be the happiest guy in Manhattan today to put it mildly.
“We have negotiated something that has no downside risk and unlimited upside exposure. Give me another dozen. Give me 20 of those.” (Additional reporting by Alwyn Scott in New York and Mike Stone in Washington DC; Editing by Carmel Crimmins)