Industry Committee on April 1st, 2008

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

We're concerned about it on another factor, Mr. Friedmann. I think that's why the committee has a number of concerns. I appreciate that you can't answer all of them.

You said earlier that you had a fiduciary duty to get value for investors. Do you think the Canadian government should also be pursuing value for its investors and getting the $450 million back that it put toward your technology, given that you're going to be making money on this?

[Daniel Friedmann]

The Canadian government got an excellent deal, negotiated a very tough deal, ran a very tough competition. We won, hands down. You cannot buy that data for less money than we're giving it to you for. You cannot buy it anywhere in the world.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Do you think that over time we'll recover that $450 million investment?

[Daniel Friedmann]

Absolutely.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

In how long will that be?

[Daniel Friedmann]

The government wants to do it over seven years. They could do it over one year if they wanted to, but that wouldn't be very efficient.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

This data would obviously become available as well to the U.S. government--is that correct--if it purchases this?

[Daniel Friedmann]

That's only if we export the data to the U.S. government.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

If the Americans make a request, under the security laws of their country, that they obtain that information without charge, how do you see that being helpful to providing financing to the company?

[Daniel Friedmann]

I can't see how the Americans could do that.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Are you aware of any type of amendment to the licence agreements? Has your company or anyone else pursued with the Canadian government or with any other government an amendment to the agreement that would envisage U.S. control of the product?

[Daniel Friedmann]

No. We have just informed the government of what's happening and changed the owner category. It's in the review.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

As I understand it, there have been eight amendments to the agreement, or proposals to the agreement. I'm wondering if there is a ninth that you might want to volunteer to the committee.

[Daniel Friedmann]

I'm not into the technical terms, but we are informing the government of what's happening, and that presumably affects the agreement. That's amendment number nine--whatever comes out of this process.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Sorry, could you explain to us what amendment nine is specifically?

[Daniel Friedmann]

I'm not a lawyer, but as I understand it, the same company that today has the licence to operate the satellite--an MDA-owned company--will still have the licence to operate the satellite. But the parent company is going to be a different parent company. That's what's being amended in the amendment. There's no change to anything else.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I'm not understanding that very well, Mr. Friedmann. In fact, it's made me a little bit more nervous. Perhaps you want to have the lawyer beside you, or your counsellor, further explain to the committee more precisely what that amendment does.

[The Chair, Conservative, James Rajotte]

Please identify yourself for the committee.

[Indra Heed, Corporate Counsel, MacDonald Dettwiler and Associates Ltd.]

My name is Indra Heed. I'm counsel for MDA.

We submitted amendment number nine to the operating licence currently held by MDA GSI, a subsidiary of MDA, upon request by Foreign Affairs to submit that application. As has been mentioned by the witnesses here today, this transaction is not a closed transaction. It's pending regulatory approval. So we submitted that information, in advance, upon request of the government.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Could we see that?

[Indra Heed]

The Foreign Affairs ministry has that amendment, so the Government of Canada has that. I suggest you speak to the ministry.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I thank you for that. That's very important. I think the committee may have some other questions based on that.

Thank you to both of you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

I do have a few questions as chair, and then we have Mr. Simard and Mr. Stanton with very brief questions.

I'm going to follow along the same lines as Mr. McTeague. I have to say that the perception of this agreement and what you're telling us here today seem to be two very different things. It has raised as many questions for me as it has provided answers, so I want to clarify and make sure I understand this.

You emphasized that Canada has full control over the satellite. Now, as I understand it, just with the comment by your counsel, we have full control over the satellite through the licences. Is that correct?

[Daniel Friedmann]

Yes. You license us to operate the satellite according to the Canadian government rules.

[The Chair, Conservative, James Rajotte]

You mentioned the $400-and-some million in information, but the satellite technology itself, if the proposed sale goes forward, will be owned by ATK.