After grilling Paper Excellence executives last Tuesday about the company’s ownership and opaque corporate structure, on Friday morning the parliamentary Standing Committee on Natural Resources turned its attention to the regulators in Ottawa.
Those regulators had approved massive acquisitions by Paper Excellence, which have made it by far the largest pulp and paper player in the country.
The committee members wanted details on the process that led to approval of the recent mergers that have given Paper Excellence control of 21% of the pulp and paper market in Canada, and 22 million hectares of its forests. But those details were not forthcoming.
This was the second meeting the committee devoted to Paper Excellence and the pulp and paper industry in Canada following an investigation by the Halifax Examiner, CBC, Glacier Media, and Le Monde in France as part of the recent Deforestation Inc. project coordinated by the International Consortium of Investigative Journalists (ICIJ).
Bloc Québécois MP Mario Simard and NDP MP and natural resources critic Charlie Angus repeatedly pushed for evidence from representatives of the Department of Innovation, Science and Industry that they did due diligence before approving the mergers.
Mark Schaan, who advises Industry Minister François-Philippe Champagne, repeatedly declined to provide that evidence, or even answer straightforward questions, citing “confidentiality.”
‘No faith due diligence was done’
“Given the testimony we heard today, I have absolutely no faith that due diligence was done to protect the Canadian interest,” Angus told the Halifax Examiner in an interview after the meeting. “And I want to know why.”
“We need to know who actually runs this company, and who does the Canadian government think runs this company,” Angus said. “Did the Canadian government do due diligence in saying it’s okay for this entity to suddenly control 22 million hectares of forests?”
The investigation into Paper Excellence is of particular importance to Nova Scotians.
Paper Excellence owns the shuttered Northern Pulp mill in Pictou County, and has filed a $450 million lawsuit against the province for losses incurred because its closing.
That lawsuit is part of closed-door mediation that Supreme Court of British Columbia Justice Shelley Fitzpatrick forced on Nova Scotia, as part of Northern Pulp’s creditor protection case.
The elusive Jackson Wijaya
Paper Excellence is said to be owned “solely” by Jackson Wijaya, a member of the billionaire Sino-Indonesian Wijaya family and son of Teguh Ganda Wijaya who owns and heads the giant Sinar Mas Group and Asia Pulp & Paper (APP).
Wijaya declined an invitation to appear before the committee, sending four Paper Excellence executives in his stead to the first meeting on May 30.
They told the committee that Paper Excellence has had no link with APP since 2015, and that all Paper Excellence’s debts to the state-owned China Development Bank had been repaid by 2020.
Angus has introduced a motion to issue a summons for Jackson Wijaya to appear before the committee by the end of June. On Friday, he told the Examiner he is “pretty sure” his motion has support of all the parties in the committee, and they are working on the language of a legal summons.
“My concern is to make sure that if he’s touching down in Canada, he’s obligated to show up in parliament,” Angus said.
Friday’s session with federal regulators left many questions unanswered about what they did and didn’t look at when they approved Paper Excellence acquisitions in Canada, enabling its rapid expansion in the country.
Paper Excellence buying spree
In recent years, Paper Excellence has been on a massive buying spree in the Americas and also Europe.
Six years after APP defaulted on nearly US$14 billion, Paper Excellence was born. In 2007, it purchased its very first mill in Canada, in Meadow Lake, Saskatchewan. At that time, however, the letterhead submitted to the Saskatchewan government identified the new owner of the mill as “a division of Sinarmas Group.”
In following years the company snapped up another mill in Saskatchewan, a few in British Columbia and the Northern Pulp mill in Nova Scotia.
As CBC reported, some of those acquisitions were financed with US$1.25 billion credit from a state-owned Chinese bank.
Starting in 2019, Paper Excellence began scooping up whole companies. First it acquired Catalyst Paper with three mills in B.C.
Two years later, Paper Excellence swallowed the North American pulp and paper giant, Domtar. In March this year, through its new subsidiary Domtar, Paper Excellence acquired Canada’s Resolute Forest Products.
National security review but no benefit analysis
Mark Schaan, the adviser to the Industry minister, said there had been a “national security” review, but admitted to the committee that there had been no “net benefit analysis” of Paper Excellence’s 2023 acquisition of Resolute.
He said that the acquisition did not require a net benefit analysis because of the Investment Canada Act and Canada’s commitments to the World Trade Organization (WTO).
That resulted in this testy exchange between Schaan and Angus:
Angus: When we’re looking at control of 22 million hectares of Canadian forests, apparently by an individual Jackson Wijaya, I’m to understand from what you’re saying that you did not do that [net benefit] review because of the WTO. Is that correct?
Schaan: A net benefit review on this transaction was not conducted.
Angus: So would you at least tell us, is the WTO member that you’re protecting based in China?
Schaan: The WTO relates to the nature of the firm and in this particular case …
Angus: So is the firm based in China?
Schaan: The Paper Excellence Group, which is the holding company, is a Dutch firm. It’s a Dutch holding company.
Angus: So it’s a Dutch firm. But you have the documents on who is the ultimate controller? … Do you know who the ultimate controller is?
Angus: Is it in China?
Schaan: The ultimate controller is Mr. Jackson Wijaya.
Angus: What’s interesting is when Premer McNeil of Nova Scotia went to deal about Northern Pulp … he flew to the Sinar Mas offices in Shanghai because that’s where the premier needed to meet to find out about Paper Excellence because they worked for Sinar Mas. Did you confirm that Sinar Mas in the Shanghai office is the ultimate controller of Paper Excellence? Did you do that review?
Schaan: I can confirm that investments under the Investment Canada Act require us to understand the beneficial owner and the ultimate controller of the firm.
Angus: Okay. Will you tell us, is the ultimate controller Sinar Mas?
Schaan: The ultimate controller is Mr. Jackson Wijaya Limantara.
Angus: I see. Okay. I have a briefing note here from the Nova Scotia government that tells me that what you’re telling me is not true. The Nova Scotia government internal document says that Paper Excellence is ultimately controlled by Asia Pulp and Paper, an integrated pulp and paper company division of Sinar Mas. Are you saying that Asia Pulp and Paper is not in control of Paper Excellence and then up through that to Sinar Mas? Will you turn over the filings that they do, their mandatory regulatory filings, so we know what you know?
Schaan: I’m not in a position to disclose that information. That is subject to the confidentiality provisions of the Investment Canada Act.
And so on.
Angus continued to push, and Schaan continued to push back, saying he could only confirm a national security review was conducted. The full meeting is available for watching here.
The Halifax Examiner emailed former Premier Stephen McNeil to request details of where exactly he met with Jackson Wijaya in Shanghai in 2014, whether it was in the Sinar Mas Plaza where APP China has it offices. So far, there has been no reply.
Beneficial owner in Canada, but not France
Schaan stated that Jackson Wijaya is the “beneficial owner” of Paper Excellence. According to FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), “Canada’s financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor,” beneficial owners are “the individuals who directly or indirectly own or control 25% or more of a corporation or an entity other than a corporation.”
France has similar criteria, so presumably the beneficial owner of Fibre Excellence, owned by Paper Excellence, would also identify its beneficial owner to the French authorities as Jackson Wijaya.
This is not the case.
The French government registry shows the beneficial owner of Fibre Excellence not as Jackson Wijaya, but as 43-year-old Singaporean citizen, Sun Yeoh Khai, described as a “legal representative.”
Major questions unanswered
The original motion by Charlie Angus for the natural resources committee to delve into the ownership of Paper Excellence and look more broadly at the pulp and paper industry in Canada foresaw only two meetings.
But after Friday’s meeting, Angus told the Examiner the committee still has “major questions” about Paper Excellence. He wants to hear from Jackson Wijaya in person.
“I think he’d want to come,” Angus said. “If this is a good Canadian story, as his Paper Excellence executives are telling us, then come and tell us this good Canadian story. Otherwise, what are you hiding?”
There is also a motion from Conservative and Bloc Québécois committee members to have Industry Minister François-Philippe Champagne appear to answer questions about his department’s approval of Paper Excellence’s acquisition of Domtar and Resolute Forest Products.
Angus said he hopes this will happen before the end of June.
At the close of Friday’s meeting, Angus told the committee he will be seeking a trove of documents from the federal departments of public safety, of natural resources, and of industry, so the committee can “do due diligence in reporting to Parliament.”
These would include documentation on the national security review of the Domtar and Resolute acquisitions, any mandatory filings, and briefing notes to ministers about them.
In an interview, Angus said he will be “pushing very hard: to get these documents to show what the federal regulators looked at.
“Did they look at anything? Did they just rubberstamp this? Did they just agree with anything Mr. Wijaya said? What do they know that they’re refusing to tell us?
The committee meets again Tuesday morning to continue its investigation into Paper Excellence and the pulp and paper industry.