This is the sixth in a series of articles resulting from a yearlong investigation into Paper Excellence, by far Canada’s largest pulp and paper producer following its 2021 acquisition of Domtar, and now also the North American logging giant, Resolute Forest Products. These articles are part of “Deforestation Inc.,” a collaboration of the International Consortium of Investigative Journalists (ICIJ) and 39 media outlets, involving 140 journalists in 27 countries. The Examiner partnered with journalists in France (Le Monde, Radio France), Canada (CBC, Glacier Media), and the United States (Inside Climate News) to produce this series. Previous Examiner articles are here: part 1, part 2, part 3, part 4, and part 5.
This article looks at Canada’s lobbying to weaken forest protection abroad, our dubious forestry record at home, and what the rapid expansion of Paper Excellence in Canada could mean for Canadian forests and the country’s pulp and paper industry.
On August 15, 2003, Timothy Mapes, an editor with the Wall Street Journal, reported on the 2001 US$13.9 billion default by Asia Pulp & Paper that had left creditors — “including every major international bank, many pension funds and the U.S. government” — fuming.
At that time, Asia Pulp & Paper (APP) was considered the crown jewel in the massive Sinar Mas business empire of Indonesia’s Wijaya (sometimes also Widjaja) family. Paper Excellence had not yet been born.
As reported in the third article of this series, creditors struggled for years to recoup what they were owed, and in the end, had little choice but to accept a restructuring agreement and take what one analyst calls “a haircut.”
Mapes wrote that creditors wanted repayment and “accused the family of shifting hundreds of millions of dollars from the business into offshore accounts.”
He also reported that APP’s largest creditor, the Indonesian government, had “played the most important role in the Widjajas’ resilience” and that the Indonesian government had “repeatedly sided with the family against other large creditors who have lobbied for outside scrutiny of APP’s cash flow and management.”
Then came this paragraph:
Frustrated lenders say the debt saga also holds a warning for Indonesia: Foreign investors may start to shun the country if the government doesn’t force APP to give its creditors a better deal. The ambassadors to Indonesia from the U.S., Japan, Canada and eight European countries wrote in a March letter to President Megawati Sukarnoputri that “failure to reasonably satisfy the creditors of APP will affect the confidence of future potential investors into Indonesia.” [emphasis added]
A letter signed by the Canadian ambassador to Indonesia’s president about Asia Pulp & Paper was something I wanted to see, given the family ties between APP and Paper Excellence.
APP is a conglomerate headed by Teguh Ganda Wijaya, who is the son of the late founder of the massive Sinar Mas Group that owns APP, and he is father to Jackson Wijaya, the owner of Paper Excellence, which owns the Northern Pulp mill and 420,000 acres of land in Nova Scotia.
It was a letter I wanted to see, but unfortunately, I couldn’t get it from Mapes, as he died in 2021.
So in June 2022, I filed an access to information request with Global Affairs Canada, asking for a copy of the March 2003 letter and for any related correspondence or documentation on APP’s 2001 default.
Half a year later, Global Affairs provided me with 56 pages of heavily redacted material related to my request. If the letter was there, there was no way of knowing.
Reading between the redactions of an October 2003 email written by Nicolas Lepage, then a trade commissioner with Global Affairs Canada, it looks as if the Canadian government was present at a meeting about the restructuring agreement between APP and major creditors:
… signing ceremony of the Master Restructuring Agreement (MRA) between [REDACTED] and nine of its foreign government export-credit agencies creditors and the Indonesian Bank Restructuring Agency. At the head table, Hermes (Germany), Deutsche Bank AG (Germany), EKN (Sweden), OEKN (Austria) and Nexi (Japan signed the MRA to restructure around [REDACTED] in debts related to [REDACTED] operations in Indonesia.
Most of the rest of the email is redacted, with the last line visible:
For Indonesia, according to many observers, the signing should send a positive signal to foreign investors and could be a fresh boost for investment…
So, a fruitless exercise, with no way of knowing if the signing ceremony involved or was related to a letter to the Indonesian president about repercussions from APP’s default and unpaid creditors. And no details of the restructuring agreement for what we can only assume were APP’s creditors.
It’s the ‘investment environment’ that matters
However, the un-redacted parts of briefing notes for the 2003 meeting between Indonesia’s then minister of industry and trade, Rini M.S. Soewandi, and Canada’s minister for international trade, Pierre Pettigrew, are revealing, and shameful.
Those briefing notes show that the messages Canada’s trade minister had for Indonesia were all about the “investment environment” in the country, Indonesia’s forests be damned, or rather, be mined … by Canadian companies.
The briefing notes for then-Minister Pettigrew contain four key objectives, only the first two of which are not redacted:
- Acknowledge Indonesia’s good macroeconomic performance, but poor investment environment.
- Emphasize important [sic] of legal and government reforms to attract Canadian trade and investment.
- [REDACTED] Law 41/ 1999
- [REDACTED]
Law 41 / 1999, say the background notes, is “a forest protection measure that has denied commercial rights to Canadian mining companies with prior legal exploration and extraction claims.”
There are three “talking points” for Canada’s trade minister, but only two are not redacted:
INVESTMENT: 2003 is Indonesia’s “year of Investment”. Canada welcomes measures that protect and encourage investment.
LAW 41 / 1999: Reform to Law 41 / 1999 would help restore investor confidence. It unfairly damages Canadian mining companies with prior exploration claims in protected areas.
According to the 2022 report “Whose land is it anyway?” by the Indonesian non-governmental organization Auriga, Forestry Law 41 was prepared and ratified under the regime of Indonesia President Habibie in 1999, and it restricted mining in forested areas, allowing only limited mining operations in production forest and only underground mining in protected areas.
The Canadian minister’s meeting with his Indonesian counterpart — at which one of his talking points was “reform” of the forestry protection law — was in 2003.
The next year, Indonesia President Megawati issued a decree allowing 13 corporations to mine inside nearly a million hectares of “protection forest estates” in Indonesia.
Syahrul Fitra is Greenpeace Indonesia’s senior forest campaigner in the Indonesian capital, Jakarta. The Halifax Examiner asked Fitra about the presidential decree that opened up protected forested areas to mining just after the Canadian trade minister asked for reforms to Indonesia’s forestry law to improve its “investment environment.” His reply:
At the time, Canadian, Australian and USA mining companies, with the help of their Jakarta embassies, pressured the Indonesian government to allow them to clear protected forests for open pit mines. The companies even made threats to sue the Indonesian government for millions of dollars. When President Megawati caved to the pressure and financial threats, Indonesian civil society organisations protested and took their concerns to the constitutional court, but were ultimately dismissed. Soon after, the whiff of corruption was strong when the Indonesian House of Representatives did an about-face and endorsed the President’s pro-corporate decision. It was a shameful episode where rich countries bullied a vulnerable forest nation for the sake of corporate profits.
This certainly wasn’t the last time Canada lobbied against forest protection legislation in other countries, as we’ll see.
Canada: world ‘leader’ or ‘laggard’ in sustainable forestry?
Natural Resources Canada’s website boasts that Canada is “a world leader in sustainable forest management.”
The Forest Products Association of Canada (FPAC) proclaims that “Canadian forestry in sustainable forestry.”
Many disagree.
In May 2022, 90 scientists working on issues related to ecosystems and climate change wrote to Prime Minister Trudeau, saying:
…we are deeply concerned by the evidence of continued deforestation and degradation of primary forests globally and in Canada because of the resulting impact on greenhouse gas emissions and the biodiversity crisis. Canada’s primary boreal and temperate forests have a vital role to play as natural climate solutions, and it is important that their protection is central to Canada’s climate and biodiversity policies.
Global Forest Watch calculates that between 2000 and 2021, the net loss of tree cover in Canada was 8.2 million hectares, or 2.8% of Canada’s forests in just two decades, higher than the 2.4% loss for the whole planet. In just 2021 alone, Canada lost 2.5 million hectares of tree cover.
Shane Moffatt, who leads Greenpeace Canada’s nature and food campaign, says “Canada is a world laggard in forest management and is a world leader in biodiversity loss in our forests, a world leader in forest degradation.”
He explains:
Canada has fallen way behind other G7 countries achieving protected areas in forest and other ecosystems, endangered species laws completely enforced, disjointed and not effective here in the forest. The failure to protect forest in Canada is exacerbated by the forest degradation driven by the logging industry across the country. It’s also driving the decline of iconic wildlife like caribou. The logging industry is tipping forests in Canada from being carbon sinks to carbon emitters.
Moffatt tells the Halifax Examiner he finds the increasing concentration of corporate control of Canada’s forests and the pulp and paper industry “terrifying.”
He says Canada is also trying to impede other governments that try to reduce deforestation, pointing to the November 2022 letter from Canada’s ambassador to the European Union, Ailish Campbell, to parliamentarians and bureaucrats in Europe.
In the letter, Campbell says she is conveying “Canada’s concerns and proposals regarding the European Commission proposed Regulation on deforestation-free products,” and she complains that although Canada had been raising these concerns for a year, it had yet to receive assurances that they would be “adequately addressed.”
In the very next line, Campbell claims — oddly since she’s contesting anti-deforestation policies — “Canada and the EU share the goal of preventing deforestation globally,” and repeats the Natural Resources Canada (NRCAN) claim that “Canada is a world leader on forest management.”
Says Moffatt:
The ambassador in her letter states that 92% of logging is done on public lands, as if that is proof of anything related to sustainability. It’s not. And incidentally, these forests are not simply public lands, but they are the territories of many Indigenous nations, which she should be more forthright in recognizing. So the claim that Canada is a world leader in forest management absolutely does not stand up to any scrutiny.
Canadian lobbying in the U.S.
Ambassador Campbell’s letter isn’t the only recent attempt by Canadian diplomats to sabotage forest protection bills in other jurisdictions.
In April 2021, Yves Beaulieu, Canada’s consul in California, wrote to the Chair of California’s Assembly Accountability and Administrative Review Committee, to raise “significant concerns” the Canadian government has about” called a bill called the “California Deforestation-Free Procurement Act.”
Beaulieu repeated the Forest Products Association of Canada mantra, “Canadian forestry is sustainable forestry,” and put that sentence in bold face.
He went on to say that the bill included a reference to products from Canada’s boreal forests, putting “at risk jobs on both sides of the border.” Thus, Beaulieu wrote, “Canada requests that the reference to Canada’s boreal forests be removed from the bill.”
It’s hard to know who was copying whose talking points in these lobbying efforts. In its criticism of the California deforestation-free procurement bill, the Forest Products Association of Canada also wrote that it would affect Canadian jobs, and repeated the claim that, “Canada is a world-leader [sic] in sustainable forest management.”
Canada’s Forest Products Association came out swinging against the Natural Resources Defense Council (NRDC), saying the NRDC had sponsored the California deforestation-free bill and a similar one in New York to stop those states from sourcing wood products from the boreal forests in Canada.
“I think most Canadians would be shocked to learn that our government is actually playing that role of advocating against forest protections anywhere in the world,” says Moffatt, given the “kind of commitments that successive governments have made over the years about protecting nature, about taking action on climate change.”
‘Out of the frying pan into the fire’
Moffatt is concerned that Paper Excellence now manages 22 million hectares of forest in Canada, much of it boreal forest in northern Ontario and Quebec, and is by far the biggest pulp producer in the country. That means Paper Excellence can “exercise extraordinary influence,” says Moffatt.
“It’s a critical time for forests in Canada,” Moffatt says. “Absolutely critical. You’ve got civil society, environmentalists and scientists saying that we’ve got a problem, something needs to change. And on the other hand, you have the logging industry seeming to say it’s business as usual or bust, and you’ve got, unfortunately, governments going along with them in cahoots.”
“I don’t think it’s an exaggeration to say that we’re approaching a tipping point in Canada’s forests. Carbon is being lost, biodiversity is being lost, waters are being polluted, Indigenous cultural landscapes are being destroyed. Something needs to change and if anything Paper Excellence adds urgency to that need for change.”
“And based on their track record globally, at least the companies that they’re associated with, that’s a huge, huge cause for concern,” Moffatt says.
Still, he adds, “It’s not like Paper Excellence is coming in and disrupting a sustainable logging industry in Canada. For forests in Canada this is out of the frying pan into the fire.”
Paper Excellence tells the International Consortium of Journalists (ICIJ) it is “extremely proud of the positive impact it has had on Canada, its economy broadly, and in particular, its forestry sector.”
In its response to questions about its acquisition of Resolute and the 20 million additional hectares of woodlands it now controls in the boreal forests in central Canada, Paper Excellence said:
Canadian forest products companies operate in a highly regulated environment with active enforcement by federal, provincial and local government partners. In fact, the Canadian boreal forest is one of the world’s most resilient and most regulated forests. Forest management planning ensures we’re operating responsibly and keeping the boreal healthy for future generations.
Greenpeace history with APP and Resolute
It should be noted that Greenpeace has its own history with both Asia Pulp & Paper and Resolute Forest Products.
In 2011, Greenpeace launched a campaign to have Mattel, Hasbro, Lego and Disney stop purchasing packaging from APP, alleging that the packaging was coming from “rainforest trees” in Indonesia.
The next year, following a Greenpeace investigation that an APP mill was pulping a protected tree species, several large funds pulled their investment from the mill.
In 2013, APP developed a new Forest Conservation Policy and not only did Greenpeace agree to end its campaign, it also signed an agreement to work with APP to implement the policy. That agreement lasted five years, until Greenpeace ended all engagement with the company, slamming “APP / Sinar Mas over links to deforestation,” which had been reported by Associated Press.
APP strongly denied the links to deforestation.
As a result of that collaboration with APP, Moffatt says, “It’s fair to say that Greenpeace has seen APP up close and personal in a way that some others haven’t.”
Greenpeace also has ongoing legal disputes with Resolute Forest Products, now part of the privately owned Paper Excellence corporate family.
In 2013, Resolute filed lawsuits against several Greenpeace offices and individual staff members in the U.S., and a $7 million defamation case against Greenpeace Canada and two staff members in Ontario, including against Shane Moffatt.
In his affidavit to the U.S. District Court in Georgia, Jay Malcolm, full professor of forestry at the University of Toronto, wrote that in his opinion, Greenpeace statements that “Resolute is ‘destroying’ the boreal forest through its boreal logging operations, and in the process is contributing to global climate change, are entirely reasonable.”
“Greenpeace is correct in noting that Resolute is contributing to the destruction of the boreal forest,” Malcolm added.
Failing grades for big pulp producers in Canada
In its 2021 report, Pulp Fiction: Canada’s largest pulp producers’ actions do not match their sustainability claims, the Natural Resources Defense Council issued a scorecard showing how the seven companies rate when it comes five criteria, including “free, prior and informed consent from Indigenous Peoples potentially impacted by their logging operations to supply their mills,” and whether the company has “committed to not sourcing from primary forests.”
Only one of Canada’s largest pulp producers, Alberta-Pacific Forest Industries, came even close to having a passing grade.
Paper Excellence together its subsidiary Domtar, the largest pulp producer in the country when the report was written, failed on four of the five criteria, as did Resolute Forest Products, now owned by Domtar and part of the Paper Excellence conglomerate.
The authors of the NDRC report are scathing about the sustainability of Canada’s pulp and paper industry as a whole:
The pulp operations are owned by powerful companies with collective annual revenues of tens of billions of dollars. With these resources, they could dramatically improve the human rights and sustainability requirements of their operations while supporting the well-being of local communities in the areas where they operate. Instead, Canada’s largest pulp suppliers are failing to implement even baseline environmental and social standards. Meanwhile, their communications materials are greenwashing their poor behavior, concealing harmful activities with false claims of sustainability.
Cautionary tales from Indonesia
There are cautionary tales from Indonesia about the record of the Wijaya family’s businesses when it comes to forests and Indigenous rights.
As mentioned earlier, Greenpeace ended its engagement with APP after an Associated Press investigation.
Associated Press (AP) journalist Stephen Wright reported that, “Despite its denials, one of the world’s biggest paper producers has extensive behind-the-scenes ties and significant influence over wood suppliers linked to fires and deforestation that have degraded Indonesia’s stunning natural environment.” Wright made several allegations:
Indonesia’s Sinarmas — better known by its international trade name, Asia Pulp & Paper — has insisted in company publications, public events and to the media that most of the companies that supply it with wood are “independent,” not owned by it or in other ways affiliated with it. But the AP has found links between Sinarmas, its pulp and paper arm and nearly all the 27 plantation companies that it has told the outside world are independent. The company’s apparent aim: to “greenwash” its image for the global market.
Asia Pulp & Paper / Sinar Mas called the Associated Press allegations “unsubstantiated,” “false and malicious,” and said, “we strongly refute them.”
As documented earlier in this series, as recently as 2017, Jackson Wijaya — who owns Paper Excellence — was also “director and assistant president” of APP Ever Dragon Investments Group. At the same time, his father Teguh Ganda Widjaja was “chairman and president” of the same APP Group. And Jackson Wijaya was also listed as “Assistant president” of Sinar Mas Paper (China) Investment, owned by Asia Pulp & Paper China Ltd. In other words, the Wijaya corporate ties appear to be more than just family ones.[1]
And as reported in previous articles, Paper Excellence has told ICIJ that it is “completely independent from Asia Pulp & Paper, and APP reiterated its previous statements that any “suggestion that Paper Excellence is part of the same corporate group” as Asia Pulp & Paper is “not correct.”
Free trade with Indonesia
According to the Forest Products Association of Canada, now that Paper Excellence has swallowed both Domtar and Resolute, it has 21% of the entire pulp and paper industry market share in the country, and manages 22 million hectares of woodland.
And as reported in the second article in this series, Statistics Canada’s Inter-corporate ownership database shows that Paper Excellence is ultimately owned by Sinar Mas and controlled out of Indonesia.
For Syahrul Fitra of Greenpeace Indonesia, this rapid expansion of the corporate empire of the Wijaya family into the Americas is “concerning.”
Fitra is also concerned about the free trade deal being negotiated by Canada and Indonesia. He says the deal is being negotiated “on the quiet,” that “Indonesian citizens are in the dark,” and such a trade deal has risks for the environment and Indigenous rights in both countries.
Related: A quietly negotiated trade agreement with Indonesia is a bad deal for Canada
Fitra says the lack of transparency means, “there’s a risk that a trade deal may provide the basis to once again ride roughshod over environmental and human rights concerns, as was done two decades ago to benefit mining companies.”
“There is plenty that could and should be regulated in a trade deal, to ensure products from both countries aren’t being traded at the expense of forests, whether they’re tropical or boreal, and that Indigenous rights are being upheld.”
The rapid expansion of Paper Excellence also raises questions about consolidation of control in the pulp and paper industry in Canada, Fitra says. “Anti-trust agencies in the EU [European Union], Canada, or elsewhere this company is operating in must keep an eye on this company.”
‘Widespread belief’ of ‘significant link’ between APP and Paper Excellence
In December 2021, Canada’s Competition Bureau reviewed the acquisition by “Karta Halten B.V. (Paper Excellence)” of Domtar for about $3 billion. It found that the acquisition would “likely lessen competition substantially” in the southern interior and coastal region of British Columbia, creating monopsony power — the power to purchase below competitive market prices — for Paper Excellence for the purchase of wood fibre.
The Competition Bureau approved the merger, but stipulated that Paper Excellence would have to sell Domtar’s mill in Kamloops.
During its review of the merger, the Competition Bureau “learned that many industry participants view Paper Excellence and APP as sharing a significant relationship.” Its decision statement included these carefully worded statements:
Due to the size and scope of APP’s business, as well as the widespread belief in the industry of a significant link between the two companies, the Bureau sought to determine whether a significant interest exists and, if so, whether the ability of APP to materially influence Paper Excellence could potentially result in the Proposed Transaction substantially lessening or preventing competition in the sale of pulp and/or paper in Canada.
Additionally, to determine whether Paper Excellence would have market power following its acquisition of Domtar, the Bureau extensively considered the potential existence of a significant interest between Paper Excellence and Asia Pulp & Paper (APP), which is owned by family members of the owner of Paper Excellence. APP is a major global producer of pulp and paper, and is one of the largest consumers of NBSK [northern bleached softwood pulp] in the world.
… While a number of market participants alleged that Paper Excellence’s relationship with APP would incentivize it to act in an anti-competitive manner, even when such actions would not be profitable for a fully independent entity, the Bureau determined that there is insufficient evidence to conclude that the Proposed Transaction would likely substantially lessen or prevent competition in the sale of pulp and/or paper in Canada, even under a scenario where a significant interest is found to exist.
A year later, the Competition Bureau had yet another big pulp and paper merger to review. This time Domtar, recently acquired by Paper Excellence and taken private, was acquiring Resolute Forest Products. The Competition Bureau found that together Domtar and Resolute account for “a significant portion of the supply of NBSK in Eastern and Central Canada” and “result in market shares well above the 35% threshold” allowed by the Bureau’s merger guidelines.
To prevent monopsony power in northwest Ontario that would allow Domtar to pay lower than competitive prices to wood fibre suppliers, the Competition Bureau determined that Domtar would have to sell its Dryden and Thunder Bay mills.
But with that condition in place, the merger was approved.
The Halifax Examiner asked the Competition Bureau for more details about its review of the Domtar-Resolute merger and whether it had looked at the entire holdings of Paper Excellence in Canada. Spokesperson Sarah Brown replied that, “because Domtar is a wholly-owned Affiliate of Paper Excellence, the Bureau considered Paper Excellence and Domtar as a single entity for the purposes of its assessment of the Resolute transaction.”
However, Brown said the Competition Bureau is required by law to do its work confidentially, and for now the only available information are the news release and the consent agreement.
Brown wrote that the Competition Bureau “expects to issue a position statement” related to the review of the Domtar (Paper Excellence) merger with Resolute Forest Products “coming weeks.”
The merger, however, went ahead on March 1. As of publication, the Competition Bureau has yet to issue a position statement on the merger.
Anti-trust issues
Jim, the whistleblower who we introduced this series with and who worked at APP, says that after he left APP he tried to alert anti-trust agencies in Europe and Brazil about what he saw as anti-trust behaviours and issues, offering to send material he thought offered evidence of that behaviour.
He says his offers were either ignored or simply rebuffed.
Out of frustration, he then approached the media.
Which brings us to the end, and back to the beginning, with that email that landed from China a year ago and triggered the research that led to this series of articles.
The series may end here, but the story of Paper Excellence as Canada’s largest pulp and paper producer is really just starting.
[1] Corporate bonds filings in Hong Kong on September 18, 2017: Green Fortune Capital Limited bonds guaranteed by APP Ever Dragon Investments Group Limited
We have a somewhat good structure for establishing sustainable forestry in Canada through the Canada Forest Accord administered by the Canadian Council of Forest Ministers. Unfortunately, each province is deficient in meeting the requirements of the accord in their owns special ways. Nobody has any ability to force them to make changes is tasked with keeping them accountable to either each other or to the people living in each province. It’s kind of a pie in the sky ministerial level thing that isn’t brought down to the day to day or forestry practices in each province. The text of the accord though allows for a very robust road to sustainability and social responsibility if it were fully implemented an is a good document for any politician who wants to make change to hold up and say ‘hey, we should do this thing we agreed to do’.
A big on the ground problem is that forestry schools in Canada mostly turn out foresters who learn how to plan forestry operations and not critical thinkers about forestry and ecology…though sometimes good people slip through the system and make a difference in the field. These schools sometimes have ties to big money from local corporate players in forestry and in turn the schools turn out students that are ‘useful’ to the companies instead of ones who might question the whole system and whether it aligns with the most current ecological knowledge. We were lucky to have the Lahey report produced in NS but most provinces are not putting such a refined critical eye to the forestry practices and really rooting out the unsustainable practices.
Scientifically we are really just nosing our way to the edges of understanding or even appreciating the utterly mind-blowing complexity of the web of life in a forest ecosystem, when we get down to the level of communities of insects, microbes, fungus, moss and lichens that support all the more visible parts of the ecosystem. It’s incredibly difficult to take anybody of any experience level out into the woods and convey to them both the incredible things we know and the vastness of what we don’t yet understand. The average professional person in charge of approving what is cut down and what is not in any province in Canada, through no fault of their own, has an incredibly superficial understanding of forest ecology, because the system isn’t set up to produce those people en-masse.
Such a giant, awful, twisted, depressing mess on so many levels. IT is not all right – and I hate myself because I bought TP today without thinking to look at the label – and now I don’t want to know. AAaargh!