Federal lawmakers are raising questions about how deeply the Canadian government probed the ties of a wealthy Indonesian businessman as his company amassed a commanding share of Canada’s forest products sector.
Members of Parliament for the New Democratic Party and the Bloc Québécois were among the most vocal Friday as two senior bureaucrats with Canada’s department of Innovation, Science and Economic Development (ISED) appeared before the House of Commons standing committee on natural resources to explain how the federal government handled the approvals of Paper Excellence Group’s recent acquisitions.
Richmond, B.C.-based Paper Excellence is owned by Jackson Widjaja, a businessman who lives in Asia. It has rapidly become Canada’s biggest player in pulp and paper. Launched with a single pulp mill in Saskatchewan 15 years ago, the company bought British Columbia’s Catalyst Paper Corp. in 2019, Montreal-based Domtar in 2021 and Resolute Forest Products Inc. in a deal that closed earlier this year.
That speedy growth has generated a significant amount of concern from environmental groups and others who say the company’s documented ties to the Widjaja family’s other holdings, specifically the Indonesian conglomerate Sinar Mas and its Asia Pulp & Paper subsidiary, bodes ill for Canada because of APP’s track record of environmental destruction.
After reports by The Globe and Mail and other media outlets in recent months highlighting Paper Excellence’s growing influence over Canada’s forest products sector, the natural resources committee struck a mandate to hear from executives and seek reassurances from government bureaucrats on the due diligence that was done. Executives from the company appeared on Tuesday, and on Friday, the committee heard from federal officials.
None of Paper Excellence’s recent acquisitions in Canada qualified for a federal review of the net benefit to Canada from a foreign takeover because they were “indirect” transactions, Mark Schaan, senior assistant deputy minister for ISED’s strategy and innovation policy sector, told the committee Friday. But they were examined under the national security provisions of the Investment Canada Act, he said.
Paper Excellence’s ties to controversial Indonesian forestry giant could hinder Canadian expansion
Mr. Schaan and DeNeige Dojack, director of the department’s investment review division, said the government’s analysis confirms that Paper Excellence is controlled by Mr. Widjaja. But they declined to get into specifics about the analysis, citing confidentiality agreements in place.
Ms. Dojack said it’s very common for corporations being examined to have investments structured through a series of holding companies and subsidiaries, as is the case with Paper Excellence. She said the government considers the threshold for control over a company to be one-third of its equity, and that the review can also include an examination into “influence” over the ownership from other places. She was unable to elaborate before being interrupted.
“You will not tell us whether … you bothered to even look into whether Jackson Widjaja works for Asia Pulp and Paper and has an office at Sinar Mas in Shanghai,” NDP committee member Charlie Angus told the two federal officials. “Will you say whether or not you actually looked into that? Because if you didn’t, that’s serious negligence. And it’s putting Canadian jobs, our communities and environment at risk.”
Mr. Schaan answered that national-security reviews are extraordinarily important and that the government takes them very seriously. He said he’s not in a position to reveal the details of the national security considerations in this case because of their sensitivity. But he explained that in every transaction reviewed, the government understands the ownership structure of the investors seeking approval.
In testimony before the committee earlier this week, Paper Excellence chair John Williams vowed that the company will be “as transparent as you need us to be” in providing more information. He and three other company officials acknowledged that Mr. Widjaja received assistance from other family businesses for Paper Excellence in its early days, but the help has stopped and that it’s completely independent from them now. And the officials said the concern that the company is simply a conduit for Canadian wood fibre going to China is wrong.
Many industry consultants and analysts give Paper Excellence credit for investing in assets no one else wanted and keeping mills running that rival producers might have given up on much sooner. But others have sounded the alarm that a company controlling such a vast swath of the Canadian forestry sector is in foreign hands.
Mr. Widjaja, who lives outside Canada, did not appear before the committee and there are no indications he will.