Softwood chips, a residual of the sawmill's softwood lumber is collected for making newspaper at Resolute Forest Products in Gatineau, Quebec.CHRISTINNE MUSCHI/Reuters
Paper Excellence Group, the privately held pulp and paper maker controlled by a family member of an Indonesian business dynasty, is facing renewed questions about its ownership structure and future plans for Canada’s forests as the company pushes on with a rapid cross-country expansion.
The Richmond, B.C.-based company, owned by Jackson Widjaja, the grandson of a well-known Indonesian billionaire tycoon, appeared before the House of Commons standing committee on natural resources late Tuesday and was quickly forced onto the defensive.
Four Paper Excellence representatives, including manufacturing industry veteran John Williams, the former Domtar chief executive who is the company’s non-executive chair, answered a battery of queries from lawmakers for an hour. At the end of it, they agreed to be “as transparent as you need us to be” in providing more information, as Mr. Williams put it.
They acknowledged that the company’s ownership structure, consisting of a series of holding companies, might appear opaque but said they are set up for tax efficiency. They acknowledged that Mr. Widjaja did receive assistance from other family businesses for Paper Excellence in its earlier days but that the help has stopped and that it’s completely independent from them. And they said the concern that the company is simply a conduit for Canadian wood fibre going to China is wrong.
“Jackson had a vision, and still has a vision actually, that he can help the Canadian pulp and paper business become a sunrise business rather than the sunset business it’s been for a number of years,” Mr. Williams said. “And he’s ready to invest behind that.”
Mr. Widjaja, who lives outside Canada, did not appear.
Scrutiny of Paper Excellence by federal politicians comes after reports by The Globe and Mail and other media outlets in recent months highlighting the company’s growing influence over Canada’s forestry products sector and concerns about its accountability. The company says it has already been through an extensive review under the Investment Canada Act, but the natural resources committee struck a mandate to hear from executives and seek reassurances on the due diligence that was done.
Greenpeace Canada says that based on its own investigations, the secrecy surrounding Paper Excellence’s corporate entities presents an obstacle to the Canadian public holding the company answerable for its actions. It is calling for new measures that would show who’s logging, how it’s being done and who’s profiting from it, as well as more effective forest regulation.
“Instead of meekly accepting the company’s assurances, this calls for co-ordinated action from the federal government,” said Shane Moffatt, who leads Greenpeace Canada’s nature and food campaign. “Forests across Canada are in pretty rough shape right now.”
Paper Excellence launched with a single pulp mill in Saskatchewan 15 years ago and slowly expanded through smaller acquisitions – until late 2019, when it closed the purchase of B.C.’s Catalyst Paper Corp. and its three mills. Since then, its appetite has been voracious.
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The company bought Montreal-based Domtar Corp. for US$2.8-billion in November, 2021. Just months later, it took the industry by surprise with the proposed takeover of Resolute Forest Products Inc. for US$2.7-billion.
That deal was approved by the Competition Bureau and was also subject to a foreign investment review because Paper Excellence’s ownership is not Canadian, said Laurie Bouchard, a spokesperson for François-Philippe Champagne, Minister of Innovation, Science and Industry. Canada’s lead security agencies were consulted on the transaction, she said.
“Recognizing the need to ensure that this investment continues to be in Canada’s best interests, as part of the review process, the investor has provided meaningful commitments to Canada,” Ms. Bouchard said via e-mail.
That includes ensuring strong levels of investment to facilities in Quebec, maintaining existing Canadian patents, maintaining Canadian participation on Resolute Canada’s board and senior management team, and adhering to Canadian employment and environmental laws, Ms. Bouchard said.
As of December of last year, Paper Excellence controlled pulp and paper manufacturing operations that yield almost 10.4 million tonnes annually, with a work force of more than 14,000 at some 40 locations across the Americas and Europe. In Canada, it had 10 mills, including those of Domtar.
With the Resolute deal now complete, Paper Excellence gained another two dozen operations in Canada, including more pulp and paper mills, several facilities where construction-grade lumber and other wood products are made, as well as a clutch of power-generation facilities. Resolute manages, directly or indirectly, more than 20 million hectares of forests, most of them in Ontario and Quebec.
Many industry consultants and analysts give the company credit for investing in assets no one else wanted and keeping things running in mills that rival producers might have given up on years ago. Others have sounded the alarm that a company controlling such a vast swath of the Canadian forestry sector is in foreign hands.
One big concern is just how deep the company’s links to the Widjaja family’s other holdings run, specifically the Indonesian conglomerate Sinar Mas and its Asia Pulp and Paper (APP) subsidiary.
The Forest Stewardship Council (FSC), an international non-profit organization that certifies companies that manage forests, disassociated itself from APP in 2007 citing “substantial, publicly available information that APP was involved in destructive forestry practices.” While APP has been trying to get recertified ever since, negotiations have stalled over requests for greater transparency into APP’s corporate structure.
FSC certification can be vital for selling products to big retailers, which might be concerned about public backlash if they are tied to alleged deforestation. After a Greenpeace campaign in the early 2010s, APP was ditched by multiple major customers, including Kraft Foods, Unilever PLC and Staples Inc.
Paper Excellence has FSC certification, and a spokesperson for the stewardship council said it had evaluated the ownership multiple times, most recently in 2021, and was satisfied it was sufficiently separate from APP. However, a new policy was introduced at the beginning of this year that could trigger a closer examination of the company.
Mr. Williams said he’s never had any interaction with anyone from APP. “The idea that they would be sort of the puppet masters, I have to say, seems inconceivable,” he told the committee.
Testimony before the committee is scheduled to continue on Friday.