5 questions swirling around Canada’s newest forestry powerhouse as it faces grilling from MPs today | CBC News

Opaque offshore affiliates, close collaboration on hiring decisions with a supposed competitor, a CEO who seems to want to avoid the spotlight — tough questions are swirling around Paper Excellence. 

The company, which is Canada’s newest forestry sector powerhouse after it bought Quebec-based Resolute Forest Products in March, will be under the microscope this afternoon in Ottawa.

MPs on the House of Commons natural resources committee have a chance to grill company officials on anything from possible Chinese state involvement in one of Canada’s signature industries to why the name of Paper Excellence’s CEO is absent from the management bios on its website.

The hearings were announced after CBC News — in collaboration with the Halifax Examiner, B.C.-based Glacier Media, France’s Le Monde and the International Consortium of Investigative Journalists — published investigations into Paper Excellence in March that revealed the company has closer ties than previously known to Beijing, as well as to an Indonesian resource industry behemoth called the Sinar Mas Group, which has a track record of rainforest destruction. 

The company is now Canada’s biggest wood-pulp producer and third-biggest logging company by one measure, and controls 22 million hectares of Canadian forest, an area more than four times the size of Nova Scotia.

But as a private entity, it has no obligations to be transparent about its business. While it once openly acknowledged its ties to Sinar Mas on its own letterhead, in recent years Paper Excellence has loudly proclaimed its independence — avowals that have been called into question in media and NGO reports. 

In recent weeks, CBC has found further evidence of links between the company and a controversial Sinar Mas subsidiary called Asia Pulp and Paper (APP).

Who actually runs Paper Excellence?

The company says businessman Jackson Wijaya is the only person who has ever owned or controlled Paper Excellence. Wijaya is a member of the wealthy Chinese-Indonesian family that runs the Sinar Mas conglomerate, and has had many roles in Sinar Mas’s subsidiaries over the years, but Paper Excellence says it’s completely independent. 

It’s difficult to verify that claim. Paper Excellence Canada is owned by a Dutch company called Paper Excellence BV, whose financial statements over the years have named its ultimate shareholder as various holding companies in the British Virgin Islands, an opaque offshore tax haven.

Through the end of 2009, the ultimate parent listed in those filings was a company called Marque Technologies Ltd. Records in a huge 2013 leak of tax-haven financial data show that Marque Technologies’ directors, as of 2010, included Jackson Wijaya’s father, Teguh Ganda Wijaya, who is currently the chairman of APP. Other directors included APP’s former chief financial officer and a top APP in-house lawyer.

CBC News asked Paper Excellence for evidence to back up its claim about Jackson Wijaya’s sole ownership and control, but it provided none.

Will Jackson Wijaya testify?

When the natural resources committee adopted NDP MP Charlie Angus’s motion to hold hearings into Paper Excellence and Canada’s pulp and paper industry, it spelled out that it wanted Wijaya to take the stand. Sources say the committee gave Wijaya a variety of possible dates and the opportunity to testify by video conference.

Instead, the company has put forward four executives to field questions. In a statement Monday, spokesperson Martin Croteau said the company welcomed the opportunity to appear and takes the matter seriously. However, he did not say whether Wijaya will testify.

If Wijaya chooses to ignore the call to testify, the committee can either content itself with testimony from the other executives or vote to issue a summons. While the committee’s jurisdiction doesn’t extend outside Canada, a summons could be served if Wijaya returns to Canada.

The committee also has the power to refer Wijaya’s refusal to appear to Parliament, which could decide what course of action to take.

In an interview, Angus said he wants to hear from Wijaya — not mill managers.

“We want to know who controls this,” he said. “We need to know what Mr. Wijaya’s interest [is] in controlling the largest swath of Canadian forest of any company in this country…. Only he can answer that.”

What did the company do to prepare for today’s hearings? 

CBC News has learned that in the weeks leading up to today’s hearings, officials from Paper Excellence registered to lobby the federal government and began reaching out to MPs who sit on the committee.

Bloc Québécois MP Mario Simard, who had tried to meet with the company in the lead-up to its acquisition of Resolute Forest Products earlier this year, got some time with company officials via Zoom a couple weeks ago, he told CBC. They took note of his concerns that valuable kraft pulp would be exported to Asia but didn’t offer guarantees, saying the kraft pulp market was “volatile.”

The company also reached out to Conservative MP Shannon Stubbs after the motion to hold hearings was adopted.

Angus said the company reached out to him a couple of weeks ago and he refused to meet with them ahead of the committee hearings. While he often meets with industry representatives, he said it is “highly unusual” for a company with no history of past contact to call him before a committee appearance.

“Suddenly they wanted to be my best friend,” Angus said. “I think it is inappropriate to try and get that inside track when something is going to be heard in public.”

Croteau says the company was just trying to prepare better answers.

“Ahead of the committee hearing, we sought to understand what type of information was being solicited from Paper Excellence so we could provide fulsome responses,” he said via email.

Why was Paper Excellence created in the first place?

The timing of Paper Excellence’s formation raises questions about why it was even created in the first place. The company’s oldest holding in Canada, the mill at Meadow Lake, Sask., was actually purchased through a British Virgin Islands-registered corporation in 2007. Until at least 2010, it operated under the Sinar Mas banner.

But during that time, Sinar Mas’s APP unit was looking to expand in North America. A subsidiary tried to purchase three bankrupt pulp mills in 2008. It hit a snag because various APP companies still owed a U.S. government agency $144 million US following a huge default in 2001 and the U.S. government was trying to seize some of the funds for the mills purchase, court records show.

So APP tried another approach, according to the court filings. It transferred its right to buy the pulp mills into two newly incorporated companies that it didn’t directly own, for no money. Both were then folded into yet another new, Dutch company: Paper Excellence BV, the first entity to bear that name.

The U.S. government moved to block the transfers, alleging they were implemented as “a shield for fraudulent or improper conduct” and that the Wijaya family had “hindered and delayed” debt collection efforts. The mill deal fell through. 

But two years later, in 2010, another chance to buy two of the same mills arose. This time, APP’s name was nowhere on the transactions. Paper Excellence BV directly purchased the Mackenzie mill north of Prince George, B.C. Another company bought the Oregon mill.

Were APP and Paper Excellence co-ordinating their hiring in 2013? 

After CBC and its partners published their initial investigations into Paper Excellence in March, someone who worked at APP in the mid-2010s reached out to speak about his experiences at the company. 

He told CBC he observed that strategic decisions on things like Paper Excellence’s next acquisitions came from Teguh Wijaya, Jackson’s father. He said Jackson still managed the company day to day, but from APP’s offices in Shanghai, with resources and staffing from APP. 

CBC agreed not to name him to protect his professional relationships, because he still works in the industry.

Emails provided by the source show APP and Paper Excellence even sometimes collaborated on hiring. In a 2013 email chain among hiring managers for the two companies, around 140 candidates for jobs at an APP construction project in Indonesia were also offered to Paper Excellence to fill positions in Canada, with an APP executive volunteering to send along their resumés to Paper Excellence’s HR manager. 

The APP source’s recollections echo information provided to the Halifax Examiner and later CBC by another confidential source who used to work at the company, who said the teams handling market analysis, strategic direction, legal matters and financing for Paper Excellence were all APP staff, and that there were no real boundaries between the two companies’ back offices.

A third employee who worked for APP for nearly a decade and also requested anonymity said that didn’t reflect his experience, which was that APP and Paper Excellence were “pretty well siloed.”

Paper Excellence did not respond to previous CBC inquiries about collaboration with APP on strategic and legal matters. APP said any suggestion that its staff have worked for or alongside Paper Excellence, or that it has shared confidential information with Paper Excellence, is wrong.

Elizabeth Thompson can be reached at [email protected]. Zach Dubinsky can be reached at [email protected].