MPs ask whether pulp giant's revamped board is Canadian enough

Members of Parliament are raising concerns after Canada's new pulp and paper giant dismissed the previous board of directors of Resolute Forest Products and replaced it with a board dominated by longtime Paper Excellence executives.

They are also questioning whether the new board satisfies the commitment Paper Excellence gave the federalgovernment when itapproved its takeover of Resolute that it would "maintain" a Canadian presence on Resolute's board of directors.

"I think Canadians are waking up to the fact that a company that has very unclear ownership, that has ties directly to Shanghai and to Indonesia, may be controlled by a family that has massive control over international pulp and paper markets, is now sitting on top of and in control of 22 million hectares of Canadian forest," said NDP natural resources critic Charlie Angus.

"We need to know who's making the decisions here. They were allowed to take over Resolute, they made promises about the takeover of Resolute, that this was going to remain very much Canadian."

Seth Kursman, spokesperson for Resolute Forest Products, confirmed that the company's previous board of directors is no longer in place. He said two of the three current directors have Canadian citizenship and "all members of the Resolute executive team are also Canadian."

Industry Minister Franois-Philippe Champagne won't reveal what the company promised the federal government regardingwhat percentage of Resolute's board have to be Canadian citizens, saying he has to respect the Investment Canada Act. He said his department will be watching to ensure that the company keeps the promises it made when it acquired Resolute.

"Canadians know me by now. I'm a hawk on these things," Champagne toldCBC News. "We have a sophisticated process and we have always made sure that whatever undertakings that people (make) to the government of Canada, we follow up and we make sure that they are respected."

Bloc QubcoisNatural Resources criticMario Simardsaid he has concerns about the deal to acquire Resolute and wants to know more about the promises the company made to the government.

Simardsaid he plans to table a motion with the House of Commons natural resources committee calling on the committee to ask Paper Excellence's owner Jackson Wijaya to waive the confidentiality of discussions the company had with the government "regarding the company's ownership structure and business relationships in the Canadian pulp and paper industry."

Champagne's comments come after Domtar, owned by Paper Excellence, acquiredResolute Forest Products earlier this year a deal that consolidated Paper Excellence's dominance of Canada's wood pulp industry.

In March,CBC News took part in a months-long investigation of the global forestry industry with40 media outlets under the umbrella of the Washington-based International Consortium of Investigative Journalists. That investigation raised questions about who is behind Canada's new pulp and paper powerhouse.

The people behind or associated with Paper Excellence appear to have a pattern of using thickets of corporations including some in tax havens effectively shielding transactions and assets from public and government scrutiny.

The company has also been tight-lipped about its past financing, some of which was facilitated by the China Development Bank, which is owned by the Chinese government.

CBC's investigation also found leaked records and insider accounts that show that, at least until a few years ago,Paper Excellence appeared to have been closely and secretlyco-ordinating business and strategy decisions with Asia Pulp & Paper.

Asia Pulp & Paper is one of the world's biggest pulp and paper players andhas a track record of environmental destruction.

The company maintains that Paper Excellence is independent of Asia Pulp and Paper and is owned byWijaya.

In the wake of the investigation, the House of Commons Natural Resources committee voted to call witnesses to testify about the company and its ownership. Those hearings have been plagued by committee meeting cancellations for technical reasons and problems scheduling Paper Excellence representatives to appear.

On Tuesday, committee Chairman John Aldagsaid Paper Excellence officials are now scheduled to appear May 30.

But the committee is stillhaving difficulty gettingWijaya to testify. In a letter dated May 1 obtained by CBC News, Wijaya told the committee he was unable to appear "due to extensive global business commitments."

Wijaya told the committee that Paper Excellence and its subsidiaries "are owned solely and exclusively by me and are wholly separate and independent from any other company, including Asia Pulp and Paper and the Sinar Mas group."

Asia Pulp and Paper is part of the Sinar Mas group, owned by the Wijaya family.

Wijaya also shed new light on a $1.25 billion USdemand debenture from the China Development Bank in 2012.

"Relying in part on connections that I had developed through family and other relationships, Paper Excellence sought financing to make major capital investments in three Canadian mills," Wijaya wrote. "Based on these goals, our team successfully negotiated a loan and credit facility from China Development Bank (CDB), which was actively sourcing international project financings in many parts of the world, including Canada, at that time.

"This was a standard commercial loan and we paid that financing down over the succeeding years and subsequently fully paid it off in 2020. We have no relationship today with CDB or any other Chinese bank."

CBC's investigation found the company subsequently obtained financing from two Indonesian banks which registered mortgages on mill properties in B.C and Saskatchewan.

The latest questions being raised centre on the deal to acquire Resolute,which provides Paper Excellence with mills, power generating facilities and wood supplies in Ontario, Quebec and the U.S.

When the federal government approved the deal, the company gave assurances it would maintain Canadian participation on the board of directors. Prior to the acquisition, seven of the eight directors on Resolute's board lived in Canada.

However, after the deal to acquire Resolute closed, the previous board was removed, with the exception of company president Remi Lalonde, and two new board members were added Sugiarto (Awie) Kardiman and Peter (Hardi) Wardana.

Filings with the United States Securities and Exchange Commission for Domtar in 2022 say Wardhana has been with Paper Excellence since its inception and was a director of Paper Excellence B.V. and the company's global head of mergers and acquisitions. They sayWardhana, a former consultant with McKinsey & Co., earned a bachelor of science in mechanical engineering from Columbia University, a master of science in engineering-economic systems from Stanford University and a master in finance from the London Business School.

A 2010 Globe and Mail article said he previously worked with Sinar Mas. As recently as 2017, corporate filings listed an address in Indonesia, although the newest filings for Resolute list his domicile as Paper Excellence's corporate offices in Richmond, B.C.

Kursman said Wardhana is not a Canadian citizen and did not say where he lives.

Kardiman worked for Paper Excellence from 2010 to 2013, according to his LinkedIn profile, then rejoined the company in November 2020 after working for two other companies. Kardiman did his BA in accounting in Indonesia and, in early corporate documents for Paper Excellence companies,listed an address in Indonesia. Kursman said Kardiman has Canadian citizenship andlives in Coquitlam, B.C.

Green Party co-leader Elizabeth May said she doesn't think Resolute's current board satisfies the terms ofthe assurance the government was given.

"With a board of directors with key players from outside Canada who come from Paper Excellence culture, Paper Excellence background, it's worrying to see people come on the board whose ties are to Indonesia," she said.

Shane Moffatt of Greenpeace said Resolute's board of directors has tended toplayan important role in setting the company's direction.

"When it comes to Resolute Forest Products, I have certainly seen their boards be a significant force within the company and I would be surprised if the appointment of new Paper Excellence representatives was not intended to ensure some new perspectives around the direction of the company," he said.

Moffatt, who is among those scheduled to testify before the Natural Resources committee, said it is important for Wijaya to appear before MPs.

"I really think it is so critically important for public trust in what's happening in the forests for Jackson Wijaya to show," Moffatt said. "I can't possibly imagine him not showing up and thinking that's going to be acceptable to anyone."