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Government will ensure wood pulp giant Paper Excellence respects Canadian laws: Wilkinson

CANADA (From news reports) -- The federal government will work with the provinces to ensure that Canada's largest pulp producer respects federal and provincial laws and regulations, federal Natural Resources Minister Jonathan Wilkinson said.

Speaking to reporters after testifying before the House of Commons natural resources committee, Wilkinson promised to hold Paper Excellence and other companies to account.

"I'm not going to prejudge what the company is going to or not going to do. They went through a rigorous Investment Canada review that obviously falls under the Investment Canada Act, which falls under [Industry Minister François-Philippe] Champagne," Wilkinson said.

"But certainly, we are going to be thoughtful about ensuring that they, just like all companies in the forest products industry, abide by appropriate laws and regulations."

Wilkinson's comments come in the wake of an investigation into Paper Excellence by CBC News in conjunction with other media outlets -- part of a wider look at the global forestry industry under the umbrella of the International Consortium of Investigative Journalists.

The investigation found that the people behind or associated with Paper Excellence appear to have a pattern of using multiple corporations, including tax havens, in a way that effectively shields transactions and assets from public and government scrutiny.

The company won't open up about its past financing, some of which was facilitated at one point by a $1.25 billion US demand debenture with the China Development Bank. The bank 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 appears to have been closely and secretly co-ordinating business and strategy decisions with Asia Pulp & Paper, one of the world's biggest pulp-and-paper companies. Environmental groups have said Asia Pulp & Paper has a track record of environmental destructionThe company maintains that Paper Excellence is completely independent of Asia Pulp & Paper and is owned solely by Jackson Wijaya.

Wijaya is a member of the family that owns Asia Pulp & Paper and Indonesian giant Sinar Mas.

With its recent acquisition of Resolute Forest Products, Paper Excellence is now Canada's largest producer of wood pulp and manages nearly 22 million hectares of Canadian forest.

On Tuesday, NDP natural resources critic Charlie Angus served formal notice of a motion to summon top company and government officials to testify before the natural resources committee. His motion has the support of the Conservatives and the Bloc Québécois.

On Wednesday, Paper Excellence said it strictly complies with environmental regulations and officials will agree to testify before the committee.

"If invited, Paper Excellence welcomes the opportunity to answer questions from the committee about its commitment to creating jobs and growing Canada's forestry sector, maintaining a positive working relationship with government at all levels across the country," the company said in a media statement to CBC News.

Conservative natural resource critic Shannon Stubbs said she wasn't aware of Paper Excellence's complex corporate structure before the investigation by CBC and other media outlets. Now she wants to know more about the company and the government's decision to allow its acquisition of Resolute.

"I support our colleague's aims to get more information for Canadians on that decision," Stubbs said after Tuesday's committee meeting.

"We have said that there are a number of measures that the Liberals could take to lower the thresholds for security reviews -- in particular from foreign, state owned and hostile regime acquisitions into resource development."

Asked about the company's financial help from the China Development Bank between 2012 and 2020, Stubbs said she would like to see more transparency about the investment.

During the committee meeting, Angus peppered Wilkinson with questions about Paper Excellence, its ownership, its track record in Nova Scotia and its acquisition of Resolute.

"This is a company that now controls 22 million hectares of Canadian forests," Angus told the committee. "What concerns me is that they control Resolute, Domtar, Northern Pulp.

"Their ownership says they're Canadian-based but what we've been trying to track is that it goes through a whole series of shell companies set up in the Netherlands, Malaysia, [the] Malaysian offshore jurisdiction of Labuan, two shell companies in the Virgin Islands, and all of them are tied back to Indonesia and the Sinar Mas group."

"Do we have any certainty whether this company is a Canadian company and who are they?"

Wilkinson said Paper Excellence's acquisition of Resolute was subjected to the national security review provisions of the Investment Canada Act and Canada's lead security agencies were consulted on the transaction. He said Paper Excellence also made commitments to invest in facilities in Quebec, maintain existing Canadian patents and maintain a Canadian presence on Resolute's board.

Wilkinson said the Canadian government was involved in enforcing the laws that resulted in the shutdown of the company's Northern Pulp mill in Nova Scotia because "Boat Harbour was so polluted."

Wilkinson faced questions as well from Bloc Québécois natural resources critic Mario Simard, who also wants to hear from top officials at Paper Excellence.

Simard said he wants to know whether Paper Excellence will invest in the Resolute mills it has acquired, whether it will respect the employee pension plan and whether it is interested in more than just kraft paper.

"They want to respond to Asia's need for kraft paper," Simard said. "Are they going to concentrate only on that and forget the overall network and lose numerous jobs?"

Angus's motion is expected to be debated at the committee's next meeting on March 31.

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